Sunday, November 14, 2010

11:07 PM

Remedial Law Review

University of the Philippines College of Law
Second Semester Yr 2010-2011
Prof. TJ Herbosa

Jurisdiction
Subject matter jurisdiction
Allegations of complaint determine jurisdiction – Hasegawa 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 Court
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 al GR 154404 Sep 11, 2008; First
United v. Poro Point GR 178799 Jan 19, 2009
Appellate jurisdiction – First Lepanto Ceramics, Inc. v. CA, GR 110571, Mar 10, 1994
SC 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 law , 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. Heirs of Eusebio Villegas GR 183357 Mar 15,
2010;
Encarnacion v. Amigo, GR No. 169793 Sep 15, 2006
Issue of constitutionality – Planters Products v. Fertiphil GR 166006 Mar 14, 2008
Quasi judicial agency – Badillo v. CA GR 131903 June 26, 2008
CIAC – Fort Bonifacio v Domingo GR 180768 Feb 27, 2009
RTC acting as Special Agrarian Court – Land Bank v. Ralla Balista GR 164631 Jun 26, 2009
Default jurisdiction – Mun 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 Relation 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

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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 abandonment 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 domicile in case of disagreement of the spouses),
Art. 73 (spouse’s objection to the profession of the other spouse),
Arts. 96 and
124 (annulment of husband’s decision in the administration and enjoyment 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)
and Art. 217 (entrusting children to homes and orphanages).
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 Procedure Governing Intra-corporate Controversies
A.M. 00-8-10-SC Interim Rules of Procedure on Corporate Rehabilitation (note FRIA)
Oscar Reyes v. RTC Makati GR 165744 Aug 11, 2008

Metropolitan Trial Courts, Municipal Trial Courts/Circuit Trial Courts

BP 129, as amended by RA 7691, Secs. 2 to 4
Unlawful detainer v. agrarian dispute – Sps Fajardo v. Anita Flores GR 167891 Jan 15, 2010
Recovery of possession – Vda De Barrera 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 39
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 174109 Dec 24, 2008;

Rule 2 Cause of Action

Elements of a cause of action - Ceroferr v. CA 376 SCRA 144; Camarines Sur Electric v.
Aquino GR 167691 Sep 23, 2008
Sufficiency of allegations –Vinzons-Chato v. Fortune GR 141309 Dec 23, 2008
Splitting a cause of action – BPI Family v. De Coscuella, GR No. 167724, Jun 27, 2006
Joinder of causes of action – 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; Josephine Marmo v Moises Anacay GR
182585 Nov 27 2009; Leonis Navigation v Catalina Villamater 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 - Van ZuiDen v. GTVL Manufacturing 523 SCRA 233; Deutsche
v CA GR 152318 Apr 16, 2009
Misjoinder/non-joinder of parties – Chua v. Torres GR 151900 Aug 30, 2005; Anicia Valdez
Tallorin v Heirs of Juanito Tarona GR 177429 Nov 24, 2009; Littie Sarah 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 149787 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

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Indigent parties – Sps Algura v. LGU GR 150135 Oct 30, 2006

Rule 4 Venue of Actions

Personal action – Uniwide v. Cruz GR 171456 Aug 9, 2007
Real Action – Infante v. Aran Builders, GR 156594 Aug 24, 2007; HiYield v. CA GR 168863
Jun 23, 2009
Principal party ; when to object – Irene Marcos-Araneta v. CA GR 154096 Aug 22, 2008
Stipulated venue not exclusive - Philbanking v. Tensuan, 230 SCRA 413; Spouses Lantin v.
Judge Lantion, GR No. 160053, Aug 28, 2006

Rule 5 Uniform Procedure in Trial Courts

Revised Rules on Summary Procedure
Summary procedure – Estate of Macadangdang v Gaviola GR 156809 Mar 4, 2009; Angelina
Soriente v Estate pf Arsenio Concepcion 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
Compulsory counterclaim – Financial Builders. V. FPA 338 SCRA 346; Reillo v. San Jose
GR 166393 Jun 18, 2009
Permissive counterclaim – Banco de Oro v. CA GR 160354 Aug 25, 2005; Dec 19, 2007
Third party complaint – Asian Construction v. CA 458 SCRA 750; 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. 149576, 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 168667 Jul 23, 2008
Who can sign w/o sec cert – Mid-Pasig Land v Mario Tablante GR 162924 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
Modes of specific denial – Gaza et al v. Lim GR 126863 Jan 16, 2003;
Actionable document – Casent Realty v. Philbanking GR 150731 Sep 14, 2007; Malayan v.
Regis Brokerage GR 172156 Nov 23, 2007

Rule 9 Effect of Failure to Plead

No default motu proprio – 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. Gothong 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 -Araneta et al v. CA GR 154096 Aug 22, 2008
Conform to evidence – Cagungun v. Planters Dev Bank GR 158674 Oct 17, 2005

Rule 11 When to File Responsive Pleading

Saturday, Sunday or legal holiday - Alarilla v. Ocampo 417 SCRA 601

Rule 12 Bill of Particulars

When a complaint is vague – Bantillo v. IAC, GR No 75311, Oct. 18, 1988; Republic v. SB
and Marcos, GR 148154, 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 31, 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 141484, Nov 11, 2005
Notice of lis pendens – Sps Vicente v. Avera GR 169970 Jun 20, 2009

Rule 14 Summons

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Rule 14 Summons
Kinds of actions - Gomez v. CA GR 127692 March 10, 2004; San Pedro v. Ong GR 17758
Oct 17, 2008;
Personal vs. substituted service of summons - Guiguinto 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 Trading 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 entity – BPI v. Spouses Santiago Mar 28, 2007; Paramount v. Ordonez GR
175109, Aug 6, 2008
Substantial compliance - Mason v. CA 413 SCRA 303; Millenium v. Tan GR 131724 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 for extension – Sarmiento v. Zaratan Feb 5, 2007
Proof of service – Romulo et al v. Peralta, GR 165665 Jan 31, 2007

Rule 16 Motion to Dismiss

Jurisdiction over subject matter – DAR v. Hon. Abdulwahid 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 143556 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. Maramag GR 181132 Jun 5, 2009
Lack of cause of action - Rural Bank of Calinog v. CA GR 146519, Jul 8, 2005; Bayot v. CA
GR 155635 Nov 7, 2008
Litis pendentia - Mid Pasig Land Dev v. CA 413 SCRA 204; Intramuros Administration v.
Contacto 402 SCRA 581
Res judicata – Francisco v. Roque GR 151339 Jan 31, 2006; Cruz v. CA GR 164797 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. – Doña Rosana Realty v. Molave Dev Corp GR 180523 Mar 26, 2010
Forum Non Conveniens – Raytheon Int‘l v. Rouzie GR 162894 Feb 26, 2008
Denial of, unappealable – Malicdem v. Flores Sep 8, 2006; PNB v Estate of De Guzman et al
GR 182507 Jun 16, 2010
Rule 17 Dismissal of Actions
Grounds – Pinga v. Santiago, GR No. 170354, Jun 30, 2006
Failure 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, March 11,
2004; Cruz v. CA GR 164797 Feb 13, 2006
Notice of dismissal prevails over motion to dismiss – Dael v. Sps Beltran GR 156470 Apr 30,
2008
Counterclaim – Mendoza 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 Trial Court Judges and Clerks of
Court in the Conduct of Pre-Trial and Use of Deposition-Discovery Measures
Effect of failure to appear - Saguid v. CA 403 SCRA 678; Jazmin Espiritu v. Vladimir Lazaro,
GR 181020, Nov 25, 2009
Admissions at pre-trial - Biesterbos v. CA 411 SCRA 396
Other pre-trial requirements - Advance Textile 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 intervene - Salandanan v Sps Mendoza GR 160280 (2009)
Who may intervene – GSIS v Nocom GR 175989 Feb 4, 2008; Asia‘s 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

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Rule 20 Calendar of Cases
Rule 21 Subpoena
Macaspac v. Flores AM No. P-05-2072 Aug 13, 2008; Re Subpoena of Dir Amante AM No.
10-1-13-SC Mar 2, 2010

Rule 22 Computati 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 Philippine Consular Officers Abroad
Purpose of rules of discovery – Republic v. Sandiganbayan, 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. Rojas GR 159127 Mar 3, 2008; Dasmarinas v. Reyes, 225 SCRA 622
Deposition (oral examination) 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 – DBP 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-compliance – Limos et al v Sps Odones GR 186979 Aug 11, 2010

Rule 27 Production or Inspection 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 Refusal to Comply with Modes of Discovery

Rule 30 Trial
When trial can be dispensed with - Republic v. Vda De Neri GR 139588 Mar 4, 2004
Absence of a party – Spouses Calo v. Spouses Tan, GR 151266 Nov 29, 2005
Rule 31 Consolidation or Severance
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, GR 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 Palma GR 160832 Oct 27, 2006
What evidence – Casent Realty v. Philbanking GR 150731 Sep 14, 2007

Rule 34 Judgment on the Pleadings

Sham or specific denials - Manufacturer‘s 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 156474 Aug 16,
2005; Sps Ong v. Roban Lending GR 172592 Jul 9, 2008; Reillo v San Jose 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 182984 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 157862 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 410 SCRA 627; Asian
Construction v. PCI Bank, GR No. 153827, Aug 25, 2006; Jose Feliciano Loy v. SMC GR

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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. SJS 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
Dispositive portion – Obra v. Badua et al GR 149125 Aug 9, 2007

Rule 37 New Trial or Reconsideration

Second MR not allowed – Sps Balanoba v. Madriaga 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 146845 Jul 2, 2002
Excusable negligence - Land Bank v. Natividad 458 SCRA 441; Gomez 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 judgment – 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 Aug 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 Becco GR 183753 Jun 19, 2009;
Rosario T. Florendo vs. Paramount Ins. Co. GR 167976 Jan. 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 period - 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
Sheriff‘s duties-Benjamin Sanga vs. Florencio Alcantara AMO-09-2657 Jan. 25, 2010;
Domingo Peña vs. Achilles Regalado AM P-10-2772 Feb. 16, 2010
Third party claimant – Fermin v. Hon Estevez GR 147977 Mar 26, 2008
Foreign judgment – Republic v. Gingoyon 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 al 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-Lorino, GR No. 160258, Jan 19, 2005
Mode of appeal from special courts - Land Bank 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-payment of appeal fee - Badillo v. Tayag GR 143976 Apr 3, 2003
AM No. 07-7-12-SC Amendments 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 Manila, 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

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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 GR 120384 Jan 13, 2004; Lullete S
Ko v. PNB GR 169131-32 Jan 20, 2006
Period to appeal - 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 Heirs 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, Mar 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, 2006
Supporting papers – BE San Diego Inc. v. Alzul 524 SCRA 402
Appeal from CSC – DECS v Cuanan GR 169013 Dec 16, 2008

Rule 44 Ordinary Appealed Cases

Revised Internal Rules of the Court of Appeals (RIRCA)
Grounds for dismissal of appeal - De Leon v. CA 383 SCRA 217
Contents of appellant‘s 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. Lorenzo, 464 SCRA 60, Jul 22, 2005; BPI v. CA, GR 160890,
Nov. 10, 2004; CGP Transportation v. PCI Leasing Mar 28, 2007
Limited review – Local Superior of the Servants of Charity v. Jody King Construction GR
141715 Oct 12, 2005; Perez – Rosario, et 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; International
Corporate Bank v. CA & PNB, Sept 5, 2006; San Miguel Bukid Homeowner 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 142464, 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 Milling 26 SCRA 712
Direct appeal to SC- Atlas Consolidated Mining 201 SCRA 51
Non-payment of fee – Cu-Unjieng v. CA, GR No. 139596, Jan 24, 2006
Non-filing of brief – Gov‘t v. CA et al GR 164150 Apr 14, 2008; Bachrach v. PPA GR

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Non-filing of brief – Gov‘t v. CA et al GR 164150 Apr 14, 2008; Bachrach v. PPA GR
159915 Mar12, 2009

Rule 51 Judgment
Multiple proceedings - Crystal vs. CA, 160 SCRA 79

Rule 52 Motion for Reconsideration

Badiola v. Ca GR 170691 Apr 23, 2008
Rule 53 New Trial
Rule 54 Internal Business
Rule 55 Publication of Judgments and Final Resolutions
Rule 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; Professional Video V Tesda GR 155504 Jun 26, 2009; Metro Inc. et al
v. Lara‘s Gifts, GR 171741, 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 Textile 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 SCRA 122; Sofia Torres v. Nicanor
Satsatin, GR 166759, Nov 25, 2009

Rule 58 Preliminary Injunction-

Clear 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 should 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 134971 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
Electrification Adm v Val Villanueva GR 168203 Mar 9, 2010
RA 8975 act to ensure the expeditious implementation and completion of government
infrastructure projects - 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 Workers 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. Sundiam 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. Ginete 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 131286 18 Mar 2004
Future support cannot be subject of compromise - De Asis vs. CA, 303 SCRA 176 (1999)

Special Civil Actions

Rule 62 Interpleader- -
Lessee‘s recourse to interpleader - Ocampo v. Tirona GR 147812 Apr 6, 2005
Rule 63 Declaratory Relief and Similar Remedies
Nature; Requisites for declaratory relief - Jumamil v. Café et al, GR 144570, Sep 21, 2005;
Republic v Mangotara, GR 170375 July 7, 2010

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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 Feb 20, 2006;
Martelino et al v. NHMFC GR 160208 Jun 30, 2008

Rule 64 Review of Judgments 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
Certiorari
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 Ever 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
Constitutional commission – Comoporo v. COMELEC GR 178624 Jun 30, 2009
Distinguished from Rule 45 – Ang Biat Huan Sons v. CA Mar 22, 2007 ; DOLE v. Ruben
Maceda, GR 185112, Jan 18, 2010
Sec 6 – Jimmy Areno v. Skycable, GR 180302, Feb 5, 2010

Prohibition
Holy Spirit Homeowners v. Defensor, GR No. 163980, Aug. 3, 2006 ; Tan v. CA 524 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, 2010 (mandamus will not lie if no public
interest)

Rule 66 Quo Warranto- -

Against public officers – Calleja v. Panday GR 168696 Feb 28, 2006
Clear legal right - Garces vs. CA, 253 SCRA 99 (1996); Feliciano v. Villasin GR 174929 Jun
27, 2008
Damages – 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
Public Use – Masikip v. City of Pasig GR 136349 Jan 23, 2006
Reckoning date – City of Iloilo 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 Jun 27,
2006; Teresita Monzon v. Sps Relova GR 171827 Sep 17, 2008

Rule 69 Partition
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 stages – 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 ―forcible 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
Jurisdictional requirements for unlawful detainer - Ross-Rica v. Sps Ong GR 132197 Aug 16,
2005; Abaya v. Merit GR 176324 Apr 16, 2008
Jurisdictional requirements for forcible entry – Leonardo David v. Cordova GR 152992 July

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Jurisdictional requirements for forcible entry – Leonardo David v. Cordova GR 152992 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 filing (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 Suerte AM No. RTJ-04-1875

SPECIAL PROCEEDINGS
Rule 72 Subject Matter and Applicability of General Rules
Distinction between ―civil action‖ and ―special proceeding‖ - Natcher v. CA 366 SCRA 385
Determination of heirship – Portugal v. Portugal-Beltran GR 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 jurisdiction of probate court - Camaya v. Patulandon, GR 144915 23 Feb 2004;
Pacioles 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
Termination of the special proceeding - Munsayac-De Villa, v. CA 414 SCRA 436
Meaning 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 - Pascual v. CA, 409 SCRA 105
Probate proceeding in rem – Alaban v. CA GR 156021 Sept 23, 2005
False will – Obando v People GR 138696 July 7, 2010

Rule 76 Allowance or Disallowance of Will - -

Grounds – Azuela v. CA, GR No. 122880, April 12, 2006

Rule 77 Allowance of Will Proved Outside of Philippines and Administration of Estate –

Ancheta v. Guersay-Dalaygon; GR No. 139868, June 8, 2006

Rule 78 Letters Testamentary and of Administrati on, When and to Whom Issued
Failure to attend hearings of applicant - Silverio v. CA, 304 SCRA 541
Intestate estate of Cristina suntay v Isabel Cojuangco GR 183053 June 16, 2010

Rule 79 Opposing Issuance of Letters Testamentary. Petition and Contest for Letters of
Administration
Justification for appointment of an administrator - Avelino 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
Appointment 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 Administration, Death, Resignation, and Removal of Executors
and Administrators
Ocampo v Ocampo GR 187879 Jul 2 , 2010
Rule 83 Inventory and Appraisal. Provision for Support of Family
Provisional inclusion in inventory - Heirs of Miguel Franco v. CA, 418 SCRA 60; Chua v.

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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 interest - 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. LCN Const GR 174873 Aug 26,
2008

Rule 86 Claims Against Estate

Substitution of heirs - Heirs of Lorilla, et al. v. CA, GR 118655 12 Apr 2000;
Liability of heirs for debts of decedent - Union Bank v. Santibañez, GR 149926, 23 Feb 2005
Atty‘s fees - Salonga Hernandez v. Pascual, GR No. 127165, May 2, 2006
Money claims – Stronghold v. Republic GR 174561 Jun 22, 2006 ; Gutierrez v. Barreto-Datu
GR L-17175 Jul 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 from 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 Encumbrances 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 20, 2005
Can heir sell estate property - Aggabao v. RTC, GR No. 146006 Feb 23, 2004

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 Appointment of Guardians
Rule 94 Bonds of Guardians
Rule 95 Selling and Encumbering Property 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
Express trust vs. implied trust – Richard Lopez Trustee v. CA GR 157784 Dec 16, 2008;
Heirs of Lorenzo Yap v. CA 312 SCRA 603;
Saltiga de Romero v. CA 319 SCRA 180 ; Richard 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 Habeas 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. Hernandez, GR 117209, 9 Feb 1996
In re petition for adoption of Michelle Lim GR 168992 May 21, 2009

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Special Proceedings Invol vi ng Family Code Provisions
AM 02-11-10-SC Rules on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages
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 and 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 legitime)
Art. 69 (judicial declaration of family domicile in case of disagreement of the spouses)
Art. 73 (spouse’s objection to the profession of the other spouse)
Arts. 96 and 124 (annulment of husband’s decision in the administration and enjoyment
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)
Art. 217 (entrusting children to homes and orphanages).

Rule 101 Proceedings for Hospitalization of Insane Persons

Chin Ah Foo v. Concepcion, 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 Caballes v. CA, GR 163108, 23 Feb 2005; Ilusorio v. Bildner, 332 SCRA 169
Pp v. Andal, 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 Mary 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 An 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 Correction of Entries in the Civil Registry

Tan Co v. Civil Register, GR 138496; 23 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 Siapian 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 PDUC 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 - Macasaet v. People, 452 SCRA 255
Venue of BP 22 cases - Rigor v. People, GR No. 144887, Nov. 17, 2004
AM No. 02-2-07, Sec 5

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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 157472 Sep 20, 2007
Sec 5 (affidavit of desistance) – People v. De la Cerna GR 136899 – 904 Oct 9, 2002
Sec 6 – Lasoy et al v. Zenarosa GR 129472; People v. Puig GR 173654 – 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 28, 2008
Date/time of commission – People v. Almendral GR 126025 Jul 6, 2004
Qualifying 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) – People 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, 2002; Cheng v. Sy GR 174238 Jul 7, 2009
Sec 3 – Samson v. Daway GR 1600554 Jul 21, 2004
Sec 5 – Ferrer v. SB GR 161067 Mar 14, 2008
Sec 7 – Dreamwork Construction v. Janiola GR 184861 Jun 30, 2009
Implied reservation - Sarmiento v. CA 394 SCRA 315
Express reservation - Hambon v. CA 399 SCRA 255
Civil liability - Salazar v. Pp 411 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. Consing GR 148193 Jan 16, 2003; Reyes v. Pearlbank GR
171435 Jul 30, 2008; Dreamwork v. Janiola GR 184861 Jun 30, 2009

Rule 112 Preliminary Investigation-

AM No. 05-8-26-SC Amendment of Rules 112 and 114 of the Revised Rules on Criminal
Procedure by Removing the Conduct of Preliminary Investigation from Judges of the First
Level Courts
Probable cause discretion 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. Ibanez 523 SCRA 136
Authority of prosecutor – Tolentino v. Paqueo 523 SCRA 377
Sec 3 – Santos-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 – Aguirre v. DOJ GR 170723 Mar 23, 2008; Juanito Chan v. DOJ
Sec GR 147065 Mar 14, 2008
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 SCRA 194; Uy v. SB 354 SCRA 651
Sec 6 – Baltazar v. People GR 174016 Jul 28, 2008; Tabujara III v. People GR 175162 Oct
29, 2008
Sec 7 – GR 158211 Aug 31, 2004 San Agustin 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 - Sesbreno v. Aglugub 452 SCRA 365
Second information – Saludaga v SB GR 184537 Apr 23, 2010

Rule 113 Arrest-

People 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. Laguio GR 128587 March 1, 2007
Inquest – Ladlad v. Velasco 523 SCRA 318
PP v. Molina 352 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;

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GR 182348 Nov 20, 2008;
Hot pursuit – People v. Recepcion et al GR 141943-45 Nov 13, 2002

Rule 114 Bail- -

Right to bail – San Miguel v. Hon. Maceda AM RTJ-03-1749 Apr 3, 2007
Esteban v. Alhambra GR No. 135012 Sep 7, 2004
Procedure re grant - Taborite 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 appeal from denial of bail – Chua v. CA GR 140842 Apr 12, 2007
Discretionary bail (Sec 20) – Andres v. Beltran 415 SCRA 598 (2001)
Sec. 26 – Okabe v. Gutierrez GR 150185 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 person arrested, detained or under custodial
investigation as well as the duties of arresting, detaining and investigating officers and
providing penalties for violations thereof – Lumanog v People GR 182555 Sep 7, 2010
Speedy disposition – Cabarles 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 rights – Pp v. Teves 356 SCRA 14
Out of Court Identification – People v. Jojo Musa GR 170472, July 3, 2009
Right to counsel – Aquino v. Paiste GR 147782 Jun 25, 2008; People v. Serzo Jr GR 118435
Jun 20, 1997; PP v Domingo Reyes GR 178300 Mar 17, 2009

Rule 116 Arraignment and Plea-

Change of plea - Pp v Bernas 377 SCRA 391; Pp v. Ulit GR 131799-901 23 Feb 2004;
Sec. 2 - Daan v SB GR 163972-77 Mar 28, 2008

Rule 117 Motion to Quash-

Not a MOD- Antonio Abador v. People GR 186001, Oct 2, 2009
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, 2005
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.
Romualdez GR 166510 Jul7 23, 2008
Res judicata – Pacifico Cruz v. SB GR 174599-609 Feb 12, 2010

Rule 118 Pre-Trial-

Stipulation of facts - Bayas v. SB 391 SCRA 415
People v. Sitao, 387 SCRA 701

Rule 119 Trial

RA No. 6981 The Witness Protection Act
Affidavit v. testimony - Angcaco v Pp 378 SCRA 297
Right to counsel - People v. Sunga 399 SCRA 624
Demurrer to evidence - People v. Sandiganbayan GR 137707-11, Dec 17, 2004; Pp v.
Sayaboc 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 GR 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 Judgment-

Delay in promulgation - Cea v. Paguio 397 SCRA 494
Failure to appear at promulgation - Tolentino v. People, GR No. 170396, August 31, 2006
Sec 5 – Suero v People GR 156408 Jan 31, 2005

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Sec 5 – Suero v People GR 156408 Jan 31, 2005
Determination of penalty – People v. Temporada 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 Penalty 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 147070 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 Trial 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

Rule 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 133265 May 29, 2002
Unannounced entry- People v. Huang Zhen Hua, GR 139301, Sep 29, 2004
Control of property - People v. Del Castillo GR 153254, Sep 30, 2004
Exceptions 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
Determination of probable cause - Sony Music v. Espanol GR 156804 March 14, 2005
People 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. CA 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 Alba GR 148220
Jun 15, 2005

Documentary Evi dence: Best/Secondary/Parol Evi dence

Best evidence rule (Rule 130 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 document –Pacasum v PP GR 180314 Apr 16, 2009

Electronic Evidence

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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
Testimonial 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 disqualification Rule 130 Sec 22 – Pp v. Castaneda 88 SCRA 562
Deadman‘s Statute Rule 130 Sec 23 – Razon v. IAC 207 SCRA 234

Privileged Communications
Marital communications 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
Physician-patient Rule 130 Sec. 24 - Lim v. CA 214 SCRA 273 (1992); Krohn v. CA 233
SCRA 146
State secrets Rule 130 Sec 24 (e) – BF v. Monetary Board 142 SCRA 523 (1986)
Parental and filial privilege Rule 130 Sec 25
Newsman‘s privilege RA 53, as amended 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. Yparriguirre 268 SCRA 35; Pp v. Godoy 250 SCRA
676

Res Inter Alios Acta

Rule 130 Sec 28 - Pp v. Racquel 265 SCRA 248
Exceptions to res inter alios acta rule
Partner‘s agent‘s admissions Rule 130 Sec 28
Coconspirator‘s 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 Ming 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
Hearsay, what is – Phil Free Press v. CA 473 SCRA GR 132864
Dying Declaration Rule 130 Sec 37 - Pp v. Macandog June 6, 2001 GR 129534; Pp v.
Latayada GR 146865 Feb 18, 2004; Pp v Cerilla GR 177147 Nov 28, 2007
Declaration against interest Rule 130 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 / Family reputation or tradition regarding pedigree Rule 130
Secs 39, 40, 41 - Rosendo 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;
Arthur 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 Jun 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, 2008
Commercial lists and the like Rule 130 Sec 45 – PNOC Shipping v. Ca 299 SCRA 402
Learned Treatises Rule 130 Sec 46

Prior testimony
Rule 130 Sec 47 – Tan v. CA 20 SCRA 54

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Opinion Rule Rule 130 Secs 48 -50
Expert witnesses – Milagors Ilao Quianay v. Mapile GR 154087 Oct 25, 2005; Pp v. Adoviso
309 SCRA 1; Bacalso v. Padigos GR 173192 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 evidence 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 Dec 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
Recalling witnesses – Pp v. Rivera 200 SCRA 786
Pp v. Cadley GR 150735 15 Mar 2004
Zalamea 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, 2008
SC Administrative Memo No. 00-4-07 Rule on Examination of a Child Witness

Authentication 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
Llemos 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

Offer and Objection Rule 132 Secs 34-40

Vda de Onate v. CA 250 SCRA 283; Heirs of Doromio 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 155110 March 31, 2005; Pp v. Hijada GR 123696 11 Mar
2004; Heirs of Conti v. CA 300 SCRA 345

DNA Evi dence

Estate of Ong v Diaz GR 171713 Dec 17, 2007
People v. Umanito GR 172607 Oct 26, 2007
Herrera v Alba GR 148220 Jan 15, 2005
In re Writ of Habeas Corpus 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 custody in drugs cases – Bonifacio Tejada v. Pp GR 180693, Sep 4, 2009

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202011.doc>

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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 KITAMURA
[G.R. No. 149177, November 23, 2007] NACHURA

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the April 18, 2001 Decision [1] of the Court of Appeals (CA) in CA-G.R.
SP No. 60827, and the July 25, 2001 Resolution [2] denying the motion for
reconsideration thereof.

On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a
Japanese consultancy firm providing technical and management support in the
infrastructure projects of foreign governments, [3] entered into an Independent
Contractor Agreement (ICA) with respondent Minoru Kitamura, a Japanese national
permanently residing in the Philippines. [4] The agreement provides that respondent
was to extend professional services to Nippon for a year starting on April 1, 1999. [5]
Nippon then assigned respondent to work as the project manager of the Southern
Tagalog Access Road (STAR) Project in the Philippines, following the company's
consultancy contract with the Philippine Government. [6]

When the STAR Project was near completion, the Department of Public Works and
Highways (DPWH) engaged the consultancy services of Nippon, on January 28, 2000,
this time for the detailed engineering and construction supervision of the Bongabon-
Baler 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
intention 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,
2000, just in time for the ICA's expiry. [9]

Threatened with impending unemployment, respondent, through his lawyer,

requested a negotiation conference and demanded that he be assigned to the BBRI
project. Nippon insisted that respondent’s contract 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 Case No. 00-0264 for specific
performance and damages with the Regional Trial Court of Lipa City. [11]

For their part, petitioners, contending that the ICA had been perfected in Japan and
executed by and between Japanese nationals, moved to dismiss 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 celebrationis and lex contractus.[12]

In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the
replacement of Kitamura by a certain Y. Kotake as project manager of the BBRI
Project.[13]

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Project.[13]

On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank [14] 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, their 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 grounds—for lack of
statement of material dates and for insufficient verification and certification against
forum shopping. [19] An Entry of Judgment was later issued by the appellate court on
September 20, 2000.[20]

Aggrieved by this development, petitioners filed with the CA, on September 19,
2000, still within the reglementary period, a second Petition for Certiorari under
Rule 65 already stating therein the material dates and attaching thereto the proper
verification and certification. This second petition, which substantially raised the
same issues as those 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
assailed 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 principle of lex loci
solutionis.[23]

Petitioners' motion for reconsideration was subsequently denied by the CA in the

assailed July 25, 2001 Resolution. [24]

Remaining steadfast in their stance despite the series of denials, petitioners

instituted the instant Petition for Review on Certiorari [25] imputing the following
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 proceedings 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 principle 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 dispose 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 CA -G.R.
SP No. 60827 (fundamentally raising the same issues as those in the first one) and

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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 in the CA's dismissal of the said case due to
defects in the formal requirement of verification [28] and in the other requirement in
Rule 46 of the Rules of Court on the statement of the material dates. [29] The
dismissal being without prejudice, petitioners can re-file the petition, or file a
second petition attaching thereto the appropriate verification and certification—as
they, in fact did—and 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 the absence of a decision on the
merits and leaves the parties free to litigate the matter in a subsequent action as
though the dismissed action had not been commenced. 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 theory. [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 instant petition for review of the
second certiorari petition, the status of the aforesaid 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 warrant 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 Hasegawa 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 petition and which is
also attached to the instant petition for review, is limited in scope—its 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, and that authority
cannot extend to the instant petition for review. [36] In a plethora of cases, however,
this Court has liberally applied the Rules or even suspended its application whenever
a satisfactory explanation and a subsequent fulfillment of the requirements have
been made.[37] Given that petitioners herein sufficiently 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 agree,
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,
2001 Authorization were issued only by Nippon's president and chief executive
officer, 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 from the
board.[40] Considering that Hasegawa verified and certified the petition only on his

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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 denied
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 justice, nonetheless,
they are intended to effect the proper and orderly disposition 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 -established
rule that an order denying a motion to dismiss is interlocutory, and cannot 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 objections raised in
the motion, to proceed to trial, and, in case of an adverse decision, 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 them.

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 question 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 entered into and perfected in
Tokyo, Japan, by Japanese nationals, and written wholly in the Japanese language. Thus,
petitioners posit that local courts have no substantial relationship to the parties [46]
following the [state of the] most significant relationship rule in Private International
Law. [47]

The Court notes that 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
court, petitioners never contended that the RTC is an inconvenient forum. They merely
argued that the applicable law which will determine the validity or invalidity 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 their petition before the appellate
court, petitioners on certiorari significantly invoked the defense of forum non
conveniens. [50] On petition for review before this Court, petitioners dropped their other
arguments, maintained the forum non conveniens defense, and introduced their new
argument that the applicable principle 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 emphasize their
incorrect assertion of conflict of laws principles.

To elucidate, in the judicial resolution of conflicts problems, three consecutive phases

are involved: jurisdiction, choice of law, and recognition and enforcement 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] Jurisdiction
considers whether it is fair to cause a defendant to travel to this state; choice of law asks
the further question whether the application of a substantive law which will determine
the merits of the case is fair to both parties. The power to exercise jurisdiction does not
automatically give a state constitutional authority to apply forum law. While jurisdiction
and the choice of the lex fori will often coincide, the “minimum contacts― for one

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and the choice of the lex fori will often coincide, the “minimum contacts― for one
do not always provide the necessary “significant contacts― for the other. [55] The
question of whether the law of a state can be applied to a transaction is different from
the question of whether the courts of that state have jurisdiction to enter a judgment. [56]

In this case, only the first phase is at issue—jurisdiction. Jurisdiction, however, has
various aspects. For a court to validly exercise its power to adjudicate a controversy, it
must have jurisdiction over the plaintiff or the petitioner, over the defendant or the
respondent, over the subject matter, over the issues of the 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 herein, petitioners are actually referring to subject matter
jurisdiction.

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign
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 allegations 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 dismissal of an action for lack of jurisdiction
over the subject matter of the claim, [60] the movant must show that the court or tribunal
cannot act on the matter 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 that 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 cognizable by the RTC of Lipa City. [62] What they
rather raise as grounds to question subject matter jurisdiction are the principles of lex
loci celebrationis and lex contractus, and the “state of the most significant
relationship rule.―

The Court finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the “law of 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 place where a contract is executed or to be
performed.―[65] It controls the nature, construction, and validity of the contract [66]
and it may pertain to the law voluntarily 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 ascertain 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 case involving a contract, the court should consider where the contract was
made, was negotiated, was to be performed, and the domicile, place of business, or
place of incorporation of the parties. [68] This rule takes into account several contacts and
evaluates them according to their relative importance with respect to the particular
issue to be resolved. [69]

Since these three principles in conflict of laws make reference to the law applicable to a
dispute, they are rules proper for the second phase, the choice of law. [70] They
determine which state's law 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, petitioners' premature invocation of choice-of-law rules is exposed by the fact

that 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

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situation requiring the application of the conflict of laws rules. [72] Also, when the law of a
foreign country is invoked to provide the proper rules for the solution 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 open to the latter
in disposing of it: (1) dismiss the case, either because of lack of jurisdiction or refusal to
assume jurisdiction over the case; (2) assume jurisdiction 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 court’s power to hear cases
and controversies is derived from the Constitution and the laws. While it may choose to
recognize laws of foreign nations, the court is not limited by foreign sovereign law short
of treaties or other formal agreements, even in matters regarding rights provided by
foreign sovereigns. [75]

Neither can the other ground raised, forum non conveniens, [76] be used to deprive the
trial court of its jurisdiction herein. First, it is not a proper basis for 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 dismissed 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; hence, 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 assail that jurisdiction
are inappropriate, the trial and appellate courts correctly denied the petitioners’
motion to dismiss.

WHEREFORE, premises considered, the petition for review on certiorari is DENIED.

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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: Estoppel by laches
NATURE: Petition for review on certiorari

FACTS: Petitioner was charged with the crime of reckless imprudence resulting in homicide. The RTC
found 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 the petitioner from questioning the jurisdiction of the RTC—the trial went on for 4 years with
the petitioner actively participating therein and without him ever raising 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: WON petitioner’s failure to raise the issue of jurisdiction during the trial of this case,
constitute laches in relation to the doctrine laid down in Tijam v. Sibonghanoy, notwithstanding the
fact that said issue was immediately raised in petitioner’s appeal to the CA

HELD:No .

RATIO: Citing the ruling in Calimlim vs. Ramirez, the Court held that as a general rule, the issue of
jurisdiction may be raised 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 jurisdiction 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 to be applicable, that is, lack of jurisdiction must have been raised so
belatedly as to warrant the presumption that the party entitled to assert it had abandoned or declined
to assert it.

In Sibonghanoy, the party invoking lack of jurisdiction did so only after fifteen years and at a stage when
the proceedings had already been elevated to the CA. Sibonghanoy is an exceptional case because of the
presence of laches.

In the case at bar, the factual settings attendant in Sibonghanoy are not present. Petitioner Atty.
Regalado, after the receipt of the Court of Appeals resolution finding her guilty of contempt, promptly
filed a Motion for Reconsideration assailing the said court’s jurisdiction based on procedural infirmity in
initiating the action. Her compliance with the appellate court’s directive to show cause why she should
not be cited for contempt and filing a single piece of pleading to that effect could not be considered as
an active participation in the judicial proceedings so as to take the case within the milieu of
Sibonghanoy. Rather, it is the natural fear to disobey the mandate of the court that could 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 that time, no considerable period had
yet elapsed for laches to attach.

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yet elapsed for laches to attach.

DISPOSITIVE: Petition for review on certiorari is granted. Criminal case is dismissed

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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. PABLO C. FORMARAN III, Presiding Judge of Regional
Trial Court Branch 21, Naga City, as Pairing Judge for Regional Trial Court
Branch 22, Formerly Presided By HON. NOVELITA VILLEGAS-LLAGUNO
(Retired 01 May 2006), ROMEO Y. TAN, ROBERTO L. OBIEDO 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 Rules 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 assailed Decision,
affirmed the Order[2 ] dated 24 March 2006 of the Regional Trial Court (RTC), Branch
22, of Naga City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby Shelter
Builders and Realty Development Corporation to pay additional 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

respondents 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, covered by Transfer Certificates of Title (TCTs) No. 38376,[4 ] No.
29918,[5 ] No. 38374,[6 ] No. 39232,[7 ] and No. 39225,[8 ] issued by the Registry
of Deeds for Naga City, in the name of petitioner. When petitioner was
unable to pay the loan when it became due and demandable, respondents
Tan and Obiedo agreed to an extension 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 condoned 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 Agreement required, in turn, that
petitioner execute simultaneously with the said Memorandum, 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 petitioner 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 following purchase prices: chanroblesvirtuallawlibrary

TCT No. Purchase Price

38376 P 9,340,000.00
29918 P 28,000,000.00
38374 P 12,000,000.00
39232 P 1,600,000.00
39225 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 and Obiedo the following prices for the same, inclusive of interest and
penalties: chanroblesvirtuallawlibrary

TCT No. Redemption Price

38376 P 25,328,939.00
29918 P 35,660,800.00
38374 P 28,477,600.00
39232 P 6,233,381.00
39225 P 6,233,381.00

In the event that petitioner is able to redeem any of the afore-mentioned

parcels of land, the Deed of Absolute Sale covering the said property shall be
nullified and have no force and effect; and respondents Tan and Obiedo shall
then return 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 parcels of land within the period agreed upon,
respondents Tan and Obiedo could already 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 TCTs to the said properties in
their names. chanroblesvirtuallawlibrary

The Memorandum of Agreement further provided that should petitioner

contest, judicially or otherwise, any act, transaction, or event related to or
necessarily connected with 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 damages inclusive of costs and
attorneys fees. Petitioner would likewise pay respondents Tan and Obiedo
the condoned interests, surcharges and penalties.[10] Finally, should a contest
arise from the Memorandum of Agreement, Mr. Ruben Sia (Sia), President of
petitioner corporation, personally assumes, jointly and severally 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, on one hand, and petitioner, on the other.
chanroblesvirtuallawlibrary

Pursuant to the Memorandum of Agreement, petitioner, represented by Mr.

Sia, executed separate Deeds of Absolute Sale,[1 1 ] over the five parcels of
land, in favor 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. The 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 land
in their names. chanroblesvirtuallawlibrary

On 16 March 2006, petitioner filed before the RTC a Complaint[1 2 ] against

respondents Tan, Obiedo, and Atty. Reyes, for declaration of nullity of deeds
of sales and damages, with prayer for the issuance of a writ of preliminary
injunction and/or temporary restraining order (TRO). The Complaint was
docketed as Civil Case No. 2006-0030. chanroblesvirtuallawlibrary

On the basis of the facts already recounted above, petitioner raised 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 intention of petitioner to pay its loan and requesting a
meeting to compute the final amount due. The parties held meetings on 3
and 4 January 2006 but they failed to arrive at a mutually acceptable
computation of the final amount of loan payable. Respondents Tan and
Obiedo then refused the request of petitioner for further dialogues.
Unbeknownst to petitioner, despite the ongoing meetings, respondents 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 Deeds 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 Obiedo; that the Deeds of Absolute Sale, executed in accordance with
the Memorandum of Agreement, constituted pactum commisorium and as
such, were null and void; and that the acknowledgment in the Deeds of
Absolute Sale were falsified, petitioner averred: chanroblesvirtuallawlibrary

13.That by reason of the fraudulent actions by the [herein respondents],

[herein petitioner] is prejudiced and is now in danger of being deprived,
physically and legally, of the mortgaged properties without benefit of
legal processes such as the remedy of foreclosure and its attendant
procedures, solemnities and remedies available to a mortgagor, while
[petitioner] 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

that 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 falsified Deeds of Absolute Sale and fenced the said properties with
barbed wire. Beginning 3 March 2006, respondents Tan and Obiedo started
demolishing some of the commercial spaces standing on the parcels of land
in question which were being rented 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 structure housing a motor
vehicle terminal operated by petitioner. The actions of respondents Tan and
Obiedo were to the damage and prejudice of petitioner and its
tenants/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 Obiedo and their armed goons of the five parcels of
land. chanroblesvirtuallawlibrary

Ultimately, petitioners prayer in its Complaint reads: chanroblesvirtuallawlibrary

WHEREFORE, premises considered, it is most respectfully prayed of

this Honorable Court that upon the filing of this complaint, a 72-hour
temporary restraining order be forthwith issued ex parte: chanroblesvirtuallawlibrary

(a)Restraining [herein respondents] Tan and Obiedo, their agents,

privies or representatives, 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; chanroblesvirtuallawlibrary

(b)Restraining the Register of Deeds of Naga City from entertaining

moves by the [respondents] to have [petitioners] certificates of title to
the mortgaged 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 imposing 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 pago in the event of non-
payment of the debt as pactum commissorium; chanroblesvirtuallawlibrary

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 solidarily 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. chanroblesvirtuallawlibrary

[Petitioner] further prays for such other reliefs as may be proper, just and equitable under the premises. [14]
chanroblesvirtuallawlibrary

Upon filing its C omplaint with the RTC on 16 March 2006, petitioner paid the sum of P13,644.25 for docket and
other legal fees, as assessed by the Office of the Clerk of Court. The Clerk of Court initially considered Civil Case
No. 2006-0030 as an action incapable of pecuniary estimation and computed the docket and other legal fees due
thereon according to Section 7(b)(1), Rule 141 of the Rules of Court. chanroblesvirtuallawlibrary

Only respondent Tan filed an Answer[15] to the C omplaint of petitioner. Respondent 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 Tan and Obiedo of the interests, surcharges and penalties accruing on the loan of petitioner was
replete with errors and uncertainties. However, Mr. Sia failed to back up his accusation of errors and uncertainties
and to present his own final computation of the amount due. Disappointed and exasperated, respondents Tan and
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. Sia 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 petitioner must pay
respondent Tan and Obiedo. Mr. Sia, instead, sought a nine-month extension for paying the loan obligation of
petitioner and the reduction of the interest 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 merely 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 indebtedness of petitioner to respondents Tan and Obiedo, and the condonation of the 15-month interest
which already accrued on the loan, while providing petitioner with the golden opportunity to still redeem all or even
portions of the properties 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, respondent Tan alleged that it was Mr. Sia
who, with the aid of armed men, on board a Sports Utility Vehicle and a truck, rammed into the personnel of
respondents Tan and 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 properties 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 petitioner, but also the grant of his
counterclaim. The prayer in his Answer is faithfully reproduced below: chanroblesvirtuallawlibrary

Wherefore, premises considered, it is most respectfully prayed that, after due hearing, judgment be
rendered dismissing the complaint, and on the counterclaim, [herein petitioner] and Ruben Sia, be ordered
to indemnify, jointly and severally [herein respondents Tan and Obiedo] the amounts of not less than
P10,000,000.00 as liquidated damages and the further sum of not less than P500,000.00 as attorneys fees.
In the alternative, and should it become necessary, it is hereby prayed that [petitioner] be ordered to pay
herein [respondents Tan and Obiedo] the entire principal loan of P95,700,620.00, plus interests, surcharges
and penalties 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 nullified. Other relief and remedies as are just and equitable under the premises are hereby prayed
for.[1 6] chanroblesvirtuallawlibrary

Thereafter, respondent Tan filed before the RTC an Omnibus Motion in which he contended 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 took 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 the said case. Hence, respondent Tan asked the RTC to issue an order requiring
petitioner to pay the correct and accurate docket fees pursuant to Section 7(a), Rule 141 of the Rules of Court, as
amended; and should petitioner fail to do so, to deny and dismiss the prayer of petitioner for the annulment of the
Deeds of Absolute Sale for having been executed in contravention of the law or of the Memorandum of Agreement
as pactum commisorium. chanroblesvirtuallawlibrary

REMLAW Page 31
As required by the RTC, the parties submitted their Position Papers on the matter. On 24 March 2006, the RTC
issued an Order[17] granting respondent Tans Omnibus Motion. In holding that both petitioner and respondent Tan
must pay docket fees in accordance with Section 7(a), Rule 141 of the Rules of Court, as amended, the RTC
reasoned: chanroblesvirtuallawlibrary

It must be noted that under paragraph (b) 2. of the said Section 7, it is provided that QUIETING OF
TITLE which is an action classified as beyond pecuniary estimation shall be governed by paragraph (a).
Hence, the filing fee in an action for Declaration of Nullity of Deed which is also classified as beyond
pecuniary estimation, 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 the plaintiff, the former
must likewise pay the necessary filling (sic) fees as provided for under Section 7 (A) of Amended
Administrative Circular No. 35-2004 issued by the Supreme Court.[18] chanroblesvirtuallawlibrary

C onsequently, the RTC decreed on the matter of docket/filing fees: chanroblesvirtuallawlibrary

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
fifteen (15) days from receipt of this Order to the C lerk of Court, Regional Trial Court, Naga C ity and for the
latter to compute and to collect the said fees accordingly.[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 annulment of the Deeds of Absolute Sale and, as such, incapable of
pecuniary estimation. Petitioner submitted that the RTC erred in applying Section 7(a), Rule 141 of 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 cloud on the title to real property
or any interest therein or to prevent a cloud from being cast upon title to the real property (Art. 476, Civil
Code of the Philippines) 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.), and 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 Section
7(a) of the Amended Administrative Circular No. 35-2004 afore-mentioned. chanroblesvirtuallawlibrary

Furthermore, while [petitioner] claims that the action for declaration of nullity of deed of sale and
memorandum of agreement is one incapable of pecuniary estimation, however, as argued by the
[respondent Tan], the issue as to how much filing and docket fees should be paid was never raised as an
issue in the case of Russell vs. Vestil, 304 SCRA 738. chanroblesvirtuallawlibrary

xxxx chanroblesvirtuallawlibrary

WHEREFORE, the Motion for Partial Reconsideration is hereby DENIED. [22] chanroblesvirtuallawlibrary

In a letter dated 19 April 2006, the RTC Clerk of C ourt computed, upon the request of counsel for the petitioner,
the additional docket fees petitioner must pay 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 petitioner 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 Certiorari 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, amounting to lack or excess of jurisdiction, when it issued its Orders dated 24 March 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 revoked,
corrected, or rectified, petitioner would suffer grave injustice and irreparable damage. chanroblesvirtuallawlibrary

On 22 November 2006, the Court of Appeals promulgated its Decision wherein it held 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 documents. In other words, the objectives of the petitioner in
filing the complaint 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 in accordance with Section
7(b). As a real action, Section 7(a) must be applied in the assessment and payment of the proper docket
fee. chanroblesvirtuallawlibrary

Resultantly, there is no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
the court a quo. By grave abuse of discretion is meant capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, and mere abuse of discretion is not enough it must be grave. The abuse
must be grave and patent, and it must be shown that the discretion was exercised arbitrarily and

REMLAW Page 33
 despotically. chanroblesvirtuallawlibrary

Such a situation does not exist in this particular case. The evidence is insufficient 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 attributed to it. [25] chanroblesvirtuallawlibrary

Hence, the fallo of the Decision of the appellate court reads: chanroblesvirtuallawlibrary

WHEREFORE, the petition for certiorari is DENIED. The assailed Orders of the court a quo are
AFFIRMED.[2 6 ] chanroblesvirtuallawlibrary

Without seeking reconsideration of the foregoing Decision with the Court of Appeals, petitioner filed its Petition for
Review on Certiorari before this Court, with a lone assignment of error, to wit: chanroblesvirtuallawlibrary

18.The herein petitioner most respectfully submits that the C ourt of Appeals committed a grave and serious
reversible error in affirming the assailed Orders of the Regional Trial Court which are clearly contrary to
the pronouncement of this Honorable Court in the case of Spouses De Leon v. Court of Appeals,
G.R. No. 104796, March 6, 1998, not to mention the fact that if the said judgment is allowed to stand and
not rectified, the same would result in grave injustice and irreparable damage to herein petitioner in view of
the prohibitive amount assessed as a consequence of said Orders. [27] chanroblesvirtuallawlibrary

In Manchester Development Corporation v. Court of Appeals,[28] the Court explicitly pronounced that [t]he court
acquires jurisdiction over any case only upon the 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 guidelines for the implementation of its
previous pronouncement in Manchester under particular circumstances, to wit: chanroblesvirtuallawlibrary

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

2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall
not be considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow
payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or
reglementary period. 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 claim not specified in the
pleading, or if specified the same has been left for determination by the court, the additional filing fee
therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of C ourt or his duly
authorized deputy to enforce said lien and assess and collect the additional fee. chanroblesvirtuallawlibrary

In the Petition at bar, the RTC found, and the Court of Appeals affirmed, that petitioner 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 docket fees in accordance with Section 7(a), Rule 141 of the Rules of Court, as amended. 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 munificence of the
RTC , petitioner refused to pay the additional docket fees assessed against 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. chanroblesvirtuallawlibrary

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-party, 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
involving 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 INTERNAL REVENUE, WHICHEVER IS
HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION OR THE VALUE OF
THE PERSONAL PROPERTY IN LITIGATION OR THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION AS
ALLEGED BY THE CLAIMANT, is: chanroblesvirtuallawlibrary

[Table of fees omitted.] chanroblesvirtuallawlibrary

If the action involves both a money claim and relief pertaining to property, then THE fees will be charged on
both the amounts claimed and value of property based 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 chanroblesvirtuallawlibrary

2.Special civil actions, except judicial foreclosure of mortgage, EXPROPRIATION PROCEEDINGS,

PARTITION AND QUIETING OF TITLE which will chanroblesvirtuallawlibrary

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 depend on the fair market value of
the same: the higher the value of the real property, the higher the docket fees due. In contrast, Section 7(b)(1),
Rule 141 imposes a fixed or flat rate of docket fees on actions incapable of pecuniary estimation. chanroblesvirtuallawlibrary

In order to resolve the issue of whether petitioner paid the correct amount of docket fees, it is necessary to
determine the true nature of its Complaint. The dictum adhered to in this jurisdiction is that the nature of an action
is determined by the allegations in the body of the pleading or Complaint itself, rather than by its title or
heading.[32] However, the Court finds it necessary, in ascertaining the true nature of Civil Case No. 2006-0030, to
take into account significant facts and circumstances beyond the Complaint of petitioner, facts and circumstances
which petitioner failed to state in its C omplaint but were disclosed in the preliminary proceedings before the court a
quo. chanroblesvirtuallawlibrary

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 allegations and reliefs in the Complaint alone, one would get the impression
that the titles to the subject real properties still rest with petitioner; and that the interest of respondents Tan and
Obiedo in the same lies only in the Deeds of Absolute 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 parcels 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.
Respondents Tan and Obiedo have also acquired possession of the said properties, enabling them, by petitioners
own admission, to demolish the improvements thereon. chanroblesvirtuallawlibrary

It is, thus, suspect that petitioner kept mum about the afore-mentioned facts and 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
vein, although petitioner alleged that respondents Tan and Obiedo forcibly took physical possession of the subject
real properties, petitioner did not seek the restoration of such possession to itself. And despite learning that
respondents Tan and Obiedo already secured TCTs over the subject properties in their names, petitioner did not
ask for the cancellation of said titles. The only logical and reasonable explanation is that petitioner is reluctant to
bring to the attention of the C ourt certain facts and circumstances, keeping its C omplaint safely worded, 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 the 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 real action is an action affecting title to or recovery of possession of real
property.[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 for real action, to wit: chanroblesvirtuallawlibrary

In a real action, the assessed value of the property, or if there is none, the estimated value thereof shall be
alleged by the claimant and shall be the basis in computing the fees. 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 respondents Mercedes Gochan, et al. with the RTC was denominated
as one for specific performance and damages, the relief sought was the conveyance or transfer of real property, or
ultimately, the execution of deeds of conveyance in their favor 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 properties, the Court found that the
RTC did not acquire jurisdiction over the same for 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 Revocation of Title and Damages; and adjudged the same to be a real
action, the filing fees for which should have been computed based on the assessed value of the subject property
or, if there was none, the estimated value thereof. The Court expounded 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 latter on the basis thereof, be declared null and void. In a
very real sense, albeit the amended petition is styled as one for Mandamus with Revocation of Title and
Damages, it is, at bottom, a suit to recover from Standford the realty in question and to vest in respondent
the ownership and possession thereof. In short, the amended petition is in reality an action in res or a real
action. Our pronouncement in Fortune Motors (Phils.), Inc. vs. Court of Appeals is instructive. There, 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. (Inton, 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 action. Its
prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760, 1954)

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 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. 737, 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 his claim for damages are
closely intertwined with the issue of ownership of the building which, under the law, is
considered immovable property, the recovery of which is petitioner's primary objective.
The prevalent doctrine is that an action 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 fee, respondent Manalo never
alleged in the body of his amended petition, much less in the prayer portion thereof, the assessed value of
the subject res, or, if there is none, the estimated value thereof, to serve as basis for the receiving clerk in
computing and arriving at the proper amount of filing fee due thereon, as required under Section 7 of this
C ourts en banc resolution of 04 September 1990 (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 over 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 averred that undue influence, coercion, and intimidation were exerted upon
him by therein petitioners Serrano, et al. to effect transfer of his properties. Thus, Delica 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 cancelled; 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 preliminary
injunction be issued ordering Serrano, et al. to immediately restore him to his 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 following 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, or, as stated in Section 2(a), Rule
4 of the Revised Rules of Court, a real action 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 property.
chanroblesvirtuallawlibrary

REMLAW Page 38
 Obviously, respondents complaint is a real action involving not only the recovery 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 thereof shall be alleged by the claimant and shall be the
basis in computing the fees. 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. It 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
computed. As such, his complaint should not have been accepted by the trial court. We thus 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, respondents 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, cannot modify or reverse the doctrine laid down in Spouses De Leon v.
Court of Appeals.[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 real property is incapable of pecuniary estimation. chanroblesvirtuallawlibrary

The C ourt, however, does not perceive a contradiction between Serrano and the Spouses 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 determining whether an action is one the subject matter of which is not capable of pecuniary 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 action therein that private respondents
instituted before the RTC was solely for annulment or rescission of the contract of sale over a real property.[40]
There appeared to be no transfer of title or possession to the adverse party. Their complaint 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 violation of the terms and conditions of the said contract. chanroblesvirtuallawlibrary

2. Declaring void ab initio the Deed of Absolute Sale for being absolutely simulated; and chanroblesvirtuallawlibrary

3. Ordering defendants (petitioners) to pay plaintiffs (private respondents) attorney'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. 2006-0030 instituted by petitioner

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As this C ourt has previously discussed herein, the nature of Civil Case No. 2006-0030 instituted by petitioner
before the RTC is closer to that of Serrano, rather 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. chanroblesvirtuallawlibrary

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 computation 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, OR IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION x x x
shall be 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. chanroblesvirtuallawlibrary

A real action indisputably involves real property. The docket fees for a real action would still be determined in
accordance with the value of the real property involved therein; the only difference is in what constitutes the
acceptable value. 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 the 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 petitioner against respondents is the
recovery of title to and possession of real property. It is a real action necessarily involving real property, the docket
fees for 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 error 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 the judgment of the Court of Appeals
is allowed to stand and not rectified, it would result in grave injustice and irreparable injury to petitioner in view of
the 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 paying P720,392.60 additional docket fees so it could champion before
the courts its rights over the disputed real properties. Moreover, even though the C ourt exempts individuals, as
indigent or pauper litigants, from paying docket fees, it has never extended such an exemption to a corporate
entity. chanroblesvirtuallawlibrary

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 petitioner 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
Court, as amended, is hereby AFFIRMED. Costs against the petitioner.

Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI12.600\ruby%20shelter.docx>

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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 PHILIPPINES, Petitioners,
vs.
COURT OF APPEALS, RAFAEL BASKIÑAS and RICARDO MANAPAT, Respondents.
DEC ISIO N
TINGA, J.:
An Information for Libel dated 26 June 1995 was filed before the Regional Trial Court (RTC) of
Manila against private respondents Rafael Baskinas and Ricardo Manapat, with petitioner
Francisco Chavez as the complainant. The Information reads in part:
"That on or about March 1995, in the City of Manila, Philippines, the said accused [Baskinas and
Manapat] conspiring and confederating with others whose true names, real identities and present
whereabouts are still unknown and helping one another, with malicious intent of impeaching the
honesty, virtue, character and reputation of one FRANCISCO I. CHAVEZ, former Solicitor
General of the Philippines, and with the evident purpose of injuring 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 Editor-in-Chief and Author-Reporter, the following, to wit:
xx x x
with which published 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, besmirch and destroy the good name,
character and reputation of said FRANCISCO I. CHAVEZ, as in fact, he was exposed to
dishonor, discredit, public hatred, contempt and ridicule.
CONTRARY TO LAW.1
Private respondents moved to quash the Information, as well as the corresponding warrants of
arrest subsequently issued. However, these motions were denied by the RTC of Manila, Branch
16, in an Order dated 31 August 1995.2 Private respondents then filed a Petition for Certiorari
with the Court of Appeals, assailing the 31 August 1995 Order. The petition was granted 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
publication 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 editor or business manager of a daily
newspaper, magazine or serial publication, shall 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 offense: Provided,
however, That where one of the offended parties is a public officer whose office is in the City of
Manila at the time of the commission of the offense, the action shall be filed in the Court of First
Instance of the City of Manila 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 Manila, 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 where the libelous article is printed and first
published and in case one of the offended 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 action shall be filed
in the Court of First Instance of the province or city where 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.)
Referring to the fact that the Information against private respondents states that the libelous
matter was "caused to be published in Smart File, a magazine of general 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 said 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 "venue of libel cases where the
complainant is a private person is either in any of only two places, namely: (1) where the subject
article was printed and first published; and (2) where complainant of the commission actually
resides at the time of the commission of the offense." The Information, it was noted, did not
indicate that the libelous articles were printed or first published in Manila, or that petitioner
resided in Manila at the time of the publication of the articles.
The Court of Appeals further observed that even during the preliminary investigation, private
respondents had already interposed that Smart File was actually printed and first published in the
City of Makati, and that the address of the publisher Animal Farms Publication as indicated in
the editorial page of the publication 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
respondent‘s printing and publishing business was actually in Manila, the Court of Appeals noted
that he should have been alerted enough by private respondents' adverse insistence and that a due
investigation would have inevitably revealed that private respondents had transferred from their
previous Manila address to Makati by the time the subject articles were published.6
Before this Court, petitioner attacks the reliance placed on Agbayani and Soriano, primarily by
pointing out that in both cases, the complainants were public officers, and not private officials.
Petitioner submits that the 1965 amendments to Article 360 of the Revised Penal Code which
imposed the present venue requisites were introduced in order to preclude the harassment of
members of the press through libel suits filed in remote and distant places by public officers.
Petitioner also assails the conclusion 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 evidence.
Does the subject information sufficiently vest jurisdiction in the Manila trial courts to hear the
libel charge, in consonance with Article 360 of the Revised Penal Code? Jurisprudence applying
the provision has established that it does not.
Agbayani supplies a comprehensive restatement of the rules of venue in actions for criminal
libel, following the amendment by Rep. Act No. 4363 of the Revised 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 libel was published, displayed or exhibited,
regardless of the place where the same 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 criminal action for libel may be instituted in
any jurisdiction where the libelous article was published or circulated, irrespective of where it
was written or printed (People v. Borja, 43 Phil. 618). Under that rule, the criminal action is
transitory and the injured party has a choice of venue.
Experience had shown that under 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 libel in the justice of the
peace court of San Fabian, Pangasinan (Amansec v. De Guzman, 93 Phil. 933).
To forestall such harassment, Republic Act No. 4363 was enacted. It lays down specific rules as
to the venue of the criminal action so as to prevent the offended party in written defamation
cases from inconveniencing the accused by means of out-of-town libel suits, meaning complaints
filed in remote municipal courts (Explanatory Note for the bill which became Republic Act No.

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filed in remote municipal courts (Explanatory Note for the bill which became Republic 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 article 360 may be restated thus:
1. Whether the offended party is a public official or a private person, the criminal
action may be filed in the Court of First Instance of the province or city where the
libelous article is printed and first published.
2. If the offended party is a private individual, the criminal action may also be filed in the
Court of First Instance of the province where he actually resided at the time of the
commission of the offense.
3. If the offended party is a public officer whose office is in Manila at the time of the
commission of the offense, the action may be filed in the Court of First Instance of Manila.
4. If the offended party is a public officer holding office outside of Manila, the action may
be filed in the Court of First Instance of the province or city where he held office at the
time of the commission of the offense.7 (Emphasis supplied.)
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 place 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 very language itself
of Article 360, as amended, does not support petitioner's thesis that where the complainant is a
private person, a more liberal interpretation of the phrase "printed and first published" is
warranted than when a public officer 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 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 offense. x x x
Where the law does not distinguish, we should not distinguish.8
Petitioner faults the Court of Appeals for relying on Agbayani and Soriano, two cases wherein
the complainant was a public officer. Yet the Court has since had the opportunity to reiterate the
Agbayani doctrine even in cases where the complainants were private persons.
Most telling of the recent precedents is Agustin v. Pamintuan,9 which involved a criminal action
for libel filed by a private person, the acting general manager of the Baguio Country 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 Baguio, Philippines, and within the
jurisdiction of this Honorable Court, the said accused, with deliberate intent and malicious intent
and evil motive of attacking, injuring and impeaching the character, honesty, integrity, virtue and
reputation 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, contempt, ridicule, discredit and
dishonor, without any justifiable motive, did then 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
Philippines 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 Philippines" 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
Manila," and both private complainants in Agustin and the case at bar were private 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, constituted a substantial defect that could not even be cured by mere
amendment. The rules on venue as laid down in Agbayani were restated in Agustin,11 retaining
no distinction as to venue whether the offended party is a public official or a private person. In
fact, the Court considered the phrase "a newspaper of general circulation 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 the bulk of the discussion instead
centered on whether the allegation that the complainant 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 ruled 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 of 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 that
complainant was a resident of Quezon City, the Court ultimately held that the allegations
contained in the Information "[were] utterly insufficient to vest jurisdiction on the RTC of
Quezon City."14 Again, the rules laid down in Agbayani were cited as controlling.15 The Court
further held that the evidence establishing the complainant's place of residence as Quezon City
could not cure the defect of the Information, noting that "it is settled that jurisdiction of a court
over a criminal case is determined by the allegations of the complaint or information."16
Macasaet resolutely stated that since the place of printing and first publication 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
information renders the latter fatally defective."17 We affirm that proposition, which 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 to 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 to the physical
act of producing the publication."18 Certainly, that argument flies in the face of our holding in
Agustin, which involved a similarly worded Information, and which stands as a precedent we
have no inclination to disturb. Still, a perusal of the Information in this case reveals that the word
"published" is 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 Information 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 situate 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 Philippine 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, there would be no impediment to the
filing of the libel action in other locations where 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 precisely what Rep. Act No.
4363 sought to avoid.
Our ruling in Banal III v. Panganiban19 might tend to support petitioner's argument that the
phrase "printed and first published" need not be necessarily employed in the Information. The
Information in that case filed by private persons before the Makati City RTC read that the
libelous matter was found in a newspaper column "of the Philippine Daily Inquirer which is
published in English in the City of Makati, Metro Manila, Philippines and of general circulation
in the Philippines and abroad x x x x."20 The Court did observe that this information was
"sufficient in form"21 as it clearly stated "that the newspaper is published in Makati City but
circulated throughout the country, which allegation accordingly vests jurisdiction over the
offense charged in the RTC of Makati City."22 Yet even notwithstanding the fact that the
information in Banal III did not use the phrase "printed and first published," it still categorically

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information in Banal III did not use the phrase "printed and first published," it still categorically
stated, at the very least, that the libelous matter was "published 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 File," not "published in Manila."23 The fact that the present Information
further alleges that Smart File was "of general circulation in Manila" does not necessarily mean
that the magazine was printed and first published in Manila. In any event, as the language in the
present information hews closer to that in Agustin rather 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 abandon 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 complainant's place of residence. We would also have to abandon the
subsequent cases that 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 imposed 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 their
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 formalistic 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 been committed or any
one of its essential ingredients took place within the territorial jurisdiction of the court.25 Article
360 states, in as unequivocal a manner 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 first
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 establish with particularity any of these two
venue requirements, the trial court would have no jurisdiction to hear the criminal case.
Another point bears to be added. We are unable to share petitioner's insistence that since the
protection of members of the mass media from frivolous libel suits filed by public officers in far-
flung
places appears to have been a motivating force behind the amendments to Article 360, a more
liberal interpretation of the provision should obtain if the 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 remote of places. While Rep. Act No. 4363 does attribute value to the right to comment
on the performance of public officials of their duties, it actually extends its protection to the right
of any person to free expression, by assuring a reasonable venue requirement even if the subject
of comment is not a public officer. Libel stands as an exception to one of the most cherished
constitutional rights, that of free expression. While libel laws ensure a modicum of responsibility
in one's own speech or expression, a prescribed legal standard that conveniences the easy
proliferation of libel suits fosters an atmosphere that inhibits the right to speak freely. When such
a prescribed standard is submitted for affirmation 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 first published in Manila or Makati City. The plain fact is
that the Information failed to make the sufficient allegation in that regard, and even any
ascertainment that the articles were printed and first published in Manila does not cure the
jurisdictional defect of the Information.
WHEREFORE, the petition is DENIED.

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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 HEIRS OF PETRA
CAPISTRANO PIIT, Petitioners,
vs.
HONORABLE PRESIDING JUDGE OF REGIONAL TRIAL COURT OF MISAMIS
ORIENTAL, BRANCH 40, CAGAYAN DE ORO CITY, DEPARTMENT 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 SABINA CANTORANA, Respondents.
DEC ISIO N
AUSTRIA-MARTINEZ, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court. The
principal 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 previously owned Lot No. 2291 located in Cagayan de Oro City which
measured 123,408 square meters under Transfer Certificate of Title No. T-62623. Springfield
Development 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 Springfield developed
these properties into a subdivision project called Mega Heights Subdivision.2
On May 4, 1990, the Department of Agrarian Reform (DAR), through its Municipal Agrarian
Reform Officer, issued a Notice of Coverage,3 placing the property 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 Piit, the case was docketed as DARAB Case No. X-305. On
August 27, 1991, DARAB Provincial Adjudicator Abeto A. Salcedo, Jr. rendered a decision
declaring the nature of the property as residential and not suitable for agriculture.4 The Regional
Director filed a notice of appeal, which the Provincial Adjudicator disallowed for being pro
forma and frivolous.5 The decision became final and executory6 and Springfield proceeded to
develop the property.7
The DAR Regional Director then filed a petition for relief from judgment of the DARAB
Decision, docketed as DARAB 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
Municipal Agrarian Reform Office to proceed with the documentation, acquisition, and
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 Springfield
to pay the farmer-beneficiaries the amount of Twelve Million, Three Hundred Forty Thousand,
Eight Hundred Pesos (P12,340,800.00), corresponding to the value of the property since the
property has already been developed into a subdivision.
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 DARAB 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
On July 2, 1997, petitioners filed with the Court of Appeals (CA) a special civil action for

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On July 2, 1997, petitioners filed with the Court of Appeals (CA) a special civil action for
certiorari, mandamus, and prohibition with prayer for the issuance of writ of preliminary
injunction and/or temporary restraining order, docketed as 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 actually 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
certiorari, as the DARAB Decision is void ab initio for having been rendered without due
process of law.12
In the assailed Decision13 dated July 16, 1998, the CA dismissed the petition for lack of merit,
ruling that the RTC does not have jurisdiction to annul the DARAB Decision because it is a co-
equal body.14
However, on January 12, 1999, the CA ordered the elevation of the DARAB records before it,
declaring that it "overlooked the fact that petitioners likewise applied for a writ 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 case 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 Office, 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
records, the CA simply denied petitioners' motion for reconsideration per Resolution17 dated
February 23, 2000 without specifically resolving the issues raised concerning 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 APPLYING
THE PRINCIPLE OF JUDICIAL STABILITY TO JUSTIFY ITS CONCLUSION
DIVESTING THE REGIONAL TRIAL COURT OF ITS JURISDICTION VESTED BY
LAW OVER CASES WHERE THE EXCLUSIVE JURISDICTION WAS NOT
EXPRESSLY GRANTED TO ANY OTHER COURTS [SIC] OR TRIBUNAL, IN
EFFECT, MODIFYING THE APPLICABLE LAW ON THE MATTER.
II
THE COURT OF APPEALS IRREGULARLY DISMISSED PETITIONERS' MOTION
FOR RECONSIDERATION AFTER IT HAD RESOLVED TO ENTERTAIN
PETITIONERS' PETITION FOR PROHIBITION AND TO REVIEW THE DARAB
PROCEEDINGS, THEREBY DEPARTING FROM THE USUAL COURSE OF
JUDICIAL PROCEEDINGS.
III
THE HONORABLE SUPREME COURT, BEING THE HIGHEST TEMPLE OF
RIGHTS, AND TO AVOID SERIOUS MISCARRIAGE OF JUSTICE AND NEEDLESS
DELAYS, IS MOST RESPECTFULLY URGED TO TAKE COGNIZANCE OF THE
PETITION FILED IN CA-G.R. SP No. 44563 IN THE EXERCISE OF ITS
CONCURRENT JURISDICTION, AS IF THE PETITION WAS ORIGINALLY
LODGED BEFORE 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 DARAB judgments. Petitioners, however,
contend that the RTC may take cognizance of the annulment case since Section 19 of B.P. Blg.
129 vests the RTC with general jurisdiction and an action for annulment is covered under such
general jurisdiction. 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 their application for a writ of
prohibition, as it was necessary to restrain the DARAB 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
inequitable.
In their Joint-Comments, the farmer-beneficiaries and the DARAB (respondents) refute

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petitioners' allegation that they were not afforded due process in the DARAB proceedings,
stating that petitioners were impleaded as a party thereto, and in fact, they attended some of the
hearings although their counsel was absent. Respondents 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 case is whether the RTC has jurisdiction to annul a
final judgment of the DARAB.
Note 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 Procedure, 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 rendered by another court of first instance
or by another branch of the same court. This was the Court's ruling in Dulap v. Court of
Appeals.20 Yet, in subsequent cases,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 the
annulment cases to be tried by the same court or branch which heard the main action.
The foregoing doctrines were modified in Ngo Bun Tiong v. Sayo,22 where the Court expressed
that pursuant to the policy of judicial stability, the doctrine of non-interference between
concurrent and coordinate courts should be regarded 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 original 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 Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, except those falling within the appellate jurisdiction of
the Supreme Court in accordance with the Constitution, the provisions of this Act, and of sub-
paragraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17
of the Judiciary Act of 1948." As provided in paragraph 16 of the Interim Rules and Guidelines
implementing B.P. Blg. 129, the quasi-judicial bodies whose decisions 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.
Significantly, 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 Association, Inc. v.
Intermediate Appellate Court,25 the Court ruled that the RTCs have jurisdiction over actions for
annulment of the decisions of the National Water Resources Council, which is a quasi-judicial
body ranked with inferior courts, pursuant to its original jurisdiction to issue writs of certiorari,
prohibition, and mandamus, under Sec. 21(1) of B.P. Blg. 129, in relation to acts or omissions of
an inferior court. This led to the conclusion that despite the absence of any provision in B.P. Blg.
129, the RTC had the power to entertain petitions for annulment of judgments of inferior courts
and administrative or quasi-judicial bodies of equal ranking. This is also in harmony with the
"pre-B.P. Blg. 129" rulings of the Court recognizing the power of a trial court (court of first
instance) to annul final judgments.26 Hence, while it is true, as petitioners contend, that the RTC
had the authority to annul final judgments, such authority pertained only to final judgments
rendered by inferior courts and quasi-judicial bodies of equal ranking with such inferior
courts.
The foregoing statements beg the 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 body created by Executive Order Nos. 229 and 129-A. R.A. No.
6657 delineated its adjudicatory powers and functions. The DARAB Revised Rules of Procedure
adopted on 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 the

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SECTION 1. Certiorari to the Court of Appeals. Any decision, order, award or ruling by the
Board or its Adjudicators on any agrarian dispute or on any matter pertaining to the application,
implementation, enforcement or interpretation of agrarian reform laws or rules and regulations
promulgated thereunder, may be brought within fifteen (15) days from receipt of a copy thereof,
to the Court of Appeals by certiorari, except as provided in the next succeeding section.
Notwithstanding an appeal to the Court of Appeals the decision of the Board or Adjudicator
appealed from, shall be immediately executory.
Further, the prevailing 1997 Rules of Civil Procedure, as amended, expressly provides for an
appeal from the DARAB decisions to the CA.28
The rule is that where legislation provides for an appeal from decisions of certain administrative
bodies to the CA, it means that such 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 to the CA, the inevitable conclusion is that the
DARAB is a co-equal body with the RTC and its decisions are beyond the RTC's control.
The CA was therefore correct 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
entertain the same.
This brings to fore the issue of whether the petition for annulment of the DARAB judgment
could be brought to the CA. As previously noted, Section 9(2) of B.P. Blg. 129 vested in the CA
the exclusive original jurisdiction over 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 quasi-
judicial bodies. 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 final and executory
judgment of the NLRC, citing Section 9 of B.P. Blg. 129, as amended, which only vests in the
CA "exclusive jurisdiction over actions for annulment of judgments of Regional Trial Courts."
This was reiterated in Galang v. Court of Appeals,31 where the Court ruled that that the CA is
without jurisdiction to entertain a petition for annulment of judgment of a final decision of the
Securities and Exchange Commission.
Recent rulings on similar cases involving annulments 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 of 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 annulment of judgment is confined to decisions of the
Regional Trial Court on the ground 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 are fraud and lack of
jurisdiction, said petition cannot prosper for the simple reason that the decision sought to be
annulled was not rendered by the Regional Trial Court but by an administrative agency
(HLU Arbiter and Office of the President), hence, not within the jurisdiction of the Court
of Appeals. There is no such 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 review under Rule 43 of the 1997 Rules of Civil Procedure, the same should have
been 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 covers only errors of judgment. A petition
for annulment of judgment is an initiatory remedy, hence no error of judgment can be the subject
thereof. Besides, the Arbiter and the Office of the President indisputably have jurisdiction over
the cases brought before them in line with our ruling in Francisco Sycip, Jr. vs. Court of Appeals,
promulgated on March 17, 2000, where the aggrieved townhouse buyers may seek protection
from the HLURB under Presidential Decree No. 957, otherwise 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 resolutions covers "annulment by the Court of
Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for
which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies

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which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies
could no longer be availed of through no fault of the petitioner." 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
disciplinary cases only, and the right to appeal is not to be considered granted to parties
aggrieved by orders and decisions of the Ombudsman in criminal or non-administrative cases.
While these cases involve annulments of judgments under the 1997 Rules of Civil Procedure, as
amended, still, they still find application in the 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, the silence of B.P. Blg. 129 on the jurisdiction of the CA to annul judgments or
final orders and resolutions of quasi-judicial bodies like the DARAB indicates its 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 they claim was not acted upon by the CA, citing the Court's action
in Fortich v. Corona35 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 involved 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 period of 10 years. During
the existence of the lease, the DAR placed the entire 144-hectare property under compulsory
acquisition and assessed the land value at P2.38 million. When the NQSRMDC/BAIDA
(Bukidnon Agro-Industrial Development Association) 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 Sangguniang Bayan of Sumilao, Bukidnon, reclassifying the area from
agricultural to industrial/institutional, the same was disapproved by the DAR Secretary and
instead, the property was placed under the compulsory coverage of Comprehensive Agrarian
Reform Program for distribution to all qualified beneficiaries. This prompted Governor Carlos O.
Fortich of Bukidnon to file an appeal with the OP, while NQSRMDC filed with the CA a petition
for certiorari, and prohibition with preliminary injunction.
The OP then issued a Decision dated March 29, 1996 reversing the DAR Secretary's decision
and approving the application for conversion. Executive 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 declared that the OP Decision dated March 29, 1996 had already become
final and executory.
Because of this, the farmer-beneficiaries staged a hunger strike on October 9, 1997, protesting
the OP's decision. In order to resolve the strike, the OP issued a so-called "Win/Win" resolution
on November 7, 1997, modifying the decision 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 agriculture shall be
distributed to qualified farmer-beneficiaries.1awphi1.net
A petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court36 was then
filed with the Court, which was contested by the Office of the Solicitor General on the ground
that the proper remedy should have been to file a petition 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 Supreme Court, CA and RTC have
original concurrent jurisdiction to issue a writ of certiorari, prohibition, and mandamus.
However, due to compelling reasons and in the interest of speedy justice, the Court resolved to
take primary jurisdiction over the petition in the interest of speedy justice, after which the Court
nullified 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

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the redress desired cannot be obtained in the appropriate courts, and exceptional and compelling
circumstances, such as cases of national interest and of serious implications, justify the availment
of the extraordinary remedy of writ of certiorari, prohibition, or mandamus calling for the
exercise of its primary jurisdiction.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 present
case such that the Court is not bound to abandon all rules, take primary jurisdiction, and resolve
the merits of petitioners' application for a writ of prohibition.
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 Notice of Coverage was made pursuant to
a petition for relief from judgment filed by the DAR, albeit petitioners are contesting the validity
of the proceedings held thereon. On the other hand, in Fortich, the OP's "Win/Win" resolution
dated November 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 that 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 to 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 petitioners' argument of
lack of due process, absent notice and hearing.
Moreover, the principle of hierarchy of courts applies generally to cases involving factual
questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues.38
The question of whether the DARAB Decision dated October 5, 1995 is null and void and
enforceable against petitioners for having been rendered without affording petitioners due
process is a factual question which requires 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 the issuance of the
writ of prohibition, which, significantly, focuses on the alleged 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 actually 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, whereby
in an action to obtain a different relief, an attack on the judgment is nevertheless made as an
incident thereof,40 is one of these. This tenet is based upon a court's inherent authority to
expunge void acts from its records.41 Despite recognizing the need to resolve petitioners'
application for the writ of prohibition in its Resolution dated January 12, 1999, the CA
nonetheless summarily denied petitioners' motion for reconsideration in its Resolution dated
February 23, 2000,42 leaving the matter hanging and unresolved.
At first, the Court considered resolving the merits of petitioners' motion for reconsideration
concerning their 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 directed 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 deems it more judicious to remand this case to the CA for immediate
resolution of petitioners' motion for reconsideration, re: their application for the writ of
prohibition.
Moreover, the radical conflict in the findings of the Provincial Adjudicator 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 probative value of the evidence supporting the findings of the Provincial
Adjudicator 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 promote the ends of
substantial justice, and further order the transmittal of the proper records for it to fully adjudicate
the case. After all, it is an avowed policy of the courts that cases should be determined on the
merits, after full opportunity to all parties for ventilation of their causes and defenses, rather than
on technicality or some procedural imperfections. In that way, the ends of justice would be

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on technicality or some procedural imperfections. In that way, the ends of justice would be
served better.44
WHEREFORE, the petition is PARTLY GRANTED. This case 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 Reconsideration.
Upon finality of this Decision, let the records be remanded forthwith to the Court of Appeals.

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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 November
28, 2008
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure
seeking the reversal of the Court of Appeals (CA) Decision2 dated March 5, 2004 which reversed and set
aside the Decision3 of the Department of Agrarian Reform Adjudication Board (DARAB) dated 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 Subdivision, 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 to Leon and his wife, respondent Aurora Carpo. It was devoted to rice and corn production
(subject land) and was tenanted by one Domingo Pastolero (Domingo), husband of Adoracion Pastolero
(Adoracion).7 When Domingo passed away, Adoracion together with her son Elpidio Pastolero, assumed
the tenancy rights of Domingo over the subject land.
However, on December 29, 1983, Adoracion, by executing a notarized Pinanumpaang Salaysay8 with the
conformity of Leon, and for a consideration 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), became
the new tenants of the subject land.
At the outset, the parties had a harmonious tenancy relationship.10 Unfortunately, circumstances
transpired which abraded 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 agreement with petitioner and Marciano to increase the existing
rentals from 36 cavans to 45 cavans, and that, if respondents wanted to repossess the property, they
only had to pay the petitioner the amount of P72,500.00, the same amount paid by the latter to
Adoracion. Respondents further averred that despite repeated demands, petitioner refused to pay the
actual rentals from July 1985 to September 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
Committee, suitable for commercial and industrial purposes, per Zoning Ordinance of 1981 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 rentals.
In their Answer12 dated January 26, 1990, petitioner and Marciano denied that there was an agreement
to increase the existing rental which was already fixed 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 rentals because
they even sent verbal and written notices to the respondents, advising them to accept the same; and
that in view of the latter’s failure to respond, petitioner and Marciano were compelled to sell the
harvest and to deposit the proceeds thereof in Savings Account No. 9166 with the Universal Savings
Bank at Sta. Rosa, Laguna under the names of Leon and Marciano. As their special affirmative defense,
petitioner and Marciano claimed that Marciano is a farmer-beneficiary of the subject land pursuant to
P.D. 27. Petitioner and Marciano prayed for the outright dismissal of the complaint and for the
declaration of Marciano as full owner of the subject land.
Thereafter, trial on the merits ensued.
The PARAD’s Ruling
On October 12, 1993, the PARAD ruled that petitioner and Marciano deliberately defaulted in the
payment of the rentals due the respondents. The PARAD found that the deposit made with Republic
Planters Bank was actually in the names of 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 Marciano deposited the
amount of P40,000.00 with the Universal Savings Bank for the unpaid rentals. As such the PARAD
considered the deposits as late payments and as implied admission that indeed petitioner and Marciano
did not pay the past rentals when they fell due. The PARAD further held and disposed thus:
The intent of the defendant to subject the said area under PD 27 should pass the criteria set. Foremost
is the determination of the aggregate riceland of plaintiff. He must have more than seven (7) hectares of
land principally devoted to the planting of palay. Area over seven (7) hectares shall be the one to be
covered by PD 27 on Operation 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 that 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 agricultural 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. However, 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 sustenance.
WHEREFORE, in view of the foregoing, Judgment is hereby rendered:
a) Ordering the ejectment of defendant from the subject landholding for non-payment of 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]eclaring the subject land not covered by Presidential Decree No. 27, Republic Act [No.] 6657, and
Executive Order No. 228.
SO ORDERED.
Petitioner and Marciano sought relief from the DARAB.13
The DARAB’s Ruling
On June 24, 1998, the DARAB held:
It is a fundamental rule in this jurisdiction that for non-payment of lease rentals 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 farmer-
tenant, 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 circumstances obtaining in this case, it cannot be concluded that the defendants-
appellants deliberately failed or refused to pay their lease rentals. It was not the fault of defendants-
appellants herein that the rentals did not reach the plaintiffs-appellees because the latter choose to
lend a deaf ear to the notices sent to them. Clearly, therefore plaintiffs-appellees failed to show by
substantial evidence that the defendants-appellants deliberately failed or refused to pay their lease
rentals. It has been held that the mere failure of a tenant to pay the landowner’s share does not
necessarily give the latter the right to eject the former when there is lack of deliberate intent on the part
of the tenant to pay (Roxas y Cia v. Cabatuando, 1 SCRA 1106).
Thus:
WHEREFORE, finding the appeal interposed by the defendants-appellants to be meritorious, the
Decision appealed from is hereby SET ASIDE and another judgment issued as follows:
1. Enjoining plaintiffs-appellees to respect the peaceful possession and cultivation of the land in suit by
the defendants-appellants; and
2. Directing the MARO of Sta. Rosa, Laguna to assist the parties in the proper accounting of lease rentals
to be paid by the defendants-appellants to the plaintiffs-appellees.
No costs.
SO ORDERED.
Aggrieved, respondents appealed to the CA. On April 16, 2003, Marciano passed away.14
The CA’s 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 with bad faith and deliberate intent. Thus, petitioner and Marciano did not legally comply
with their duties as tenants. Moreover, the CA held that the subject land was not covered by P.D. 27,

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with their duties as tenants. Moreover, the CA held that the subject land was not 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 contention that the "subject
landholding is for residential, commercial, and industrial purposes as declared by zoning ordinance of
1981 of the town of Sta. Rosa, Laguna upon recommendation of the Human Settlement Committee xxx."
The vicinity map of the subject landholding shows that it is almost beside Nissan Motors Technopa[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 Pulong Santa Cruz, National Road. The vicinity
map shows therefore that the subject landholding is 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 CA ruled in favor of the respondents in this wise:
WHEREFORE, premises considered and pursuant to applicable law and jurisprudence on the matter, the
present Petition is hereby GRANTED. Accordingly, the decision of the Department of Agrarian Reform
Adjudication Board-Central Office, Elliptical Road, Diliman, Quezon City (promulgated on June 24, 1998)
is hereby REVERSED and SET ASIDE and a new one entered- REINSTATING the decision of the
Department of Agrarian Reform Adjudication Board-Region IV, Office of the Provincial Adjudicator, Sta.
Cruz, Laguna (dated October 12, 1993). No pronouncement as to costs.
SO ORDERED.
Petitioner filed a Motion for Reconsideration15 assailing the aforementioned Decision which the CA,
however, denied in its Resolution16 dated June 28, 2004.
Hence, this Petition based on the following grounds:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ARROGATING UPON ITSELF WHAT IS
OTHERWISE DAR’S POWER TO DETERMINE WHETHER THE SUBJECT AGRICULTURAL LAND HAS BECOME
RESIDENTIAL/INDUSTRIAL/COMMERCIAL.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT EQUATED "LAND RECLASSIFICATION"
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 LEASE 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 DARAB-REGION IV,
OFFICE OF THE PROVINCIAL ADJUDICATOR, STA. CRUZ, LAGUNA INSTEAD OF THAT OF THE DARAB-
CENTRAL--IS VIOLATIVE OF SEC. 14, ART. VIII OF THE 1987 CONSTITUTION FOR HAVING DECIDED
WITHOUT EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE FACTS 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 INTENT TO DEPRIVE THE LAND OWNERS THEREOF.
Petitioner asseverates that there is no evidence 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 whether or not the subject land is non-
agricultural, hence, exempt from the coverage of the Comprehensive Agrarian Reform Law (CARL), lies
with the DAR, and not with the courts; that mere reclassification by way of a zoning ordinance does not
warrant the dispossession of a tenant but conversion does, and entitles the tenant to payment of
disturbance compensation; the legal concepts of reclassification and conversion are separate and
distinct from each other; that respondents' complaint 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 non-
payment of lease rentals is a question of fact, due to the 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

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and CA with those of the DARAB, petitioner asks that this Court review the evidence on record, and
pursuant to the CA decision in Cabero v. Caturna, et al.,17 rule on whether petitioner willfully and
deliberately refused to pay lease rentals as to warrant her dispossession from the subject land.18
On the other hand, respondents 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, petitioner cannot be
considered as a landless tenant deserving the protection of agrarian reform laws; that the DARAB
negated the highest degree of respect the factual findings of the PARAD deserved; that petitioner's
claims that Marciano repeatedly 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 certificate as to the existence of said bank deposits in Republic Planters Bank as of April 20, 1987
and October 1, 1987, petitioner herself commented, "Nagdeposito ho talaga kami sa pangalan
namin";21 that the statement of petitioner is an admission that bank deposits, if any, were made, not in
the name of Leon as contained 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, said deposits do
not actually exist; that per recent inquiry, the bank deposit in Universal Savings Bank only contains
P1,020.19 due to previous withdrawals made by Marciano; that the foregoing circumstances indicate a
pattern of fraudulent misrepresentations by the petitioner to mislead the DARAB into believing that
petitioner and Marciano did not deliberately refuse to pay the lease rentals; that from 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 the petitioner has been recurring for several years already, thus depriving
the respondents 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 its vicinity map,23 the subject land is of a residential,
commercial and industrial 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 Marciano 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 susceptible of any ratification.24
Our Ruling
Before we resolve this case on the merits, a procedural issue must be disposed of.
Respondents strongly argue that the instant Petition was filed out of time because, while petitioner
originally claimed to have received her copy of the CA Resolution25 dated June 28, 2004, denying her
Motion for Reconsideration,26 on July 12, 2004, petitioner eventually admitted, after respondents
showed proof to the contrary, that she actually received 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 her Motion28 for Extension of Time to File Petition for Review on Certiorari (Motion) 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 thirty-day extended period. Hence, respondents submit that the CA
decision had already 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 Resolution.
Petitioner replied that she received her copy on July 12, 2004. On July 20, 2004, counsel filed an Entry of
Appearance with the CA.30 On July 23, 2004, petitioner through counsel filed the Motion for Extension of
Time to File Petition for Review. On August 11, 2004, petitioner received a copy of respondents'
Opposition to the Motion. Thereafter, upon verification, petitioner admitted that she received the copy
of the CA Resolution on July 7, 2004. Thus, her Motion was admittedly 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 justice. If the application of
the Rules would tend to frustrate rather than to promote justice, it is always within our power to
suspend the rules or except a particular case from their operation. Law and jurisprudence grant to
courts the prerogative to relax compliance with the procedural rules, even the most mandatory in
character, mindful of the duty to reconcile the need to put an end to litigation speedily and the parties'

REMLAW Page 57
right to an opportunity to be heard.31
Our recent ruling in Tanenglian v. Lorenzo32 is instructive:
We have not been oblivious to or unmindful of the extraordinary situations that merit liberal application
of the Rules, allowing us, depending 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 mean to undermine
the force and effectivity of the periods set by law. In those rare cases where we did not stringently apply
the procedural 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 maintain a healthy balance between the 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 deny the Petition on this
ground alone is too harsh a penalty for a day’s delay, taking into consideration the time, resources and
effort spent by petitioner and even 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 the merits. The
ends of justice are better served when cases are determined on the merits – with all parties given full
opportunity to ventilate their causes and defenses – rather than on technicality or some procedural
imperfections.33
The Petition is impressed with merit.
In sum, there are two (2) ultimate issues that require resolution in this case:
1) Whether the CA erred in ruling that the subject land had already become residential, commercial
and/or industrial, thus, excluded from the coverage of our laws on agrarian reform; and
2) Whether the petitioner, as an agricultural tenant, failed to pay her lease rentals when the same fell
due as to warrant her dispossession of the subject land.
On the first issue, we rule in the affirmative.
To recapitulate, the instant case sprang from a Complaint for Ejectment based on Non-Payment of lease
rentals. Though an allegation was made by the respondents that the land had been declared, upon the
recommendation of the Human Settlements Committee, suitable for commercial and industrial
purposes, per Zoning Ordinance of 1981 of the Municipality of Sta. Rosa, no argument 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 rentals. 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 the issue of petitioner’s failure to pay lease rentals. When the
DARAB ruled that petitioner and Marciano did not deliberately fail to pay said rentals, respondents
raised a new issue in their Omnibus Motion that the transaction between Adoracion and petitioner was
void in violation of P.D. No. 27, despite the conformity of 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, commercial 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
covered by our agrarian laws because of the retention rights of the respondents. The 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 vicinity map. These rulings violated the doctrine of
primary jurisdiction.
The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which
jurisdiction has initially been lodged in an administrative body of special competence. For agrarian
reform cases, jurisdiction is vested in the Department of Agrarian Reform (DAR); more specifically, in the
Department of Agrarian 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 reform, except those falling under the exclusive
original jurisdiction of the Department 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
jurisdiction to determine and adjudicate agrarian reform matters and shall have the exclusive
jurisdiction over all matters involving the implementation of the agrarian reform program." The DARAB
has primary, original and appellate jurisdiction "to determine and adjudicate all agrarian disputes, cases,
controversies, and matters or incidents involving the implementation of the Comprehensive Agrarian
Reform 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 implementing 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 tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise
over lands devoted to agriculture, including disputes concerning farmworkers associations or
representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or
conditions of such tenurial arrangements. It includes any controversy relating to compensation of lands
acquired under this Act and other terms and conditions of transfer of ownership from landowners to
farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants stand in the
proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee."
Simply put, agrarian disputes, as defined by law and settled in jurisprudence, are within the primary and
exclusive original jurisdiction of the PARAD and the DARAB, while issues of retention and non-coverage
of a land under agrarian reform, among others, are within the domain of the DAR Secretary.
Thus, Section 3, Rule II of the 2003 DARAB Rules of Procedure provides:
SECTION 3. Agrarian Law Implementation Cases. – The Adjudicator or the Board shall 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 administrative 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 agrarian reform program and
the initial issuance of CLOAs and EPs, including protests or oppositions thereto and petitions for lifting of
such coverage;
3.2 Classification, identification, inclusion, exclusion, qualification, or disqualification of potential/actual
farmer-beneficiaries;
3.3 Subdivision surveys of land under CARP;
3.4 Recall, or cancellation of provisional lease rentals, Certificates of Land Transfers (CLTs) and CARP
Beneficiary Certificates (CBCs) in cases outside the purview of Presidential Decree (PD) No. 816,
including the issuance, recall, or cancellation of EPs or CLOAs not yet registered with the Register of
Deeds;
3.5 Exercise of the right of retention by the landowner;
3.6 Application for exemption from coverage under Section 10 of RA 6657;
3.7 Application for exemption pursuant to Department of Justice (DOJ) Opinion No. 44 (1990);
3.8 Exclusion 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 (CA) found unsuitable for agricultural purposes;
3.11 Application for conversion of agricultural land to residential, commercial, industrial, or other non-
agricultural uses and purposes including protests or oppositions thereto;
3.12 Determination of the rights of agrarian reform beneficiaries to homelots;
3.13 Disposition 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 landed estates administered by DAR and its predecessors; or
3.16 Such other agrarian 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 rentals 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

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respondents as landowners and the exclusion/exemption of the subject land from the coverage of
agrarian reform are issues not cognizable by the PARAD and the DARAB, 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 respondents would, invariably, proffer an additional theory or defense, in order to effect
petitioner’s eviction from the land. As a consequence, the simple issue of ejectment based on non-
payment 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 the issue of the right of
retention of the respondents, was not offered in evidence. Worse, the PARAD resolved the issue of
retention even if it was not raised by 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 Jurisdiction, 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 have 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, premature and irregular were the PARAD ruling on the retention
rights of the respondents, and the CA decision on the non-agricultural character of the land subject 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 this stage, pieces
of evidence and evaluating the same, without the respondents having 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/exemption from agrarian reform coverage, being the agency lodged with such authority
inasmuch it possesses the necessary expertise on the matter.38
Likewise, we refrain from entertaining the issue raised by respondents that petitioner and her family are
not landless tenants and are therefore not deserving of any protection under our laws on agrarian
reform, because fairness and due process dictate that issues not raised in the proceedings below should
not be raised for the first time 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 rests upon the respondents as agricultural lessors.41
This proceeds from the principle that a tenancy relationship, once established, entitles the tenant to
security 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 continue in the enjoyment and possession of
his landholding except when his dispossession 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 not pay the lease rental when it falls due: Provided, That if the non-
payment of the rental shall be due to crop failure to the extent of seventy-five per centum as a result of
a fortuitous event, the non-payment shall not be a ground for dispossession, although the obligation to
pay the rental due that particular crop is not thereby extinguished;
xxx x
Respondents failed to discharge such burden. The agricultural tenant's failure to pay the lease rentals
must be willful and deliberate in order to warrant his dispossession of the land that he tills.
Petitioner's counsel opines that there appears to be no decision by this Court on the matter; 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. Cabatuando, et al.,43 we held that under our law and

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Decision by this Court in Roxas y Cia v. Cabatuando, et al.,43 we held that under our law and
jurisprudence, mere failure of a tenant to pay the landholder's share does not necessarily give the latter
the right to eject the former when there 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 consequences.44 The term "willful," on the other hand, is defined as one
governed by will without yielding to reason or without regard to reason.45
We agree with the findings 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 sent to them. To note, as early
as November 10, 1986, Marciano executed an Affidavit46 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 and 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 settle.50
These factual circumstances negate the PARAD findings of Marciano’s and petitioner's deliberate and
willful intent not to pay lease rentals. Good faith was clearly demonstrated by Marciano and petitioner
when, because respondents refused to accept the proffered payment, they even went to the point of
seeking government intervention in order to address their problems with respondents. Absent such
deliberate and willful refusal to pay lease rentals, petitioner's ejectment from the subject land is not
justified.

WHEREFORE, the instant Petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R.
SP No. 60640 is hereby 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 REINSTATED 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) Secretary on the other issues they raised. No costs.

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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 Representatives Committees On Public Information, Public Order And
Safety, National Defense And Security, Information And Communications Technology, And Suffrage And Electoral
Reforms
G.R. No. 179275 December 23, 2008
Santiago Javier Ranada And Oswaldo D. Agcaoili, Petitioners,
Vs.
The Senate Of The Republic Of The Philippines, 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-ranking official of the Commission on Elections (COMELEC)
surfaced. They captured unprecedented public attention and thrust the country into a controversy that
placed the legitimacy of the present administration on the line, and resulted in the near-collapse of the
Arroyo government. The tapes, notoriously referred to as the "Hello Garci" tapes, allegedly contained
the President’s instructions to COMELEC Commissioner Virgilio Garcillano to manipulate in her favor
results of the 2004 presidential elections. These recordings were to become the subject of heated
legislative hearings conducted separately by committees of both Houses of Congress.1
In the House of Representatives (House), on June 8, 2005, then Minority Floor Leader Francis G.
Escudero delivered a privilege speech, "Tale of Two Tapes," and set in motion a congressional
investigation jointly conducted by the Committees on Public Information, Public Order and Safety,
National Defense and Security, Information and Communications Technology, and Suffrage and Electoral
Reforms (respondent House Committees). During the inquiry, several versions of the wiretapped
conversation emerged. But on July 5, 2005, National Bureau of Investigation (NBI) Director Reynaldo
Wycoco, Atty. Alan Paguia and the lawyer of former NBI Deputy Director Samuel Ong submitted to the
respondent House Committees seven alleged "original" tape recordings of the supposed three-hour
taped conversation. After prolonged and impassioned debate by the committee members on the
admissibility and authenticity of the recordings, the tapes were eventually played in the chambers of the
House.2
On August 3, 2005, the respondent House Committees decided to suspend the hearings indefinitely.
Nevertheless, they decided to prepare committee reports based on the said recordings and the
testimonies of the resource persons.3
Alarmed by these developments, petitioner Virgilio O. Garcillano (Garcillano) filed with this Court a
Petition for Prohibition and Injunction, with Prayer for Temporary Restraining Order and/or Writ of
Preliminary Injunction4 docketed as G.R. No. 170338. He prayed that the respondent House Committees
be restrained from using these tape recordings of the "illegally obtained" wiretapped conversations in
their committee reports and for any other purpose. He further implored that the said recordings and
any reference thereto be ordered stricken off the records of the inquiry, and the respondent House
Committees directed 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 Panfilo Lacson roused the slumbering issue with a
privilege speech, "The Lighthouse That Brought Darkness." In his discourse, Senator Lacson promised to
provide the public "the whole unvarnished truth – the what’s, when’s, where’s, who’s and why’s" of the
alleged wiretap, and sought an inquiry into the perceived willingness of telecommunications providers
to participate in nefarious wiretapping activities.
On motion of Senator Francis Pangilinan, Senator Lacson’s speech was referred to the Senate
Committee on National Defense and Security, chaired by Senator Rodolfo Biazon, who had previously

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Committee on National Defense and Security, chaired by Senator Rodolfo Biazon, who had previously
filed two bills6 seeking to regulate the sale, purchase and use of wiretapping equipment and to prohibit
the Armed Forces of the Philippines (AFP) from performing electoral duties. 7
In the Senate’s plenary session the following 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 Miriam Defensor-Santiago
delivered a privilege speech, articulating her considered view that the Constitution absolutely bans the
use, possession, replay or communication of the contents of the "Hello Garci" tapes. However, she
recommended a legislative investigation into the role of the Intelligence Service of the AFP (ISAFP), the
Philippine National Police or other government entities in the alleged illegal wiretapping of public
officials.9
On September 6, 2007, petitioners Santiago Ranada and Oswaldo Agcaoili, retired justices of the Court
of Appeals, filed 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 legislative inquiry. They argued in the main that the intended
legislative inquiry violates R.A. No. 4200 and Section 3, Article III of the Constitution.11
As the Court did not issue an injunctive writ, the Senate proceeded with its public hearings on the "Hello
Garci" tapes on September 7,12 1713 and October 1,14 2007.
Intervening 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 September 25, 2007.
The Court subsequently heard the case on oral argument.17
On October 26, 2007, Maj. Lindsay Rex Sagge, a member of the ISAFP and one of the resource persons
summoned by the Senate to appear and testify at its hearings, moved to intervene as petitioner in G.R.
No. 179275.18
On November 20, 2007, the Court resolved to consolidate G.R. Nos. 170338 and 179275.19
It may be noted that while both petitions involve the "Hello Garci" recordings, they have different
objectives–the first is poised at preventing the playing of the tapes in the House and their subsequent
inclusion in the committee reports, and the second seeks to prohibit and stop the conduct of the Senate
inquiry on the wiretapped conversation.
The Court dismisses the first petition, G.R. No. 170338, and grants the second, G.R. No. 179275.
-I -
Before delving into the merits of the case, the Court shall first resolve the issue on the parties’ standing,
argued at length in their pleadings.
In Tolentino v. COMELEC,20 we explained that "‘*l+egal standing’ or locus standi refers to a personal and
substantial interest in a case such that the party has sustained or will sustain direct injury because of the
challenged governmental 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 fairly traceable to the challenged action; and (3) the injury is likely to be redressed 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
upon which the court so largely depends for illumination of difficult constitutional questions."22
However, considering that locus standi is a mere procedural technicality, the Court, in recent cases, has
relaxed the stringent direct injury test. David v. Macapagal-Arroyo23 articulates that a "liberal policy has
been observed, allowing ordinary citizens, members of Congress, and civic organizations to prosecute
actions involving the constitutionality or validity of laws, regulations and rulings."24 The fairly recent
Chavez v. Gonzales25 even permitted a non-member of the broadcast media, who failed to allege a
personal stake in the outcome of the controversy, to challenge the acts of the Secretary of Justice and
the National Telecommunications Commission. The majority, in the said case, echoed the current policy
that "this Court has repeatedly and consistently refused to wield procedural barriers as impediments to
its addressing and resolving serious legal questions that greatly impact on public interest, in keeping
with the Court’s duty under the 1987 Constitution to determine whether or not other branches of
government have kept themselves within the limits of the Constitution and the laws, and that they have

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government have kept themselves within the limits of the Constitution and the laws, and that they have
not abused the discretion given to them."26
In G.R. No. 170338, petitioner Garcillano justifies his standing to initiate the petition by alleging that he
is the person alluded to in the "Hello Garci" tapes. Further, his was publicly identified by the members of
the respondent committees as one of the voices in the recordings.27 Obviously, therefore, petitioner
Garcillano stands to be directly injured by the House committees’ actions and charges of electoral fraud.
The Court recognizes his standing to institute the petition for prohibition.
In G.R. No. 179275, petitioners Ranada and Agcaoili justify their standing by alleging that they are
concerned citizens, taxpayers, and members of the IBP. They are of the firm conviction that any attempt
to use the "Hello Garci" tapes 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 alleges violation of his right to due process considering that he is summoned to attend
the Senate hearings without being apprised not only of his rights therein through the publication of the
Senate Rules of Procedure Governing Inquiries in Aid of Legislation, but also of the intended legislation
which underpins the investigation. He further intervenes as a taxpayer bewailing the useless and
wasteful expenditure of public funds involved in the conduct of the questioned hearings.29
Given that petitioners Ranada and Agcaoili allege an interest in the execution 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 controversy by merely being citizens of the Republic.
Following the Court’s ruling in Francisco, Jr. v. The House of Representatives,31 we find sufficient
petitioners Ranada’s and Agcaoili’s and intervenor Sagge’s allegation that the continuous conduct by the
Senate of the questioned legislative inquiry will necessarily involve the expenditure of public funds.32 It
should be noted that in Francisco, rights personal to then Chief Justice Hilario G. Davide, Jr. had been
injured by the alleged unconstitutional acts of the House of Representatives, yet the Court granted
standing to the petitioners therein for, as in this case, they invariably invoked the vindication of their
own rights–as taxpayers, members of Congress, citizens, individually or in a class suit, and members of
the bar and of the legal profession–which 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 petitioners and intervenor Sagge
advance constitutional issues which deserve the attention of this Court in view of their seriousness,
novelty and weight as precedents. The issues are of transcendental and paramount importance not only
to the public but also to the Bench and the Bar, and should be resolved for the guidance of all.34
Thus, in the exercise of its sound discretion and given the liberal attitude it has shown in prior cases
climaxing in the more recent case of Chavez, the Court recognizes the legal standing of petitioners
Ranada and Agcaoili and intervenor Sagge.
- II -
The Court, however, dismisses G.R. No. 170338 for being 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
determination and resolution of actual cases and controversies.35 By actual cases, we mean existing
conflicts appropriate or ripe for judicial determination, not conjectural or anticipatory, for otherwise the
decision of the Court will amount to an advisory opinion. The power of judicial inquiry does not extend
to hypothetical questions because any attempt at abstraction could only lead to dialectics and barren
legal questions and to sterile conclusions unrelated to actualities.36 Neither will the Court determine a
moot question in a case in which no practical relief can be granted. A case becomes moot when its
purpose has become stale.37 It is unnecessary to indulge in academic discussion of a case presenting a
moot question as a judgment thereon cannot have any practical legal effect or, in the nature of things,
cannot be enforced.38
In G.R. No. 170338, petitioner Garcillano implores from the Court, as aforementioned, the issuance of an
injunctive writ to prohibit the respondent House Committees from playing the tape recordings and from
including the same in their committee report. He likewise prays that the said tapes be stricken off the
records of the House proceedings. But the Court notes 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

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on the "Hello Garci" inquiry were completed and submitted to the House in plenary by the respondent
committees.40 Having been overtaken by these events, the Garcillano petition has to be dismissed for
being moot and academic. After all, prohibition 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 cannot be allowed to
continue with the conduct of the questioned legislative inquiry without duly published rules of
procedure, in clear derogation of the constitutional requirement.
Section 21, Article VI of the 1987 Constitution explicitly provides that "[t]he Senate or the House of
Representatives, or any of its respective committees may conduct inquiries in aid of legislation in
accordance with its 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 notice whatsoever, not even a constructive one.43 What constitutes publication is set
forth in Article 2 of the Civil Code, which provides that "[l]aws shall take effect after 15 days following
the completion of their publication either in the Official Gazette, or in a newspaper of general circulation
in the Philippines."44
The respondents in G.R. No. 179275 admit in their pleadings and even on oral argument that the Senate
Rules of Procedure Governing Inquiries in Aid of Legislation 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 which the term of half of its members commenced on June 30, 2007, no effort was
undertaken 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 Committees likewise violated Section
21 of Article VI of the Constitution, requiring that the inquiry be in accordance with the "duly published
rules of procedure." We quote the OSG’s explanation:
The phrase "duly published rules of procedure" requires the Senate of every Congress to publish its rules
of procedure governing inquiries 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 one-half of the Senate’s
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, reinforces this ruling with the
following rationalization:
The present Senate under the 1987 Constitution is no longer a continuing legislative body. The present
Senate 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 Congress. The 1987 Constitution, like the 1935 Constitution, requires
a majority of Senators to "constitute a quorum to do business." Applying the same reasoning in Arnault
v. Nazareno, the Senate under the 1987 Constitution is not a continuing body 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 Court sees fit to issue a clarification. Certainly,
there is no debate that the Senate as an institution is "continuing," as it is not dissolved as an entity
with each national election or change in the composition of its members. However, in the conduct of its
day-to-day business the Senate of each Congress acts separately 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 Congress as if present for the first time.

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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 and even
legislative investigations, of the Senate of a particular Congress are considered terminated upon the
expiration of that Congress and it is merely optional 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
practicality of such a rule is readily apparent considering that the Senate of the 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 with respect to the conduct of its business, then pending matters will not be deemed terminated
with the expiration of one Congress but will, as a matter of course, continue into the next Congress with
the same status.
This dichotomy of the continuity of the Senate as an institution and of the opposite nature of the
conduct of its business is reflected in its Rules. The Rules of the Senate (i.e. the Senate’s 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 endorse the Rules to the appropriate committee for amendment
or revision.
The Rules may also be amended by means of a motion which should be presented at least one day
before its consideration, and the vote of the majority of the Senators present 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 and shall remain in force until they
are amended or repealed.
Section 136 of the Senate Rules quoted above takes into account the new composition of the Senate
after 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 simply state "(t)hese Rules shall take effect seven (7) days after publication in
two (2) newspapers of general circulation." The latter does not explicitly provide for the continued
effectivity of such rules until they are amended or repealed. 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 into 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 business.
The language of Section 21, Article VI of the Constitution requiring that the inquiry be conducted in
accordance with the duly published rules of procedure 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
clearly state that the same shall be effective in subsequent Congresses or until they are amended or
repealed to sufficiently put public on notice.
If it was the intention of the Senate for its present rules on legislative inquiries to be effective 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 non-observance of the constitutionally mandated publication by arguing that
the rules 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 Senate’s internet web page.49
The Court does not agree. The absence of any amendment to the rules cannot justify the Senate’s
defiance of the clear and unambiguous language of Section 21, Article VI of the Constitution. The organic
law instructs, 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 does 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 Carpio’s response to the same argument raised by the respondents is illuminating:
The publication of the Rules of Procedure in the website of the Senate, or in pamphlet form available at
the Senate, is not sufficient under the Tañada v. Tuvera ruling which requires publication either in the

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the Senate, is not sufficient under the Tañada v. Tuvera ruling which requires publication 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,"
precluding any other form of publication. Publication in accordance with Tañada is mandatory to comply
with the due process requirement because the Rules of Procedure put a person’s 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 provisions 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
the more incorrect. R.A. 8792 considers an electronic data message or an electronic document as the
functional equivalent of a written document only for evidentiary purposes.51 In other words, the law
merely recognizes the admissibility in evidence (for their being the original) of electronic data messages
and/or electronic documents.52 It does not make the internet a medium for publishing laws, rules and
regulations.
Given this discussion, the respondent Senate Committees, therefore, could not, in violation of the
Constitution, use its unpublished rules in the legislative inquiry subject of these consolidated cases. The
conduct of inquiries in aid of legislation by the Senate has to be deferred until it shall have 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 the publication of the Senate Rules of Procedure Governing Inquiries in
Aid of Legislation 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 infirmity of the inquiry sought to be
prohibited by the instant petitions. Insofar as the consolidated cases are concerned, the legislative
investigation subject thereof still could not be undertaken by the respondent Senate Committees,
because no published rules governed it, in clear contravention of the Constitution.
With the foregoing disquisition, the Court finds it unnecessary to discuss the other 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 writ of prohibition be issued enjoining the Senate of the Republic of the Philippines
and/or any of its committees from conducting any inquiry in aid of legislation centered on the "Hello
Garci" tapes.

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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. DAVID and ANGELITO A.
PELAYO, Petitioner,
vs.
HON. ANIANO A. DESIERTO as OMBUDSMAN, and SANDIGANBAYAN, THIRD DIVISION,
Respondents.
DEC I SI O N
PERALTA, J.:
This resolves the petition for certiorari under Rule 65 of the Rules of Court, praying that the
Ombudsman's disapproval of the Office of the Special Prosecutor's (OSP) Resolution 1 dated
September 18, 2000, recommending dismissal of the criminal cases filed against herein petitioners,
be reversed and set aside.
The antecedent facts are as follows.
On July 22, 1998, the Fact-Finding and Intelligence Bureau 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 defined and penalized under Article 220 of the Revised Penal Code and violation of
Section 3, paragraphs (a) and (e) of Republic Act (R.A.) No. 3019, as amended.
The complaint alleged that there were irregularities in the use by then Congressman 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 from his CDF; he signed vouchers and supporting
papers pertinent to the disbursement as Disbursing Officer; and he received, as claimant, eighteen
(18) checks amounting 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, thereafter, the Evaluation and Preliminary
Investigation Bureau (EPIB) issued a Resolution 2 dated May 29, 2000 recommending the filing
against herein petitioners of fourteen (14) counts each of Malversation of Public Funds and violation
of Section 3 (e) of R.A. No. 3019. Said Resolution was approved by the Ombudsman; hence,
twenty-eight (28) Informations docketed as Criminal Case Nos. 26087 to 26114 were filed against
herein petitioners before the Sandiganbayan.
Petitioner Lazatin and his co-petitioners then filed their respective Motions for
Reconsideration/Reinvestigation, which motions were granted by the Sandiganbayan (Third
Division). The Sandiganbayan also ordered the prosecution to re-evaluate the cases against
petitioners.
Subsequently, the OSP submitted to the Ombudsman its Resolution 3 dated September 18, 2000. It
recommended the dismissal of the cases against petitioners for lack or insufficiency of evidence.
The Ombudsman, however, ordered the Office of the Legal Affairs (OLA) to review the OSP
Resolution. In a Memorandum4 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 against
petitioners. On October 27, 2000, the Ombudsman adopted the OLA Memorandum, thereby
disapproving the OSP Resolution dated September 18, 2000 and ordering the aggressive
prosecution of the subject cases. The cases were then returned to the Sandiganbayan for
continuation of criminal proceedings.
Thus, petitioners filed the instant petition.
Petitioners allege that:
I.
THE OMBUDSMAN ACTED WITH GRAVE ABUSE OF DISCRETION OR ACTED WITHOUT OR IN
EXCESS OF HIS JURISDICTION.
II.
THE QUESTIONED RESOLUTION WAS BASED ON MISAPPREHENSION OF FACTS,
SPECULATIONS, SURMISES 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 Constitution, 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 granted the power to
prosecute. They point out that under the Constitution, the power to prosecute belongs to the OSP
(formerly the Tanodbayan), which was intended by the framers to be a separate and distinct entity

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(formerly the Tanodbayan), which was intended by the framers to be a separate and distinct entity
from the Office of the Ombudsman. Petitioners conclude that, as provided by the Constitution, the
OSP being a separate and distinct entity, the Ombudsman should have no power and authority over
the OSP. Thus, petitioners maintain that R.A. No. 6770 (The Ombudsman Act of 1989), which made
the OSP an organic 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 reimbursement for the advances he made from his personal
funds for expenses incurred to ensure the immediate implementation of projects that are badly
needed by the Pinatubo victims.
The Court finds the petition unmeritorious.
Petitioners' attack against the constitutionality of R.A. No. 6770 is stale. It has long been settled 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 constitutional 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 the Ombudsman.6
Therein, the Court held that giving prosecutorial powers to the Ombudsman is in accordance with
the Constitution as paragraph 8, Section 13, Article XI provides that the Ombudsman shall "exercise
such other functions or duties 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 indeed present,
the Commission [referring to the Constitutional Commission of 1986] did not hesitate to recommend
that the Legislature could, through statute, prescribe such other powers, functions, and duties to the
Ombudsman. x x x As finally approved by the Commission after several amendments, this is now
embodied in paragraph 8, Section 13, Article XI (Accountability of Public Officers) of the Constitution,
which provides:
Sec.13. The Office of the Ombudsman shall have the following powers, functions, and duties:
xx x x
Promulgate its rules and procedure and exercise such other functions or duties as may be provided
by law.
Expounding on this power of Congress to prescribe other powers, functions, and duties to the
Ombudsman, we quote Commissioners Colayco and Monsod during interpellation by Commissioner
Rodrigo:
xx x x
MR. RODRIGO:
Precisely, I am coming to that. The last of the enumerated functions of the Ombudsman is: "to
exercise such powers or perform such functions or duties as may be provided by law." So, the
legislature may vest him with powers taken away from the Tanodbayan, may it not?
MR. COLAYCO:
Yes.
MR. MONSOD:
Yes.
xx x x
MR. RODRIGO:
Madam President. Section 5 reads: "The Tanodbayan shall continue to function and exercise
its powers as provided 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 that 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 legislature later on might remove some powers from the Tanodbayan and transfer
these to the 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

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 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 powers 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 Commissioner Blas Ople):
xx x x
With respect to the argument that he is a toothless animal, we would like to say that we are
promoting the concept in its form at the present, 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
Commissioner 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. This is not foreclosed.
1awphi 1

So, this is a reversible disability, unlike that of a eunuch; 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 likewise upheld by the Court in Acop. It was explained, thus:
x x x the petitioners conclude that the inclusion of the Office of the Special Prosecutor as among the
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 the Ombudsman and for Other Purposes") is
unconstitutional and void.
The contention is not impressed with merit. x x x
xx x x
x x x Section 7 of Article XI expressly provides that the then existing Tanodbayan, to be henceforth
known as the Office of the Special Prosecutor, "shall continue to function and exercise its powers as
now or hereafter may be provided by law, except those conferred on the Office of the Ombudsman
created under this Constitution." The underscored phrase evidently refers to the Tanodbayan's
powers under P.D. No. 1630 or subsequent amendatory legislation. It follows then that Congress
may remove any of the Tanodbayan'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 mandate of paragraph
8, Section 13, Article XI of the Constitution, the Ombudsman may "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. 1630 and
transfer them to the Ombudsman; or grant the Office of the Special Prosecutor 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
Office of the Ombudsman v. Valera,10 the Court, basing its ratio decidendi on its ruling in Acop and
Camanag, declared that the OSP is "merely a component of the Office of the Ombudsman and may
only act under the supervision and control, and upon 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 The 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 foundation 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 that under the Constitution, Congress was not proscribed from legislating
the grant 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 constitutionality 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 Civil Code of the Philippines which
provides, thus:
ART. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the
legal 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

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country to follow the rule established in a decision of the Supreme Court thereof. 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 principle that once a question of law has been
examined and decided, it should be deemed settled and closed to further argument. 14 1avvphi 1

In Chinese Young Men's Christian Association of the Philippine Islands v. Remington Steel
Corporation,15 the Court expounded on the importance of the foregoing doctrine, stating that:
The doctrine of stare decisis is one of policy grounded on the necessity for securing certainty and
stability of judicial decisions, thus:
Time and again, the court has held that it is a very desirable and necessary judicial practice that
when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to
that principle and apply it to all future cases in which the facts are substantially the same. Stare
decisis et non quieta movere. Stand by the decisions and disturb not what is settled. Stare decisis
simply means that for the sake of certainty, a conclusion reached in one case should be
applied to those 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 any 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 by a competent court, the rule of stare decisis is a bar to any attempt to relitigate
the same issue.16
The doctrine has assumed such value in our judicial system that the Court has ruled that "[a]
bandonment thereof must be based only on strong and compelling reasons, otherwise, the
becoming virtue of predictability which 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 the great benefits derived
by our judicial system from the doctrine of stare decisis, can the courts be justified in setting aside
the same.
In this case, petitioners 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 successfully
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 supervision over the OSP, to disapprove or
overturn any resolution issued by the latter.
The second issue advanced by petitioners is that the Ombudsman's disapproval of the OSP
Resolution recommending dismissal of the cases is based on misapprehension of facts,
speculations, surmises and conjectures. The question is really whether the Ombudsman correctly
ruled that there was enough evidence to support a finding of probable cause. That issue, however,
pertains to a mere error of judgment. It must be stressed that certiorari is a remedy meant to correct
only errors of jurisdiction, not errors of judgment. This has been emphasized in First 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 - beyond 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 probative value thereof. It does not include an inquiry as to the
correctness of the evaluation of evidence. Any error committed in the evaluation of evidence
is merely an error of judgment that cannot be remedied by certiorari. An error of judgment 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 court 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
correctible only by the extraordinary writ of certiorari. Certiorari will not be issued to cure errors
of the trial court in its appreciation of the evidence of the parties, 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 quo.19
Evidently, the issue of whether the evidence indeed supports a finding of probable cause would
necessitate an examination and re-evaluation of the evidence upon which the Ombudsman based its
disapproval of the OSP Resolution. Hence, the Petition for Certiorari should not be given due
course.
Likewise noteworthy is the holding of the Court in Presidential Ad Hoc Fact-Finding Committee on
Behest Loans v. Desierto,20 imparting the value of the Ombudsman's independence, stating 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 of
his investigatory and prosecutory powers as long as his rulings are supported by substantial

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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 influence.21
Indeed, for the Court to overturn the Ombudsman's finding of probable cause, it is imperative for
petitioners to clearly prove that said public official acted with grave abuse of discretion. In
Presidential Commission on Good Government v. Desierto,22 the Court elaborated on what
constitutes such abuse, to wit:
Grave abuse of discretion implies a capricious and whimsical exercise of judgment tantamount to
lack of jurisdiction. The Ombudsman's exercise of power must have been done in an arbitrary or
despotic manner which must be so patent and gross 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 described
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 disapproved 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 Division; 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.

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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 MIJARES, PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 108,
PASAY CITY, METRO MANILA, 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 Court. 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,
Pasay City, which denied the appearance of the plaintiff Ferdinand A. Cruz, herein petitioner, as party
litigant, and the refusal of the public respondent, Judge Priscilla Mijares, to voluntarily inhibit herself
from trying the case. No writ of preliminary injunction was issued by this Court.

The antecedents:

On March 5, 2002, Ferdinand A. Cruz (petitioner) sought permission to enter his appearance for and on
his behalf, before the RTC, Branch 108, Pasay 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 Administrator before he could be allowed to appear as counsel for himself, a party-litigant.
Atty. Stanley Cabrera, counsel for Benjamin Mina, Jr., filed a Motion to Dismiss instead of a pre-trial
brief to which petitioner Cruz vehemently objected alleging 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 hearing 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. The 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 Judge
Mijares during the pre-trial. It asserts that the judge, in uttering an uncalled for remark, reflects a
negative frame of mind, which engenders the belief that justice will not be served.[5]

In an Order[6] dated April 19, 2002, Judge Mijares denied the motion for inhibition stating that throwing
tenuous allegations of partiality based on the said remark 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
reconsideration[7] of the said order.

On May 10, 2002, Judge Mijares denied the motion with finality.[8] In the same Order, 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 requirements or conditions under Rule 138-A of the Rules of Court, his appearance
was denied.

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

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different circumstances, but the respondent judge denied the same, still invoking Rule 138-A, in an
Order[10] dated July 31, 2002.

On August 16, 2002, the petitioner directly filed with this Court, the instant petition and assigns the
following 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 latter'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 litigant;
II.

the respondent court gravely erred and abused its discretion when it did not voluntarily inhibit despite
the advent of jurisprudence [sic] that such an inhibition is proper to preserve the people's faith and
confidence to the courts.

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 Court may issue; and (2) whether the respondent
court acted with grave abuse of discretion 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 herself from trying
the case.

This Court's jurisdiction to issue writs of certiorari, prohibition, mandamus and 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 taken as an absolute, unrestrained freedom to choose the court
where the application therefor will be directed.[11] A becoming regard of the judicial hierarchy most
certainly indicates that petitions for the issuance of extraordinary writs against the RTCs should be filed
with the Court of Appeals.[12] The hierarchy of courts is determinative of the appropriate forum for
petitions for the extraordinary writs; and only in exceptional cases and for compelling reasons, or if
warranted by the nature of the issues reviewed, may this Court take cognizance of petitions filed directly
before it.[13]

Considering, however, that this case involves the interpretation of Section 34, Rule 138 and Rule 138-A
of the Rules of Court, the Court takes cognizance of herein petition. Nonetheless, the petitioner is
cautioned not to continue his practice of filing directly before this Court petitions 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 judicial hierarchy as it necessarily delays more important concerns before us.

In resolving 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:

RULE 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-year prescribed law curriculum and is enrolled in a recognized law school's clinical
legal education program approved by the Supreme Court, may appear without compensation 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.

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signed by the supervising attorney for and in behalf of the legal clinic.
The respondent 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 attorney duly accredited by the
law school.

However, the petitioner insisted that the basis of his appearance was Section 34 of Rule 138, which
provides:
Sec. 34. By whom litigation is conducted. - In the court of a justice of the peace, a party may conduct his
litigation in person, with the aid of an agent or friend appointed 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 appearance 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 conceded 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 authorized member of the Bar.
The individual litigant may personally do everything in the course of proceedings from commencement
to the termination of the litigation.[14] Considering that a party personally conducting his litigation is
restricted to the same rules of evidence and procedure as those qualified to practice law,[15] petitioner,
not being a lawyer himself, runs the risk of falling into the snares and hazards of his own ignorance.
Therefore, Cruz as plaintiff, at his own instance, can personally conduct the litigation of Civil Case No.
01-0410. He would then be acting not as a counsel or lawyer, but as a party exercising his right to
represent himself.

The trial court must have been misled by the fact that the petitioner is a law student and must,
therefore, be subject to the conditions of the Law Student Practice Rule. It erred in applying Rule 138-A,
when the basis of the petitioner's claim is Section 34 of Rule 138. The former rule provides for
conditions when a law 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 when it released the guidelines for limited law
student practice. In fact, it was intended as an addendum to the instances when a non-lawyer may
appear in courts and 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 ruling was articulated in People v. Holgado,[18] where we declared that
"even the most intelligent or educated man may have no skill in the science of law, particularly in the
rules of procedure, and without counsel, he may be convicted not because 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 in a civil case, who insists that he can, without a lawyer's assistance, effectively
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 asserts that he has the competence to litigate the case
himself. Evidently, he is aware of the perils incident to this decision.

In addition, it was subsequently clarified in Bar Matter 730, that by virtue of Section 34, Rule 138, a law
student may appear as an agent or a friend of a party litigant, without need of the supervision of a

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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 his wish.

Additionally, however, petitioner contends that the respondent judge committed manifest bias and
partiality by ruling that there is no valid ground for her voluntary inhibition despite her alleged negative
demeanor during the pre-trial when she said: "Hay naku, masama `yung marunong pa sa Huwes. Ok?"
Petitioner avers that by denying his motion, the respondent judge already manifested conduct indicative
of arbitrariness and prejudice, causing petitioner's and his co-plaintiff'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 of Judicial Ethics, which we dismissed for lack of merit on
September 15, 2002. We now adopt the Court's findings of fact in the administrative case and rule that
there was no grave abuse of discretion on the part of Judge Mijares when she did not inhibit herself
from the trial of the case.

In a Motion for Inhibition, the movant must prove the ground for bias and prejudice by clear and
convincing evidence to disqualify a judge from participating in a particular trial,[20] as voluntary inhibition
is primarily a matter of conscience and addressed to the sound discretion of the judge. The decision on
whether she should inhibit herself must be based on her rational and logical assessment of the
circumstances prevailing 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 presumption 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 petitioner in Civil Case No. 01-0410 as a party litigant.

No pronouncement as to costs.

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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 action for certiorari and prohibition
with prayer for the issuance of a temporary restraining order, seeking to annul (i) the re-bidding of the
contract for the Upgrading of the San Fernando Airport Project, Phase I, held on May 8, 2007; (ii) the
Notice of Award1 dated May 23, 2007 to Satrap Construction Company, Inc. (SCCI); and (iii) Notice to
Proceed2 dated May 29, 2007 also to SCCI. FUCC also seeks to permanently enjoin the Special Bids and
Awards Committee (SBAC) and Poro Point Management Corporation (PPMC) from implementing the
Contract3 in favor of SCCI.
The factual antecedents are as follows:
On January 26, 2007, PPMC approved the 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.
FUCC and two (2) other contractors - C.M. Pancho Construction, Inc. (C.M. Pancho) and EEI-New Kanlaon
Construction, Inc. Joint Venture (EEI-New Kanlaon JV) responded to the invitation and were pre-qualified
to bid for the project. However, upon evaluation, none of the pre-qualified bidders was chosen. C.M.
Pancho was disqualified 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 submit a special license to bid as
joint venture. FUCC’s technical proposal, on the other hand, obtained a failing mark because it failed to
submit the automated weather 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 protest5 with the PPMC. On March 26, 2007, Atty. Felix S. Racadio, PPMC Head,
resolved FUCC’s protest, viz.:
In sum, based on the issues raised and [the] arguments presented 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 2007 (denial of FUCC’s Motion for Reconsideration).
In addition to the "NO REVERSIBLE 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
proof lies with the FUCC. On this score, FUCC failed to even just scratch the surface 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 leave 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 Metro Bank Cashier’s Check No. 0600018513, dated
March 19, 2007, in the amount of Four Million Seven Hundred Twenty-One Thousand Pesos
(P4,721,000.00), Philippine Currency, which is equivalent to one [percent] (%) of the ABC being NON-
REFUNDABLE (Sec. 55.1, IRR-A, RA 1984), the same is hereby ordered FORFEITED in favor of PPMC.
SO ORDERED.6
SBAC then scheduled a re-bidding and issued new invitations to bid for the project. To enjoin the re-
bidding set on May 8, 2007, FUCC filed a petition for injunction with prayer for the issuance of a
preliminary injunction or temporary restraining order (TRO) with the Regional Trial Court (RTC) of La
Union, 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
prohibit the bidding or award of a government infrastructure project. SBAC thus proceeded with the re-
bidding of the project on May 8, 2007 and awarded the project to SCCI as the lowest qualified bidder.8

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bidding of the project on May 8, 2007 and awarded the project to SCCI as the lowest 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 with the RTC to enjoin the implementation of the project. The Office of
the Government Corporate Counsel (OGCC) moved to dismiss the petition for lack of jurisdiction.
Pending resolution of OGCC’s 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 dismissal of the amended
petition, in effect the dismissal of the whole action, without 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, or 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 implementation of
the project, asserting that SCCI is not qualified to undertake the project and the award clearly poses a
real threat to the public welfare and safety. In its November 12, 2007 Resolution, this Court denied
FUCC’s application for the 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 Restraining Order (TRO) be issued enjoining the
implementation of the contract for the 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 the 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 Fernando 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 the
Upgrading of the San Fernando Airport, Phase I entered into, by and between respondent PPMC
and respondent [SCCI] on 29 May 2007, and the Notice to Proceed dated 29 May 2007; and (4)
directing respondent SBAC and/or respondent PPMC and/or respondent Atty. Recadio to
reconsider the "Failed" rating of the bid of FUCC, open the Financial Proposal Envelope submitted
by FUCC during the original bidding, declare FUCC as the winning bidder, and forthwith award the
contract to FUCC, 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 disqualifying its bid, in denying its
protest, in conducting a re-bidding and in awarding 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 petition.
Republic Act (RA) No. 9184, or the Government Procurement Reform Act, outlines the procedure to
assail decisions of the SBAC in this wise:
SEC. 55. Protests 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. Decisions 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 which 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 decisions 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
treated 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 Article shall have been completed. Cases that are filed in violation of the process
specified in this Article shall be dismissed for lack of jurisdiction. The regional trial court shall have
jurisdiction over final decisions of the head of the procuring 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 the 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 affirmed the

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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 affirmed the
SBAC decision. Instead of filing a petition for certiorari, as provided in Section 58, FUCC filed a petition
for injunction with prayer for the issuance of a temporary restraining order and/or preliminary
injunction with the RTC. FUCC, however, later moved for its dismissal theorizing that the RTC had no
jurisdiction over petitions for injunction. Thereafter, it filed this petition for certiorari with this Court.
Section 4, Rule 65 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 decision on March 27, 2007.14 However, it filed this petition assailing
the said decision only on July 30, 2007. It is, therefore, too late in the day for FUCC, via this 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 certiorari directly with
this Court. Section 58 is clear that petitions for the issuance 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
jurisdiction of the RTC over petitions for certiorari is concurrent with this Court. However, such
concurrence does not allow unrestricted freedom of choice of the court forum. A direct invocation of
the Supreme Court’s original jurisdiction to issue this writ should be allowed only when there are special
and important reasons, 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
should be allowed. Thus, we reaffirm the judicial policy that this Court will not entertain a direct
invocation of its jurisdiction unless the redress desired cannot be obtained in the appropriate lower
courts, and exceptional and compelling circumstances justify the resort to the extraordinary remedy of a
writ of certiorari.
Similarly, the RTC is the proper venue to hear FUCC’s 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
subdivisions, officials or any person or entity to restrain, prohibit or compel the bidding or awarding of a
contract or project of the national government. The proscription, however, covers only temporary
restraining orders or writs but not decisions on the merits granting permanent injunction. Therefore,
while courts below are prohibited by RA No. 8795 from issuing TROs or preliminary restraining orders
pending the adjudication of the case, said statute, however, does not explicitly proscribe the issuance of
a permanent injunction granted by a court of law arising 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 issuance of temporary restraining orders and writs of
preliminary injunction and preliminary mandatory injunction. [It] cannot, under pain of violating the
Constitution, 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
invoke the original jurisdiction of this Court over the issuance of a writ of certiorari and permanent
injunction.
In any event, the invitation to bid contains a reservation for PPMC to reject any bid. It has been held that
where the right to reject is so reserved, the lowest bid, or any bid for that matter, may be rejected on a
mere technicality.19 The discretion to accept or reject bid and award contracts is vested in the
government agencies entrusted with that function. This discretion 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 within its prerogatives unless it is apparent that it is used as a shield to a fraudulent award;20 or
an unfairness or injustice is shown;21 or when in the exercise of its authority, it gravely abuses or
exceeds its jurisdiction. Thus, where PPMC 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, unless fraudulent
acts, injustice, unfairness or grave abuse of discretion is shown.
FUCC alleges that SBAC and PPMC, along with the SCCI and five (5) other bidders, colluded to rig the
results of the re-bidding so that SCCI would emerge as the so-called lowest bidder. The record, however,
is bereft of any proof to substantiate the allegation. Neither is there any evidence offered to establish
unfairness, injustice, caprice or arbitrariness on the part of the SBAC or the PPMC in awarding the
contract to SCCI, the lowest bidder. The presumption of regularity of the bidding must thus be upheld.

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contract to SCCI, the lowest bidder. The presumption of regularity of the bidding must thus be upheld.
As we explained in JG Summit Holdings, Inc. v. Court of Appeals: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 to the authorities on this matter is of such wide
latitude that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a
fraudulent award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x The exercise of this discretion is a
policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation.
This task can best be discharged by the Government agencies concerned, not by the Courts. The role of
the Courts is to ascertain whether a branch or instrumentality of the Government has transgressed its
constitutional boundaries. But the Courts will not interfere with executive or legislative discretion
exercised within those boundaries. Otherwise, it strays into the realm of policy decision-making.
It is only upon a clear showing 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 capricious, arbitrary and
whimsical exercise of power (Filinvest Credit Corp. v. Intermediate 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 all in
contemplation of law, where the power is exercised in an arbitrary and despotic manner by reason of
passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et al[.], L-40867, 26 July 1988, 163 SCRA
489).
Accordingly, there being 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 DISMISSED. The assailed Decision of the PPMC is AFFIRMED.
SO ORDERED.

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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 MANUFACTURING, INC.,
NOCON, J.:
Brought to fore in this petition for certiorari and 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 Batas Pambansa Bilang 129,
otherwise known as the "Judiciary Reorganization Act of 1980," Executive Order No. 226, also known as
the Omnibus Investments Code of 1987 and Supreme Court Circular No. 1-91 is, thus, called for.
Briefly, this question 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 product 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 review with respondent Court of
Appeals pursuant to Circular 1-91.
Acting on the petition, 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, 1993, respondent court
temporarily restrained the BOI from implementing its decision. This temporary restraining order lapsed
by its own terms on March 9, 1993, twenty (20) days after its issuance, without respondent court issuing
any preliminary injunction.
On February 24, 1993, petitioner filed a "Motion to Dismiss Petition 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 vested 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 dismiss, the dispositive portion of
which reads as follows:
WHEREFORE, private respondent's motion to dismiss the petition is hereby DENIED, for lack of merit.
Private respondent is hereby given an inextendible period of ten (10) days from receipt hereof within
which to file its comment to the petition. 1
Upon receipt of a copy 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 nature and immediately filed a
petition for certiorari and prohibition before this Court.
Petitioner posits the view that respondent court acted without or in excess of its jurisdiction in issuing
the questioned resolution of May 25, 1993, for the following reasons:
I. Respondent court has no jurisdiction to entertain Mariwasa's appeal from the BOI's decision in BOI
Case No. 92-005, which has become final.
II. The appellate jurisdiction conferred by statute upon this Honorable Court cannot be amended or
superseded by Circular No. 1-91. 2
Petitioner then concludes that:
III. Mariwasa has lost it right to appeal . . . in this case. 3
Petitioner argues that the Judiciary Reorganization Act of 1980 or Batas Pambansa Bilang 129 and
Circular 1-91, "Prescribing the Rules Governing Appeals to the Court of Appeals from a Final Order or
Decision of the Court of Tax Appeals and Quasi-Judicial Agencies" cannot be the basis of Mariwasa's
appeal to respondent court 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 shall be filed directly
with this Court, to wit:
Judicial relief. — All orders or decisions 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; Provided, that all appeals shall be filed directly with the Supreme Court within thirty (30) days
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decision; Provided, that all appeals shall be filed directly with the Supreme Court within thirty (30) days
from receipt of the order or decision.
On the other hand, Mariwasa maintains that whatever "obvious inconsistency" or "irreconcilable
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 quoted below:
1. Scope. — These rules shall apply to appeals from final orders or decisions of the Court of Tax Appeals.
They 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. Among these agencies
are the Securities and Exchange Commission, Land Registration Authority, Social Security Commission,
Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National Telecommunications Commission, Secretary of
Agrarian Reform and Special Agrarian Courts under RA 6657, Government Service Insurance System,
Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission and
Philippine Atomic Energy Commission.
2. Cases not covered. — These rules shall not apply to decisions and interlocutory orders of the National
Labor Relations Commission or the Secretary of Labor and Employment under the Labor Code of the
Philippines, the Central Board of Assessment Appeals, and other quasi-judicial agencies from which no
appeal to the courts is prescribed or allowed by statute.
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-judicial agency shall be taken to the Court of Appeals
within the period and in the manner herein provided, whether the appeal involves questions of fact or
of law or mixed questions of fact and law. From final judgments or decisions of the Court of Appeals, the
aggrieved party may appeal by certiorari to the Supreme Court 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 Appeals, to wit:
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, awards of
Regional Trial Courts and
quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this
Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of
Section 17 of the Judiciary Act of 1948.
The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its
original and appellate jurisdiction, including the power to grant and conduct new trials or further
proceedings.
These provisions shall not apply to decisions and interlocutory orders issued under the Labor Code of
the Philippines and by the Central Board of Assessment Appeals.
Clearly evident in the aforequoted provision of B.P. 129 is the laudable 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 laudable is the twin objective of B.P. 129 of unclogging the docket of this Court to enable 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 transient 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 that not only was the Court of Appeals reorganized,
but its jurisdiction and powers were also broadened by Section 9 thereof. Explaining the changes, this
Court said:
. . . Its original jurisdiction to issue writs of mandamus, prohibition, certiorari 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 the writ of quo warranto, and also (2) empowering it to issue all said extraordinary writs

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so as to include the writ of quo warranto, and also (2) empowering it to issue all said extraordinary writs
"whether or not in aid of its appellate jurisdiction." Its appellate jurisdiction was also extended to cover
not only final judgments of Regional Trial Courts, but also "all final judgments, decisions, resolutions,
orders or awards of . . . quasi-judicial agencies, instrumentalities, boards or commissions, except those
falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
provisions of this Act, and of 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 this connection that
the text of the law is broad and comprehensive, and the explicitly stated exceptions have no reference
whatever to the Court of Tax Appeals. Indeed, the intention to expand the original and appellate
jurisdiction of the Court of Appeals over quasi-judicial agencies, instrumentalities, boards, or
commissions, is further stressed by the last paragraph of Section 9 which excludes from its provisions,
only the "decisions and interlocutory orders issued under the 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 obvious lack of deliberation in the drafting of our laws could
perhaps explain the deviation of some of our laws from the goal of uniform procedure which B.P. 129
sought to promote.
In exempli gratia, Executive Order No. 226 or the Omnibus Investments Code of 1987 provides that all
appeals shall be filed directly with the Supreme Court within thirty (30) days from receipt of the order or
decision.
Noteworthy is the fact that presently, the Supreme Court entertains ordinary appeals only from
decisions of the Regional Trial Courts in criminal cases where the penalty imposed is reclusion perpetua
or higher. Judgments of regional trial courts may be appealed to the Supreme Court only by petition for
review on certiorari 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, as 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 appeal
provided in E.O. 226 within thirty (30) days from receipt of the order or decision is clearly not in
consonance with the present procedure before this Court. Only decisions, orders or rulings of a
Constitutional Commission (Civil Service Commission, Commission on Elections or Commission on Audit),
may be brought to the Supreme Court on original petitions for certiorari under Rule 65 by the aggrieved
party within thirty (30) days form receipt of a copy thereof. 7
Under this contextual backdrop, this Court, pursuant to its Constitutional power under Section 5(5),
Article VIII of the 1987 Constitution to promulgate rules concerning pleading, practice and procedure in
all courts, and by way of implementation of 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 quasi-
judicial agencies to eliminate unnecessary contradictions and confusing rules 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 according 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 to impose a
sanction on a judge who violated Circular No. 7 of this Court dated
September 23, 1974, as amended by Circular No. 3 dated April 24, 1975 and Circular No. 20 dated
October 4, 1979, requiring raffling of cases, this Court quoted the ratiocination of the Investigating
Judge, brushing aside the contention of respondent 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 it 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 customs 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 substantive right which, under the Constitution cannot be modified, diminished or increased by
this Court in the exercise of its rule-making powers is not entirely defensible as it seems. Respondent
correctly argued that Article 82 of E.O. 226 grants the right of appeal from decisions or final orders of
the BOI and in granting such right, it also provided where and in what manner such appeal can be
brought. These latter portions simply deal with procedural aspects which this Court has the power to
regulate by virtue of its constitutional rule-making powers.

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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).
Substantive law is that part of the law which creates, defines and regulates rights, or which regulates
rights and duties which give rise to a cause of action, as oppossed to adjective or remedial law, which
prescribes the method of enforcing rights or obtains a redress for their invasion. 12
Indeed, the question of where and in what manner appeals from decisions of the BOI should be brought
pertains 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. Circular 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., fifteen (15)
days from notice. It did not make an incursion into the substantive right to appeal.
The fact that BOI is not expressly included in the list of quasi-judicial 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 decision 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 enumeration is preceded by the words "(A)mong these agencies are . . . ," strongly
implying that there are other quasi-judicial agencies which are covered by the Circular but which have
not been expressly listed therein. More importantly, BOI does not fall within the purview of the
exclusions listed in Section 2 of the circular. Only the following final decisions and interlocutory orders
are expressly excluded from the circular, namely, those of: (1) the National Labor Relations Commission;
(2) the Secretary of Labor and Employment; (3) the Central Board of Assessment Appeals and (4) other
quasi-judicial agencies from which no appeal to the courts is prescribed or allowed by statute. Since in
DBP v. CA 13 we upheld the 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 law.
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 decisions of the BOI are concerned. Appeals from
decisions of the BOI, which by statute was previously allowed to be filed directly with the Supreme
Court, should now be brought to the Court of Appeals.
WHEREFORE, in view of the foregoing reasons, the instant petition for certiorari and prohibition with
application for temporary restraining order and preliminary injunction is hereby DISMISSED for lack of
merit. The Temporary Restraining Order issued on July 19, 1993 is hereby LIFTED.

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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, RESPONDENT.

REYES, R.T., J.:

CAN the Civil Service Commission (CSC) properly assume jurisdiction 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 the Court of Appeals (CA)
affirming the CSC's exercise of administrative jurisdiction over petitioner.
The Facts
The following facts are uncontroverted:

On November 10, 1991, a Professional Board Examination for Teachers (PBET)[2] was held in Davao
City. A certain Evelyn Junio-Decir[3] applied for and took the examination at Room 16, Kapitan Tomas
Monteverde Elementary School. She passed with a rating of 74.27%.[4]

At the time of the PBET examinations, petitioner Sarah P. Ampong (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, 1993, Ampong transferred to the Regional Trial Court (RTC) in Alabel,
Sarangani Province, where she was appointed as Court Interpreter III.

On July 5, 1994, a woman representing herself as Evelyn Decir went to the Civil Service Regional Office
(CSRO) No. XI, Davao City, to claim a copy of her PBET Certificate of Eligibility. 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
eligibility was different from the one who took the examinations. It was petitioner Ampong who took
and passed the examinations under the name Evelyn Decir.

The CSRO conducted a preliminary investigation and determined the existence of a prima facie case
against Decir and Ampong for Dishonesty, Grave Misconduct and Conduct Prejudicial to the Best
Interest of the Service. On August 23, 1994, they were formally charged and required to file answers
under oath. The formal charge reads:
That sometime before the conduct of the November 10, 1991 Professional Board Examination for
Teachers (PBET), a certain Ms. Evelyn B. Junio (now Decir) took the said 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 CSC Region XI Office to get her Guro Certificate; That upon verification, it was
found 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 Junio-
Decir marked herein as annex "B," "B-1," respectively. 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.
Sarah Navarra, wife of her husband's first cousin, who took the said examination in 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 in behalf of another undermines the sanctity of the CS examinations; All these
contrary to existing civil service laws and regulations. (Emphasis supplied)
In her 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 wrong picture on the PSP and that
her signatures were different because she was still signing her maiden name at the time of the
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her signatures were different because she was still signing her maiden name at the time of the
examination. In her Answer, Decir contended that:
2. The same accusation is denied, the truth being:
a. When I took the Professional Board Examination 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 to the marked difference in my signature both appearing in the aforesaid Seat
Plan 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 special order (s.o.), appointment
and among others, purposely to take said communications. However, immediately after
taking the PBET Examination in 1991, I started using the full name of Evelyn Junio-Decir.[6]
Even before filing an Answer, petitioner Ampong voluntarily appeared at the CSRO on February 2, 1995
and admitted to the wrongdoing. When reminded that she may avail herself of the services of counsel,
petitioner voluntarily waived said right.

On March 13, 1995, petitioner gave another admission in the following tenor:
Q: 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?
A: I came here because I want to admit personally. So that I will not be coming here anymore. I
will submit my case for Resolution.

Q: So, you intend to waive your right for the formal hearing and you also admit orally on the guilt
of the charge on the Formal Charge dated August 24, 1994?
A: Yes, Ma'am.

Q: What else do you want to tell the Commission?

A: x x x Inasmuch as I am already remorseful, I am repenting of the wrong that I have done. I am
hoping that the Commission 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 to the Commission
without the assistance of the counsel or waiver of your right to 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 Education, Culture and
Sports, as Teacher in-charge of San Miguel Primary School, Malungon 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 behalf of his wife to which I disagreed but he earnestly begged so
that I was convinced to agree because I pity his wife considering that she is an immediate relative,
and there was no monetary consideration involved in this neither a compensatory 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 ground
for disciplinary action and punishable by dismissal;
5. That I should not have conformed to this anomalous transaction considering that I was born in a
Christian 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

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 Church Board, had been a religious leader for so many years, and had been the organizer of the
Music Festival of the Association of Evangelical Churches of Malungon, 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 petitioner Ampong and Decir guilty of dishonesty, dismissing them
from the service. The dispositive part of the CSC resolution states:
WHEREFORE, the Commission hereby finds Evelyn J. Decir and Sarah P. Navarra guilty of
Dishonesty. Accordingly, they are meted the penalty of dismissal with all its accessory penalties. The
PBET rating of Decir is revoked.[9]
Petitioner moved for reconsideration, raising for the first time the issue of jurisdiction.[10] She argued
that the exclusive authority to discipline employees of the judiciary lies with the Supreme Court; that
the CSC acted with abuse of discretion when it continued to exercise jurisdiction 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 lost jurisdiction over her. She was appointed as Interpreter III of the RTC, Branch
38, Alabel, Sarangani Province on August 3, 1993.

The CSC denied the motion for reconsideration.[11] According to the Commission, to allow petitioner to
evade administrative liability would be a mockery of the country's administrative disciplinary system. It
will open the floodgates for others to escape prosecution by the mere expedient of joining another
branch of government. In upholding its jurisdiction over petitioner, the CSC differentiated between
administrative supervision exercised by the Supreme Court and administrative jurisdiction granted to
the Commission over all civil service employees:
Moreover, it must be pointed out 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 Administrative Code of 1987 (Executive Order No. 292) which provides as follows:
"(11) Hear and decide administrative cases instituted by or through it directly or on appeal, including
contested appointment, and review decisions and actions of its offices 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 isolate them from the operations of the Civil Service Law. Appointments of all officials and
employees in the judiciary is governed by the Civil Service Law (Section 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 the CSC that has disciplinary jurisdiction over her.

In a Decision dated November 30, 2004,[13] the CA denied the petition for lack of 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 opined that while lack of jurisdiction may be assailed at any stage, a party's active
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 of the judiciary may be under the jurisdiction of two different
bodies. As a public school teacher or a court interpreter, petitioner was part of the civil service, subject
to its rules and regulations. When she committed acts in violation of the Civil Service Law, the CSC was
clothed with administrative jurisdiction over her.
Issue

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clothed with administrative jurisdiction over her.
Issue

Petitioner, through this petition, assigns the lone error that:

The Honorable Court of Appeals-First Division decided a question of substance in a way not in accord
with law and jurisprudence, gravely erred in facts and in law, and has sanctioned such departure and
grave error because it ignored or was not aware of Garcia v. De la Peña, 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 authority to discipline employees of the judiciary lies with the Supreme Court, in issuing
the questioned decision and resolution; which grave error warrant reversal of the questioned decision
and resolution.[14]
Put simply, the issue boils down to whether the CSC has administrative jurisdiction over an employee of
the Judiciary for acts committed while said employee was still with the Executive or Education
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 administrative jurisdiction over the civil service. As defined under the
Constitution and the Administrative Code, the civil service embraces every branch, agency, subdivision,
and instrumentality of the government, and government-owned or controlled corporations.[15] Pursuant
to its administrative authority, the CSC is granted the power to "control, supervise, and coordinate the
Civil Service examinations."[16] This authority grants to the CSC the right to take cognizance of any
irregularity or anomaly connected with the examinations.[17]

However, the Constitution provides that the Supreme Court is given exclusive administrative
supervision over all courts and judicial personnel.[18] By virtue of this power, it is only the Supreme
Court that can oversee the judges' and court personnel's compliance with 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 intrude into this power, without running afoul of the doctrine of
separation of powers.[19] Thus, this Court ruled that the Ombudsman cannot justify its investigation 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 the judiciary.[20]

In Civil Service Commission v. Sta. Ana,[21] this Court held that impersonating an examinee of a civil
service examination is an act of dishonesty. But because the offender involved a judicial employee
under the administrative supervision of the Supreme Court, the CSC filed the necessary charges before
the Office of the Court Administrator (OCA), a procedure which this Court validated.

A similar fate befell judicial personnel in Bartolata v. Julaton,[22] involving judicial employees who also
impersonated civil service examinees. As in Sta. Ana, the CSC likewise filed the necessary charges
before the OCA because respondents were judicial employees. Finding respondents guilty of dishonesty
and meting the penalty of dismissal, this Court held that "respondents' machinations reflect 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 in that petitioner committed the offense before
her appointment to the judicial branch. At the time of commission, petitioner was a public school
teacher under the administrative supervision of the DECS and, in taking the civil service examinations,
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 cheating 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 the 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 commission is not material to determining which court has jurisdiction. It stands
to reason that administrative jurisdiction over petitioner belongs to the Supreme Court, the action
having been instituted by the CSC at the time when petitioner 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 principle of estoppel. The
previous actions of petitioner have estopped her from attacking the jurisdiction of the CSC. A party who
has affirmed and invoked the jurisdiction of a court or tribunal exercising quasi-judicial functions to
secure an affirmative relief may not afterwards deny that same jurisdiction to escape a penalty.[25] As
this Court declared in Aquino v. Court of Appeals:[26]
In the interest of sound administration of justice, such practice cannot be tolerated. If we are to sanction
this argument, then all the proceedings had before the lower court and the Court of Appeals while valid
in all other respects would simply become useless.[27]
Under the principle of estoppel, a party may not be permitted to 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 CSC, while recognizing at the same time that original disciplinary jurisdiction over public school
teachers belongs to the appropriate committee created for the purpose 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
jurisdiction.

Petitioner was given ample opportunity to present her side and adduce evidence in her defense before
the CSC. She filed with it her answer to the charges leveled 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 accorded 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 she 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 dismissal.

Now, she assails said confession, arguing that it was given without aid of counsel. In police custodial
investigations, the assistance of counsel is necessary in order for an extra-judicial confession to be made
admissible in evidence against the accused in a criminal complaint. If assistance was waived, the waiver
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 inquiry may or may not be assisted by counsel. Moreover, the administrative
body is 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 intimidation. 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/spurious 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, collusion, impersonation, or any other anomalous
act which amounts to any violation of the Civil Service examination."[34] Petitioner impersonated Decir
in the PBET exam, to ensure that the latter would obtain a passing mark. By intentionally practicing a
deception to secure a passing mark, their acts undeniably involve dishonesty.[35]

This Court has defined dishonesty as the "(d)isposition to lie, cheat, deceive, or defraud;
untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack of fairness and
straightforwardness; disposition to defraud, deceive or betray."[36] Petitioner's dishonest act as a civil
servant renders her unfit to be a judicial employee. Indeed, We take note that petitioner should not
have been appointed as a judicial employee had this Court been made aware of the cheating that she
committed in the civil service examinations. 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 behavior 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, as a true temple of justice,
is mirrored in the conduct, official or otherwise, of 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
dishonesty:
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 slightest irregularity in the conduct of, said officers and employees, if so
warranted. 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 final point, we take this opportunity to emphasize that no quibbling, much less hesitation or
circumvention, on the part of any employee to follow and conform to the rules and regulations
enunciated by this Court and the Commission on Civil Service, should be tolerated. The Court, therefore,
will not hesitate to rid its ranks 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
kawani.

WHEREFORE, the petition is DENIED for lack of merit.

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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 APPEALS, INCREASING
THE NUMBER OF COURT OF APPEALS JUSTICES FROM FIFTY-ONE (51) TO SIXTY-NINE (69), AMENDING FOR THE
PURPOSE BATAS PAMBANSA BILANG 129, AS AMENDED OTHERWISE KNOWN AS THE JUDICIARY
REORGANIZATION 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. Sec. 3, Chapter 1 of Batas Pambansa Blg. 129, as amended, is hereby further amended to read as
follows:

"Sec. 3. Organization. - There is hereby created a Court of Appeals which shall consist of a Presiding
Justice and sixty-eight (68) Associate Justices who 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 is 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 original
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 Pambansa 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 powers, 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 administrative, ceremonial or other non-adjudicatory functions."

Sec. 3. Sec. 10 of Batas 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 permanent stations as follows:
the first seventeen (17) divisions shall be stationed in the City of Manila for cases coming from the First to
the Fifth Judicial Regions; the Eighteenth, Nineteenth, and Twentieth Divisions shall be in Cebu City for
cases coming from the Sixth, Seventh and Eighth Judicial Regions; the Twenty-first, Twenty-second and
Twenty-third Divisions shall be in Cagayan de Oro City 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
completed 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 shall be included in the General
Appropriations Act of the year following its enactment into law and thereafter.

Sec. 5. Upon the effectivity of this Act, all pending cases, except those which have been submitted for
resolution, shall be referred 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 assignment, 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 provided in the Constitution, or alter the seniority in said Court in
accordance with 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 prosecution, 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, and a member of the public at large.

The Committee shall undertake a serious study 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 Supreme Court shall submit the findings and recommendations of this Committee to Congress one (1) year
after the effectivity of this Act.

Sec. 8. Separability Clause. - 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 force and effect.

Sec. 9. Repealing Clause. - All laws, presidential decrees, letters of instruction, executive orders, rules
and regulations, or any part thereof inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

Sec. 10. Effectivity. - This Act shall take effect after fifteen (15) days following its publication in two (2)
newspapers of general circulation.

Approved: 30 December 1996

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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, Petitioner,
vs.
PCI LEASING AND FINANCE, INCORPORATED, Respondent.
DE C I S I O N
CHICO-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 Decision1 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 Capacity as
Presiding Judge of Branch 256 of the Regional Trial Court of Muntinlupa City and CGP Transportation
and Services Corporation." In the assailed decision, 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 180241 of the Register of Deeds for Makati
City (CGP Transportation & Services Corporation 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.
This case stemmed from the extra-judicial foreclosure proceedings instituted by herein 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:
Petitioner CGP obtained two loans from respondent PCI, the collective principal sum 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
extant on the face of the Promissory Notes covering the two loans aforementioned. Accordingly, the
latter filed a petition for extra-judicial foreclosure of the real properties subject of the Real Estate
Mortgage and the Amendment of Real Estate Mortgage, pursuant to Act No. 3135,8 as amended.
During the public auction held thereafter, respondent PCI was the highest bidder of the subject real
properties. Consequently, the corresponding Certificates of Sale were issued in the name of respondent
PCI.
On 19 November 1997, the above-mentioned Certificates of Sale were registered with the Registry of
Deeds of Makati City.
Petitioner CGP, however, failed to redeem the real properties during the redemption period; thus,
respondent PCI insisted that actual possession thereof be turned over to it. Expectedly, petitioner CGP
balked at the idea and refused the demand. On 12 April 1999, respondent PCI9 filed before the Regional
Trial Court of Muntinlupa City, Branch 256, and docketed as LRC Case No. 99-020, a petition for an ex-
parte issuance of a Writ of Possession. Petitioner CGP opposed the subject petition.
On 15 November 2000, the RTC issued an Order ruling against oppositor (herein petitioner) CGP’s
stance. The Order, in part, reads:
The petitioner is correct, the law expressly 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 that 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-parte reception of evidence is scheduled on December 1, 2000, at 2:00 o’clock 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 same parties – particularly Civil Case No. 99-234, respecting a complaint for the annulment
of the foreclosure proceedings earlier mentioned. It argued that notwithstanding the fact that the
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of the foreclosure proceedings earlier mentioned. It argued that notwithstanding the fact that the
complaint for annulment of foreclosure proceedings had already been dismissed by the trial court, such
order had not yet become final and executory 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 oppositor to be meritorious and considering further that there
are several motions to be resolved yet by the court, the Motion for Reconsideration is GRANTED, the
order of this court dated October 20, 2000 is set aside and the ex-parte proceedings is hereby nullified
and set aside. The Preliminary Injunction previously issued is reinstated.11
Consequently, it was respondent PCI’s turn to file a Motion for Reconsideration.
In an Order dated 30 August 2001, the RTC stood pat on its 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 resolves the Motion for Reconsideration filed by petitioner on the order of this court 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 motion of petitioner insofar as the reinstatement of preliminary injunction
earlier issued by this court and submission for resolution of motions are concerned, as they all refer to
Civil Case No. 99-234. This Court recognizes the snafu brought 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 opposition of the oppositor, including
it annexes, is not inclined to grant the ex-parte proceedings as asserted by the petitioner. This court
reviewed the grounds 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 grounds 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 filed by oppositor in Civil Case No. 99-234 also before this court.
It is the considered view of this court that the verified opposition on record joined issues that 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 issued 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 status quo
between the parties until all the issues joined therein are heard and disposed. 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 indeed pending incidents that needed to be resolved in Civil Case No. 99-234.
Precisely, 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 Case 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 inadvertence 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 complaint on the merits automatically
dissolves the injunction issued therein even if the decision or order of dismissal is on appeal. The
dismissal of this court 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 court believes that considering that
the dissolution of the injunction was the consequence of the order of dismissal of the complaint in Civil
Case No. 99-234, which 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 this case until the said appeal is
disposed.12
Aggrieved, respondent PCI filed before this Court, a Petition for Certiorari under Rule 65 of the Revised
Rules of Court, premised on the following grounds:
1. THE PUBLIC RESPONDENT ACTED WITH GRAVE 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 PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION, WHEN IT REINSTATED IN THE CASE A QUO THE PRELIMINARY INJUNCTION

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EXCESS OF JURISDICTION, WHEN IT REINSTATED IN THE CASE A QUO THE PRELIMINARY INJUNCTION
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 WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION, WHEN 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 Court of Appeals by this Court for
appropriate action in a Resolution,14 dated 3 December 2001, pursuant to Section 6, Rule 56 of the 1997
Revised Rules of Civil Procedure, 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 promulgated on 26 March 2004, the Court of Appeals granted herein respondent PCI’s
petition and set aside the RTC Order dated 30 August 2001. The dispositive portion reads:
WHEREFORE, the instant petition is hereby GRANTED. The orders dated March 27, 2001 and August 28
(sic), 2001 of the Regional Trial Court, Branch 256, Muntinlupa 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 dispatch.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 CGP – one that is entirely separate from the case
earlier filed. Moreover, "[w]ith the dismissal of the main case, (an) injunction (issued therein) is
automatically lifted and the dissolution thereof is not appealable." The Court of Appeals then clarified
that though the preceding principle is the general rule, the circumstances surrounding the
reinstatement of the subject writ of preliminary injunction 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, receivership, accounting
and support, and such other judgments as are now or may hereafter be declared to be immediately
executory, shall be enforceable after their rendition and shall not be stayed by an appeal taken
therefrom, unless otherwise ordered by the trial court. On appeal therefrom, the appellate court in its
discretion may make an order suspending, modifying, restoring or granting the injunction, receivership,
accounting, or award of support.
The stay of execution shall be upon such terms as to bond or otherwise as may be considered proper for
the security or protection of the rights of the adverse party.
It likewise noted that the fact that there was no dispute vis-à-vis herein petitioner CGP’s failure to
redeem the foreclosed real properties within the period, herein respondent PCI’s right to possession
thereof is quite patent and absolute; and that "any question regarding 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 substantive aspect of the decision of the Court of
Appeals. It’s petition is predicated 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 December 3, 2001, in G.R. No. 150483, that the
said petition raised questions of facts and therefore not proper for petition for certiorari."18
In its one page argument, Petitioner CGP contends, in whole, that:
It is undisputed that this Honorable Court in its resolution dated December 3, 2001 in G.R. No. 150483
has found that issues of facts are raised in the petition filed therein. That these conclusion 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 Court of Appeals, in the case entitled CGP TRANSPORTATION AND SERVICES CORPORATION,

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Plaintiff-appellant versus PCI LEASING AND FINANCE CORPORATION, defendant-appellee docketed as
C.A. G.R. No. 69466.] With this factual backdrop, petitioner honestly believes, that there can be no other
fate on the said petition [of respondent] but the dismissal, it being a settled jurisprudence that in a
petition for review, 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 doctrine 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 discharged the duty assigned to it by this Honorable Court," apropos the latter’s 3
December 2001 Resolution.
We sustain respondent PCI’s importunings and dismiss petitioner CGP’s petition.
Although the form or mode of the original petition filed by herein respondent PCI from the Order of the
RTC was a special civil action for certiorari, an incorrect mode of appeal there being questions of fact as
assigned errors, i.e., the existence and relevancy of specific surrounding circumstance, their 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 entrenched is the rule that this
Court is not a trier of facts.23 The resolution of factual issues is the function of lower courts, whose
findings on these matters are received with respect and are in fact binding on us subject to certain
exceptions.24 Cases where an appeal involved questions of fact, of law, or both fall within the exclusive
appellate jurisdiction of the Court of Appeals.25 This is attested to by Section 15, Rule 44 of the 1997
Revised Rules of Civil Procedure. The section reads:
SEC. 15. Questions that may be raised on appeal. – x x x he may include in his assignment of errors any
question of law or fact that has been raised 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 appeal 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 dismissed 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 appropriate action. The determination of
the Supreme Court on whether or not issues of fact are involved shall be final. [Emphasis supplied.]
This Court’s discretion to refer the case to the Court of Appeals is by reason of the term "may" in both
sections. Such term denotes discretion on our part in dismissing an appeal or referring one to the Court
of Appeals.
Besides, it must be borne in mind that procedural rules are intended to ensure proper administration of
law and justice. The rules of procedure ought not to be applied in a very rigid, technical sense, for they
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, for after all, the dispensation of justice is the core
reason for the existence of the courts.
In the case at bar, substantial ends of justice warranted the referral of the case to the appellate court for
further appropriate proceedings.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed 26 March 2004
Decision and 13 July 2004 Resolution, both of the Court of Appeals, in CA G.R. SP No. 68528 entitled "PCI
Leasing and Finances, Inc. v. Hon. Alberto L. Lerma, In His Capacity as Presiding Judge of Branch 256 of
the Regional Trial Court of Muntinlupa City and CGP Transportation and Services Corporation," are
AFFIRMED.

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AFFIRMED.
No costs.

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RA 9282
Sunday, November 14, 2010
11:21 PM

Republic of the Philippines

Congress of the Philippines
Metro Manila
Twelfth Congress
Third Regular Session
Begun and held in Metro Manila, on Monday, the twenty-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. 1125, AS
AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AND 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. Court; Justices; Qualifications; Salary; Tenure. - There is hereby created a Court of Tax
Appeals (CTA) which shall be of the same level as the Court of Appeals, possessing all the inherent
powers of a Court of Justice, and shall consist of a Presiding Justice and five (5) Associate Justices. The
incumbent Presiding Judge and Associate Judges shall continue in office and bear the new titles of
Presiding Justice and Associate Justices. The Presiding Justice and the most Senior Associate 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 Justice shall be so designated in his appointment, and the Associate Justices shall have
precedence according to the date of their respective appointments, or when the 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 privileges, be subject to the same inhibitions and disqualifications, and enjoy the same
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 of Appeals are
increased, such increases in salaries shall be deemed correspondingly extended to and enjoyed by the
Presiding Justice and Associate Justices of the CTA.
"The Presiding Justice and Associate Justices shall hold office during good 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 causes and in the same manner provided by law for members of the judiciary of
equivalent rank."
Section 2. Section 2 of the same Act is hereby amended to read as follows:
"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) Justices.
"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, disability, or any other lawful cause, the Presiding Justice shall designate any
Justice of other Divisions of the Court to sit temporarily therein.
"The affirmative votes of four (4) members of the Court en banc or two (2) members of a Division, as the
case may be, shall be necessary for the rendition of a decision or resolution."
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 Clerks of Court who shall be appointed by the Supreme
Court. No person shall be appointed Clerk of Court or Division Clerk of Court unless he is duly authorized
to practice 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 matters within the Court's jurisdiction, as are

REMLAW Page 99
exercised and performed by the Clerk of Court and Division Clerks of Court of the 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 other
benefits as those provided for the Clerk of Court and Division Clerks of Court 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. - The Supreme Court shall appoint all officials and employees of
the CTA, in accordance 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 functions 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 the Rules of Court for the disqualification of
judicial officers. No person who has 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 before the Court
for a period of one (1) year from his retirement or resignation."
Section 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, designate."
Section 7. Section 7 of the same Act is hereby amended to read as follows:
"Sec. 7. Jurisdiction. - The CTA shall exercise:
"a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
"1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds
of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising
under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue;
"2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds
of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising
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 or appellate jurisdiction;
"4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or
other money charges, seizure, detention or release of property affected, fines, forfeitures or other
penalties in 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 Assessment Appeals in the exercise of its appellate jurisdiction over
cases involving the assessment and taxation of real property originally decided by the provincial or city
board of assessment appeals;
"6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for review
from decisions of the Commissioner of Customs which are adverse to the Government under Section
2315 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 article,
involving dumping and countervailing duties under Section 301 and 302, respectively, of the Tariff and
Customs Code, and safeguard measures under Republic Act No. 8800, where either party may appeal
the decision to impose or not to impose said duties.
"b. Jurisdiction over cases involving criminal offenses as herein provided:
"1. Exclusive original jurisdiction over all criminal offenses arising from violations of the National Internal
Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of Internal
Revenue or the Bureau of Customs: Provided, however, That offenses or felonies mentioned in this
paragraph where the principal amount o taxes and fees, exclusive of charges and penalties, claimed is
less than One million pesos (P1,000,000.00) or where there is no specified amount claimed shall be tried

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less than One million pesos (P1,000,000.00) or where there is no specified amount claimed shall be tried
by the regular Courts and the jurisdiction of the CTA shall be appellate. Any provision of law or the Rules
of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the
recovery of civil liability for taxes and penalties shall at all times be simultaneously 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 the 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 appellate jurisdiction in criminal offenses:
"a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases
originally decided by them, in their respected territorial jurisdiction.
"b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial 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 penalties: Provided, however, That collection cases where the principal amount
of taxes and fees, exclusive of charges and penalties, claimed is less than One million pesos
(P1,000,000.00) shall be tried by the proper Municipal Trial Court, Metropolitan Trial Court and Regional
Trial Court.
"2. Exclusive appellate jurisdiction in tax collection cases:
"a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax collection
cases originally decided by them, in their respective territorial jurisdiction.
"b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
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 of the same Act is hereby amended to read as follows:
"SEC. 10. Power to Administer 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 for the same causes, under the same procedure and with the same penalties
provided therein."
Section 9. Section 11 of the same Act is hereby amended to read as follows:
"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 Internal Revenue, the Commissioner of Customs, the
Secretary of Finance, the Secretary 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 the 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 procedure analogous to that provided for
under Rule 42 of the 1997 Rules of Civil Procedure 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 the period
fixed by law to act thereon. A Division of the CTA shall hear the appeal: Provided, however, That with
respect to decisions or rulings of the Central Board of Assessment Appeals and the Regional Trial Court
in the exercise of its appellate 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 Civil 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 Section 7 shall
be raffled to its Divisions. A party adversely affected by a ruling, order or decision of a Division of the
CTA may file a motion for reconsideration of new trial before the same Division of the CTA within
fifteens (15) days from notice thereof: Provide, however, That in criminal cases, the general rule
applicable 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 Internal Revenue or the
Commissioner of Customs or the Regional Trial Court, provincial, city or municipal treasurer or the
Secretary of Finance, the Secretary of Trade and Industry and Secretary of Agriculture, as the case may

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Secretary of Finance, the Secretary of Trade and Industry and Secretary of Agriculture, as the case may
be shall suspend the payment, levy, distraint, and/or sale 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 Court the collection by the aforementioned government agencies may jeopardize the interest of
the Government and/or the taxpayer the Court any stage of the proceeding may suspend the said
collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not
more than double the amount with 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."
Section 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 Court 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 provide for the
publication of its decision in the Official Gazette in such form and manner as may best be adopted for
public information and use.
"The Justices of the Court shall each certify on their applications for leave, and upon salary vouchers
presented by them for payment, or upon the payrolls under which their salaries are paid, that all
proceedings, petitions and motions which have been submitted 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 granted
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 of Tax Appeals En Banc. - No civil proceeding involving matter arising
under the National Internal Revenue Code, the Tariff and Customs Code or the Local Government Code
shall be maintained, except as herein provided, until and unless an appeal has been previously filed with
the CTA and disposed of in accordance with the provisions of this Act.
"A party adversely affected by a resolution of a Division 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 adversely affected by a decision or ruling of the CTA en banc
may file with the Supreme Court a verified petition for review on certiorari pursuant to Rule 45 of the
1997 Rules of Civil Procedure."
Section 13. Distraint of Personal Property and/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
authorizing 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 and rights to personal property and/or levy the real property of such persons
in sufficient quantity to satisfy the tax or charge together with any increment thereto incident to
delinquency. This remedy shall not be exclusive and shall not preclude the Court from availing of other
means under the Rules of Court.
Section 14. Retention of Personnel; Security of Tenure; Upgrading of Positions and Salaries. - All existing
permanent personnel of the CTA shall not be adversely affected by this Act. They shall continue in office
and shall not be removed or separated 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 Associate Judges shall comprise a Division pending the constitution of the entire Court.
Section 16. Appropriations. - The amount necessary to carry out the provisions of this Act shall be
included in the General Appropriations Act of the year 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 are hereby deemed repealed,
amended or modified accordingly.
Section 18. Separability Clause. - If for any reason, any section or provision of this Act shall be declared
unconstitutional or invalid, the other parts thereof not affected thereby shall remain valid.

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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 general 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 and House Bill No. 6673 was finally passed by
the Senate and the House of Representatives on December 8, 2003 and February 2, 2004, respectively.

OSCAR G. YABES ROBERTO P. NAZARENO

Secretary of Senate Secretary General
House of Represenatives
Approved: March 30 2004
GLORIA MACAPAGAL-ARROYO
President of the Philippines

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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 Senate and House of Representatives of the Philippines in Congress assembled::
Section 1. The first paragraph of Section 1 of Presidential Decree No. 1606, as amended, 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 powers of a court
ofjustice, to be known as the Sandiganbayan is hereby created composed of a presiding justice and
fourteen associate justices who shall be appointed 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 Sessions. - The Sandiganbayan shall have its principal office
in the Metro Manila area and shall hold sessions thereat for the trial and determination of cases filed
with it: Provided, however, That cases originating from the principal geographical regions of the country,
that is, from Luzon, Visayas or Mindanao, shall be heard in their respective regions of origin except only
when the greater convenience of the accused and of the witnesses, or other compelling considerations
require the contrary, in which instance a case originating from one geographical region may be heard in
another geographical region: Provided, further, That for this purpose the presiding justice shall authorize
any divisions of the court to hold sessions at any time and place outside Metro Manila and, where the
interest of justice so requires, outside the territorial boundaries of the Philippines. The Sandiganbayan
may require the services of the personnel and the use of facilities of the courts or other government
offices where any of the divisions is holding 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 the same decree is hereby deleted.
Section 4. Section 4 of the same decree is hereby 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, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the Revised Penal
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 branch occupying the positions of regional director and higher, otherwise
classified as Grade '27' and higher, of the Compensation and Position Classification Act of 1989 (Republic
Act No. 6758), specifically including:
"(a) Provincial governors, vice-governors, members of the sangguniang panlalawigan and provincial
treasurers, assessors, engineers and other provincial department heads;
"(b) City mayors, vice-mayors, members of the sangguniang panlungsod, city treasurers, assessors
engineers and other city department heads;
"(c) Officials of the diplomatic service occupying the position of consul and higher;
"(d) Philippine army and air force colonels, naval captains, and all officers of higher rank;
"(e) Officers of the Philippine National Police while occupying the position of provincial director and
those holding the rank of senior superintendent or higher;
"(f) City and provincial prosecutors and their assistants, and officials and prosecutors in the Office of the
Ombudsman and special prosecutor;
"(g) Presidents, directors or trustees, or managers of government-owned or -controlled corporations,
state universities or educational institutions or foundations;
"(2) Members of Congress and officials thereof classified as Grade'27'and up under the Compensation
and Position Classification Act of 1989;
"(3) Members of the judiciary without prejudice to the provisions of the Constitution;

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"(3) Members of the judiciary without prejudice to the provisions of the Constitution;
"(4) Chairmen and members of Constitutional Commissions, without prejudice to the provisions of the
Constitution; and
"(5) All other national and local officials classified as Grade'27'and higher under the Compensation and
Position Classification Act of 1989.
"b. Other offenses orfelonies whether simple or complexed 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 criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14 and 14-
A, issued in 1986.
"In cases where none of the accused are occupying positions corresponding to salary grade '27' or
higher, as prescribed in the said Republic Act No. 6758, or military or PNP officers mentioned above,
exclusive original jurisdiction thereof shall be vested in the proper regional trial court, metropolitan 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 their
appellate jurisdiction as herein provided.
"The Sandiganbayan shall have exclusive original jurisdiction over petitions for the issuance of the writs
of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary writs and processes
in aid of its appellate jurisdiction and over petitions of similar nature, including quo warranto, arising or
that may arise in cases filed or 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 hereafter promulgate, relative to appeals/petitions for review
to the Court of Appeals, shall apply to appeals and petitions for review filed with the Sandiganbayan. In
all cases elevated to the Sandiganbayan and from the Sandiganbayan to the Supreme Court, the Office
of the Ombudsman, through its special prosecutor, shall represent the People of the Philippines, except
in cases filed pursuant to Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986.
"In case private individuals are charged as co-principals, accomplices or accessories with the public
officers or employees, including those employed in govemment-owned or controlled corporations, they
shall be tried jointly with said public officers and employees in the proper courts which shall exercise
exclusive jurisdiction over them.
"Any provisions of law or Rules of Court to the contrary notwithstanding, the criminal action 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 the criminal action being deemed to necessarily carry with it the filing of the civil action, and
no right to reserve the filing of such civil action separately from the criminal action shall be recognized:
Provided, however, That where the civil 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 Sandiganbayan or the appropriate court, as
the case may be, for consolidation and joint determination with the criminal action, otherwise the
separate civil action shall be deemed abandoned."
Section 5. Section 7 of the same decree is hereby further amended to read as follows:
'SECTION 7. Form, Finality and Enforcement of Decisions. - All decisions and final orders determining the
merits of a case or finally disposing of the action or proceedings of the Sandijanbayan shall contain
complete 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 reconsideration of any final order or decision may be filed within fifteen (15) days from
promulgation or notice of the final order on judgment, and such motion for reconsideration shall be
decided within thirty (30) days from submission thereon.
"Decisions and final orders ofthe Sandiganbyan shall be appealable to the Supreme 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 death is imposed, the decision shall be appealable to the Supreme Court in the manner
prescribed in the Rules of Court.

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prescribed in the Rules of Court.
"Judgments and orders of the Sandiganbayan shall 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 well as
those rendered by them in the exercise of their appellate jurisdiction shall be appealable to, or be
reviewable by, the Sandiganbayan in the manner provided by Rule 122 of the Rules of the Court.
"In case, however, the imposed penalty by the Sandiganbayan or the regional trial court in the proper
exercise of their respective jurisdictions, is death, review by the Supreme Court shall be automatic,
whether or not accused files an appeal."
Section 6. Appropriations. - The amount necessary to carry out the initial implementation of this Act
shall be charged against the current fiscal year appropriations of the Sandiganbayan. Thereafter, such
sums as may be needed for its continued implementation shall be included 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 not begun as of the approval hereof
Section 8. Separability of Provisions. - If for 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
effect.
Section 9. Repealing Clause. - All acts, decrees, general orders and circulars, or parts thereof
inconsistent with the provisions of this Act are hereby repealed or modified accordingly.
Section 10. Effectivity. - This Act shall take effect fifteen (15) days after its complete publication in at
least two (2) newspapers of general circulation.
Approved:

(Sgd.) ERNESTO M. MACEDA (Sgd.) JOSE DE VENECIA, 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 28,1997 and January 29, 1997, respectively.

(Sgd.) LORENZO E. LEYNES, JR. (Sgd.) ROBERTO P. NAZARENO

Secretary of Senate Secretary General
House of Represenatives
Approved: February 5, 1997
(Sgd.) FIDEL V. RAMOS
President of the Philippines

Pasted from <http://www.lawphil.net/statutes/repacts/ra1997/ra_8249_1997.html>

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BP 129, as amended by RA 7691, Sec. 5
Sunday, November 14, 2010
11:21 PM

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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, represented 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 seeking 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 certiorari filed therewith.
The factual and procedural antecedents are as follows:
Petitioner 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 docketed 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 virtue of the right of
representation, the heirs of FELICIDAD BUSA-PANAL and CONCORDIA S. BUSA and REYNALDO S.
BUSA, respectively;
4. Defendants in this case are heirs of MIGUEL BOKINGO;
5. Defendants ALFREDO BOKINGO [herein petitioner], WENCESLAO B. AMBRAY, JR., ROSA B.
AMBRAY, CELIA A. ALMORA and JOSELITO B. AMBRAY, filed an application for titling of a parcel of
land before the Department of Environment 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 located at Baan
(Buhangin), Butuan City, containing an area of 2.1600 hectares, more or less;
7. The land subject matter of the application for titling of defendants is a parcel of land inherited
by plaintiffs from their father, the late CELESTINO BUSA. This parcel of land is described
particularly as:
TAX DECLARATION NO. GR.-10-002-0189-A
"A parcel of land covered by Tax Declaration No. GR-10-002-0189-A, situated in Buhangin, Butuan
City, containing an area of 2.1600 HAS., more or less. Bounded on the North – Elisa Busa, South -
Pastor Ago, East – Ho. Miguel Bokingo and on the West – Baan River."
8. When plaintiffs knew of defendants’ application, plaintiffs filed a protest against defendants’
application on February 5, 1996. Attached as Annex A is the Protest;
9. On November 24, 1998, the Provincial Environment and Natural Resources Officer, HUGO I.
BAÑOSIA, resolved the Protest in favor of Plaintiffs-the protestant in the DENR case. Attached as
Annex B is the order;
10. On January 6, 1999, the Provincial Environment and Natural Resources Officer, HUGO T.
BAÑOSIA, issued a certification stating that the order dated November 24, 1998 has become final
and executory. Attached as Annex C is the machine copy of the Certification;
11. On September 9, 1999, the same DENR Officer HUGO T. BAÑOSIA issued an Order of Execution
which states that:
In complying herewith, the Land Management Officer III concerned should be instructed to set forth the
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, Butuan City, September 9, 1999.
12. Plaintiffs requested on June 23, 1999, for a Survey Authority to survey the land subject matter
of this case before the CENRO Office of Butuan City. Attached as Annex D is the Survey
Application;
13. On July 30, 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;
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 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-in-law of Concordia S. Busa, personnel of the Butuan PNP and the personnel of ENGR.
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 BOKINGO,
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 stopped by SPO3 FERDINAND B. DACILLO and ALFREDO
BOKINGO;
15. Plaintiff[s] availed 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 area. Thus, a
Certificate to File Action was issued by the Lupong Tagapamayapa. Copy 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 defendants constrained the plaintiff*s+ to litigate and to incur attorney’s 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 hearing, 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. ERNESTO M. CAMPOS;
2) Order defendants to pay plaintiffs the sum of P10,000.00 as attorney’s 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 with the court a quo a motion
to dismiss alleging that the latter has no jurisdiction over the subject matter of the claim. Specifically,
petitioner Bokingo contended that it could be gleaned from the complaint that the issue between the
parties involved the possession of the land. As such, the assessed value of the land was crucial to
determine the court’s jurisdiction over the subject matter in accordance 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 subject
matter. Otherwise, jurisdiction is with the RTC.
Petitioner Bokingo pointed out in his Motion to Dismiss that the assessed value of the land subject
matter of the complaint was not indicated. Nonetheless, he proffered that based on his father’s 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 Regional Trial Court, had no jurisdiction over the subject matter of
the complaint filed 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 thereof.
Acting thereon, the court a quo issued the Order dated March 13, 2002 denying the motion to dismiss. It
pointed out that the complaint’s allegation is that the respondents, as plaintiffs, are entitled to have the
subject land surveyed after petitioner Bokingo’s and his co-claimants’ application for the titling of the
subject land was dismissed by the Provincial Environment and Natural Resources Officer (PENRO) and
the respondents were declared to have a better right to file a public land application covering the same.
Further, the relief being sought in the complaint is injunction in order that the respondents’ right to
survey the subject 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
injunction may be granted by the court where the action or proceeding is pending." It accordingly
denied petitioner Bokingo’s 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 part of the court a quo in denying his motion to dismiss.

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of discretion on the part of the court a quo in denying his motion to dismiss.
On December 17, 2003, the CA rendered the assailed Decision dismissing the said petition for lack of
merit, in fact and in law. It ruled that the remedy of certiorari 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 that petitioner Bokingo filed a motion for reconsideration of
the order of the court 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 petition that the court a quo, in
issuing the assailed order, acted with grave abuse of discretion amounting to lack of jurisdiction. The
issue raised by petitioner Bokingo, the CA held, was proper for an appeal but not a petition for
certiorari.
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 court a quo is a possessory action. To determine which court, the RTC or MTC, has
primary jurisdiction, petitioner Bokingo theorizes that it is necessary that the assessed value of the land
be alleged in the initiatory complaint. Absent such allegation, the court where the case was filed should
allegedly preliminarily determine 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, according 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 with 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 dismissal by the CA of petitioner Bokingo’s
petition for certiorari filed therewith. As correctly held by the CA, the mere fact that he failed to move
for the reconsideration of the court a quo’s order denying his motion to dismiss was sufficient cause for
the outright dismissal of the said petition. Certiorari as a special civil 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.10 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 Bokingo 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 present petition lacks substantive merit. It is axiomatic that the nature of the action and
which court has original and exclusive jurisdiction over the same is determined by the material
allegations of the complaint, the type of relief prayed for by the plaintiff, and the law in effect when the
action is filed, irrespective of whether the plaintiffs are entitled to some or all of the claims asserted
therein.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 defendant or agreement of the parties, or to the
waiver or acquiescence of the parties.12
A careful perusal of the respondents’ complaint, quoted earlier, shows that it alleges that per the Order
dated November 24, 1998 of PENRO of Butuan City, petitioner Bokingo’s and his co-claimants’
application for titling of the subject land 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 covering the
same land. It was further alleged that the said order became final and executory, and in connection
therewith, the respondents were authorized by the City Environment and Natural Resources Officer
(CENRO) of Butuan City to conduct a survey on the subject land. However, petitioner Bokingo, through
his representatives, unjustly prevented the conduct of the said survey. Even when the matter regarding
the survey was submitted to the Lupong Tagapamayapa, petitioner Bokingo still allegedly refused to
allow the respondents to survey the subject land. Hence, the Complaint for Injunction filed by the
respondents where the principal relief sought is to enjoin permanently the illegal acts of the defendants
therein, including petitioner Bokingo, of preventing the survey of the land subject matter of the case.
In this connection, it is well to note that the Court had the occasion to explain that "in determining
whether an action is one the subject matter of which is not capable of pecuniary estimation, the nature
of the principal action, or remedy sought must first be ascertained. If it is primarily for the recovery of a
sum of money, the claim is considered capable of pecuniary estimation, and jurisdiction over the action
will depend on the amount of the claim. However, where the basic issue is something other than the
right to recover a sum of money, where the money claim is purely incidental to, or a consequence of,
the principal relief sought, the action is one where the subject of litigation may not be estimated in

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the principal relief sought, the action is one where the subject of litigation may not be estimated in
terms of money, which is cognizable exclusively by Regional Trial Courts."13
As gleaned from the complaint, the principal relief sought by the respondents in their complaint is for
the court a quo to issue an injunction 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 defendants of preventing the survey of the land subject
matter of this case by ENGR. ERNESTO M. CAMPOS;
2) Order defendants to pay plaintiffs the sum of P10,000.00 as attorney’s 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. 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 possession of real property and these are distinguished in this wise:
What really distinguishes an action for unlawful detainer from a possessory action (accion publiciana)
and from a reinvindicatory action (accion reinvindicatoria) is that the first 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 ejectment suit that may be filed to recover possession of real property. Aside from the
summary action of ejectment, accion publiciana or the plenary action to recover the right of possession
and accion reinvindicatoria or the action to recover ownership which includes recovery of possession,
make up the three kinds of actions to judicially recover possession.15
Significantly, the respondents’ complaint has not sought to recover the possession or ownership of the
subject land. Rather, it is principally an action to enjoin petitioner Bokingo and his representatives from
committing acts that would tend to prevent the survey of the subject land. It cannot be said therefore
that it is one of a possessory action. The respondents, as plaintiffs in the court a quo, to be entitled to
the injunctive relief sought, need to establish the following requirements: (1) the existence of a right to
be protected; and (2) that the acts against which the injunction is to be directed are violative of the said
right. As such, the subject matter of litigation is incapable of pecuniary estimation and properly
cognizable exclusively by the court a quo, a Regional Trial Court under Section 19 (1) of BP Blg. 129, as
amended by RA 7691:
SEC. 19. Jurisdiction in Civil Cases. – Regional Trial Courts shall exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;
xxx
Hence, the court a quo did not err in denying petitioner Bokingo’s 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 AFFIRMED in toto.

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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 dated April
30, 1998 and its resolution dated October 15, 1998 denying the motion for reconsideration.
On June 18, 1997, private respondent Manuel Dulawon filed with the Regional Trial Court of Tabuk,
Kalinga, Branch 25, a complaint for breach of contract of lease with damages against petitioner Radio
Communications of the Philippines, Inc. (RCPI). Petitioner filed a motion to dismiss the complaint for
lack of jurisdiction contending that it is the Municipal Trial Court which has jurisdiction as the complaint
is basically one for collection of unpaid rentals in the sum of P84,000.00, which does not exceed the
jurisdictional amount of P100,000.00 for Regional Trial Courts. The trial court denied the motion to
dismiss, as well as petitioner’s motion for reconsideration. Hence, petitioner went to the Court of
Appeals on a petition for certiorari. On April 30, 1998, the Court of Appeals dismissed the petition. The
dispositive portion thereof reads:
WHEREFORE, the petition is hereby DENIED DUE COURSE and is DISMISSED. Costs against petitioner.
SO ORDERED.
The motion for reconsideration of the foregoing decision was denied on October 15, 1998. Hence, this
petition.
The issue for resolution in this petition is whether or not the Regional Trial Court has jurisdiction over
the complaint filed by private respondent.
Pertinent portion of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, provides:
SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;
xxx xx x xxx
(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney’s
fees, litigation expenses, and costs or the value of the property in controversy exceeds One hundred
thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of
the abovementioned items exceeds Two hundred thousand pesos (P200,000.00).
Corollary thereto, Administrative Circular No. 09-94, states:
xxx xx x xxx
2. The exclusion of the term “damages of whatever kind” in determining the jurisdictional amount
under Section 19 (8) and Section 33 (1) of B.P. 129, as amended by R.A. No. 7691, applies to cases where
the damages are merely incidental to or a consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one of the causes of action, the amount of
such claim shall be considered in determining the jurisdiction of the court.
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
sought must first be ascertained. If it is primarily for the recovery of a sum of money, the claim is
considered capable of pecuniary estimation, and jurisdiction over the action will depend on the amount
of the claim. However, where the basic issue is something other than the right to recover a sum of
money, where the money claim is purely incidental to, or a consequence of, the principal relief sought,
the action is one where the subject of the litigation may not be estimated in terms of money, which is
cognizable exclusively by Regional Trial Courts.
It is axiomatic that jurisdiction over the subject matter of a case is conferred by law and is determined
by the allegations in the complaint and the character of the relief sought, irrespective of whether the
plaintiff is entitled to all or some of the claims asserted therein.
In the case at bar, the allegations in the complaint plainly show that private respondent’s cause of action
is breach of contract. The pertinent portion of the complaint recites:
xxx xx x xxx

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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 appropriate officials
negotiated with plaintiff the lease of a portion of the latter’s building x x x
3. That the lease contract was effective for a period of three (3) years of from January 1, 1996 to
January 1, 1998 with advance payment for the year 1996. The advance was not however given in lump
sum but on installment. One check that was given in payment of one month’s rental for 1996 was even
stale and had to be changed only after demand;
4. That as per contract the monthly rental for 1997 was P3,300.00 while for 1998, it is P3,700.00;
5. That the defendant surreptitiously removed its equipments and other personalities from the
leased premises and failed to pay rentals due for the months of January to March 1997 to the damage
and prejudice of plaintiff; that this failure and refusal on the part of plaintiff accelerated the payment of
all rentals for each month for the years 1997 and 1998;
6. That the acts of defendant amounts to a breach of contract which is unlawful and malicious, as in
fact, it caused plaintiff serious anxiety, emotional stress, and sleepless nights for which he is entitled to
moral damages;
7. That plaintiff conveyed his feelings to Mr. Ronald C. Manalastas as evidenced by a letter dated
January 7, 1997 a copy of which is hereto attached to form part hereof as Annex “B”. This was later
followed by a letter of plaintiff’s counsel a machine copy of which is hereto attached to form part hereof
and marked as Annex “C”. Both these letters landed on deaf ears thereby aggravating the
worries/anxieties of plaintiff;
8. That the period agreed is for the benefit of both parties and any unilateral termination constitutes
breach of contract;
9. That defendant actually used the leased premises during the year 1996; that had it not been for
the contract, plaintiff could have leased the premises to other persons for business purposes; that this
unlawful and malicious breach of contract cannot be lawfully countenanced hence defendant must be
taught a lesson by being ordered to pay exemplary damages;
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 Manufacturer’s Distributors, Inc. v. Siu Liong, the Court held that actions for 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 find that the
subject contract of lease was breached. As alleged therein, petitioner’s failure to pay rentals due for the
period from January to March 1997, constituted a violation of their contract which had the effect of
accelerating the payment of monthly rentals for the years 1997 and 1998. The same complaint likewise
implied a premature and unilateral termination of the term of the lease with the closure of and removal
all communication equipment in the leased premises. Under the circumstances, the court has to
scrutinize the facts and the applicable laws in order to determine whether there was indeed a violation
of their lease agreement that would justify the award of rentals and damages. The prayer, therefore, for
the payment of unpaid rentals in the amount of P84,000.00 plus damages consequent to the breach is
merely incidental to the main action for specific performance. Similarly, in Manufacturer’s Distributor’s
Inc., the Court explained –
xxx xx x xxx
That plaintiff’s complaint also sought the payment by the defendant of P3,376.00, plus interest and
attorney’s fees, does not give a pecuniary estimation to the litigation, for the payment of such amounts
can only be ordered as a consequence of the specific performance primarily sought. In other words,
such payment would be but an incident or consequence of defendant's liability for specific performance.
If no such liability is judicially declared, the payment can not be awarded. Hence, the amounts sought
do not represent the value of the subject of litigation.
“Subject matter over which jurisdiction can not be conferred by consent, has reference, not to the res or
property involved in the litigation nor to a particular case, but to the class of cases, the purported
subject of litigation, the nature of the action and of the relief sought (Appeal of Maclain, 176 NW. 817).”
Specifically, it has been held that:
“The Court has no jurisdiction of a suit for specific performance of a contract, although the damages

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“The Court has no jurisdiction of a suit for specific performance of a contract, although the damages
alleged for its breach, if permitted, are within the amount of which that court has jurisdiction.” (Mebane
Cotton Breeding Station. vs. Sides, 257 SW. 302; 21 C.J.S. 59, note).
xxx xx x xxx
Clearly, the action for specific performance case, irrespective of the amount of rentals and damages
sought to be recovered, is incapable of pecuniary estimation, hence cognizable exclusively by the
Regional Trial Court. The trial court, therefore, did not err in denying petitioner’s motion to dismiss.
WHEREFORE, in view of all the foregoing, the petition is DENIED and the assailed decision of the Court
of Appeals in CA-G.R. SP No. 45987 is AFFIRMED.

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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 Court (RTC) of Binangonan, Rizal in Civil Case No. R-00-035.
This controversy stemmed from a Complaint dated 14 November 2000 for accion publiciana filed by
respondent Heirs of Eusebio Villegas against petitioner Honorio Bernardo, Romeo Gaza (Gaza) and
Monina Francisco (Francisco). Respondents had earlier filed an ejectment case against the trio, docketed
as Civil Case No. 99-065 with the Municipal Trial 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
period 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 covered by Transfer Certificate of Title (TCT) No. 46891 with an area of 18,369 square
meters and situated in Barangay Pag-asa, Binangonan, Rizal; that petitioner, by stealth and in the guise
of merely grazing his cattle, surreptitiously entered 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 for conciliation but
no settlement was reached by the parties; and that petitioner, Gaza and Francisco had forcibly,
unlawfully and unjustly possessed and continue to possess the subject property and had refused to
vacate the same.
In his Answer, petitioner denied taking possession of any portion of the property of respondents. He
argued that the cause of action is barred by the judgment in the ejectment case. He claimed that he had
been in possession of his land since the early 1950s.3 As he did before the MTC, petitioner also alleged
lack of jurisdiction on the part of the RTC.
Gaza alleged that he has been occupying an abandoned river 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 conducted by the trial court judge. On 5 March 2007, the trial court rendered
judgment 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 respondents the amount of P30,000.00 as
attorney’s fees and the cost of suit.6
The trial court held that the suit, being an accion publiciana, falls within its jurisdiction. It found that the
houses of petitioner and Gaza were inside the titled property of respondents. Its findings were based on
the testimony of one of the respondents, Estelito Villegas; the relocation plan prepared by Engineer Rico
J. Rasay; and the Technical Report on Verification Survey submitted by Engineer Robert C. Pangyarihan,
petitioner’s own witness.7 The trial court noted that petitioner failed to present any title or tax
declaration to prove ownership or possessory right.8
On appeal, the Court of Appeals affirmed the ruling of the trial court.
In his appeal, petitioner questioned the jurisdiction of the trial court over the subject matter and argued
that in their complaint, the respondents failed to 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
failed to file a motion to dismiss on such ground and, instead, actively participated in the proceedings
before the trial court.
With respect to the argument that 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,

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have been impleaded as parties, the appellate court disagreed and invoked Article 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 all kinds of actions for recovery of possession.9
The appellate court sustained the trial court’s finding that the portions of the land occupied by
petitioner and Gaza are owned by respondents. The appellate court likewise ruled that respondents
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 the premises, verbally asked him to discontinue the
construction.10
His motion for reconsideration having been denied, petitioner filed the instant petition.
Petitioner 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 property involved in their complaint. Petitioner belies
the ruling of the appellate court that he failed to raise objections before the trial court. Petitioner
reiterates that he raised the defense of lack of jurisdiction as early as in his Answer filed before the trial
court. Moreover, he argues that even if he did not raise the defense of lack of jurisdiction, the trial court
should have dismissed the complaint motu proprio. Petitioner disputes the application to him of the
doctrine of estoppel by laches in Tijam v. Sibonghanoy.11 Petitioner avers that unlike 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 trial court.13
The issue presented before this Court is simple: Whether or not estoppel bars petitioner from raising the
issue of lack of jurisdiction.
Under Batas 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 limited to real actions where the assessed value exceeds
P20,000.00, and P50,000.00 where the action is filed in Metro Manila, thus:
SEC. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive original jurisdiction:
xxx x
(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or, for
civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except
actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which
is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts.
Under the law as modified, jurisdiction is determined by the assessed value of the property.
A reading of the complaint shows that respondents failed to state the assessed value of the disputed
land. The averments read:
xxx x
3. EUSEBIO VILLEGAS, deceased father of hte plaintiffs, is the registered owner of a parcel of land
situated in Barangay Pag-asa (formerly Barangay Tayuman), Binangonan, Rizal with a land area of 18,369
square meters. The same is covered by and embraced in Transfer Certificate of Title No. 46891 of the
Registry of Deeds for the Province of Rizal. x x x.
4. Plaintiffs 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 deceased 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 of possession and ownership thereof;
5. That sometime in 1996, defendant Honorio Bernardo, by stealth and in guise of merely grazing his
cattle, without the consent of the plaintiffs, surreptitiously entered into the possession of a portion of
the subject parcel of land. Employing threats and intimidations, he claimed later that the area he
illegally occupied is purportedly not part and parcel of the land owned by the plaintiff’s predecessor,
Eusebio Villegas, and forcibly fenced 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 into the
plaintiffs’ parcel of land, and in furtherance of his desire to forcibly exclude 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
constructing their own houses on the subject parcel of land through stealth and intimidation;

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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 settlement 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 the defendants have forcibly, unlawfully, and unjustly dispossessed and still continues 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 counsel to protect their interest on the property for an agreed attorney’s fee of
P50,000.00, and have incurred litigation expenses[;]
10. By reason of the unlawful and forcible invasion by the defendants of the property of the plaintiffs
which 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 wanton and unlawful acts,
defendants should be held answerable for exemplary damages of not less than P50,000.00.15
This fact was noted by the Court of Appeals in its Decision but it proceeded to rule in this wise:
Records show that at the time plaintiffs-appellees filed their complaint below, R.A. No. 7691 which
amended Batas Pambansa Blg. 129 was already in effect. However, the complaint failed to allege the
assessed value of the real property involved. Although appellant indeed raised the issue of jurisdiction in
his answer, he had not filed a motion to dismiss on this ground nor reiterated the matter thereafter but
actively participated 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 of the registered owner and supposed
lack of technical description of the property in the certificate of title. Indeed, appellant is now estopped
to question the trial court’s jurisdiction over the subject matter and nature of the case having actively
pursued throughout the trial, by filing various pleadings and presenting 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 agree.
As already shown, nowhere in the complaint was the assessed value of the subject 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 allegation 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 questioned 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 grounds 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 belatedly reject or repudiate its decision after voluntarily
submitting to its jurisdiction, just to secure affirmative relief against one's opponent or after failing to
obtain such relief. The Court has, time and again, frowned upon the undesirable 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 adverse.21
In Tijam, the Court held that it is iniquitous and unfair to void the trial court’s decision for lack of
jurisdiction considering that it was raised only after fifteen (15) years of tedious litigation, thus:
The facts of this case show that from the time the Surety became a quasi-party on July 31, 1948, it could
have raised the question of the lack of jurisdiction of the Court of First Instance of Cebu to take
cognizance of the present action by reason of the sum of money involved which, according to the law
then in force, was within the original exclusive jurisdiction of inferior courts. It failed to do so. Instead, at
several stages of the proceedings in the court a quo as well as in the Court of Appeals, it invoked the
jurisdiction of said courts to obtain affirmative relief and submitted its case for a final adjudication on
the merits. It was only after an adverse decision was rendered by the Court of Appeals that it finally

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the merits. It was only after an adverse decision was rendered by the Court of Appeals that it finally
woke up to raise the question of jurisdiction. Were we to sanction such conduct on its part, We would in
effect be declaring as useless all the proceedings had in the present case since it was commenced on
July 19, 1948 and compel the judgment creditors to go up their Calvary once more. The inequity and
unfairness of this is not only patent but revolting.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 publiciana. 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. And there was no showing, indeed, not even an allegation, that the
MTC was not aware 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. When, as a result of such dismissal, respondents brought the case as accion
publiciana before the RTC, petitioner never brought up the issue of jurisdictional amount. What
petitioner mentioned in his Answer before the RTC was the generally phrased allegation that "the
Honorable Court has no jurisdiction over the subject matter and the nature of the action in the above-
entitled 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 actively participated during the trial by
adducing evidence and filing numerous pleadings, none of which mentioned any defect in the
jurisdiction of the RTC. It was only on appeal before the Court of Appeals, after he obtained an adverse
judgment in the trial court, that petitioner, for the first time, came up with the argument that the
decision is void because there was no allegation in the complaint about the value of the property.
Clearly, petitioner is estopped from questioning the jurisdiction of the RTC.
We note that the decisions of the RTC and of the 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
records had to be reconstituted after the fire that gutted the courthouse. 24 If we were to accede to
petitioner’s prayer, all the effort, time and expenses of parties who participated in the litigation would
be wasted. Quite obviously, petitioner 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 Technical Report on Verification Survey25 by Engineer Robert C. Pangyarihan, which
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 enjoys the presumption of regularity as it has been issued by the proper
government agency.27 Under Republic Act No. 7691, the RTC in fact has jurisdiction over the 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 assessed value of the property as evidenced by the case records, jurisdiction pertains, rightfully
so, with the RTC. Perforce, the petition should be denied.
WHEREFORE, the decision of the Court of Appeals dated 21 April 2008, affirming the judgment of the
Regional Trial Court of Binangonan, Rizal dated 5 March 2007, is AFFIRMED.
SO ORDERED.

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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
YNARES-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 Case No. Br. 20-1194 to the Regional Trial Court of Cauayan, Isabela,
Branch 20, for further proceedings.
The antecedent facts are as follows:
Petitioner Victoriano 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-way, Cauayan, Isabela. Said two lots originally
form part of Lot No. 2121, a single 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, Victoriano Encarnacion. Thereafter, the latter caused the subdivision of the land into
two lots3 and the issuance of titles in his name on July 18, 1996.4
Respondent Nieves Amigo allegedly entered the premises and took possession of a portion of the
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 lawyer sent a letter5 dated Febuary 1, 2001 demanding that the
respondent vacate the subject property. As evidenced by the registry return receipt, the demand letter
was delivered by registered mail to the respondent on February 12, 2001. Notwithstanding receipt of
the demand letter, respondent still refused to vacate the 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 occupation of a portion of the subject land
since 1968 and that the issuance of Free Patent and titles in the name of petitioner was tainted with
irregularities.7
On October 24, 2001, the Municipal Trial Court in Cities rendered judgment, which reads:
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 defendant NIEVES AMIGOE
(sic) as follows:
a) ORDERING the defendant to vacate the portion 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) ORDERING the defendant to pay the plaintiff the sum of FIVE THOUSAND PESOS (P5,000) 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 ground that as the
Municipal Court had no jurisdiction over the case, this Court acquired no appellate jurisdiction
thereof. Costs against plaintiff-appellee.
SO ORDERED.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 Decision remanding the case to the Regional Trial Court. The

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Appeals which promulgated the assailed Decision remanding the case to the Regional Trial Court. The
dispositive portion thereof reads:
WHEREFORE, premises considered, this case is hereby REMANDED to Branch 20, Regional Trial
Court of Cauayan, Isabela for further proceedings.
No costs.
SO ORDERED.11
Hence the present petition raising the sole issue:
[WHETHER] THE COURT OF APPEALS ERRED IN HOLDING THAT THE PROPER ACTION IN THIS CASE
IS ACCION PUBLICIANA AND NOT UNLAWFUL DETAINER 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 recovery of possession of real property are:
1. Accion interdictal, or an ejectment proceeding which may be either that for forcible entry
(detentacion) or unlawful detainer (desahucio), which is a summary action for recovery of physical
possession where the dispossession has not lasted for more than one year, and should be brought
in the proper inferior court;
2. Accion publiciana or the plenary action 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
than one year; and
3. Accion reinvindicatoria or accion de reivindicacion, which is an action for the recovery of
ownership which must be brought in the proper Regional Trial Court. 13
Based on the foregoing distinctions, the material element that determines the proper action to be filed
for the recovery of the possession 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 granted to a person
deprived of the possession of any land or building by force, intimidation, threat, 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 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 unlawful deprivation or withholding of possession, an action in the proper Municipal
Trial 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 lasted for
more than one year, the proper action to be filed is an accion publiciana 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 Appeals
committed no reversible error in holding that the proper action in this case is accion publiciana; and in
ordering the remand of the case to the Regional Trial 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 action is determined
by the allegations of the complaint at the time of its filing, irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein. What determines the jurisdiction of
the court is the nature of the action pleaded as appearing from the allegations in the complaint. The
averments therein and the character of the relief sought are the ones to be consulted.15 On its face, the
complaint must show enough ground for the court to assume jurisdiction without resort to parol
testimony.16
From the allegations in the complaint, it appears that the petitioner became the owner of the property
on April 11, 1995 by virtue of the waiver of rights executed by his mother-in-law. He filed the complaint
for ejectment on March 2, 2001 after his February 1, 2001 letter to the respondent demanding that the
latter vacate the premises 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 complaints for unlawful detainer, it is also equally
true that petitioner became the owner 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 to his filing of
his complaint for ejectment in 2001, almost 6 years have elapsed. The length of time that the petitioner

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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 action beyond the ambit of an accion interdictal and
effectively made it one for accion publiciana. After the lapse of the one-year period, the suit must be
commenced in the Regional Trial Court via an accion publiciana which is a suit for recovery of the right
to possess. It is an ordinary civil proceeding to determine the 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 the 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 person 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 publiciana 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 owners of the subject lot
and were unlawfully deprived of their right of possession, they should present their claim before
the regional trial court in an accion publiciana or an accion reivindicatoria, and not before the
metropolitan trial court in a summary proceeding for unlawful detainer or forcible entry. For even
if one is the owner of the property, the possession thereof cannot be wrested from another who
had been in physical or material possession of the same for more than 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 on the land of the petitioner was in 1985 but it was only on March
2, 2001 or sixteen years after, when petitioner filed his ejectment case. The respondent should
have filed an accion publiciana case which is under the jurisdiction of the RTC.
However, the RTC should have not dismissed the case.
Section 8, Rule 40 of the 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 court 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 ground of dismissal is lack of jurisdiction over the subject matter, the
Regional Trial Court, if it has jurisdiction thereover, shall try the case on the merits as 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 Court on appeal shall not dismiss the case if it has original
jurisdiction thereof, but shall decide the case in accordance with the preceding section,
without prejudice to the admission of amended pleadings and additional evidence in the
interest of justice.
The RTC should have taken cognizance of the case. If the case is tried on the merits by the
Municipal Court without jurisdiction over the subject matter, the RTC on appeal may no longer
dismiss the case if it has original jurisdiction thereof. Moreover, the RTC shall no longer try the
case on the merits, 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 additional evidence in
the interest of justice.19
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated June 30, 2005 in CA-
G.R. SP No. 73857 ordering the remand of Civil Case No. Br. 20-1194 to the Regional Trial Court of
Cauayan, Isabela, Branch 20, for further proceedings, is AFFIRMED.

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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 CORPORATION,

FACTS:

Petitioner PPI and private respondent Fertiphil are private corporations incorporated under Philippine
laws.[3] They are both engaged in the importation and distribution of fertilizers, pesticides and agricultural
chemicals.

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 fertilizers in the Philippines.[4] The LOI provides:

3. The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing formula a capital
contribution component of not less than P10 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.[5]

Pursuant to the LOI, Fertiphil paid P10 for every bag of fertilizer 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 Company, the depositary bank of PPI. Fertiphil paid P6,689,144 to FPA from July 8, 1985 to January 24,
1986.

After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy. With the return of
democracy, Fertiphil demanded from PPI a refund of the 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 solely
favored PPI, a privately owned corporation, which used the proceeds to maintain its monopoly of the
fertilizer industry.

In its Answer,[10] FPA, through the Solicitor General, countered 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 country. It
also averred that Fertiphil did not sustain any damage from the LOI because the burden imposed by the levy
fell on the ultimate consumer, not the seller.

HELD:
On Locus Standi

Whether or not the complaint for collection is characterized 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 P10 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 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 severe sanctions for failure to pay the levy. The fact of payment is
sufficient injury to Fertiphil.

On theJurisdiction of the RTC

It is settled that the RTC has jurisdiction to resolve the constitutionality of a statute, presidential decree or an
executive 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:

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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 cases in which the constitutionality or validity of any treaty, international or executive agreement, law,
presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.
The P10 levy under LOI No. 1465 is
an exercise of the power of taxation.

We agree with the RTC that the imposition of the levy 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
purpose of the levy is revenue generation. If the purpose is primarily revenue, or if revenue is, at least, one 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 consumer. 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 for revenue
generation. The LOI expressly provided that the levy was imposed â¼ 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.

The purpose of a law is evident from its text or inferable from other secondary sources. Here, We agree 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 its fertilizer pricing formula a capital contribution component of not less than P10 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
Letter of Understanding 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 the 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.

The LOI is still unconstitutional even if enacted 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 â¼ lawful subjectsâ¼ and â¼ lawful means.â¼ Jurisprudence states the
test as follows: (1) the interest of the public generally, as distinguished from those of particular class, requires
its exercise; and (2) the means employed are reasonably necessary for the accomplishment of the purpose
and not unduly oppressive upon individuals.

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REMLAW Page 124
REYES, R.T., J.:

THE Regional Trial Courts (RTC) have the authority and jurisdiction to consider the constitutionality of statutes,
executive orders, presidential decrees and other issuances. The Constitution vests that power not only in the
Supreme Court but in all Regional Trial Courts.

The principle is relevant in this 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 petitioner Planters Products, Inc. (PPI) liable
to private respondent Fertiphil Corporation (Fertiphil) for the levies it paid under Letter of Instruction (LOI) No.
1465.

The Facts

Petitioner PPI and private respondent Fertiphil are private corporations incorporated under Philippine laws.[3]
They are both engaged in the importation and distribution of fertilizers, pesticides and agricultural chemicals.

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 fertilizers in the Philippines.[4] The LOI provides:

3. The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing formula a capital
contribution component of not less than P10 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.[5] (Underscoring supplied)

Pursuant to the LOI, Fertiphil paid P10 for every bag of fertilizer 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 Company, the
depositary bank of PPI. Fertiphil paid P6,689,144 to FPA from July 8, 1985 to January 24, 1986.[6]

After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy. With the return of
democracy, Fertiphil demanded from PPI a refund of the 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 solely favored PPI, a privately
owned corporation, which used the proceeds to maintain its monopoly of the fertilizer industry.

In its Answer,[10] FPA, through the Solicitor General, countered 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 country. It also
averred that Fertiphil did not sustain any damage from the LOI because the burden imposed by the levy fell on the
ultimate consumer, not the seller.

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RTC Disposition

On November 20, 1991, the RTC rendered judgment in favor of Fertiphil, disposing as follows:

WHEREFORE, in view of the foregoing, the Court hereby 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 attorney’s fees;

3) the cost of suit.

SO ORDERED.[11]

Ruling that the imposition of the P10 CRC was an exercise of the State’s inherent power of taxation, the RTC
invalidated the levy for violating the basic principle that taxes can only be levied for public purpose, viz.:

It is apparent that the imposition of P10 per fertilizer 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 constituents. However, there are two kinds of limitations on the power of taxation: the
inherent limitations and the constitutional limitations.

One of the inherent limitations 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 same 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 for the improvement of private property, or for the benefit, and promotion of private
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 except for the purpose of raising money which is to be expended for public use.
Funds 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 exercised or employed as an authority to destroy the economy of the
people. A tax, however, 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 plaintiff paid the amount of P6,698,144.00 to the Fertilizer and Pesticide Authority pursuant
to the P10 per bag of fertilizer sold imposition under LOI 1465 which, in turn, remitted the amount to the
defendant Planters Products, Inc. thru the latter’s depository bank, Far East Bank and Trust Co. Thus, by virtue
of LOI 1465 the plaintiff, Fertiphil Corporation, which is a private domestic corporation, became 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 P6,698,144.00.

Tested by the standards of constitutionality as set forth in the afore-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 said
amount should go to the defendant Planters Product, Inc. is unlawful because it violates the mandate that a tax
can be levied only for a public purpose and not 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 filed a notice of appeal with the RTC but it
failed to pay the requisite appeal docket 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 November 28, 2003, the CA handed down its decision affirming with modification that of the RTC, with the
following fallo:

IN VIEW OF ALL THE FOREGOING, the decision appealed from is hereby AFFIRMED, subject to the MODIFICATION

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IN VIEW OF ALL THE FOREGOING, the decision appealed from is hereby AFFIRMED, subject to the MODIFICATION
that the award of attorney’s 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 is 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 not 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 unmistakable
showing to the contrary.

However, the courts are not precluded from exercising 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 challenge. Fourth, the question of constitutionality must have been raised at the earliest opportunity;
and lastly, the issue of constitutionality must be the very 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
unconstitutional special assessment. Consequently, the requisite that the constitutionality 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 police power of the state, it is
still unconstitutional because it did not promote 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
exercise of the State’s power of taxation inasmuch as it violated the inherent and constitutional prescription
that taxes be levied only for public purposes. It reasoned out 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 statute’s passage was a valid exercise of police power. In
addition, it disputes the court a quo’s findings arguing that the collections under LOI 1465 was for the benefit
of Planters Foundation, Incorporated (PFI), a foundation created by law to hold in trust for millions of farmers, the
stock ownership of PPI.

Of the three fundamental powers of the State, the exercise of police power has been characterized as the most
essential, insistent and the 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 regulated 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 within the limits set by the Constitution, which requires the
concurrence of a lawful subject and a lawful method. Thus, our courts have laid down the test to determine the
validity of a police measure as follows: (1) the interests of the public generally, as distinguished from those of a
particular class, requires its exercise; and (2) the means employed are reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals (National Development Company v.
Philippine Veterans Bank, 192 SCRA 257 [1990]).

It is upon applying this established tests that We sustain the trial court’s holding LOI 1465 unconstitutional. To
be sure, ensuring the continued 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 this is by no means a measure that will
promote the public welfare. The government’s commitment to support the successful rehabilitation and
continued viability of PPI, a private corporation, is an unmistakable attempt to mask the subject statute’s
impartiality. There is no way to treat the self-interest of a favored entity, like PPI, as identical with the general
interest of the country’s farmers or even the Filipino people in general. Well to stress, substantive due process
exacts fairness and equal protection disallows distinction where none is needed. When a statute’s public

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exacts fairness and equal protection disallows distinction where none is needed. When a statute’s 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 government 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 for the exclusive benefit
of private individuals.[17]

The CA did not accept PPI’s claim that the levy imposed under LOI No. 1465 was for the benefit of Planters
Foundation, Inc., a foundation created to hold in trust the stock ownership of PPI. The CA stated:

Appellant next claims that the collections under LOI 1465 was for the benefit of Planters Foundation, Incorporated
(PFI), a foundation created by law to hold in trust for millions of farmers, the stock ownership of PFI on the
strength of Letter of Undertaking (LOU) issued by then Prime Minister 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
pricing formula a capital recovery component, the proceeds of which will be used initially for the purpose of
funding the unpaid portion of the outstanding capital stock of Planters presently held in trust 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
being hereafter referred to as the ‘Unpaid Capital’), and subsequently for such capital increases as may be
required for the continuing 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 Planters shares now held in trust by Planters Foundation, have been assigned to,
among others, the Creditors. Accordingly, the Republic, through FPA, hereby agrees to deposit the proceeds of the
capital recovery component in the special trust account designated in the notice dated April 2, 1985, addressed by
counsel for the Creditors to Planters Foundation. Such proceeds shall be deposited by FPA on or before the 15th
day of each month.

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 payment of the Subsidy Receivables, (c) any carrying cost accruing from the
date hereof on the amounts which may be outstanding from time to time of the Unpaid Capital 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’ shall 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-denominated obligations.” (Records,
pp. 42-43)

Appellant’s proposition is open to question, to say the least. The LOU issued by then Prime Minister Virata
taken together with the Justice Secretary’s Opinion does not preponderantly 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 explicitly provided in LOI 1465 – that
one of the primary aims in imposing the levy is to support the successful rehabilitation and continued viability of
PPI.[18]

PPI moved for reconsideration but its motion was denied.[19] It then filed the present petition with this Court.

Issues

Petitioner PPI raises four issues for Our consideration, viz.:

THE CONSTITUTIONALITY OF LOI 1465 CANNOT BE COLLATERALLY ATTACKED AND BE DECREED VIA A DEFAULT
JUDGMENT IN A CASE FILED FOR COLLECTION AND 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 STANDING TO DO SO.

II

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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 CONSTITUTES A VALID LEGISLATION PURSUANT TO THE
EXERCISE OF TAXATION AND POLICE POWER FOR PUBLIC PURPOSES.

III

THE AMOUNT COLLECTED UNDER THE CAPITAL RECOVERY COMPONENT 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 UNCONSTITUTIONALITY OF LOI 1465.

IV

THE PRINCIPLE OF UNJUST VEXATION (SHOULD BE ENRICHMENT) FINDS NO APPLICATION IN THE INSTANT
CASE.[20] (Underscoring supplied)

Our Ruling

We shall first tackle the procedural issues of locus standi and the jurisdiction of the RTC to resolve constitutional
issues.

Fertiphil has locus standi 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 “personal and substantial interest in the case or will sustain direct injury as a result of its enforcement.â
€*21+ It asserts that Fertiphil did not suffer any damage from the CRC imposition because †œincidence of the
levy fell on the ultimate consumer or the farmers themselves, not on the seller fertilizer company.”*22+

We cannot agree. 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 put, the doctrine requires a litigant to have a material
interest in the outcome of a case. In private suits, locus standi requires a litigant to be a “real party in interest,â
€ which is defined as †œthe party who stands to be benefited or injured by the judgment in the suit or the party
entitled to the avails of the suit.”*23+

In public suits, this Court recognizes the difficulty of applying the doctrine especially 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 intrusion and illegal official
action. At the other end, there is the public policy precluding excessive judicial interference in official acts, which
may unnecessarily hinder the delivery of basic public services.

In this jurisdiction, We have adopted the “direct injury test”to determine locus standi in public suits. In
People v. Vera,*25+ it was held that a person who impugns the validity of a statute must have “a personal and
substantial interest in the case such that he has sustained, or will sustain direct injury as a result.” The â
€œdirect injury test”in public suits is similar to the “real party in interest”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”test may hamper public interest, this Court relaxed
the requirement in cases of “transcendental importance”or with “far reaching implications.” Being a
mere procedural 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 characterized 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

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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 fertilizer sold on the domestic market. It may be true that Fertiphil has passed
some or 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 severe sanctions for failure to pay the levy. The fact of payment is sufficient injury 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 certainly rendered the fertilizer products of Fertiphil and other domestic sellers much
more expensive. The harm to their business consists not only in fewer clients because of the increased price, but
also in adopting alternative corporate strategies 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 market. The harm occasioned on
the business of Fertiphil is sufficient injury for purposes 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, the 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 from the
text of the LOI. PPI is expressly named in the LOI as the direct beneficiary of the levy. Worse, the levy was made
dependent and conditional upon PPI becoming financially viable. The LOI provided that “the capital
contribution shall be collected 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 constitutional duty to
squarely resolve the issue as the final arbiter of all justiciable controversies. The doctrine of standing, being a mere
procedural technicality, should be waived, if at all, to adequately thresh out an important constitutional issue.

RTC may resolve constitutional

issues; the constitutional issue was
adequately raised in the complaint; it
is the lis mota of the case.

PPI insists 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 attacked in a complaint for collection.[28] Alternatively, the
resolution of the constitutional issue is not necessary for a determination of the complaint for collection.[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 claim
without resolving the issue.[30]

It is settled that the RTC has jurisdiction to resolve the constitutionality of a statute, presidential decree or an
executive 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 the law or the Rules of Court may provide,
final judgments and orders of lower courts in:

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

In Mirasol v. Court of Appeals,[31] this Court recognized the power of the RTC to resolve constitutional issues,
thus:

On the first issue. It is settled that Regional Trial Courts have the authority and jurisdiction to consider the
constitutionality of a statute, presidential decree, or executive order. The Constitution vests the power of judicial
review or the power to declare a law, treaty, international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation not only in this Court, but in all Regional Trial Courts.[32]

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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 jurisdiction over cases involving the validity or constitutionality of a
rule or regulation issued by administrative agencies. Such jurisdiction, however, is not limited to the Court of
Appeals or to this Court alone for even the regional trial courts can take cognizance of actions assailing a specific
rule or set of rules promulgated by administrative bodies. Indeed, the Constitution vests the power of judicial
review or the power to declare a law, treaty, international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation in the courts, including the regional trial courts.[34]

Judicial review of official acts on the ground of unconstitutionality may be sought or availed of through 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-Subversion law,
or in ordinary actions, as in Krivenko v. Register of Deeds[36] involving the constitutionality of laws prohibiting
aliens from acquiring public lands. The constitutional issue, however, (a) must be properly raised and presented in
the 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]

Contrary to PPI’s claim, the constitutionality of LOI No. 1465 was properly and adequately raised in the
complaint for collection filed with the RTC. The pertinent portions 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, unjust, 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 efforts 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 PPI, 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 amounting 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 fertilizer industry to the detriment of other distributors and importers.[38]
(Underscoring 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. It 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 should be
refunded under the civil code principle against unjust enrichment. The refund is a mere consequence of the law
being declared unconstitutional. The RTC surely cannot order PPI to refund Fertiphil if it does not declare the LOI
unconstitutional. It is the unconstitutionality of the LOI which triggers the refund. The 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 any rate, the Court holds that the RTC and the CA did not err in ruling against the constitutionality of the LOI.

PPI insists that LOI No. 1465 is a valid exercise either of the police power or the power of taxation. It claims that
the LOI was 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 the LOI is unconstitutional because it was enacted to give benefit to a private company. The

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Fertiphil counters that the LOI is unconstitutional because it was enacted to give 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 welfare 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 for public purpose. The main purpose of police power is the regulation of a behavior or
conduct, while taxation is revenue generation. The “lawful subjects”and “lawful means”tests 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 levy 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 purpose of the levy
is revenue generation. If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial
purposes, then the exaction 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
by the State of its police power, but of its taxation power, thus:

It is clear from the provisions of Section 73 of Commonwealth Act 123 and Section 61 of the Land Transportation
and Traffic Code that the legislative intent and purpose behind the law requiring owners of vehicles to pay for their
registration is mainly to raise funds for the construction and maintenance of highways and to a much lesser
degree, pay for the operating expenses of the administering agency. x x x Fees may be properly regarded as taxes
even though they also serve as an instrument 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 revenue 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 refers
to the imposition on the registration, operation or ownership of a motor vehicle as a “tax or fee.”x x x
Simply put, if the exaction under Rep. Act 4136 were merely a regulatory fee, the imposition in Rep. Act 5448 need
not be an “additional”tax. Rep. Act 4136 also speaks of other “fees”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 minimal 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 fees are
to go into the expenditures of the Land Transportation Commission as provided for in the last proviso of Sec.
61.[44] (Underscoring supplied)

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 consumer. 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 for 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 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 taxation is public purpose. Taxes are exacted only for a public purpose.
They cannot be used for purely private purposes or for the exclusive benefit of private persons.[46] The reason for
this is simple. The power to tax exists for the general 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 citizens and use the funds
generated for a private purpose. As an old United States case bluntly put it: “To lay with one hand, the power
of the government on the property of the citizen, and with the other to bestow it upon favored individuals to aid
private enterprises and build up private fortunes, is nonetheless a robbery because it is done under the forms of
law and is called taxation.”*47+

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The term “public purpose”is not defined. It is an elastic concept that can be hammered to fit modern
standards. Jurisprudence states that “public purpose”should be given a broad interpretation. It does not
only pertain to those purposes which are traditionally viewed as essentially government functions, such as building
roads and delivery of basic services, but also includes those purposes designed to promote social 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 tax law. When a tax law is only a mask to exact funds from the public when its true
intent is to give undue benefit and advantage to a private enterprise, that law will not satisfy the requirement of â
€œpublic purpose.”

The purpose of a law is evident from its text or inferable from other secondary sources. Here, We agree 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:

3. The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing formula a capital
contribution component of not less than P10 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.[48] (Underscoring supplied)

It is a basic rule of statutory construction that the text of a statute should be given a literal meaning. In this case,
the text of the LOI is plain that the levy was imposed in order to raise capital for PPI. The framers of the LOI did not
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 utterly repulsive that a tax law would expressly name a private company
as the ultimate beneficiary of the taxes to be levied from the public. This is a clear case of crony capitalism.

Second, the LOI provides that the imposition of the P10 levy 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 Fertiphil 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
also proves that the main purpose of the law was to give undue benefit and advantage to PPI.

Fourth, the levy was used to pay the corporate debts of PPI. A reading of the Letter of Understanding[50] dated
May 18, 1985 signed by then Prime Minister Cesar Virata reveals that PPI was in deep financial problem because of
its huge corporate debts. There were pending petitions for rehabilitation against PPI before the Securities and
Exchange Commission. The government guaranteed payment of PPI’s 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 UNDERTAKING

May 18, 1985

TO: THE BANKING AND FINANCIAL INSTITUTIONS LISTED IN ANNEX A HERETO WHICH ARE CREDITORS
(COLLECTIVELY, THE “CREDITORS”) OF PLANTERS PRODUCTS, INC. (“PLANTERS”)

Gentlemen:

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This has reference to Planters which is the principal importer and distributor of fertilizer, pesticides and
agricultural chemicals in the Philippines. As regards 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 difficulties, 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
suspension of payment of all its obligations, and a separate petition filed by Manufacturers Hanover Trust
Company, Manila Offshore Branch for the appointment of a rehabilitation receiver for Planters.

In connection with the foregoing, the Republic of the Philippines (the “Republic”) confirms that it considers
and continues to consider Planters as a major fertilizer distributor. Accordingly, for and in consideration of your
expressed willingness to consider and participate in the effort to rehabilitate Planters, the Republic hereby
manifests its full and unqualified support of the successful rehabilitation and continuing viability of Planters, and 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 cause 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 unpaid portion of the outstanding capital stock of Planters presently held in trust 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 being hereafter referred to as the “Unpaid Capital”), and subsequently for such capital increases 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 payment of the Subsidy Receivables, (c) any carrying cost accruing from the
date hereof on the amounts which may be outstanding from time to time of the Unpaid Capital 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”shall 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-denominated obligations.

REPUBLIC OF THE PHILIPPINES

By:

(signed)
CESAR E. A. VIRATA
Prime Minister and Minister of Finance[51]

It is clear from the Letter of Understanding 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 the 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 the levy imposed under LOI No. 1465 was not for a public
purpose. LOI No. 1465 failed to comply with the public purpose requirement for tax laws.

The LOI is still unconstitutional even

if enacted 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 “lawful means.”Jurisprudence states the test as follows:
(1) the interest of the public generally, as distinguished from those of particular class, requires its exercise; and (2)
the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals.[52]

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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 advantage to a private corporation. We quote with approval the CA ratiocination on this
point, thus:

It is upon applying this established tests that We sustain the trial court’s holding LOI 1465 unconstitutional. To
be sure, ensuring the continued 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 this is by no means a measure that will
promote the public welfare. The government’s commitment to support the successful rehabilitation and
continued viability of PPI, a private corporation, is an unmistakable attempt to mask the subject statute’s
impartiality. There is no way to treat the self-interest of a favored entity, like PPI, as identical with the general
interest of the country’s farmers or even the Filipino people in general. Well to stress, substantive due process
exacts fairness and equal protection disallows distinction where none is needed. When a statute’s 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 government 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 for the exclusive benefit
of private individuals. (Underscoring supplied)

The general rule is that an

unconstitutional law is void; the
doctrine of operative fact is inapplicable.

PPI also argues that Fertiphil cannot seek a refund even if LOI No. 1465 is declared unconstitutional. It banks on the
doctrine of operative fact, which provides that an unconstitutional law has an effect before being declared
unconstitutional. PPI wants to retain the levies paid under LOI No. 1465 even if it is subsequently declared to be
unconstitutional.

We cannot agree. It is settled that no question, issue or argument will be entertained on appeal, unless it has been
raised in the court a quo.[53] PPI did not raise the applicability of the doctrine of operative fact with the RTC and
the CA. It cannot belatedly 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 general rule is that an unconstitutional law is void. It produces
no rights, imposes no duties and affords no protection. It has no legal effect. It is, in legal contemplation,
inoperative as if it has not been passed.[54] Being void, Fertiphil is not required to pay the levy. All levies paid
should be refunded in accordance 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 shall not be excused by
disuse or custom or practice to the contrary.

When the courts declare a law to be inconsistent with the Constitution, the former shall be void 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 nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a
determination of unconstitutionality is an operative fact and may have consequences which cannot always be
ignored. The past cannot always 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
have relied on the invalid law. Thus, it was applied to a criminal case when a declaration 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 creating it.[58]

Here, We do not find anything iniquitous in ordering PPI to refund the amounts paid by Fertiphil under LOI No.
1465. It unduly benefited from the levy. It was proven during the trial that the levies paid were remitted and
deposited to its bank account. Quite the reverse, it would be inequitable and unjust not to order a refund. To do so
would unjustly enrich PPI at the expense of Fertiphil. Article 22 of the Civil Code explicitly provides that “every
person who, through an act of performance by another comes into possession of something at the expense of the

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person who, through an act of performance by another comes into possession of something at the expense of the
latter without just or legal ground shall return the 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.

WHEREFORE, 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>

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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. RAGASA REPRESENTED BY HEIRS CYNTHIA G. RAGASA, AND THEIR
CHILDREN JOSEPH, CATHERINE AND CHARMAINE ALL SURNAMED RAGASA, ROLANDO SANCADA, AND DIONISIO
UMBALIN VS. COURT OF APPEALS, REGISTER OF DEEDS OF QUEZON CITY, GOLDKEY DEVELOPMENT CORPORATION,
JOSEFA CONEJERO, IGNACIO D. SONORON, PEDRO DEL ROSARIO, AND DOWAL REALTY AND MANAGEMENT SYSTEM
COMPANY

CARPIO, J.:

The Case

This petition for certiorari[1] assails the 17 September 1997 Decision[2] of the Court of Appeals in CA-G.R. CV No. 50035.
The Court of Appeals dismissed the appeal filed by petitioners Oscar R. Badillo, Giovanni C. Ong, Edgar A. Ragasa,
Rolando Sancada, and Dionisio Umbalin (petitioners) questioning the 5 June 1995 Order[3] of Branch 222 of the Regional
Trial Court of Quezon City in Civil Case No. Q-91-10510 for Annulment of Documents with Prayer for Issuance of
Prohibitory and Mandatory Injunction and Damages.
The Facts

Petitioners alleged that they are the registered owners of several lots adjoining a road lot known as Lot 369-A-29 or
Apollo Street of subdivision 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 covered 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 of TCT No.
RT-20895 is a court-ordered Entry No. 605/T-22655 which reads as follows: "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 violation of the court order, del Rosario sold an unsegregated portion of the road lot to
his co-respondents Josefa Conejero (Conejero) and Ignacio Sonoron (Sonoron) without obtaining prior court approval.
Del Rosario, Conejero, and Sonoron then entered into a partition agreement to divide the road lot into four lots which
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 the 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 order when it allowed the registration of the sales and
the subsequent issuance of new titles without first obtaining judicial approval. Petitioners claimed that Goldkey had built
cement fences on the lot, thus blocking the ingress and egress 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 (HLURB) has exclusive jurisdiction over
the cases mentioned in Section 1 of Presidential Decree No. (PD) 1344.[9] Goldkey argued that the Court of Appeals
correctly dismissed petitioners' appeal because petitioners merely assigned an error involving a pure question of
law. Goldkey added that petitioners are using the present petition as a substitute for an already lost appeal since
petitioners' counsel had received the decision on 17 October 1997 and the present petition was posted only on 16
December 1997.[10]

In May 1991, petitioners filed an initial complaint with the Office of the Building Official (building official) of Quezon City,
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 when 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 issued a Development Permit to Goldkey allowing it to develop the land into
residential townhouse units. The permit also mentioned that the project is classified as "Residential Townhouse
Subdivision" and, as evaluated, the same is "in accordance with the Zoning Ordinance of Quezon City."[13]
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Subdivision" and, as evaluated, the same is "in accordance with the Zoning Ordinance of Quezon City."[13]

On 4 November 1991,[14] petitioners filed a case for Annulment of Title and Damages[15] with the Regional Trial Court of
Quezon City.

Subsequently, the building official of Quezon City resolved the building case against petitioners and this decision became
final and executory.[16] The ruling held that the property is not a road lot but a residential lot.[17]

On 5 June 1995, 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 disputed property a residential lot and
not a road lot; hence, the building official 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. The trial court stated that petitioners'
contention that the property is a road lot 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 should have appealed the same to the Secretary
of Public Works and Highways as provided in Section 307 of Executive Order No. (EO) 1096. The findings of
administrative agencies which have expertise are generally accorded not only respect but even 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 therefore 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 Court

On 17 September 1997, the Court of Appeals dismissed the appeal on the ground 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 were illegally converted into residential lots
and thereafter disposed by del Rosario, the subdivision developer. Therefore, petitioners' complaints were filed for the
purpose of enforcing a contractual and statutory obligation of del Rosario to preserve a subdivision road lot for street
purposes. As such, the agency with jurisdiction is the HLURB, pursuant to the provisions of PD 957, 1216, and 1344, 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 subject matter of the complaints. Petitioners' assigned error involves a
pure question of law; hence, petitioners appealed to the wrong forum. Petitioners should have 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 three issues in this petition:

1. Whether the appellate court acted without or in excess of jurisdiction or with grave abuse of discretion by
dismissing petitioners' appeal on the ground that jurisdiction does not lie with the regular courts but 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 the ground that petitioners did not assign any error of fact; and
3. Whether a petition 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 administrative discretion.[20]
Jurisdiction Lies with the HLURB

PD 957,[21] otherwise known as "The Subdivision and Condominium Buyers' Protective Decree," granted the National

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PD 957,[21] otherwise known as "The Subdivision and Condominium Buyers' Protective Decree," granted the National
Housing Authority (NHA) the exclusive jurisdiction 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:
"WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or sellers
have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage,
sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering the health and safety
of home and lot buyers," (Emphasis supplied)
Thus, Section 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 public use and/or other form of subdivision development as contained in the approved subdivision plan
and/or represented in its advertisements, without the permission of the Authority and the written conformity or
consent of the duly organized homeowners association, or in the absence of the latter, by the majority of the 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 decisions.
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
provided for in Presidential Decree No. 957, the National Housing Authority shall have 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
owner, developer, dealer, broker or salesman; and

c. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner, developer, dealer, broker or salesman.(Emphasis supplied)
Under EO 648,[23] the NHA's functions were transferred to the Human Settlement Regulatory Commission. Section 8 of
EO 648 provides:
Section 8. Transfer of Functions. - The regulatory functions of the National Housing Authority pursuant to Presidential
Decrees No. 957, 1216, 1344 and other related laws are hereby transferred to the Commission, together with such
applicable personnel, appropriation, records, equipment and property necessary for the enforcement and
implementation of such functions. Among these regulatory functions are: (1) Regulation of the real estate trade and
business; (2) Registration of subdivision lots and condominium projects; (3) Issuance of license to sell subdivision lots and
condominium units in the registered units; (4) Approval of performance bond and the suspension of license to sell; (5)
Registration of dealers, brokers and salesmen engaged in the business of selling subdivision lots or condominium units;
(6) Revocation of registration of dealers, brokers and salesmen; (7) Approval 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 extension
of period for completion of subdivision or condominium projects; (9) Approval 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)
Regulation of the relationship between lessors and lessees; and (11) Hear and decide cases on unsound real estate
business practices; claims involving refund filed against project owners, developers, dealers, brokers or salesmen and
cases of specific performance. (Emphasis supplied)
EO 90 [24] renamed the Human Settlement Regulatory Commission the Housing and Land Use Regulatory Board. The
HLURB retained the regulatory and adjudicatory functions of the NHA.

Clearly, the scope and limitation of the HLURB's jurisdiction are well-defined. The HLURB's jurisdiction 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 case, petitioners are the registered owners of several lots adjoining a subdivision 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 constructing cement fences, thus blocking the passageway from their lots to the main road. In sum, petitioners are
enforcing their statutory and contractual rights against the subdivision owners. This is a specific performance case which
falls under the HLURB's exclusive jurisdiction.

In Osea v. Ambrosio,[26] the Court held that 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 implementation of provisions and the enforcement of contractual rights with respect to
said category of real estate may take recourse.

Petitioners claim that respondents violated 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 such that the conversion of the road lot in the subdivision plan would fall under the HLURB's jurisdiction
pursuant to these laws.

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pursuant to these laws.

Petitioners argue that they can file a specific performance case to compel respondents to comply with their contractual
and statutory obligation to maintain the road lot. However, petitioners can only be granted complete 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 petitioners to file a case for
annulment of title and prosecute the action. Petitioners insist that in the final analysis, a case for annulment of title
would still have to be filed with the ordinary courts.[27]

In Peña v. GSIS,[28] the Court ruled that when an administrative agency is conferred quasi-judicial functions, all
controversies relating to the subject matter pertaining to its specialization are deemed to be included within its
jurisdiction. Split jurisdiction is not favored.

As observed in C.T. Torres Enterprises, Inc. v. Hibionada:[29]

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

In the Solid Homes case for example the Court affirmed the competence of the Housing and Land Use Regulatory Board
to award damages although this is an essentially judicial power exercisable ordinarily only by the courts of justice. This
departure from the traditional allocation of governmental powers is justified by expediency, or the need of the
government to respond swiftly and competently to the pressing problems of the modern world.
Finally, in Cristobal v. Court of Appeals,[30] we held that "questions relating to non-compliance with the requisites for
conversion 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 Certiorari 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 Appeals 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 rendered 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 proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such
cases, the record on appeal shall be filed and served in 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 jurisdiction shall be by petition for review in accordance with Rule 42.

(c) Appeal by 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 in accordance with Rule 45.(Emphasis supplied)
In Sevilleno v. Carilo,[31] citing Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals, this Court
summarized the rule on appeals:
(1) In all cases decided by the RTC in the exercise of its original jurisdiction, appeal may be made to the Court of Appeals
by mere notice of appeal where the appellant raises questions of fact or mixed questions 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 exercise of its appellate jurisdiction, regardless of whether the
appellant raises questions of fact, questions of law, or mixed questions of fact and law, shall be brought to the Court of
Appeals by filing a petition for review under Rule 42. (Emphasis supplied)
In First Bancorp, Inc. v. Court of Appeals,[32] this Court also 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. (Emphasis supplied)
In the present case, petitioners raised only one issue in their Appellants' Brief - whether "the Honorable Trial Court a quo
seriously erred in holding that it has no jurisdiction over the subject matter of the case when in fact it has already

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seriously erred in holding that it has no jurisdiction over the subject matter of 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 jurisdiction is undoubtedly one of law. We have held that "a question of law exists when the 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 jurisdiction over the subject matter of the case. The appellate court can determine the issue
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 the Court of Appeals. - An appeal under Rule 41 taken from the Regional Trial
Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable
by said court. Similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a
Regional Trial Court shall be dismissed.

An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be
dismissed outright. (Emphasis supplied)
Rule 65 is not a remedy for lost appeal.

Petitioners should have directly taken their appeal to this Court by filing a petition 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 under
Rule 65.

As held in Balayan v. Acorda,[34] "the special civil action for certiorari is a limited form of review and is a remedy of last
recourse." It lies only where there is no appeal or plain, speedy, and adequate remedy in the ordinary course of law.

In the present case, petitioners chose the wrong mode of appeal. 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 error 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 certiorari will not be entertained. The remedies of appeal (including petitions for
review) and certiorari are mutually exclusive, not alternate or successive. Hence, 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
lapse. 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.
(Emphasis 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 timely 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] Although the Court has the discretion to treat a petition for
certiorari as having been filed under Rule 45, there is nothing in the present case to warrant a liberal application of the
rules.

WHEREFORE, we DISMISS the petition. We AFFIRM the 17 September 1997 Decision of the Court of Appeals. Costs
against petitioners.

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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. MANUEL 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 Decision
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; and in its assailed Resolution, refused to reconsider its decision.
Petitioner, a domestic corporation duly organized under Philippine laws, is engaged in the real estate
development business. Respondent is the assignee of L and M Maxco Specialist Engineering
Construction (LMM Construction) of its receivables from petitioner.
On 5 July 2000, petitioner entered into a Trade Contract with LMM Construction 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 the defect and delay in the work of LMM Construction on the condominium project, petitioner
unilaterally terminated the Trade Contract5 and hired another contractor 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 Construction a fraction of the contract price in proportion to the works already
performed by the latter.6
On 30 July 2004, petitioner received the first Notice of Garnishment against the receivables of LMM
Construction issued by the Construction Industry Arbitration Commission (CIAC) in connection with CIAC
Case No. 11-2002 filed 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 April 2005, petitioner received a letter dated 18 April 2005 from respondent inquiring on the
retention money supposedly due to LMM Construction and informing petitioner 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 respondent’s favor on 28 February 2005. LMM
Construction assigned its receivables from petitioner to respondent to settle the alleged unpaid
obligation of LMM Construction to respondent amounting to P804,068.21.
Through its letter dated 11 October 2005, addressed to respondent, petitioner acknowledged that LMM
Construction did have receivables still with petitioner, consisting of the retention money; but petitioner
also advised respondent that the retention money was not yet due and demandable and may be
ascertained only after the completion of the corrective works undertaken by the new contractor on the
condominium project. Petitioner also notified respondent that part of the receivables was also being
garnished by the other creditors of LMM Construction.
Unsatisfied with the reply of petitioner, respondent sent another letter dated 14 October 2005 asserting
his ownership over a portion of the retention money assigned to him and maintaining that the amount
thereof pertaining to him can no longer be garnished to 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
Assignment. Attached to respondent’s letter was the endorsement of LMM Construction dated 17
January 2005 approving respondent’s claim upon petitioner in the amount of P804,068.21 chargeable
against the retention money that may be received by LMM Construction from the petitioner.
Before respondent’s claim could be fully addressed, petitioner, on 6 June 2005, received the second
Notice of Garnishment against the receivables of LMM Construction, this time, issued by the National
Labor Relations Commission (NLRC) to satisfy the liability of LMM Construction to Nicolas Consigna in
NLRC Case No. 00-07-05483-2003.
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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 Sheriff enforcing the first Notice of Garnishment and directing petitioner to deliver
to Asia-Con Builders, through the Sheriff, the amount of P5,990,227.77 belonging 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 payments amounting to P1,170,601.81, covered by the appropriate
Acknowledgement Receipts.
A third Notice of Garnishment against the receivables of LMM Construction, 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 answer for the favorable judgment obtained by Concrete Masters, Inc. (Concrete Masters) against
LMM Construction in Civil Case No. 05-164.
Petitioner, in a letter dated 31 January 2006, categorically denied respondent’s claim on the retention
money, reasoning that after the completion of the rectification works on the condominium project and
satisfaction of the various garnishment orders, there was no more left of the retention money of LMM
Construction.
It would appear, however, that petitioner fully satisfied the first Notice of Garnishment in the amount of
P5,110,833.44 only on 31 January 2006,7 the very the same date that it expressly denied respondent’s
claim. Also, petitioner complied with the Notice of Garnishment and its accompanying Order of Delivery
of Money in the amount of P558,448.27 on 8 February 2006, a week after its denial of respondent’s
claim.8
The foregoing events prompted respondent to file a Complaint for collection of sum of money, against
both LMM Construction and petitioner, docketed as Civil Case No. 06-0200-CFM before the RTC of Pasay
City, Branch 109.
Instead of filing an Answer, petitioner 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 CIAC and not the regular courts
that had jurisdiction over the dispute as provided in the Trade Contract.
On 6 June 2006, the RTC issued an Order denying the Motion to Dismiss of petitioner, ruling that a full-
blown trial was necessary to determine which one between LMM Construction and petitioner should be
made accountable for the sum due to respondent.
Petitioner sought remedy from the Court of Appeals by filing a Petition for Certiorari, docketed as CA-
G.R. SP No. 97731, challenging the RTC Order dated 6 June 2006 for having been rendered by the trial
court 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 June 2006 Order of the RTC denying the Motion to Dismiss of petitioner. The
appellate court rejected the argument of petitioner that respondent, as the assignee of LMM
Construction, was bound by the stipulation in the Trade Contract that disputes 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 ill-fated was petitioner’s Motion for Reconsideration, which was denied by the Court of Appeals
in its Resolution dated 10 December 2007.
Petitioner now comes to this Court via this instant Petition for Review on Certiorari praying for the
reversal 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 pending before the RTC.
For the resolution of this Court is the sole issue of:
WHETHER OR NOT THE RTC HAS JURISDICTION OVER CIVIL CASE NO. 06-0200-CFM.
The jurisdiction of CIAC is defined under Executive Order No. 1008 as follows:
SECTION 4. Jurisdiction.—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 disputes may involve government or private contracts. For the Board to acquire
jurisdiction, 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 violation of specifications for materials and

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jurisdiction, 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 violation of specifications for materials and
workmanship; violation of the terms of agreement; interpretation and/or application of contractual
provisions; amount of damages and penalties; commencement time and delays; maintenance and
defects; payment default of employer or contractor and changes in contract cost.
Excluded from the coverage of this law are disputes arising from employer-employee relationships
which shall continue to be covered by the Labor Code of the Philippines.
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 parties, their assigns and heirs except when the rights and obligations arising from the
contract are not transmissible. Petitioner argues that the appellate court, in recognizing the existence of
the Deed of Assignment executed by LMM Construction -- in favor of respondent -- of its receivables
under the Trade Contract, should have considered the concomitant result thereof, i.e., that respondent
became a party to the Trade Contract and, therefore, bound by the arbitral clause therein.
Respondent counters that the CIAC is devoid of jurisdiction over money claims of third persons against
the contractor, developer or owner of the project. The jurisdiction of the CIAC is limited to settling
disputes arising among contractors, developers and/or owners of construction projects. It does not
include the determination of who among the many creditors of the contractor should enjoy preference
in payment of its receivables from the developer/owner.
It is an elementary rule of procedural law that jurisdiction of the court over the subject matter is
determined by the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to
recover upon all or some of the claims asserted 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
dismiss; for otherwise, the question of jurisdiction would almost entirely depend upon the defendant.
What determines the jurisdiction of the court is the nature of the action pleaded as appearing from the
allegations in the complaint. The averments therein and the character of the relief sought are the ones
to be consulted.9 Accordingly, the issues in the instant case can only be properly resolved by an
examination and evaluation of respondent’s allegations in his Complaint in Civil Case No. 06-0200-CFM.
The allegations in respondent’s Complaint are clear and simple: That LMM Construction had an
outstanding obligation to respondent in the amount of P804,068.21; that in payment of the said
amount, LMM Construction assigned to respondent its receivables from petitioner, which assignment
was properly 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 Construction; that at the time petitioner was notified of the
assignment, only one notice of garnishment, the first Notice of Garnishment, was received by it; that
had petitioner properly recognized respondent’s right as an assignee of a portion of the receivables of
LMM Construction, there could have been sufficient residual amounts to satisfy respondent’s 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 respondent’s 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 Construction to him.
A cause of action is a party’s 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 financial obligation incurred by LMM Construction and to be preferred over the
other creditors of LMM Construction, a right which pre-existed and, thus, was separate and distinct from
the right to payment of LMM Construction under the Trade Contract.
Petitioner’s unceasing reliance on Article 131111 of the Civil Code on relativity 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
emphasize 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 respondent 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 creditors 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 expertise and technical knowledge in

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arbitration and settlement, since such cases would often require expertise and technical knowledge in
construction. Hence, some of the matters over which the CIAC may exercise jurisdiction, upon
agreement of the parties to the construction contract, "include but [are] not limited to violation of
specifications for materials and workmanship; violation of the terms of agreement; interpretation
and/or application of contractual provisions; amount of damages and penalties; commencement time
and delays; maintenance and defects; payment default of employer or contractor and changes in
contract cost."12 Although the jurisdiction of the CIAC is not limited to the afore-stated enumeration,
other issues which it could take cognizance of must be of the same or a closely related kind or species
applying the principle of ejusdem generis in statutory construction.
Respondent’s claim is not even construction-related at all. Construction is defined as referring to all on-
site works on buildings or altering structures, from land clearance through completion including
excavation, erection and assembly and installation of components and equipment.13 Petitioner’s
insistence on the application of the arbitration clause of the Trade Contract to respondent is clearly
anchored on an erroneous 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 Trade Contract is not being
impugned herein. In fact, petitioner readily conceded that LMM Construction still had receivables due
from petitioner, and respondent did 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 amounting to
P804,068.21 should have been paid to him first before the other creditors of LMM Construction, which,
clearly, does not require the CIAC’s expertise and technical knowledge of construction.
The adjudication of Civil Case No. 06-0200-CFM necessarily involves the application of pertinent statutes
and jurisprudence 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 after a full-blown trial, than an
arbitration body specifically devoted to construction contracts.
This Court recognizes the laudable objective of voluntary arbitration to provide a speedy and
inexpensive method of settling disputes by allowing the parties to avoid the formalities, delay, expense
and aggravation which commonly accompany ordinary litigation, especially litigation which goes through
the entire hierarchy of courts. It cannot, however, altogether surrender to arbitration those cases, such
as the one at bar, the extant facts of which plainly call for the exercise of jurisdiction by the regular
courts for their resolution.
WHEREFORE, premises considered, the instant Petition is DENIED. The Decision dated 19 July 2007 and
the Resolution dated 10 December 2007 of the Court of Appeals in CA-G.R. SP No. 97731 are hereby
AFFIRMED in toto. Costs against the petitioner.

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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 BELISTA
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by Land Bank
of the Philippines (petitioner), seeking to annul and set aside the May 26, 2004 Decision1 and the July 28,
2004 Resolution2 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 spouses 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 private respondent.
The eight (8) parcels of lot were placed by the Department of Agrarian Reform (DAR, for brevity) under the
coverage of the Comprehensive Agrarian Reform Program (Presidential Decree No. 27 and Executive Order
No. 228). Consequently, private respondent claimed payment of just compensation over said agricultural
lands.
It further appears that the DAR's evaluation of the subject farms 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 Valuation and Payment of Just Compensation against petitioning bank before the DARAB-
Regional Adjudicator for Region V (RARAD-V) docketed as DCN D-05-02-VC-005.
On 07 July 2003, the RARAD-V issued a Decision, in favor of herein private respondent, the fallo of which
reads:
Wherefore, just compensation for the subject areas is hereby preliminarily fixed at TWO MILLION EIGHT
HUNDRED NINETY-SIX THOUSAND and FOUR HUNDRED EIGHT & 91/100 (P2,896,408.91) PESOS. Land Bank of
the Philippines, Legaspi City, is hereby ordered to pay herein petitioner said amount pursuant to existing
rules and guidelines, minus the sum already remitted per Order dated January 2, 2003.
SO ORDERED.
As both parties interposed their respective motions for reconsideration, the RARAD-V eventually issued an
Order dated 8 October 2003, the decretal portion of which reads:
Wherefore, the Decision dated July 7, 2003 is MODIFIED, fixing the valuation claim of petitioner herein with
respect to her due share in the above lots to the tune of Two Million Five Hundred Forty Thousand, Two
Hundred Eleven and 58/100 (P2,540,211.58) Pesos. Land Bank Legaspi City is hereby ordered to pay herein
petitioner said amount pursuant to existing 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 original Petition for Determination of Just
Compensation at the same sala of the RTC, docketed as Agrarian Case No. 03-06.
The court a quo motu propio dismissed the case when it issued the herein first assailed Order dated 12
November 2003 "for failure to exhaust administrative remedies and/or comply with Sections 5, 6, and 7, Rule
XIX, 2003 DARAB Rules of Procedure.
Petitioner LBP lodged a Motion for Reconsideration arguing, inter alia, "that the DARAB 2003 Rules of
Procedure does not apply to SAC nor its precursor DARAB Case and that the ground for dismissal of the case
is not among the instances when a court may dismiss a case on its 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 through the present Petition for Review, theorizing:
I. WHETHER OR NOT THE SAC A QUO 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, RULE XIX OF THE DARAB 2003 RULES OF PROCEDURE APPLY TO
CASES FILED AND PENDING BEFORE 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, Rule XIX of the 2003 DARAB Rules of Procedure, an appeal from the
adjudicator's resolution shall be filed before the DARAB and not before the RTC; that petitioner's filing of the
case before the RTC without first seeking the intervention of the DARAB is violative of the doctrine of non-

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case before the RTC without first seeking the intervention of the DARAB is violative of the doctrine of non-
exhaustion of administrative remedies. The CA found that petitioner's petition for determination of just
compensation was filed in the 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 provided that the 2003
Rules shall govern all cases filed on or after its effectivity; 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 reconsideration, which was denied in a Resolution dated July 28, 2004.
Petitioner is now before 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 VIOLATE 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 ERRED 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
COMPENSATION) WAS FILED BEFORE THE RARAD ON NOVEMBER 11, 2002.4
Petitioner contends that the petition for valuation and payment of just compensation was filed with the
DARAB- Regional Adjudicator for Region V (RARAD) on November 11, 2002, long before the effectivity of the
2003 Rules of Procedure; that under the transitory provision of the 2003 DARAB Rules, all cases pending with
the Board and the adjudicators prior to the date of the Rules' effectivity shall be governed by the DARAB
Rules prevailing at the time of their filing; that clear from the transitory provision 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 DARAB or any of its adjudicators which is the reckoning date of the applicability of the 2003
DARAB Rules and not the date of filing with the SAC; that under the 1994 DARAB Rules prevailing at the time
of the filing of the respondent's claim for 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 in 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 petitioner's petition with the RTC is an original action and, since the
case was filed at a time when appeal to the DARAB Central Office was already provided in the 2003 DARAB
Rules before resorting to judicial action, the RTC correctly dismissed the petition, which was correctly
affirmed by the CA.
Petitioner filed a Reply reiterating its arguments in the petition.
The issue for resolution is whether it is necessary that in cases involving claims for just compensation under
Republic Act (RA) No. 6657 that the decision of the Adjudicator must first be appealed 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. Quasi-judicial Powers of the DAR. – The DAR is hereby vested with primary jurisdiction 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 (DENR) x x
x
Section 57. Special Jurisdiction. – The Special Agrarian Court shall have original and exclusive jurisdiction over
all petitions for the determination of 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 cases 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 jurisdiction 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 RTC 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 Republic v. CA,5 the Court explained:

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6657 is vested in the courts.
In Republic v. CA, 5 the Court explained:
Thus, Special Agrarian Courts, which are Regional Trial Courts, are given original and exclusive jurisdiction
over two categories of cases, to wit: (1) "all petitions for the determination of just compensation to
landowners" and (2) "the prosecution of all criminal offenses under *R.A. No. 6657+." The provisions of §50
must be construed in harmony with this provision by considering cases involving the determination 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 essentially a judicial function which cannot be vested in administrative
agencies, while in Scoty’s Department Store v. Micaller, we struck down a law granting the then Court 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 original and exclusive jurisdiction of the RTC, sitting as SAC,
over all petitions for 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 the RTC's jurisdiction over Wycoco's petition for
determination of just compensation even where no summary administrative proceedings was held before the
DARAB which 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 completion of DARAB’s re-evaluation of the land. This,
notwithstanding, the Court held that the trial court properly acquired jurisdiction because of its exclusive and
original jurisdiction over determination of just compensation, thus –
… It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has "original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners." This "original and
exclusive" jurisdiction of the RTC would be undermined if the DAR would vest in administrative officials
original jurisdiction in compensation cases and make the RTC an appellate court for the review of
administrative decisions. Thus, although the new rules speak of directly appealing the decision of
adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear from Sec. 57 that the original and
exclusive jurisdiction to determine such cases is in the RTCs. Any effort to transfer such jurisdiction to the
adjudicators and to convert the original jurisdiction of the RTCs into an appellate jurisdiction would be
contrary to Sec. 57 and, therefore, would be void. Thus, direct resort to the SAC [Special Agrarian Court] by
private respondent is valid.
In the case at bar, therefore, the trial court properly acquired jurisdiction over Wycoco’s complaint for
determination of just compensation. It must be stressed that although no summary administrative
proceeding was held before the DARAB, LBP was able to perform its legal mandate of initially determining the
value of Wycoco's land pursuant to Executive Order No. 405, Series of 1990.8 x x x
In Land Bank of the Philippines v. Natividad,9 wherein Land Bank questioned the alleged failure of private
respondents to seek reconsideration of the DAR's valuation, but instead filed a petition to fix just
compensation with the RTC, the Court said:
At any rate, in Philippine Veterans Bank v. CA, we held that there is nothing contradictory between the DAR’s
primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction
over all matters involving the implementation of agrarian reform, which includes the determination of
questions of just compensation, and the original and exclusive jurisdiction of regional trial courts over all
petitions for the determination of just compensation. The first refers to administrative proceedings, while the
second refers to judicial proceedings.1avvphi1
In accordance with settled principles of administrative law, primary jurisdiction is vested in the DAR to
determine in a preliminary manner the just compensation for the lands taken under the agrarian reform
program, but such determination is subject to challenge before the courts. The resolution of just
compensation cases for the taking of lands under agrarian reform is, after all, essentially a judicial function.
Thus, the trial court did not err in taking cognizance of the case as the determination of just compensation is
a function addressed to the courts of justice. 10
In Land Bank of the Philippines v. Celada,11 where the issue was whether the SAC erred in assuming
jurisdiction over respondent's petition for determination of just compensation despite 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 valuation of property or determination of just compensation in eminent
domain proceedings is essentially a judicial function which is vested with the courts and not with
administrative agencies. Consequently, the SAC properly took cognizance of respondent's petition for

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administrative agencies. Consequently, the SAC properly took cognizance of respondent's petition for
determination of just compensation.12
The RTC dismissed petitioner'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 Appeal within fifteen (15) days from receipt of the
resolution. The filing of a Motion for Reconsideration of said resolution shall interrupt the period herein
fixed. 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 contest the resolution
of the Adjudicator within the aforecited reglementary period provided shall be deemed a concurrence by
such party with the land valuation, hence said valuation shall become final and executory.
Section 7. Filing of Original Action with the Special Agrarian Court for Final Determination. The party who
disagrees with the decision of the Board may contest the same by filing an original action with the Special
Agrarian Court (SAC) having jurisdiction over the subject property within fifteen (15) days from his receipt of
the Board's decision.
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 the Adjudicator on land valuation and preliminary determination and payment of just compensation shall
not be appealable to the Board, but shall be brought directly to the Regional Trial Courts designated as
Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled
to only one motion for reconsideration.
where DARAB acknowledges that the decision of just compensation cases for the taking of lands under RA
6657 is a power vested in the courts.13 Although Section 5, Rule XIX of the 2003 DARAB Rules of Procedure
provides that the land valuation cases decided by the adjudicator are now appealable to the Board, such rule
could not change the clear import of Section 57 of RA No. 6657 that the original and exclusive jurisdiction to
determine just 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 before the RTC and, hence, the RTC erred in dismissing the case.
Jurisdiction over the subject matter is conferred by law.15 Only a statute can confer jurisdiction on courts and
administrative agencies while rules of procedure cannot.16
WHEREFORE, 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 delay petitioner's petition for the determination of just compensation.

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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 Petition1 for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, seeking
the reversal of the Court of Appeals (CA) Decision2 dated January 22, 2003, which denied the appeal of
petitioner Municipality of Pateros (Pateros) for undertaking a wrong mode of appeal. Subject of the appeal
was the Order3 of the Regional Trial Court (RTC) of Makati City, Branch 139, dated June 14, 1996, which
dismissed petitioner’s complaint for lack of jurisdiction.
The Facts
The property subject of this case consists of portions of then Fort William McKinley, now known as Fort
Bonifacio (subject property), currently comprising Barangays Cembo, South Cembo, West Rembo, East
Rembo, Comembo, Pembo, and Pitogo (entire property). The subject property is allegedly situated within the
territorial jurisdiction of respondent Municipality (now City) of Makati (Makati) per Proclamation No. 24754
issued on January 7, 1986 (Proclamation No. 2475) by former President Ferdinand E. Marcos (President
Marcos). Subsequently, on January 31, 1990, former President 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 of 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, filed 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 was, 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 Heeding 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 Judicial Declaration of the Territorial Boundaries of
Pateros with a prayer for the issuance of a writ of Preliminary Injunction and Temporary Restraining Order
(TRO). Pateros claimed that, based on historical and official records, it had an original area of one thousand
thirty-eight (1,038) hectares, more or less. However, when a cadastral mapping was conducted by the Bureau
of Lands in 1978, Pateros was appalled to learn that its territorial boundaries had been substantially reduced
to merely one hundred sixty-six (166) hectares. Pateros opined that this disparity was brought about by the
issuance of Proclamation Nos. 2475 and 518. Thus, Pateros prayed that the RTC judicially declare the
territorial boundaries of Pateros based on supporting pieces of evidence, and that it nullify Proclamation No.
2475.
Makati filed a Motion to Dismiss,9 contending that the issue was not the nullification of Proclamation No.
2475; that the RTC had no jurisdiction over the subject matter of the action because original jurisdiction to
resolve boundary disputes among municipalities situated in Metro Manila is vested in the Metropolitan
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 exhaust administrative remedies by failing to settle the dispute amicably;
and that Pateros' 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 and portions of the subject property are included in the proposed
charter. Makati, thus, opined that the continuation of the RTC proceedings would create a conflict between
the judicial and the legislative branches. In its Order11 dated October 21, 1994, the RTC granted Makati’s
Motion.
On July 19, 1994, Republic Act No. 785412 was enacted into law, converting Makati into a highly urbanized
city. Pateros then moved for the revival of the proceedings before the RTC,13 which it granted 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 respective 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

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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 declared that the subject property is within the territorial
jurisdiction of Makati and, 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 alteration of boundaries of
municipalities can be done only through a law enacted by Congress which shall be subject to approval by a
majority of the votes cast in a plebiscite in the political units directly affected. Hence, the RTC opined that it is
without jurisdiction to fix the territorial boundaries of the parties. Pateros filed a Motion for
Reconsideration18 which was, however, denied by the RTC in its Order19 dated August 30, 1996. Aggrieved,
Pateros appealed to the CA. 20
The CA's Ruling
On January 22, 2003, the CA denied Pateros' appeal. The CA held that the RTC did not make any findings of
fact but merely applied various provisions of law and jurisprudence. Thus, the case presented a pure question
of law, which Pateros should have brought directly to the Supreme Court, pursuant to Section 5(2),21 Article
VIII of the 1987 Constitution and Section 2,22 Rule 41 of the Revised Rules of Civil Procedure. The CA also held
that it would amount to grave abuse of discretion amounting to lack of jurisdiction if the CA insisted on
resolving 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 Petition 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 issues raised before the CA involved mixed questions of fact and law, because
Pateros sought the determination of its territorial boundaries and the nullification of Proclamation No. 2475;
that Pateros does not seek the alteration, modification, or creation of another or a new local government
unit (LGU), but is concerned only with its territorial boundaries which, according to existing records,
consisted 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 prevented 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 Constitutional infirmity; that the alteration or modification of the boundaries of municipalities or cities
can only be made by a law enacted by Congress and approved by the majority of the votes cast in a plebiscite
in the political units directly affected; that Proclamation No. 2475, although issued by then President Marcos
during the Marcos era, was not a legislative enactment, pursuant to Section 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 majority of the votes cast in a plebiscite in the political units directly affected. 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 resorted 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 Motion to Dismiss and no trial on
the merits was ever conducted. Makati points out that 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 Pateros
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 notice of appeal to the CA rather than a petition for review on
certiorari under Rule 45 of the Revised Rules of Civil Procedure filed before this Court. Makati submits 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, the 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 presented any evidence before the RTC which
resolved the case based on the parties' undisputed factual submissions and the application thereto of the
pertinent laws, Rules of Civil Procedure, and jurisprudence. Hence, the OSG concludes that the appeal before
the CA involved a pure question of law.29
Our Ruling
We agree that Pateros indeed committed a procedural infraction. It is clear that the issue raised by Pateros to
the CA involves the jurisdiction of the RTC over the subject matter of the case. The jurisdiction of a court over
the subject matter of the action is a matter of law; it is conferred by the Constitution or by law.

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the subject matter of the action is a matter of law; it is conferred by the Constitution or by law.
Consequently, issues which deal with the jurisdiction of a court over the subject matter of a case are pure
questions of law. As Pateros' appeal 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 the Philippines and Daisy Afable31
provides us with ample justification, viz.:
While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and
while the swift unclogging of the dockets of the courts 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 despite inherent procedural defects and lapses.
This is in keeping with the principle 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 must always be avoided. It is a far better and more
prudent cause of action for the 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 disposal 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 procedural 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
maintain 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 proper disposition of his cause.
The emerging trend in the rulings of this Court is to afford every party litigant the amplest opportunity for the
proper and just determination 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 case, 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 between
Pateros and Makati.
Apart from the doctrine that the jurisdiction of a tribunal over the subject matter of an action is conferred by
law, it is also the rule that the court’s exercise of jurisdiction is determined by the material allegations of the
complaint or information and the law applicable at the time the action was commenced. Lack of jurisdiction
of the court over an action or the subject matter of an action cannot be cured by the silence, by
acquiescence, or even by express consent of the parties. Thus, the jurisdiction of a court over the nature of
the action and the subject matter thereof cannot be made to depend upon the defenses set up in court or
upon a motion to dismiss for, otherwise, the question of jurisdiction would depend almost entirely on the
defendant. Once jurisdiction is vested, the same is retained up to the end of the litigation.32
It is worth stressing that, at the time the instant case was filed, the 1987 Constitution 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. Jurisdictional Responsibility for Settlement of Boundary Disputes. — Boundary disputes
between and among local government units shall, as much as possible, be settled amicably. 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 sangguniang panlungsod or sangguniang bayan concerned.
(b) Boundary disputes involving two (2) or more municipalities within the same province shall be
referred for settlement to the sangguniang panlalawigan concerned.
(c) Boundary disputes involving municipalities or component cities of different provinces shall be
jointly referred for settlement to the sanggunians of the province concerned.
(d) Boundary disputes 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 be jointly referred for
settlement to the respective sanggunians of the parties.
(e) In the event the sanggunian fails to effect an amicable settlement within sixty (60) days from the
date the dispute was referred thereto, it shall issue a certification to that effect. Thereafter, the
dispute shall be formally tried by the sanggunian concerned which shall decide the issue within sixty
(60) days from the date of the certification referred to above. 33
Notably, when Pateros filed 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 could 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

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boundary dispute, as provided in Section 118(b) of the LGC. Neither was it feasible to apply Section 118(c) or
Section 118(d), because these two provisions clearly refer to situations different from that obtaining in this
case. Also, contrary to Makati's postulation, the former MMA did not also have the authority to take 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 composed 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 requiring coordination and
consolidation; and (2) promulgation of resolutions and other issuances, approval of a code of basic services,
and exercise of its rule-making power.34 Thus, there is no merit in Makati’s argument that Pateros failed to
exhaust administrative remedies inasmuch as the LGC is silent as to the governing body in charge of
boundary disputes involving municipalities located in the Metropolitan Manila area.
However, now that Makati is already a highly urbanized city, the parties should follow Section 118(d) of the
LGC and should opt to amicably settle this dispute by joint referral to the respective sanggunians of the
parties. 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 Makati, must be complied with. In the event that no amicable settlement is reached,
as 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 concerned within sixty (60) days from the date of the
aforementioned certification. In this regard, Rule III of the Rules and Regulations Implementing the LGC shall
govern. 35
Only upon failure of these intermediary steps will resort to the RTC follow, as specifically provided in Section
119 of the LGC:
Section 119. Appeal. — Within 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 having jurisdiction over the area
in dispute. The Regional Trial Court shall decide the appeal within one (1) year from the filing thereof.
Pending final resolution of the disputed area prior to the dispute shall be maintained and continued for all
legal purposes.
On this score, the jurisdiction of the RTC over boundary disputes among LGUs was settled in National
Housing Authority v. Commission on the Settlement of Land Problems,36 where this Court recognized the
appellate jurisdiction of the proper RTC. The jurisdiction of the RTC was clarified in Municipality of Kananga v.
Judge Madrona, 37 where this Court held that, even in the absence of any specific provision of law, "RTCs have
general jurisdiction to adjudicate 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 all other courts at that stage. Indeed, the power is not only original,
but also exclusive."
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 Mariano, Jr. v. COMELEC, 38 we held that the existence of a boundary
dispute does not per se present an unsurmountable difficulty which will prevent Congress from defining with
reasonable certitude the territorial jurisdiction of an LGU. Congress, by virtue of the powers vested in it by
the Constitution, could very well put an end to this dispute. We reiterate what we already said about the
importance and sanctity of the territorial jurisdiction of an LGU:
The importance of drawing with precise strokes the territorial boundaries of a local unit of government
cannot be overemphasized. The boundaries must be clear for they define the limits of the territorial
jurisdiction of a local government unit. It can legitimately exercise powers of government only within the
limits of its territorial jurisdiction. Beyond these limits, its acts are ultra vires. Needless to state, any
uncertainty in the boundaries of local government units will sow costly conflicts in the exercise of
governmental powers which ultimately will prejudice the people's welfare. This is the evil sought to be
avoided by the Local Government Unit 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 Petition is DENIED, having been mooted by the conversion of respondent
Municipality of Makati into a highly urbanized city. The parties are hereby DIRECTED to comply 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 prejudice to judicial recourse, as provided in the Local Government
Code. No costs.

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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 CORPORATION, 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 June 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 Development, Inc. (Tri-Corp) against respondent Greystone Corporation
(Greystone) for lack of jurisdiction.
The facts, culled from the records, are as follows:
On 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 the 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. 512326 was
to be used as a family residence of Tri-Corp’s officers and stockholders. However, when Tri-Corp applied
for membership with the San Miguel Village Homeowner’s Association (SMVHA), it was denied and not
given gate passes for its vehicles. The reason cited by SMVHA for Tri-Corp’s denial of application was
that the construction of the Casa Madeira condominium project was in violation of village restrictions
annotated as Entry No. 319767 and inscribed on October 9, 1961 at the back of Transfer Certificates of
Title Nos. 2058278 and 2058289 covering the lots on which the condominium project was constructed.
SMVHA filed a case against Greystone for this violation and prayed for the cancellation of the CCTs of
the Casa Madeira condominium project before the Housing and Land Use Regulatory Board (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. Tri-
Corp, 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 against 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 pay the supersedeas bond. Civil Case
No. 63308 is still pending on appeal.12
Tri-Corp also filed before the RTC of Makati City, sitting as a Land Registration Court, a Petition for
Correction of Error /Misrepresentation in the Master Deed entered as Memorandum on TCTs Nos.
205827 and 205828 with prayer for Temporary Restraining Order and Injunction.13 The case was
docketed as LRC Case No. M-4086. Tri-Corp alleged in its petition that Greystone used different
descriptions of the condominium project in order to circumvent existing laws, rules and regulations on
registration of real estate projects, to wit:
[1] Thus, to obtain approval of the San Miguel Village Association Construction and Permits
Committee, it styled 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 dubbed the same project as a "3-
storey townhouse", to suit barangay guidelines.
[3] To 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 zoning ordinances.
[4] To obtain from the HLURB the Preliminary Approval of Condominium Plan, it described Casa
Madeira as a "Condominium Project", for the purpose of complying with PD 957 and its

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 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 called 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 condominium for the
same purpose.
[7] To obtain from the HLURB a Certificate of Locational Viability for the same project, it was
designated as a "2 Storey with Attic Residential Condominium", for the same purpose.
[8] To obtain from the Department of Environment and Natural Resources, National Capital
Region an Environmental Compliance Certificate (ECC) it designated the project as "four units,
two storey with attic townhouse project", to comply with the requirement of law.
[9] To obtain from the HLURB Certificate of Registration No. 97-09-3003, it called Casa Madeira a
condominium project, for the purpose of complying with PD 957 and its implementing rules.
[10] These misrepresentations misled the petitioner as buyer and also mis[led] the buying public
as to the real nature of [the] project. 14 [Emphasis supplied.]
During the hearing on Tri-Corp’s application for a Writ of Preliminary Injunction on September 28, 2000,
Greystone raised the issue of jurisdiction. Greystone contended in its Memorandum15 that the RTC had
no jurisdiction to try and decide the case because it involves an unsound real estate practice within the
jurisdiction of the HLURB, Tri-Corp is not a party in interest, and same issues had been raised by Tri-Corp
in the HLURB.
In an Order dated November 15, 2000, the RTC dismissed the case for lack of jurisdiction. The dispositive
portion of the order states:
IN VIEW OF THE FOREGOING PREMISES, based on law and jurisprudence, the COURT hereby ORDERS
that:
(a) The prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction is hereby
DENIED for lack of merit.
(b) The Complaint dated 19 September 1990 (sic) is hereby DISMISSED, the 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 was denied by the RTC in an Order dated June 11,
2001.
Tri-Corp appealed to the Court 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.
Tri-Corp alleges that:
I.
THE APPELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION WHEN IT DECLARED THE MOTION FOR RECONSIDERATION AS HAVING BEEN FILED
OUT OF TIME DESPITE PROOFS OF TRAVEL.
II.
THE APPELLATE 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 OF OR
EXCESS OF JURISDICTION WHEN IT RESOLVED THE INSTANT CASE IN FAVOR OF RESPONDENT
GREYSTONE WITHOUT DUE REGARD TO THE PROTECTIVE MANTLE ENSHRINED UNDER PD 957
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-Corp’s
motion for reconsideration for being filed out of time, in declaring Tri-Corp as not a party in interest, and
in affirming the RTC’s Order dismissing the case for lack of jurisdiction?

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in affirming the RTC’s Order dismissing the case for lack of jurisdiction?
In its Memorandum,19 Tri-Corp asserts that it disagrees with the findings of the appellate court that its
motion for reconsideration was filed out of time since it would 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 Philippines.20 Tri-Corp further argues that the conclusion that Tri-Corp is not a party 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 value.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 alteration of annotations and cancellation of titles
with the jurisdiction of the RTC sitting as a Land Registration Court.22
On the other hand, Greystone, in its Memorandum,23 argues that it is clear that since Tri-Corp’s mailbox,
MBE Center, received 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 of time.
As defined, grave abuse of discretion means such capricious and whimsical exercise of judgment as is
equivalent to lack or excess of jurisdiction or, where the power is exercised in an arbitrary manner by
reason of passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to an
evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law.25
After review, we find that the Court of Appeals did not act with grave abuse of discretion because of the
following reasons:
First, the petitioner in this case is Tri-Corp and not Solita Jimenez-Paulino. The reckoning time therefore
to count the period to file Tri-Corp’s motion for reconsideration was the date the decision was received
by Tri-Corp’s mailbox and not the date when it was received by its representative, Solita S. Jimenez-
Paulino.1avvphi1
Second, the Court of Appeals, in ruling that Tri-Corp is not a party in interest, pointed out in its decision
that the contract to sell entered into by both parties contains a stipulation that in case of default or non-
payment of the stipulated amortizations and the rentals, Greystone has the option to rescind 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 legal basis to hold that Tri-Corp is no longer a party in
interest.
Third, the Court of Appeals decision affirming the trial court’s Orders dismissing Tri-Corp’s petition 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 National Housing Authority to
Issue Writ of Execution in the Enforcement of its Decisions 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 Authority shall have
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 owner, developer, dealer, broker or salesman; and
C. Cases involving 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-Corp’s chief quest is the cancellation 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 Greystone’s use of
different descriptions of the condominium project in order to circumvent existing laws, rules and
regulations on registration of real estate projects in its petition. Under these circumstances, Tri-Corp is
alluding to steps allegedly taken by Greystone in consummating an alleged unsound real estate business
practice. The HLURB has the technical expertise to resolve this technical issue. Jurisdiction therefore
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 lack of jurisdiction, acted with grave abuse of discretion that would warrant the
filing of a petition for certiorari under Rule 65 against it.

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filing of a petition for certiorari under Rule 65 against it.
WHEREFORE, the instant petition is DISMISSEDfor lack of merit. Costs against petitioner.

Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI92.349\tri-corp.docx>

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?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 BILANG
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. The State shall provide a system of adjudication for youthful
offenders which takes into account their peculiar circumstances.

The State recognizes the sanctity of family life and shall protect and strengthen the family as a basic
autonomous social institution. The courts shall preserve the solidarity of the family, provide
procedures for the reconciliation of spouses 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 population.

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 follows:
"Sec. 15. (a) Qualification. - No person shall be appointed Regional Trial Judge 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 ten (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
law as indispensable requisite.
"(b) Training of Family Court Judges. - The Presiding Judge, as well as the court personnel of the
Family Courts, shall undergo training and must have the experience and demonstrated ability in
dealing with child and family cases.

"The Supreme Court shall provide a continuing education program on child and family laws,
procedure and other related disciplines to judges and personnel of such courts."

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

a) Criminal cases where one or more of the accused is below eighteen (18) years of age but not
less than nine (9) years of age but not less than nine (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, the court shall promulgate sentence and ascertain any civil liability which the
accused 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 children, habeas corpus in relation to the latter;
c) Petitions for adoption of children and the revocation thereof;
d) Complaints for annulment of marriage, declaration of nullity of marriage and those relating to
marital status and property relations of husband and wife or those living together under
different status and agreements, and petitions for dissolution of conjugal partnership of gains;
REMLAW Page 160
 different status and agreements, and petitions for dissolution of conjugal partnership of gains;
e) Petitions for support and/or acknowledgment;
f) Summary judicial proceedings brought under the provisions of Executive Order No. 209,
otherwise known as the "Family Code of the Philippines";
g) Petitions for declaration of status of children as abandoned, dependent o neglected children,
petitions for voluntary or involuntary commitment of children; the suspension, termination, or
restoration of parental authority and other cases cognizable under Presidential Decree No. 603,
Executive Order No. 56, (Series of 1986), and other related laws;
h) Petitions for the constitution of the family home;
i) Cases against minors cognizable under the Dangerous Drugs Act, as amended;
j) Violations of Republic 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 psychological harm or suffering to women; and other forms of physical
abuse such as battering or threats and coercion which violate a woman's personhood,
integrity and freedom movement; and

2) Children - which include the commission of all forms of abuse, neglect, cruelty,
exploitation, violence, and discrimination and all other conditions prejudicial to their
development.
If an act constitutes a criminal offense, the accused or batterer shall be subject to criminal
proceedings and the corresponding penalties.

If any question involving any of the above matters should arise as an incident in any case pending in
the regular courts, said incident shall be determined in that court.

Sec. 6. Use of Income. - All Family Courts shall be allowed the use of ten per cent (10%) of their income
derived from filing and other court fees under Rule 141 of the Rules of Court for research and other
operating expenses including 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 implement the provisions
of this Sec.

Sec. 7. Special Provisional Remedies. - In cases of violence among immediate family members living in
the same domicile or household, the Family Court may issue a restraining order against the accused of
defendant upon verified application by the complainant or the victim for relief from abuse.

The court may order the temporary custody of children in all civil actions 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 shall have direct
control and supervision of the youth detention home which the local government unit shall establish
to separate the youth offenders from adult criminals: Provided, however, That alternatives to
detention and institutional care shall be made available to the accused including counseling,
recognizance, bail, community continuum, or diversions from the justice system: Provided, further,
That the human rights of the accused are fully respected in a manner appropriate to their well-being.

Sec. 9. Social Services and Counseling Division. - Under the guidance ofthe Department of Social
Welfare and Development (DSWD), a Social Services and Counseling Division (SSCD) shall be
established in each judicial region as the Supreme Court shall deem necessary based on the number of

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established in each judicial region as the Supreme Court shall deem necessary based on the number of
juvenile and family cases existing in such jurisdiction. It shall provide appropriate social services to all
juvenile and family cases filed with the court and recommend the proper social action. It shall also
develop programs, formulate uniform policies and procedures, and provide technical supervision 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 behavioral sciences to
carry out the duties'of conducting intake assessment, social case studies, casework and counseling,
and othersocial services that may be needed in connection with cases filed with the court: Provided,
however, That in adoption cases and in petitions for declaration of abandonment, the case studies
may be prepared by social workers of duly licensed child caring or child placement agencies, or the
DSWD. When warranted, the division shall recommend that the court avail itself of consultative
services of psychiatrists, psychologists, and other qualified specialists presently employed in other
departments of the government in connection with its cases.

The position of Social Work Adviser shall be created under the Office of the Court 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 was designated by the Supreme Court due to
the limited number of cases, the DSWD shall designate and assign qualified, trained, and DSWD
accredited social workers 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 Confidentiality of Proceedings. - All hearings and conciliation of the child and
family cases 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 confidentiality and the identity of parties shall not be divulged unless
necessary and with authority of the judge.

Sec. 13. Special Rules of Procedure. - The Supreme Court shall 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
consideration taking into account the United Nations Convention on the Rights of the 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 ordinary Regional Trial Courts.

Sec. 15. Appropriations. - The amount necessary to carry out the provisions of this Act shall be
included in the General Appropriations Act of the year following in its enactment into law and
thereafter.

Sec. 16. Implementing Rules and Regulations. - The Supreme Court, in coordination with the DSWD,
shall formulate the necessary rules and regulations for the effective implementation of the social
aspects of this Act.

Sec. 17. Transitory Provisions. - Pending the establishment of such Family Courts, the Supreme Court
shall designate from among the branches ofthe Regional Trial Court at least one Family Court in each
of the cities of Manila, Quezon, Pasay, Caloocan, Makati, Pasig, Mandaluyong, Muntinlupa, Laoag,
Baguio, Santiago, Dagupan, Olongapo, Cabanatuan, San Jose, Angeles, Cavite, Batangas, Lucena, Naga,
Iriga, Legazpi, Roxas, Iloilo, Bacolod, 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.
Additional cases other than those provided in Sec. 5 may be assigned to the Family Courts when their

REMLAW Page 162

Additional cases other than those provided in Sec. 5 may be assigned to the Family 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 provision of this Act is declared unconstitutional, the other
provisions shall remain in effect.

Sec. 19. Repealing Clause. - All other laws, decrees, executive orders, rules or regulations inconsistent
herewith are hereby repealed, amended or modified accordingly.

Sec. 20. Effectivity. - This Act shall take effect fifteen (15) days after its publication in at least two (2)
national newspapers of general circulation.

Approved October 28, 1997.

Pasted from <http://www.chanrobles.com/republicactno8369.htm>

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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
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 Proposed Rule on Declaration of Absolute Nullity of Void
Marriages and Annulment of Voidable Marriages, the Court Resolved to APPROVE the same.
The Rule shall take effect on March 15, 2003 following its publication in a newspaper of general
circulation not later than March 7, 2003
March 4, 2003
Davide, C.J. Bellosillo, Puno, Vitug Mendoza, 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 declaration of absolute nullity of void marriages
and annulment of voidable marriages under the Family Code of te Philippines.
The Rules of Court shall apply suppletorily.
Section 2. Petition for declaration of absolute nullity of void marriages.
(a) Who may file. - A petition for declaration of absolute nullity of void marriage may be filed solely by
the husband or the wife. (n)
(b) Where to file. - The 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 both parties were psychologically incapacitated from complying with the essential
marital obligations of marriages at the time of the celebration of marriage even if such incapacity
becomes manifest only after its celebration.
The complete facts should allege the physical manifestations, if any, as are indicative of
psychological incapacity at the time of the celebration of the marriage but expert opinion need not be
alleged.
Section 3. Petition for annulment of voidable marriages. -
(a) Who may file. - The following persons may file a petition for annulment of voidable marriage based
on any of the grounds under article 45 of the Family Code and within the period herein indicated:
(1) The contracting party whose parent, or guardian, or person exercising substitute parental authority
did not give 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 with the other as husband or wife; or the
parent, guardian or person having legal charge of the contracting party , at any time before such party
has reached the age of twenty-one;
(2) The sane spouse who had no knowledge of the other's insanity; or by any relative, guardian, or
person having legal charge of the insane, at 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 after the discovery of the
fraud, provided that said party, with full knowledge of the facts constituting the fraud, has not freely
cohabited with the other as husband or wife;
(4) The injured party whose consent was obtained by force, intimidation, 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, provided that the
force, intimidation, or undue influence having disappeared or ceased, 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 consummating the marriage with
the other and such incapability continues and appears 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-transmissible disease found to be
serious and appears to be incurable, within five years after the celebration of marriage.
(b) Where to file. - The petition shall be filed in the Family Court.
Section 4. Venue. - The Petition shall be filed in the Family Court of the province or city where the
petitioner or the respondent has been 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 election of the
petitioner.
Section 5. Contents and form of petition. - (1) The petition 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 involved.
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 custody and support of common children,
visitation rights, administration of community 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 petition shall be filed in the Family Court of the province or city where the
petitioner 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 in the Philippines at the election of the
petitioner.
Section 5. Contents and form of petition. - (1) The petition 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 involved.
If there is no adequate provision 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 matters similarly requiring urgent
action.
(3) it must be verified and accompanied by a certification against forum shopping. The verification and
certification must be signed personally 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 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) it shall be filed in six copies. The petitioner shall serve a copy of the petition on the Office of the
Solicitor 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 within 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 service 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, service of summons may, by leave of court, be effected upon
him by publication once 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 the summons shall be served
on the respondent at his last known address by registered mail or any other means the court may deem

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sufficient.
(2) The summons to be published shall be contained in an order of the court with the following data: (a)
title of the case; (b) docket number; (c) nature of the petition; (d) principal grounds of the petition and
the reliefs prayed for; and (e) a directive for the respondent to answer within thirty days from the last
issue of publication.
Section 7. Motion to dismiss. - No motion to dismiss 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 affirmative defense in an answer.
Section 8. Answer. - (1) The respondent shall file his answer within fifteen days from service 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 the respondent himself and not by counsel or attorney-in-
fact.
(2) If the respondent fails to file an answer, the court shall not declare 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 whether collusion exists between the parties.
Section 9. Investigation report of public prosecutor. - (1) Within one month after receipt of the court
order mentioned in paragraph (3) of Section 8 above, the public prosecutor shall submit a report to the
court stating whether the parties are in collusion and serve copies thereof on the parties and their
respective counsels, if any.
(2) If the public prosecutor finds that collusion exists, he shall state the on the finding of collusion 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 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 pre-trial.
Section 10. Social worker. - The court may require a social worker to conduct a case study and submit
the 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 11. 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 no collusion exists between the parties.
(2) Notice of pre-trial. - (a) The notice of pre-trial shall contain:
(1) the date of pre-trial conference; and
(2) an order directing the parties to file and serve their respective pre-trial briefs in 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 separately on the parties and their respective counsels as well as on the
public prosecutor. 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. In case of
summons by publication and the respondent failed to file his answer, notice of pre-trial shall be sent to
respondent at his last known address.
Section 12. 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 as may be allowed by law,
indicating the desired terms thereof;
(b) A concise statement of their respective claims together with the applicable laws and authorities;
(c) Admitted facts and proposed stipulations of facts, as well as the disputed factual and legal issues;
(d) All the evidence to be presented, including expert opinion, if any, briefly stating or describing the
nature and purpose thereof;
(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-trial 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 appear personally, the
case shall be dismissed unless his counsel or a duly authorized representative 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, the court shall proceed with the pre-trial

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(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 report to the court stating whether his non-appearance is due to any
collusion between the parties. If there Is no collusion, the court shall require the public prosecutor to
intervene for the State during the trial on the merits to prevent suppression 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 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.
(b) In case mediation is not availed of or where it fails, the court shall proceed with the 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 disposition 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 the
conference, the action taken thereon, the amendments allowed on the pleadings, and except as to the
ground of declaration of nullity or annulment, the agreements or admissions made by the parties on any
of the matters considered, including 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 following;
(1) Facts undisputed, admitted, and those which need not be proved subject 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 presented;
(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) 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 proceedings and fabrication or
suppression of evidence during the trial on the merits.
(d) The parlies shall not be allowed to raise issues or present 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 prevent 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
as 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 support;
(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 delegation of
the reception of evidence to a commissioner shall be allowed except as to matters involving property
relations of the spouses.
(2) The grounds for declaration of absolute nullity or annulment of marriage must be proved. No
judgment on the pleadings, summary judgment, or confession of judgment shall be allowed.
(3) The court may order the exclusion from the courtroom of all persons, including 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 party to testify in open court would not enhance the ascertainment of
truth; would cause to the party psychological harm or inability to effectively communicate due to
embarrassment, fear, or timidity; would violate the right of a party to privacy; or would be offensive to
decency or public morals.
(4) No copy shall be taken 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 public prosecutor, in consultation

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Section 18. Memoranda. - The court may require the parties and the public prosecutor, in consultation
with the Office of the Solicitor General, to file their respective 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 other pleadings or papers may
be submitted without leave of court. After the lapse of the period herein provided, the case will be
considered submitted for decision, with or without the memoranda.
Section 19. Decision. - (1) If the court renders 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 Rule on Liquidation,
Partition and Distribution of Properties.
(2) 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 publication failed to
appear in the action, the dispositive part of the decision shall be published once in a newspaper of
general circulation.
(3) The decision becomes final upon the expiration of fifteen days from notice to the parties. Entry of
judgment shall be made if no motion for reconsideration or new trial, or appeal Is filed by any of the
parties the public prosecutor, or the Solicitor General.
(4) Upon the finality of the decision, the court shall forthwith issue the corresponding decree if the
parties have no properties.
If the parties have properties, the court shall observe the procedure prescribed in Section 21 of
this Rule.
The entry of judgment shall be registered in the Civil Registry where the marriage was recorded
and In the Civil Registry where the Family Court'granting the petition for declaration of absolute nullity
or annulment of marriage is located.
Section 20. Appeal. -
(1) Pre-condition. - No appeal from the decision shall be allowed unless the appellant has filed a motion
for reconsideration or 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 filing
a Notice of Appeal within fifteen days from notice of denial of the motion for reconsideration or new
trial. The appellant shall serve a copy of the notice of appeal on the adverse parties.
Section 21. Liquidation, partition and distribution, custody, support of common children and delivery of
their presumptive iegltimes. - Upon entry of the judgment granting the petition, or, in case of appeal,
upon receipt of the entry of judgment of the appellate court granting the petition, the Family Court, on
motion of either party, shall proceed with the liquidation, partition and distribution of the properties of
the spouses, including custody, support of common children and delivery of their presumptive legitimes
pursuant to Articles 50 and 51 of the Family Code unless such matters had been adjudicated in previous
judicial proceedings.
Section 22. Issuance of Decree of Declaration of Absolute Nullity or Annulment of Marriage." (a) The
court shall issue the Decree after;
(1) Registration of the entry of judgment granting the petition for declaration of nullity or annulment of
marriage in the Civil Registry where the marriage was celebrated and in the Civil Registry of the place
where the Family Court is located;
(2) Registration of the approved partition and distribution of the properties of the spouses, in the proper
Register of Deeds where the real properties are located; and
(3) The delivery of the children's presumptive legitimes in cash, property, or sound securities.
(b) The court shall quote in the Decree the dispositive portion of the judgment entered and attach to the
Decree the approved deed of partition.
Except in the case of children under Articles 36 and 53 of the Family Code, the court shall order the
Local Civil Registrar to issue an amended birth certificate indicating the new civil status of the children
affected.
Section 23. Registration and publication of the decree; decree as best evidence. - (a) The prevailing party
shall cause the registration of the Decree in the Civil Registry where the marriage was registered, the
Civil Registry 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 requirement within thirty days from receipt of
the copy of the Decree.

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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 general 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 as well as the properties or presumptive legitimes delivered to their common children.
Section 24. Effect of death of a party; duty of the Family Court or Appellate 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, without 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 annulment, the judgment shall be binding
upon the parties and their successors in interest in the settlement of the estate in the regular courts.
Section 25. Effectlvity. - 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>

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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 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 Proposed Rule on Legal Separation, the Court Resolved
to APPROVED the same.
The Rule shall take effect on March 15, 2003 following its publication in a newspaper of 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-Santiago, on leave,
Corona, officially on leave.
RULE ON LEGAL SEPARATION
Section 1. Scope. - This Rule shall govern petitions for legal separation under the Family Code 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 years 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 pressure to compel the petitioner to change religious or political
affiliation;
(c) Attempt of respondent to corrupt or induce the petitioner, a common child, or a child of the
petitioner, to engage in prostitution, or connivance in such corruption or inducement;
(d) Final judgment sentencing the respondent to imprisonment of more than six years, even if pardoned;
(e) Drug addiction or habitual alcoholism of the respondent;
(f) Lesbianism or homosexuality of the respondent;
(g) Contracting by the respondent of a subsequent bigamous marriage, whether in or outside the
Philippines;
(h) Sexual infidelity or perversion of the respondent;
(i) Attempt on the life of petitioner by the respondent; or
(j) Abandonment of petitioner by respondent without justifiable cause for more than one year.
(b) Contents 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 common children of the parties, specify the regime governing their
property relations, the properties involved, and creditors, if any. If there is no adequate provision 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 similar matters requiring urgent action,
(3) Be verified and accompanied by a certification against forum shopping. The verification and
certification must be personally 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 verification 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 copies. The petitioner shall, within five days from such filing, furnish a copy of the
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 comply with the preceding requirements may be a ground for immediate dismissal of

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such service within the same period.
Failure to comply with the preceding requirements 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 petitioner 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 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 inquiry, service of summons may, by leave of court, be effected upon
him by publication once a week for two consecutive weeks in a newspaper of general circulation in the
Philippines and in such place as the court may order. In addition, a copy of the summons shall be served
on respondent at his last known address by registered mail or by any other means the court may deem
sufficient.
(b) The summons 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 directive for respondent to answer within thirty days from the last issue
of publication.
Section 4. Motion to Dismiss. - No motion to dismiss 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 affirmative defense in an answer.
Section 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 respondent himself and not by counsel or attorney-in-fact.
(b) If the respondent fails to file an answer, the court shall not declare him in default.
(c) Where no answer is filed/or if the answer does not tender an issue the court shall order the public
prosecutor to investigate whether collusion exists between the parties.
Section 6. Investigation Report of Public Prosecutor. - (a) Within one one month 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 counsels, if any.
(b) If the public prosecutor finds that collusion exists, he shall state the basis thereof in his report. The
parties shall file their respective 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 parties are in
collusion,-it shall dismiss the petition.
(c) If the public prosecutor 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 pre-trial.
Section 7. Social Worker. - The court may require a social worker to conduct a case study and to submit
the 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 8. Pre-trial. -
(a) 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 no collusion exists between the parties on a date not earlier than six months from date
of the filing of the petition.
(b) Notice of Pre-trial.-(1) The notice of pre-trial shall contain:
(a) the date of pre-trial conference; and
(b) an order directing the parties to file and serve their respective pre-trial briefs in such manner as shall
ensure the receipt thereof by the adverse party at least three days before the date of pre-trial.
(2) The notice shall be served separately on the parties and their respective counsels as well as on the
public prosecutor. It shall be their duty to appear personally at the 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 failed 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 brief shall contain the following:
(1) A statement of the willingness of the parties to enter into agreements as may be allowed by law,

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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 agreements as may be allowed by law,
indicating the desired terms thereof;
(2) A concise statement of their respective claims together with the applicable laws and authorities;
(3) Admitted facts and proposed stipulations of facts, as well as the disputed factual and legal issues;
(4) All the evidence to be presented, including expert opinion, if any, briefly stating or describing the
nature and purpose thereof;
(5) The number and names of the witnesses and their respective affidavits; and
(6) Such other matters as the court may require.
Failure to file the pre-trial brief or to comply with its required contents shall have the same effect
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 authorized representative appears in court and
proves a valid excuse for the non-appearance 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 prosecutor to investigate the non-appearance of the respondent and submit within
fifteen days a report to the court stating whether his non-appearance is due to any collusion between
the parties/ If there is no collusion the court shall require the public prosecutor to intervene for the
State during the trial on the.merits to prevent suppression or fabrication of evidence.
Section 11. Pre-trial conference. - 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 with 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 disposition of the petition.
Section 12. 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 the
conference, the action taken thereon, the amendments allowed on the pleadings, and, except as to the
ground of legal separation, the agreements or admissions made by the parties on any of the matters
considered, including 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 following:
(1) Facts undisputed, admitted, and those which need not be proved subject to Section 13 of this Rule;
(2) Factual and legal issues to be litigated;
(3) Evidence, including 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 affidavits; 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 proceedings and fabrication
or suppression of evidence during the trial on the merits.
(c) The parties shall not be allowed to raise issues or present 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
prevent manifest injustice.
(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 separation;
(3) Any ground lor legal separation;
(4) Future support;
(5) The jurisdiction of courts; and
(6) Future legitime.
Section 14. Trial. - (a) The presiding judge shall personally conduct the trial of the case. No delegation of
the reception of evidence to a commissioner shall be allowed except as to matters involving property
relations of the spouses.

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relations of the spouses.
(b) The grounds for legal separation must be proved. No judgment on the pleadings, summary
judgment, or confession of judgment shall be allowed.
(c) The court may order the exclusion from the courtroom of all persons, including 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 othat requiring 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 communicate due to
embarrassment, fear, or timidity; would violate the party's right to privacy; or would be offensive to
decency
(d) No copy shall be taken 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 15. Memoranda. - The court may require the parties and the public prosecutor to file their
respective memoranda in support of their claims within fifteen days from the date the trial is
terminated. No other pleadings or papers may be submitted without leave of court. After the lapse of
the period herein provided, the case will be considered submitted for decision, with or without the
memoranda.
Section 16. Decision. - (a) The court shall deny the petition on any of the following grounds:
(1) The aggrieved party has condoned the offense or act complained of or has consented to the
commission of the offense or act complained of;
(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 separation;
(4) There is collusion between the parties to obtain the decree of legal separation; or
(5) The action is barred by prescription.
(b) If the court renders 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.the parties, the court shall forthwith issue a Decree of
Legal Separation which shall 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 located.
(c) The decision shall likewise declare that:
(1) The spouses are entitled to 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 spouse is disqualified from inheriting from the innocent spouse by intestate
succession, 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 publication 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 appellant 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 Solicitor General may appeal from the decision by filing
a Notice of Appeal within fifteen 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 parties.
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 granting the petition, the Family Court, on motion of either party, shall proceed with the
liquidation, partition and distribution of the properties of the spouses, including custody and support of
common children, under the Family Code unless such matters had been adjudicated in previous judicial
proceedings.
Section 19. Issuance of Decree of Legal Separation. - (a) The court shall issue the Decree of Legal
Separation after:
(1) registration of the entry of judgment granting the petition tor legal separation in the Civil Registry
where the marriage was celebrated and in the Civil Registry where the Family Court is located; and

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where the marriage was celebrated and in the Civil Registry where the Family Court is located; and
(2) registration of the approved partition and distribution of 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 partition.
Section 20. Registration and publication of the Decree of Legal Separation; decree as best evidence. -
(a) Registration of decree.-The prevailing party shall cause the registration of the Decree in the Civil
Registry where the marriage 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 the 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 shall 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 before the entry of judgment, the court shall order the case closed
and terminated without prejudice to the settlement of estate proper proceedings in the regular courts.
(b) If the party dies after the entry of judgment, the same shall be binding upon the parties and their
successors in interest in the settlement of the estate 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 legal 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 of 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 recording of the petition for
revocation in the registries of property shall be respected.
(d)After the issuance of the Decree of Legal Separation, the innocent spouse may revoke the designation
of the offending spouse as a beneficiary in any insurance policy even if such designation be stipulated as
irrevocable. The revocation or change shall take effect upon written notification thereof to the insurer.
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 issue an order terminating the proceeding.
(c) If the reconciliation occurred after the rendition of the judgment granting the petition for legal
separation but before 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 relations or choose a new
regime.
The court shall immediately issue a Decree of Reconciliation declaring that the legal separation
proceeding is set aside and specifying 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 proper motion, shall issue
a decree of reconciliation declaring therein that the Decree is set aside but the separation of property
and any forfeiture of the share 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 adopt a regime of property
relations different from that which they had prior to the filing of the petition for legal separation, the
spouses shall comply with Section 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. Revival of property regime or adoption of another. -
(a) In case of reconciliation under Section 23, paragraph (c) above, the parties shall file a verified motion
for 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

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same proceeding for legal separation attaching to said motion their agreement for the approval of the
court.
(b) The agreement which shall be verified shall specify 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 to each.
(c) The creditors shall be furnished with copies of the motion and the agreement.
(d) The court shall require the spouses to cause the publication of their verified motion for two
consecutive weeks in a newspaper of general circulation.
(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 registries 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.

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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 Proposed Rule on Provisional Orders, the Court Resolved
to APPROVED the same.
The Rule shall take effect on March 15, 2003 following its publication in a newspaper of 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-Santiago, on leave,
Corona, officially on leave.
RULE ON PROVISIONAL ORDERS
Section 1. When Issued, - Upon receipt of a verified petition for declaration of absolute 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 upon application under oath of any of the parties, guardian or
designated custodian, 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.
Section 2. Spousal Support. - In determining support for the spouses, the court may 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) whether 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 time necessary to acquire sufficient education and training to enable the spouse
seeking support to find appropriate employment, and that spouse's future earning capacity; (3) the-
duration of the marriage; (4) the comparative financial resources of the spouses, including their
comparative earning abilities in the labor market; (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 the spouses; (8) the
physical and emotional conditions of the spouses; (9) the ability of the supporting spouse to give
support, taking into account that spouse's earning capacity, earned and unearned income, assets, and
standard of living; and (10) any other factor the court may deem just and equitable.
(d) The Family Court 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 partnership.
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 and to the necessities of the recipient.
In determining the amount of provisional support, the court may likewise consider the following
factors: (1) the financial 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 and aptitudes; (3) the
standard of living the child has been accustomed to; (4) the non-monetary contributions that the
parents will make toward the care and well-being of the child.

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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
parent.
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 consideration to the material and moral welfare of the child.
The court may likewise consider the following factors: (a) the agreement of the parties; (b) the
desire and ability of each parent to foster an open and loving relationship between 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 has had any filial relationship with the child, including anyone courting
the parent; (e) the nature and frequency of contact with both parents; (f) habitual use of alcohol or
regulated substances; (g) marital misconduct; (h) the most suitable physical, emotional, spiritual,
psychological and educational environment; and (i) the preference of the child, if over seven years of
age and of sufficient discernment, unless the parent chosen is unfit.
The court may award provisional custody in the following order of preference: (1) to both parents
jointly; (2) to either parent taking into account all relevant considerations under the foregoing
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 several of them, to the grandparent chosen by the child
over seven years of age and 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 she 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 custodian temporarily designated by the" court shall give the court and the parents five 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 visitation rights of the parents.
Section 5. Visitation Rights. - Appropriate visitation rights shall be provided to the parent who is not
awarded provisional custody unless found unfit or disqualified by the court. .
Section 6. Hold Departure 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 proprio 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 allow the departure
of the child from the Philippines without the permission of the court.
The Family Court issuing the hold departure order shall furnish the Department 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-four hours from the time of its issuance and through the fastest
available means of 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 order has been issued or whose departure from
the country has been enjoined;
(b) the complete title and docket number of the case in which the hold departure was issued;
(c) the specific nature of the case; and
(d) the date of the hold-departure order.
If available, a recent photograph of the person against whom a hold-departure order has been
issued or whose departure from the country has been enjoined should also be included.
The court may recall the order. motu proprio or upon verified motion of any of the parties after
summary hearing, subject to such terms and conditions as may be necessary for the best interests of the
child.
Section 7. Order of Protection. - The court may issue an Order of Protection requiring any person:
(a) to stay away from the home, school, business, or place of employment of the child, other parent or
any other party, and to stay away from any other specific place designated by the court;
(b) to refrain from harassing, intimidating, 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 omission that create an unreasonable risk to the health, safety,
or welfare of the child;

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or welfare of the child;
(d) to permit a parent, or a person entitled to visitation by a court order or a separation agreement, to
visit the child at stated periods;
(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 proceeding pending with the Family Court;
(f) to comply with such other orders as are necessary for the protection of the child.
Section 8. Administration of Common Property. - If a spouse without just cause abandons the other or-
fails to comply with his or her obligations to the family, the court may, upon application of the aggrieved
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 may not dispose of or encumber any common property or specific
separate property of either spouse without prior authority of the court.
The provisional order issued by the court shall be registered in the proper Register of Deeds and
annotated in all titles of properties subject of the receivership or administration.
Section 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, 2003.

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A.M. No. 03-04-04-SC Rule on Custody of Minors and Writ of
Habeas Corpus in Relation 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 WRIT OF HABEAS CORPUS
IN RELATION TO CUSTODY OF MINORS
RESOLUTION
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 Proposed Rule on custody of Minors and Writ of Habeas
Corpus in Relation to Custody of Minors, the Court Resolved to APPROVE the same.
The Rule shall take effect on May 15, 2003 following its publication in a newspaper of general circulation
not later than April 30, 2003.
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 minors and writs of habeas
corpus in relation thereto.
The Rules of Court shall apply suppletorily.
Section 2. Petition for custody of minors; who may file.- A verified petition for the rightful custody of a
minor may be filed by any person claiming such right. The party against whom it may be filed shall be
designated as 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 petition. - The verified petition shall allege the following:
(a) The personal circumstances 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 respondent;
(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 form and substance, it shall direct the clerk of court to issue summons, which shall 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 or the expiration of
the period to file it, the court may order a social worker to make a case study of the minor and the
parties and to submit a report and recommendation to the court at least three days before the
scheduled pre-trial.
Section 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 parties 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.

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requiring the respondent to present the minor before the court.
The notice of its order shall be served separately on both the parties and their respective counsels. 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 presented, briefly stating or describing its nature and purpose;
(f) The number and names of the witnesses and their respective affidavits which shall serve as the
affiant's testimony on direct examination; and
(g) Such other matters as the court may require to be included in the pre-trial brief.
Failure to file the pre-trial brief or to comply with its required contents shall have the same effect as
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-trial, the case shall be dismissed, unless his counsel or a duly authorized representative 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 the pre-trial, the petitioner shall be
allowed to present his evidence ex parte. The court shall then render judgment on the basis of the
pleadings and the evidence 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 agree, the court may refer the matter to a mediator who shall have five
days to effect an agreement between the parties. If the issue is not settled through mediation, 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 petition.
Section 13. Provisional order awarding custody. - After an answer has been filed or after expiration of
the period to file it, the court may issue a provisional order awarding custody of the minor. As far as
practicable, the following order of preference shall be observed in the award of custody:
(a) Both parents jointly;
(b) Either parent, taking into account all relevant considerations, especially the choice of the minor over
seven years of age and of sufficient discernment, unless the parent chosen is unfit;
(c) The grandparent, or if there are several grandparents, the grandparent chosen by the minor over
seven years of age and of sufficient discernment, unless the grandparent chosen is unfit or disqualified;
(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 and guidance for
the minor.
Section 14. Factors to consider in determining custody. - In awarding custody, the court shall consider
the best interests of the minor 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 conditions as are
most congenial to the survival, protection, and feelings of security of the minor encouraging to his
physical, psychological and emotional development. It also means the least detrimental available
alternative for safeguarding the growth and development of the minor.
The court shall also consider the following:
(a) Any extrajudicial agreement which the parties may have bound themselves 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 existing threat or danger of physical, mental, sexual or emotional violence
which endangers 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 other 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;

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relationship with the minor, including anyone courting the parent;
(e) The nature and frequency of contact with both parents;
(f) Habitual use of alcohol, dangerous drugs or regulated substances;
(g) Marital misconduct;
(h) The most suitable 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
chosen is unfit.
Section 15. Temporary visitation rights. - The court shall provide in its order awarding provisional
custody appropriate visitation rights to the 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 custodial parent or parents at least five days'
notice of any plan to change the residence of the minor or take him out of his residence for more than
three days provided 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 petition shall not be brought out of
the country without prior order from the court while the petition is pending.
The court, motu proprio 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 allow the departure of the
minor from the Philippines without the permission of the court.
The Family Court issuing the hold departure order shall furnish the Department of Foreign Affairs and
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 through the fastest available means of transmittal.
The hold departure order shall contain the following information:
(a) The complete name (including the middle name), 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
departure from the country has been enjoined;
(b) The complete title and docket number of the case in which the hold departure order was issued;
(c) The specific nature of the case;
(d) The date of the hold departure order; and
(e) A recent photograph, 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 recall 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 necessary for the best
interests of the minor.
Section 17. Protection Order. - The 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 or
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 refrain from acts of commission or omission that create an unreasonable risk to the health, safety,
or welfare of the minor;
(d) To permit a parent, or a party entitled to visitation by a court order or a separation agreement, to
visit the minor 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 contested 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. Judgment. - 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 appears 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 minor, 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,
maintenance and education of the minor, irrespective of who may be its custodian. In determining the
amount of support, the court may consider the following factors: (1) the financial resources of the
custodial and non-custodial parent and those of the minor; (2) the physical and emotional health,

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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 court may also issue any order that is just and reasonable permitting the parent who is deprived of
the care and custody of the minor to visit or have temporary custody.
Section 19. Appeal. - No appeal from the decision shall be allowed unless the appellant has filed a
motion for reconsideration or new trial within fifteen 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 the motion for reconsideration or new trial and serving a copy thereof on the
adverse parties.
Section 20. Petition for writ of habeas corpus. - A verified petition for a writ of habeas corpus involving
custody of minors shall be filed with the Family Court. The writ shall be enforceable within its judicial
region to which the Family Court belongs.
However, the petition may be filed with the regular court in the absence of the presiding judge of the
Family Court, provided, however, 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 appropriate regular courts in places where there are no Family
Courts.
The writ issued by the Family Court or the regular court shall be enforceable in the judicial 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
returnable to a Family Court or to any regular court within the region where the petitioner resides or
where the minor may be found for hearing and decision on the merits.
Upon return of the writ, the court shall decide the issue on custody of minors. The appellate court, or
the member thereof, issuing the writ shall be furnished a copy of the decision.
Section 21. Confidentiality of proceedings. - The hearings on custody of minors may, at the discretion of
the court, be closed to the public and the records of the case shall not be released to non-parties
without 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.

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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 of Court submitting for
this Court’s consideration and approval the Proposed Rule on Guardianship of Minors, the Court
Resolved to APPROVE the same.

The Rule shall take effect on May 1, 2003 following its publication in a newspaper of general circulation
not later than April 15, 2003.

April 1, 2003.

<>I>Davide, Jr. C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Ynares-Santiago,
Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Moralez,Callejo Sr., Azcuna, JJ., concur

RULE ON GUARDIANSHIP OF MINORS

Section 1. Applicability of the Rule. – This Rule shall apply to petitions for 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 property of their
unemancipated common child without the necessity of a court appointment. 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 grounds 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 Court 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 Welfare 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 guardianship 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
resides 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, deprivation or termination of parental authority;

(c) remarriage of his surviving parent, if the latter Is found unsuitable to exercise parental
authority; or

(d) when the best interests of the minor so require.

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Sec. 5. Qualifications of guardians. – In appointing a guardian, the court shall consider the guardian’s:

(a) moral character;

(b) physical, mental and psychological 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 period 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 minor. – 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 and In case several grandparents survive, the court shall select any
of them taking 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 actual custodian of the minor over twenty-one years of age, unless unfit or disqualified;
and

(d) any other person, who in the sound discretion of the court, would serve the best interests of
the minor.

Sec. 7. Contents of petition. – A petition for the appointment of a general guardian 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 suspension of their
parental authority;

(e) The remarriage of the minor’s surviving parent;

(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.

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The petition shall be verified and accompanied by a certification against forum shopping. However, no
defect in the petition or verification shall render void the 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 given to the
persons mentioned in the petition, including the minor if he is fourteen years of age or over, and may
direct other general or special notice to be given.

Sec. 9. Case study report. – The court shall order a social worker to conduct a case study of the minor
and all the prospective guardians and submit his report and 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 petition 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 minor 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 letters to issue. – At the hearing of the petition, it must be shown that the
requirement 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 guardian of the person or property, or both, of the minor.

At the discretion of the court, 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 appointed; 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 presence of the non-resident minor.

If after hearing the court is satisfied that such non-resident is a minor and a guardian is necessary or
convenient, it may appoint a guardian over his property.

Sec. 13. Service of final and executory judgment or order. – The final and executory judgment or order
shall be served upon the 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 situated shall annotate the same in
the corresponding title, and report to the court his compliance within fifteen days from receipt of the
order.

Sec. 14. Bond of guardian; amount; conditions.-Before he enters upon the execution 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 the 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 provide for his proper care, custody and education;

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rule for the best interests of the ward, and to provide for his proper care, custody and education;

(c) To render a true and Just account of all the property of the ward in his hands, 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 times as the court directs; and at the expiration of his trust, to settle his
accounts with the court and deliver and pay over all the property, effects, and monies remaining in his
hands, or due from him on such settlement, to the person lawfully 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 guardian shall be filed in the
Family Court and, In case of breach of any of its conditions, 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 discharge from
further liability the sureties on the old bond after due notice to interested persons, if no injury may
result therefrom to those interested in the property.

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 annual income, to guarantee the performance of the obligations prescribed for general
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 proceeding In which all incidents and issues
regarding the performance of the obligations of a general guardian shall be heard and resolved.

Sec. 17. General duties of 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 all his property within the Philippines.

A guardian shall perform the following duties:

(a) To pay the just debts of the ward out of the personal property and the income 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 encumbrance;

(b) To settle all accounts of his ward, and demand, sue for, receive all debts due him, or may, with
the approval of the court, compound for the same and give discharges to the debtor on receiving
a fair and just dividend of the property and effects; and to appear for and represent the ward in all
actions and special 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 insufficient for that purpose, to sell or encumber the real
or personal property, upon being authorized by the court to do so;

(d) To consent to a partition of real or personal 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 careful investigation as to the necessity and propriety of the proposed action;

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 (e) To submit to the court a verified inventory of the property of his ward within three months
after his appointment, and annually thereafter, the rendition of which may be required upon the
application of an interested person;

(f) To report 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 such discovery,
succession, or acquisition; and

(g) To render to the court for its approval an accounting of the property one year from his
appointment, and every year thereafter or as often as may be required.

Sec. 18. Power and duty of the court – The court may:

(a) Request the assistance of one or more commissioners in the appraisal of the property of the
ward reported 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 may 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 prospective 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 written instrument belonging to the ward or his
property to appear for examination concerning any thereof and issue such orders as would secure
the property against such embezzlement, concealment or conveyance.

Sec. 19. Petition to sell or encumber property.-When the income of a property under 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 productive security, or in the improvement or security of other real property, the guardian
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 to 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 show cause why the petition should not be granted.

Sec. 21. Hearing on return of order; costs. – At the time and place designated in the order to show cause,
the court shall hear the allegations and evidence of the petitioner and next of kin, and 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 order 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 property, 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 sold 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 original 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 expedient, require an additional bond as a condition for the sale or encumbrance. The authority
to sell or encumber shall not extend beyond one year, unless renewed by the court.

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to sell or encumber shall not extend beyond one year, unless renewed by the court.

Sec. 23. Court may order investment of proceeds and direct management of property. – 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 effects, 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 to be unsuitable, or has wasted or
mismanaged the property of the ward, or has failed 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
require him to surrender the property of the ward to the person found to be lawfully entitled thereto.

The court may allow the guardian to resign for justifiable causes.

Upon the removal or resignation of the guardian, the court shall appoint a new one.

No motion for removal or resignation shall be granted unless the guardian has submitted the proper
accounting of the property of the ward and the court has approved the same.

Sec. 25. Ground for termination of guardianship. – The court motu proprio or upon verified motion of
any person allowed to file a petition for guardianship 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
days 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 Registrar 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 situated. 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 minors shall continue to be under
the jurisdiction of the regular courts and governed 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>

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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) Convention on the Rights of the Child, UN Declaration on Social and Legal Principles
Relating 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 Adoption.

(b) The State shall provide alternative protection and assistance through foster 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 remains under the care and custody of his parents and is provided
with love, care, understanding and security for the full and harmonious development of his
personality. Only when such efforts prove insufficient and no appropriate placement or adoption
within the child’s extended family is available shall adoption by an unrelated person be
considered.

(ii) safeguard the biological parents from making hasty decisions in relinquishing their parental
authority over their child;

(iii) (iii) prevent the child from unnecessary separation from his biological parents;

(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 applications and offer adoption-related services including,
but not limited to, parent preparation and post-adoption education and counseling;

(vi) encourage domestic adoption so as to preserve the child’s identity and culture in his native
land, and only when this is not available shall inter-country adoption be considered as a last
resort; and

(vii) protect adoptive parents from attempts to disturb their parental authority and custody over
their adopted child.

Any voluntary or involuntary termination of parental authority shall be administratively or judicially

declared so as to establish the status of the child as “legally available for adoption” and his custody
transferred to the Department of Social Welfare and Development or to any duly licensed and
accredited child-placing or child-caring agency, which entity shall be authorized to take steps for the
permanent placement of the child.

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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 filing of the petition
for adoption.

(b) (b) “A child legally available for adoption” refers to a child who has been voluntarily or
involuntarily committed to the Department 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
rescission 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 parental 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 charitable or similar institution
with unknown facts of birth and parentage and registered in the Civil Register as a “foundling.”

(f) (f) “Abandoned child” refers to one who has no proper parental care or guardianship or whose
parents have deserted him for a period of at least six (6) continuous 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, guardian or other custodian for good cause desires to be relieved of his care and
custody and is dependent upon the public for support.

(h) (h) “Neglected child” is one whose basic needs have been deliberately not attended to or
inadequately attended to, physically or emotionally, by his parents or guardian.

(i) (i) “Physical neglect” occurs when the child is malnourished, ill-clad and without proper shelter.

(j) (j) “Emotional neglect” exists when a child is raped, seduced, maltreated, exploited,
overworked or made to work under conditions not conducive to good health or made to beg in
the streets or public places, or placed in moral danger, or exposed 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 not limited to,
receiving applications for adoption, evaluating the prospective adoptive parents and preparing the
adoption home study report.

(l) (l) “Child-caring 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 Social Welfare and Development.

(n) (n) “Deed of Voluntary Commitment” refers to the written and notarized instrument
relinquishing parental authority and committing the child to the care and custody of the

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 relinquishing parental authority and committing the child to the care and custody of the
Department executed by the child’s biological parents or in their absence, mental incapacity or
death, by the child’s 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 the child’s legal
status, placement history, psychological, social, spiritual, medical, ethno-cultural background and
that of his biological family needed in determining 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 prospective 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 adoptee in stabilizing
their filial relationship.

(r) (r) “Licensed Social Worker” refers to one who possesses a degree in bachelor of science in
social work as a minimum educational requirement and who has passed the government licensure
examination for social workers as required by Republic Act No. 4373.

(s) (s) “Simulation of birth” is the tampering of the civil registry to make it appear in the birth
records 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 child’s mother and father by nature.

(u) (u) “Pre-Adoption Services” refer to psycho-social services provided by professionally-trained

social workers of the Department, the social services units of local governments, private and
government health facilities, Family Courts, licensed and accredited child-caring and child-
placement agencies and other individuals or entities involved in adoption as authorized by the
Department.

(v) (v) “Residence” means a person’s actual stay in the Philippines for three (3) continuous years
immediately prior to the filing of a petition for adoption and which is maintained until the
adoption decree is entered. Temporary absences for professional, 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 involving moral turpitude; who is
emotionally and psychologically capable of caring for 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 and
adoptee may be waived when the adopter is the biological parent of the adoptee or is the spouse
of the adoptee’s parent;

(2) Any alien possessing the same qualifications as above-stated for Filipino nationals: Provided,
That his country has diplomatic relations with the Republic of 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

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 living in the Philippines for at least three (3) continuous years prior to the filing of the petition for
adoption and maintains such residence until the adoption decree is entered, that he has been
certified by his diplomatic or consular office or any appropriate government agency to have the
legal capacity to adopt in his country, and that his government allows the adoptee to enter his
country as his adopted child. Provided, further, That the requirements on residency and
certification of the alien’s qualification to adopt in his country may be waived for the following:

(i) a former Filipino citizen who seeks to adopt a relative within 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 married to a Filipino citizen and seeks to adopt jointly with his spouse a
relative within 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 guardianship and clearance
of his financial accountabilities.

Husband and wife shall jointly 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 spouses are legally separated from each other.

In case husband and wife jointly adopt or one spouse adopts the illegitimate child 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 below eighteen (18) years of age who has been voluntarily committed to the
Department under Articles 154, 155 and 156 of P.D. No. 603 or judicially declared available 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 biological or adoptive parents have died: Provided, That no proceedings shall
be initiated 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

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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 specifically state at the heading of
the initiatory pleading whether the petition contains an application for change of name, rectification of
simulated birth, voluntary or involuntary commitment of children, or declaration of child as abandoned,
dependent or neglected.

1) 1) If the adopter is a Filipino citizen, the petition shall allege the following:

(a) (a) The jurisdictional facts;

(b) (b) That the petitioner is of legal age, in possession of full civil capacity and legal rights; is
of good moral character; has not been convicted of any crime involving moral turpitude; is
emotionally and psychologically capable of caring 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 adoptee’s 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 required
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 Philippines;

(d) (d) That he has been certified by his diplomatic or consular office or any appropriate
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) continuous years prior
to the filing of the petition and he maintains such residence until the adoption decree is
entered.

The requirements of certification of the alien’s qualification to adopt in his country 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 child of his Filipino spouse; or

(iii) is married to a Filipino citizen and seeks to adopt jointly with his spouse a relative
within the fourth degree of consanguinity or affinity of the Filipino spouse.

3) 3) If the adopter is the legal guardian of the adoptee, the petition shall allege that guardianship
had been terminated and the guardian had cleared his financial accountabilities.

4) 4) If the adopter is married, the spouse shall be a co-petitioner for joint adoption except if:

(a) one spouse seeks to adopt the legitimate child of the other, or

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 (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 is 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 known; sex, name and
citizenship of adoptive mother and father, and the date and place 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 shall 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 registered in the
Civil Registry.

A certification of non-forum shopping shall be included pursuant to Section 5, Rule 7 of the 1997 Rules
of Civil Procedure.

Sec. 8. Rectification of Simulated Birth. – In case the petition also seeks rectification of a simulated of
birth, it shall allege that:

(a) (a) Petitioner is applying for rectification of a simulated birth;

(b) (b) The 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 the 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 as 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 guardian, if any;

(c) (c) The name of the duly licensed child-placement agency or individual under whose care the
child is in custody; and

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 child is in custody; and

(d) (d) That the Department, child-placement or child-caring agency is authorized 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 the petition:

A. Birth, baptismal or foundling certificate, as the case may be, and 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 the child, if known, or the legal guardian, or the child-placement
agency, child-caring 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 adoptee, if any, who are
ten (10) years of age or over;

4. The illegitimate children 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 petitioner is an alien, certification by his diplomatic or consular office or any appropriate
government agency that he has the legal capacity to adopt in his country and that his government
allows the adoptee to enter his country as his own adopted child unless exempted under Section
4(2);

E. Home study report on the adopters. If the adopter is an alien or residing abroad but qualified to
adopt, the home study report by a foreign adoption agency duly accredited by the Inter-Country
Adoption Board; and

F. Decree of annulment, nullity or legal separation of the 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 form and substance, the
court shall issue an order which shall contain the following:

(1) the registered name of the adoptee in the birth certificate and the names by which the

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 (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 within six (6) months from the date of the
issuance of the order and shall direct that a copy thereof be published before the date of hearing
at least once a week for three successive weeks in a newspaper of general circulation in the
province or city where the court is situated; Provided, that in case of application for change 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 election.

The newspaper shall be selected by raffle under the supervision of the Executive 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 Department to prepare and submit child
and home study reports before the hearing if such reports had not been attached to the petition
due to unavailability at the 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 of the order of hearing shall also be furnished the Office of the
Solicitor General 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 prayed 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 the 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 was 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 late
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 are valid and authentic, that the adopter has sincere intentions and that the adoption
shall inure to the best interests of the child.

In case the adopter is an alien, the home study report must show the legal capacity to adopt and that his
government allows the adoptee to enter his country as his adopted child in the absence 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 are grounds to deny the
petition, he shall make the proper recommendation to the court, furnishing a copy thereof to the
petitioner.

Sec. 14. Hearing. – Upon satisfactory proof that the order of hearing has been published and
jurisdictional requirements have been complied with, the court shall proceed to hear the petition. The
petitioner and the adoptee must personally appear and the former must testify before the presiding

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petitioner and the adoptee must personally appear and the former must testify before the presiding
judge of the court on the date set for hearing.

The court shall verify from the social worker and determine whether the biological parent has been
properly counseled against making hasty decisions caused by strain or anxiety to give up the child;
ensure that all measures to strengthen the family have been exhausted; and ascertain if any prolonged
stay of the child in his own home will be inimical to his welfare and interest.

Sec. 15. Supervised Trial Custody. – Before issuance of the decree of adoption, the court shall give the
adopter trial custody of the adoptee for a period of at least six (6) months within which the parties are
expected to adjust psychologically and emotionally to each other and establish a bonding relationship.
The trial 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 child-caring agency which submitted and
prepared the case studies. During said period, temporary parental authority shall be vested in the
adopter.

The court may, motu proprio or upon motion of any party, reduce the period or exempt the parties if it
finds that the same shall be for the best interests of the adoptee, stating the reasons therefor.

An alien adopter however must complete the 6-month trial custody except the following:

a) a former Filipino citizen who seeks to adopt a relative within the fourth (4th) degree of
consanguinity or affinity; or

b) one who seeks to adopt the legitimate 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
latter’s relative within the fourth (4th) degree of consanguinity or affinity.

If the child is below seven (7) years of age and is placed with the prospective adopter through a pre-
adoption placement authority issued by the Department, the court shall order that the prospective
adopter shall enjoy all the 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 evidence adduced that the adoption shall redound to
the best interests of the adoptee, 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 registered;

B. Order:

1) the Clerk of Court to issue to the adopter a certificate of finality upon expiration 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 of
finality to the Civil Registrar where the child was originally registered within 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 issuing the same is situated.

3) 3) the Civil Registrar of the place where the adoptee was registered:

a. to annotate on the adoptee’s original certificate of birth 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 place 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 compliance 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 the 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 showing the date of
issuance of the decree in each case, compliance by the Civil Registrar with Section 16(B)(3) and all
incidents arising after the issuance of the decree.

Sec. 18. Confidential Nature of Proceedings and Records. –All hearings in adoption cases, after
compliance with the jurisdictional requirements shall be confidential 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 agency or institution participating in the adoption proceedings shall be kept strictly
confidential.

If the court finds that the disclosure of the information to a third person is necessary for security
reasons or for purposes connected with or arising out of the adoption and will be for the best interests
of the adoptee, the court may, upon proper motion, order the necessary information to be released,
restricting the purposes for which it may be used.

Sec. 19. Rescission of Adoption of the Adoptee. – The petition shall be verified and filed by the adoptee
who is over eighteen (18) years of age, or with the assistance 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 rescinded based on any of the following grounds committed by the adopter:

1) repeated physical and verbal maltreatment by the adopter despite having undergone
counseling;

2) attempt on the life of the adoptee;

3) sexual assault or violence; or

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 3) sexual assault or violence; or

4) abandonment or failure to comply with parental obligations.

Adoption, being in the best interests of the child, shall not be 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) years 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. 22. Order to Answer. – The court shall issue an order requiring the adverse party to answer the
petition within fifteen (15) days from receipt of a copy thereof. The order and copy of the petition shall
be served on the adverse party in such manner as the court may direct.

Sec. 23. Judgment. – If the court finds that the allegations of the petition are true, it shall render
judgment ordering the rescission of adoption, with or without 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 and
declare that the reciprocal rights and obligations of the adopter and the adoptee to each other shall be
extinguished.

The court shall further declare that successional rights shall revert to its status prior to adoption, as of
the date of judgment of judicial rescission. Vested rights acquired prior to judicial rescission 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 with a certificate of
finality issued by the Branch Clerk of the Court which rendered the decision in accordance with the
preceding Section shall be served by the petitioner upon the Civil Registrar concerned within thirty (30)
days from receipt 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 issuing 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 Section 17 hereof.

SEC. 25. Repeal. - This supersedes Rule 99 on Adoption and Rule 100 of the Rules of Court.

B. Inter-Country Adoption

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B. Inter-Country Adoption

Sec. 26. Applicability. – The following sections apply to inter-country adoption of Filipino children by
foreign nationals and Filipino citizens permanently residing 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 suitable manner, be cared for in the
Philippines;

b) ensure that the child subject of inter-country adoption enjoys the same protection accorded to
children in domestic 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 may be filed by a foreign
national or Filipino citizen permanently residing abroad with the Family Court having jurisdiction over
the place where the child resides 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 adoption may be the subject
of inter-country adoption.

Sec. 30. Contents of Petition. – The 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, unless the petitioner is the parent by nature of the child to be adopted or the spouse
of such parent, in which case the age difference does not apply;

b) b) if married, 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 act and assume all rights and responsibilities of parental authority
under his national laws, and has undergone the appropriate counseling from an accredited
counselor 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 abide by the rules and regulations issued to
implement the provisions of Republic Act No. 8043;

h) h) that he comes from a country with which the Philippines has diplomatic relations and whose

REMLAW Page 200

 h) h) that he comes from a country with which the Philippines has diplomatic relations and whose
government maintains a similarly authorized and accredited agency 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 disqualifications provided in this Rule,
in Republic Act No. 8043 and in all other applicable Philippine laws.

Sec. 31. Annexes. - The petition for adoption shall contain the following annexes written and officially
translated in English:

a) a) Birth certificate of petitioner;

b) b) Marriage contract, if married, and, if applicable, the divorce decree, or judgment dissolving
the marriage;

c) c) Sworn statement of consent of petitioner’s 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 filing of the petitioner;

g) g) Character reference from the local church/minister, the petitioner’s employer and a member
of the immediate community who have known the petitioner for at least five (5) years;

h) h) Full body postcard-size pictures of the petitioner and his immediate family taken at least six
(6) months before the filing of the petition.

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 immediately 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>

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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 Provisions

Art. 238. Until modified by the Supreme Court, the procedural rules provided 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 authority. (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 required by
law but such consent is withheld or cannot be obtained, a verified petition 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
describe 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 parties shall be submitted to and approved by
the court. (n)
Art. 240. Claims for damages by either spouse, except costs of the proceedings, may be litigated only in
a separate action. (n)
Art. 241. Jurisdiction over the petition shall, upon proof of notice to the other spouse, be exercised by
the proper court authorized to hear family cases, if one exists, or in the regional trial court or its
equivalent sitting in the place where either of the spouses resides. (n)
Art. 242. Upon the filing of the petition, the court shall notify the other spouse, whose consent to the
transaction is required, of said petition, ordering said spouse to show cause why the petition should not
be granted, on or before the date set in said 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
concerned. (n)
Art. 243. A preliminary conference shall be conducted by the judge personally without the parties being
assisted by counsel. After the initial conference, if the court deems it useful, the parties may be assisted
by counsel at the 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)
Art. 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 and circumstances may warrant. In any case,
the judge shall endeavor to protect the interests of the non-appearing spouse. (n)
Art. 246. If the petition is not resolved at the initial conference, said petition shall be decided in a
summary hearing on the basis of affidavits, documentary evidence or oral testimonies at the 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, directing 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 judicial authority to administer or encumber specific separate property of the
abandoning spouse and to use the fruits or proceeds thereof for the support of the family shall also be
governed by these rules. (n)
Chapter 3. Incidents Involving Parental Authority
Art. 249. Petitions filed under Articles 223, 225 and 235 of this Code involving parental authority shall be
verified.. (n)
Art. 250. Such petitions shall be verified and filed in the proper court of the place where the child
resides. (n)
Art. 251. Upon the filing of the petition, the court shall notify the parents or, in their absence or

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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 exercising parental authority over the child. (n)
Art. 252. The rules in Chapter 2 hereof shall also govern summary proceedings under this Chapter
insofar as they are applicable. (n)

Pasted from <http://webcache.googleusercontent.com/u/lawphil?

q=cache:NHZcT8v7bzkJ:www.lawphil.net/executive/execord/eo1987/eo_209_1987.html+summary+procedure+family+code&cd=
10&hl=en&ct=clnk&ie=UTF-8>

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 Art. 51(action of a child for presumptive legitime),
Chapter 4 Art. 69 (judicial declaration of family domicile in case of disagreement of the spouses),
Sunday, November 14, 2010 Art. 73 (spouse’s objection to the profession of the other spouse),
11:30 PM Arts. 96 and
124 (annulment of husband’s decision in the administration and enjoyment 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)
and Art. 217 (entrusting children to homes and orphanages).

Art. 41. A marriage contracted by any person during subsistence of a previous marriage shall be null and
void, unless before the celebration of the subsequent marriage, the prior spouse had been absent for
four consecutive years and the spouse present has a well-founded belief that the absent spouse was
already dead. In case of disappearance where there is danger of death under the circumstances set 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 marriage 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
spouse. (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 parties, by mutual agreement judicially approved, had already provided for such matters.
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 herein 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 nullity shall be
considered as advances on their legitime. (n)

Art. 69. The husband and wife shall fix the family domicile. In case of disagreement, the court shall
decide.
The court may exempt one spouse from living with the other if the latter should live abroad or there are
other valid and compelling 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 spouse may exercise any legitimate profession, occupation, business or activity without
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 spouse who
has not obtained consent.
The foregoing provisions shall not prejudice the rights of creditors who acted in good faith. (117a)

Section 4. Ownership, Administrative, Enjoyment and Disposition of the Community Property

Art. 96. The administration and enjoyment of the community property shall belong to both spouses
jointly. In case of disagreement, the husband's decision shall prevail, subject 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.
In 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 encumbrance 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 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. (206a)

Section 5. Administration of the Conjugal Partnership Property

Art. 124. The administration and enjoyment of the conjugal partnership shall belong to both spouses
jointly. In case of disagreement, the husband's decision shall prevail, subject 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.
In the event that one spouse is incapacitated or otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume sole powers of administration. These powers do
not include disposition or encumbrance 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 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 case of foundlings, abandoned neglected or abused children and other children similarly
situated, parental authority shall be entrusted in summary judicial proceedings to heads of children's
homes, orphanages and similar institutions duly accredited by the proper government agency. (314a)

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Madrinan v. Madrinan GR 159374 Jul 12, 2007
Sunday, November 14, 2010
11:30 PM

FELIPE N. MADRIÑAN, 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. MADRIÑAN,
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 sensitive and heart-rending affair. Such is the
case here. Even the usually technical subject of jurisdiction became emotionally charged.

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

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

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

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

Petitioner and respondent appeared at the hearing on September 17, 2002. They initially agreed that
petitioner would return the custody of their three sons to respondent. Petitioner, however, had a
change of heart[1] and decided to file a memorandum.

On September 3, 2002, petitioner filed his memorandum[2] alleging that respondent was unfit to take
custody of their three sons because she was habitually drunk, frequently went home late at night or in
the wee hours of the morning, spent much of her time at a beer house and neglected her duties as a
mother. He claimed that, after their squabble on May 18, 2002, it was respondent who left, taking their
daughter with her. It was only then that he went to Sta. Rosa, Laguna where he worked as a tricycle
driver. He submitted a certification from the principal of the Dila Elementary School in Sta. Rosa, Laguna
that Ronnick and Phillip were enrolled there. He also questioned the jurisdiction of the Court of Appeals
claiming that under Section 5(b) of RA 8369 (otherwise known as the “Family Courts Act of 1997”) family
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 decide the petition for habeas corpus filed by
respondent.[3]

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

On October 21, 2002, the Court of Appeals[5] rendered a decision[6] asserting its authority to take
cognizance of the petition and ruling that, under Article 213 of the Family Code, respondent was entitled
to the custody of Phillip and Francis Angelo who were at that time aged six and four, respectively,
subject to the visitation rights of petitioner. With respect to Ronnick who was then eight years old, the
court ruled that his custody should be determined by the proper family court in a special proceeding on
custody of minors under Rule 99 of the Rules of Court.

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

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

Section 5. Jurisdiction of Family Courts. – The Family Courts shall have exclusive original jurisdiction to
hear and decide the following cases:
xxx x xx x xx
b) Petitions for guardianship, custody of children, habeas corpus in relation to the latter;
xxx x xx x xx

Petitioner is wrong.
In Thornton v. Thornton,*7+ this Court resolved the issue of the Court of Appeals’ jurisdiction to issue
writs of habeas corpus in cases involving custody of minors in the light of the provision in RA 8369 giving
family courts exclusive original jurisdiction over such petitions:

The Court of Appeals should take cognizance of the case since there is nothing in RA 8369 that revoked
its jurisdiction to issue writs of habeas corpus involving the custody of minors.
xxx x xx x xx
We rule therefore that RA 8369 did not divest the Court of Appeals and the Supreme Court of their
jurisdiction over habeas corpus cases involving the custody of minors.
xxx x xx x xx

The provisions of RA 8369 reveal no manifest intent to revoke the jurisdiction of the Court of Appeals
and Supreme Court to issue writs of habeas corpus relating to the custody of minors. Further, it cannot
be said that the provisions of RA 8369, RA 7092 [An Act Expanding the Jurisdiction of the Court of
Appeals] and BP 129 [The Judiciary Reorganization Act of 1980] are absolutely incompatible since RA
8369 does not prohibit the Court of Appeals and the Supreme Court from issuing writs of habeas corpus
in cases involving the custody of minors. Thus, the provisions of RA 8369 must be read in harmony with
RA 7029 and BP 129 – that family courts have concurrent jurisdiction with the Court of Appeals and the
Supreme Court in petitions for habeas corpus where the custody of minors is at issue.[8] (emphases
supplied)

The jurisdiction of the Court of Appeals over petitions for habeas corpus was further affirmed by A.M.
No. 03-03-04-SC (April 22, 2004) in Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation
to Custody of Minors:

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to Custody of Minors:

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

Section 20. Petition for writ of habeas corpus. – A verified petition for a writ of habeas corpus involving
custody of minors shall be filed with the Family Court. The writ shall be enforceable within its judicial
region to which the Family Court belongs.
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
returnable to a Family Court or to any regular court within the region where the petitioner resides or
where the minor may be found for hearing and decision on the merits.

From the foregoing, there is no doubt that the Court of Appeals and Supreme Court have concurrent
jurisdiction with family courts in habeas corpus cases where the custody of minors is involved.[9]
(emphases supplied)

We note that after petitioner moved out of their Parañaque residence on May 18, 2002, he twice
transferred his sons to provinces covered by different judicial regions. This situation is what the
Thornton interpretation of RA 8369’s provision on jurisdiction precisely addressed:

[The reasoning that by giving family courts exclusive jurisdiction over habeas corpus cases, the
lawmakers intended them to be the sole courts which can issue writs of habeas corpus] will result in an
iniquitous situation, leaving individuals like [respondent] without legal recourse in obtaining custody of
their children. Individuals who do not know the whereabouts of minors they are looking for would be
helpless since they cannot seek redress from family courts whose writs are enforceable only in their
respective territorial jurisdictions. Thus, if a minor is being transferred from one place to another, which
seems to be the case here, the petitioner in a habeas corpus case will be left without legal remedy. This
lack of recourse could not have been the intention of the lawmakers when they passed [RA 8369].[10]

Moreover, a careful reading of Section 5(b) of RA 8369 reveals that family courts are vested with original
exclusive jurisdiction in custody cases, not in habeas corpus cases. Writs of habeas corpus which may be
issued exclusively by family courts under Section 5(b) of RA 8369 pertain to the ancillary remedy that
may be availed of in conjunction with a petition for custody of minors under Rule 99 of the Rules of
Court. In other words, the issuance of the writ is merely ancillary to the custody case pending before the
family court. The writ must be issued by the same court to avoid splitting of jurisdiction, conflicting
decisions, interference by a co-equal court and judicial instability.

The rule therefore is: when by law jurisdiction is conferred on a court or judicial officer, all auxiliary
writs, processes and other means necessary to carry it into effect may be employed by such court or
officer.[11] Once a court acquires jurisdiction over the subject matter of a case, it does so to the
exclusion of all other courts, including related incidents and ancillary matters.

Accordingly, the petition is hereby DENIED.

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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 Jonathan Yu (petitioner) filed a petition for habeas corpus before the Court of
Appeals alleging that his estranged wife Caroline Tanchay-Yu (respondent) unlawfully withheld from him
the custody of their minor child Bianca. The petition, which included 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 petition against petitioner before the Pasig
Regional Trial Court (RTC) for declaration of nullity of marriage and dissolution of the absolute
community of property. The petition included a prayer for the award to her of the sole custody of Bianca
and for the fixing of schedule of petitioner’s visiting rights "subject only 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, awarded petitioner full custody
of Bianca during the pendency of the habeas corpus case, with full visitation rights of respondent.
Petitioner and respondent later filed on April 5, 2002 before the appellate court a Joint Motion to
Approve Interim Visitation Agreement which was, by Resolution of April 24, 2002, approved.
On April 18, 2002, respondent filed before the appellate court a Motion for the Modification of her
visiting rights under the Interim Visitation Agreement. To the Motion, petitioner filed an Opposition with
Motion to Cite Respondent for Contempt of Court in light of her filing of the petition for declaration of
nullity of marriage before the Pasig RTC which, so he contended, constituted forum shopping.
By Resolution of July 5, 2002, the appellate court ordered respondent and 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 is concerned, under pain of contempt.
In compliance with the appellate court’s Resolution of July 5, 2002, respondent filed a Motion to Admit
Amended Petition before 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 resources and her very busy schedule rendered her unable
to devote the necessary time and attention to the petition. The Pasig RTC granted respondent’s motion
and accordingly dismissed the petition without prejudice, by Order of March 28, 2003.
On June 12, 2003, petitioner filed his own petition for declaration of nullity of marriage and dissolution
of the absolute community of property before the Pasig RTC, 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 academic, "the restraint on the liberty of the person alleged to be in restraint
[having been] lifted."
In the meantime, respondent filed on July 24, 2003 before the Pasay RTC a petition for habeas corpus,
which she denominated as "Amended Petition," 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 Visiting Agreement" which was
approved by the appellate court. The petition was docketed as SP Proc. No. 03-0048.
Not to be outdone, petitioner filed on July 25, 2003 before the Pasig RTC in his petition for declaration of
nullity of marriage an urgent motion praying for the custody of Bianca for the duration of the case.
Acting on respondent’s petition, Branch 113 of the Pasay RTC issued a Writ of Habeas Corpus, a Hold
Departure Order and Summons addressed to petitioner, drawing petitioner to file a motion to dismiss
the petition on the ground of lack of jurisdiction, 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

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the Pasig RTC.
The Pasay RTC, in the meantime, issued an Order of August 12, 2003 declaring that pending the
disposition of respondent’s petition, Bianca should stay with petitioner from Sunday afternoon to
Saturday morning and "with the company of her mother from Saturday 1:00 in the afternoon up to
Sunday 1:00 in the afternoon." To this Order, petitioner filed a Motion for Reconsideration, arguing that
the Pasay RTC did not have jurisdiction to issue the same. He likewise filed a Manifestation of August 14,
2003 stating that he was constrained to submit to the said court’s order but with the reservation that he
was not submitting the issue of custody and himself to its jurisdiction.
Respondent soon filed her Answer with Counter-Petition on the nullity case before the Pasig RTC
wherein she also prayed for the award of the sole custody to her of Bianca, subject to the final
disposition of the habeas corpus petition which she filed before the Pasay RTC.
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 parties 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, petitioner’s motion to dismiss.
The court, citing Sombong v. Court of Appeals,1 held that in custody cases involving minors, the question
of illegal and involuntary restraint of liberty is not the underlying rationale for the availability of a writ of
habeas corpus 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 Pasay, is well within the ambit of the provisions of A.M. No.
03-04-04-SC.3
On the issue of forum shopping, the Pasay RTC held that it is petitioner, not respondent, who committed
forum shopping, he having filed (on June 12, 2003) the petition for declaration of nullity of marriage
before the Pasig RTC while his petition for habeas corpus before the Court of Appeals was still pending.4
The Pasay RTC held that assuming arguendo that petitioner’s 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 RTC, petitioner not having amended his petition
before the Pasig RTC as soon as the 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 elements 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 respect to the two preceding particulars in the two cases such that any
judgment that 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 RTC’s denial of his Motion to Dismiss via Petition for Certiorari,
Prohibition and Mandamus before the appellate court wherein he raised the following issues:
A. RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION BY DENYING PETITIONER’S
MOTION TO DISMISS DESPITE THE EVIDENT LACK OF JURISDICTION OVER THE SUBJECT MATTER
OF CUSTODY, LITIS PENDENTIA, AND DELIBERATE AND WILLFUL FORUM-SHOPPING ON THE PART
OF RESPONDENT CAROLINE T. YU. 7
B. RESPONDENT JUDGE ACTED WHIMSICALLY, CAPRICIOUSLY AND ARBITRARILY IN ISSUING THE
AUGUST 12, 2003 ORDER GRANTING RESPONDENT CAROLINE T. YU OVERNIGHT VISITATION
RIGHTS OVER THE MINOR CHILD BIANCA AND DENYING PETITIONER’S URGENT MOTION FOR
RECONSIDERATION OF THE SAID ORDER. 8 (Underscoring supplied)
By Decision of August 10, 2004,9 the appellate court denied petitioner’s petition, it holding that the
assumption of jurisdiction by the Pasay 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 could
not be considered forum shopping in the strictest sense of the word as before she filed it after
petitioner’s petition for habeas corpus filed before the appellate court was dismissed; and it was
petitioner who committed forum shopping when 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 court 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 petition before the Pasay RTC on July 24,

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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 petitioner’s habeas corpus case,
jurisdiction over the issue custody of Bianca 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 that the proper remedy for the custody of Bianca was filed with the Pasay RTC,
held that said court had the authority to issue the same.
Hence, the present petition filed by petitioner faulting the appellate court for
I. . . . DECLARING THAT PETITIONER ERIC YU COMMITTED FORUM-SHOPPING IN FILLING THE PETITION
FOR DECLARATION OF NULLITY OF MARRIAGE WITH PRAYER FOR CUSTODY BEFORE THE PASIG FAMILY
COURT AND THAT THE LATTER COURT WAS BARRED FROM ACQUIRING JURISDICTION OVER THE
CUSTODY ASPECT OF THE NULLITY CASE IN RECKLESS DISREGARD OF THE PRINCIPLE THAT THE FILING OF
A PETITION FOR NULLITY OF MARRIAGE BEFORE THE FAMILY COURTS VESTS THE LATTER WITH
EXCLUSIVE JURISDICTION TO DETERMINE THE NECESSARY ISSUE OF CUSTODY.
II. . . . 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 BASIS 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 PRIVATE RESPONDENT ON MARCH 7, 2002 DOCKETED AS
JDRC CASE NO. 5745 AND NOT TO HEREIN PETITIONER’S JUNE 12, 2003 PETITION FOR NULLITY
DOCKETED AS JDRC CASE NO. 6190.
III. . . . DECLARING THAT THE PASIG FAMILY COURT MUST YIELD TO THE JURISDICTION OF THE PASAY
COURT INSOFAR AS THE ISSUE OF CUSTODY IS CONCERNED IN GRAVE VIOLATION OF THE DOCTRINE OF
JUDICIAL STABILITY AND NON-INTERFERENCE.
IV. . . . RULING THAT PRIVATE RESPONDENT CAROLINE DID NOT COMMIT FORUM-SHOPING IN FILING
THE HABEAS 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
WITH PRAYER FOR CUSTODY IS STILL PENDING BEFORE THE PASIG FAMILY COURT WHEN THE FORMER
CASE WAS INSTITUTED.
V. . . . RULING THAT RESPONDENT CAROLINE YU DID NOT SUBMIT TO THE JURISDICTION OF THE PASIG
FAMILY COURT BASED ON AN ERRONEOUS FACTUAL FINDING THAT SHE FILED ON AUGUST 25, 2003 AN
OMNIBUS OPPOSITION IN PETITIONER’S ACTION FOR NULLITY BEFORE THE PASIG COURT.10
(Underscoring supplied)
The petition is impressed with merit.
The main issue raised in the present petition is whether 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 marriage 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 identity 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 custody of petitioner rather than respondent or vice versa.
Since the ground invoked in the petition for declaration of nullity of marriage before the Pasig RTC is
respondent’s alleged psychological incapacity to perform her essential marital obligations12 as provided
in Article 36 of the Family Code, the evidence to support this cause of action necessarily involves
evidence of respondent’s fitness to take custody of Bianca. Thus, the elements of litis pendentia, to wit:
a) identity of parties, or at least such as representing the same interest in both actions; b) identity of
rights asserted and reliefs prayed for, the relief being founded on the same facts; and c) the identity in
the two cases should be such that the 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.
Respondent argues in her Comment to the petition at bar that the Pasig RTC never acquired jurisdiction
over the custody issue raised therein.
"[T]he subsequent dismissal of the habeas corpus petition by the Court of Appeals on 3 July 2003 could
not 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 dismissal of the habeas corpus petition before the
Court of Appeals, the rule is that petitioner must furnish the occasion for the acquisition of jurisdiction
by repleading his cause of action for custody and invoking said cause anew."14 (Emphasis and

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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 wherein 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 cognizance of cases of the general class to which the particular
case belongs. It is not enough that a court has power in abstract to try and decide the class litigations
[sic] to which a case belongs; it is necessary that said power be properly invoked, or called into activity,
by the filing of a petition, or complaint or other appropriate pleading. (Underscoring supplied by
Caroline.) 16
Specific provisions 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 support 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. (Emphasis 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
for the liquidation, partition and distribution of the properties of the spouses, the custody and support
of the common children, and the delivery of their presumptive legitimes, unless such other matters had
been adjudicated in previous judicial proceedings." (Emphasis and underscoring added)
By petitioner’s filing of the case for declaration of nullity of marriage before the Pasig RTC he
automatically submitted the issue of the custody of Bianca as an incident thereof. After the appellate
court subsequently dismissed the habeas corpus case, there was no need for petitioner to replead his
prayer for custody for, as above-quoted provisions of the Family Code provide, the custody issue in a
declaration of nullity case is deemed pleaded. That that is so gains light from Section 21 of the "Rule on
Declaration Of Absolute Nullity Of Void Marriages and Annulment of Voidable Marriages"18 which
provides:
Sec. 21. Liquidation, partition and distribution, custody, support of common children and delivery of
their presumptive legitimes.–Upon entry of the judgment granting the petition, or, in case of appeal,
upon receipt of the entry of judgment of the appellate court granting the petition, the Family Court, on
motion of either party, shall proceed with the liquidation, partition and distribution of the properties
of the spouses, including custody, support of common children and delivery of their presumptive
legitimes pursuant to Articles 50 and 51 of the Family Code unless such matters had been adjudicated in
previous judicial proceedings. (Emphasis and underscoring supplied)
Since this immediately-quoted provision directs the court taking jurisdiction over a petition for
declaration of nullity of marriage to resolve the custody of common children, by mere motion of either
party, it could only mean that the filing of a new action 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. 50 of the Family Code is when
"such matters had been adjudicated in previous judicial proceedings," which is not the case here.
The elements of litis pendentia having 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 petitioner 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 should have custody over Bianca
in view of the express provision of the second paragraph 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 that 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 petitioner’s petition for declaration of
nullity. The factual circumstances of the case refelected above do not justify the application of the law
of the case doctrine which has been defined as follows:
Law of the case has been defined as the opinion delivered on a former appeal. It is a term applied to an
established rule that when an appellate court passes on a question and remands the case to the lower
court for further proceedings, the question there settled becomes the law of the case upon

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court for further proceedings, the question there settled becomes the law of the case upon
subsequent appeal. It means that whatever is once irrevocably established as the controlling legal rule
or decision between the same parties in the same case continues to be the law of the case, whether
correct on general principles 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 supplied, italics in the
original) 22
WHEREFORE, the petition is GRANTED. The August 10, 2004 decision of the Court of Appeals is
REVERSED and SET ASIDE,and another is entered DISMISSING Pasay City Regional Trial Court Sp. Proc.
No. 03-0048-CFM and ordering Branch 69 of Pasig City Regional Trial Court to continue, with dispatch,
the proceedings in JDRC No. 6190.

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Sec. 5.2, RA 8799
Sunday, November 14, 2010
11:30 PM

Section 5. Powers and Functions of the Commission.– 5.2. The Commission’s jurisdiction over all cases
enumerated under section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of
general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the
exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction
over the cases. The Commission shall retain jurisdiction over pending cases 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 cases filed as of 30 June 2000 until finally disposed.

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A.M. No. 01-2-04-SC Interim Rules of Procedure Governing Intra-
corporate Controversies
Sunday, November 14, 2010
11:31 PM

The Lawphil Project - Arellano Law Foundation

A.M. No. 01-2-04-SC. March 13, 2001

A.M. No. 01-2-04-SC. March 13, 2001

Re: PROPOSED INTERIM RULES OF PROCEDURE GOVERNING INTRA-CORPORATE CONTROVERSIES
UNDER R. A. NO. 8799
RESOLUTION

INTERIM RULES OF PROCEDURE FOR INTRA-CORPORATE CONTROVERSIES

RULE 1
GENERAL PROVISIONS
SECTION 1. (a) Cases covered. – These Rules shall govern the procedure to be observed in civil cases
involving the following:
1. Devices or schemes employed by, or any act of, the board of directors, business associates,
officers or partners, amounting to fraud or misrepresentation which may be detrimental to
the interest of the public and/or of the stockholders, partners, or members of any
corporation, partnership, or association;
2. Controversies arising out of intra-corporate, partnership, or association relations, between
and among stockholders, members, or associates; and between, any or all of them and the
corporation, partnership, or association of which they are stockholders, members, or
associates, respectively;
3. Controversies in the election or appointment of directors, trustees, officers, or managers of
corporations, partnerships, or associations;
4. Derivative suits; and
5. Inspection of corporate books.
(b) prohibition against nuisance and harassment suits. - Nuisance and harassment suits are prohibited.
In determining whether a suit is a nuisance or harassment suit, the court shall consider, among 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 factual 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 harassment suits, the court may, moto proprio or upon motion, forthwith dismiss
the case.
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. – These Rules shall be liberally construed in order to promote their objective of
securing 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 petition taken therefrom shall stay the enforcement or
implementation of the decision or order, unless restrained by an appellate court. Interlocutory orders
shall not be subject to appeal.

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shall not be subject to appeal.
SEC. 5. Venue. – All actions covered by these Rules shall be commenced and tried in the Regional Trial
Court which has jurisdiction over the principal office of the corporation, partnership, or association
concerned. Where the principal office of the corporation, partnership or association is registered in the
Securities and Exchange Commission as Metro Manila, the action 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 upon 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 pleading, motion, and other paper of a
party represented by an attorney shall be signed by at least one attorney of record in the attorney’s
individual name, whose address shall be stated. A party who is not represented by an attorney shall sign
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, information, and belief formed after
reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument
for the extension, modification, or reversal of existing jurisprudence; and that it is not interposed for any
improper purpose, such as to harass or to cause unnecessary delay or needless 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. Motion for a bill of particulars;
3. Motion for new trial, or for reconsideration of 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 clearly compelling reasons. Such motion must be verified and under oath; and
5. Motion 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 judges designated by
the Supreme Court to hear and decide cases transferred from the Securities and Exchange Commission
to the Regional Trial Courts and filed directly with said courts pursuant to Republic Act No. 8799,
otherwise known as the Securities and Regulation Cod

RULE 2
COMMENCEMENT OF ACTION AND PLEADINGS
SECTION 1. Commencement of action. – An action under these Rules is commenced by the filing of a
verified complaint with the proper Regional Trial Court.
SEC. 2. Pleadings allowed. – The only pleadings allowed to be filed under these Rules are the complaint,
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
affiant has read the pleading and the allegations therein are true and correct based 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 personal or juridical circumstances of the parties;
2. all facts material and relevant to the plaintiff’s cause or causes of action, which shall be
supported by affidavits of the plaintiff or his witnesses and copies of documentary and other
evidence supportive of such cause or causes of action;
3. the law, rule, or regulation 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 involving the same issues in any court, tribunal or quasi-judicial agency, and, to the
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 status thereof; and (c) if he

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 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 been 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 complaint shall be served together not later than five (5)
days from the date of filing of the complaint.
a. Service upon domestic private juridical entities. – If the defendant is a domestic corporation,
service shall be deemed adequate if made upon any of the statutory or corporate officers as
fixed by the by-laws or their respective secretaries. If the defendant is a partnership, service
shall be deemed adequate if made upon any of the managing or general partners or upon
their respective secretaries. If the defendant is an association, service shall be deemed
adequate if made upon any of its officers or their respective secretaries.
b. Service upon foreign private juridical entity. – When the defendant is a foreign private
juridical entity which is transacting or has transacted business in the Philippines, service may
be made on its resident agent designated in accordance with law for that purpose, or, if
there be no such agent, on the government official designated by law to that effect, or on
any of its officers or agents within 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 from service of summons.
In the answer, the defendant shall:
1. Specify each material allegation of fact the truth of which he admits;
2. Specify each material allegation of fact the truth of which he does not admit. Where the
defendant desires to deny only a part of an averment, he shall specify so much of it as true
and material and shall deny only the remainder;
3. Specify each material allegation of fact as to which truth he has no knowledge or
information sufficient to form a belief, and this shall have the effect of a denial;
4. State the defenses, including 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 stated 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 supportive of such cause or causes of action;
8. State any compulsory counterclaim/s and cross-claim/s; and
9. State the relief sought.
The answer to counterclaims or cross-claims shall be filed within ten (10) days from service of the
answer in which they are pleaded.
SEC. 7. Effect of failure to answer. – If the defendant fails to answer within the period above provided,
he shall be considered in default. Upon motion or motu proprio, the court shall render judgment either
dismissing the complaint or granting the relief prayed for as the records may warrant. In no case shall
the court award a relief beyond or different from that prayed for.
SEC. 8. Affidavits, documentary and other evidence. – Affidavits shall be based 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
form, 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 appropriate
pleading; Provided, however, that affidavits, documentary and other evidence not so submitted may be
attached to the pre-trial brief required under these 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 fails 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 evidence must be submitted not later than five (5) days
prior to its introduction in evidence.

RULE 3

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RULE 3
MODES OF DISCOVERY
SECTION 1. In general. – A party can only avail of any of the modes of discovery not later than fifteen
(15) days from the joinder of issues.
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 ground that the matter requested is patently incompetent, immaterial,
irrelevant or privileged in nature.
The court shall rule on the objections not later than fifteen (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 discovery 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 addition, 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
patently 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 discovery prescribed in Rule 3 hereof, whichever comes later, the
court shall issue and serve an order immediately setting the case for pre-trial conference and directing
the parties to submit their respective pre-trial briefs. The parties shall file with the court and furnish
each other copies of their respective pre-trial brief in such manner as to ensure its receipt by the court
and the other party at least five (5) days before the date set for the pre-trial.
The parties shall set forth in their pre-trial briefs, among other matters, the following:
1. Brief statement of the nature of the case, which shall summarize the theory or theories of
the party in clear and concise language;
2. Allegations expressly admitted 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 parties;
5. Amendments to the pleadings;
6. Statement of the issues, which shall separately 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
their affidavits supporting their positions on each of the issues;
8. All other pieces 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 schedule of hearings; and
12. Such other matters as may aid in the just and speedy disposition of the case.
SEC. 2. Nature and purpose of pre-trial conference. – During the pre-trial conference, the court shall,
with its active participation, ensure 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 forms 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 facts and documents;
6. Objections to the admissibility of testimonial, documentary 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 submitting the case for decision on the basis of position papers, affidavits,
documentary and real evidence;
10. A complete schedule of hearing dates; and

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 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 preliminary conference shall be terminated not later than ten (10) days after
its commencement, whether or not the parties have agreed to settle amicably.
SEC. 4. Judgment before pre-trial. – If, after submission of the pre-trial briefs, the court determines that,
upon consideration of the pleadings, the affidavits and other evidence submitted by the parties, a
judgment may be rendered, the court may order the parties to file simultaneously their respective
memoranda within a non-extendible 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-trial order; judgment after pre-trial. – The proceedings in the pre-trial shall be recorded.
Within ten (10) days after the termination of the pre-trial, the court shall issue an order which shall
recite in detail the matters taken up in the conference, 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 considered. 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 thereof. Should the action proceed to
trial, the order shall explicitly define and limit 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 course of the action, unless modified before trial
to prevent manifest injustice.
After 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 the pre-trial order, set the case for trial on the dates
agreed upon by the parties.
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-examination in accordance with existing rules on evidence.
SEC. 2. Trial schedule. – Unless judgment is rendered pursuant to Rule 4 of these Rules, the initial
hearing shall be held not later than thirty (30) days from the date of the pre-trial order. 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 plaintiffs 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 present such witness or witnesses within
his remaining allotted hearing dates.
SEC. 3. Written offer of evidence. – Evidence not otherwise admitted by the parties or ruled upon by the
court during the pre-trial conference shall be offered in writing not later than five (5) days from the
completion of the presentation of evidence of the party concerned. The opposing party shall have five
(5) days from receipt of the offer to file his comments or objections. The court shall make its ruling 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, within 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 proceedings;
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 for resolution;
4. The "Arguments," which is a clear and concise presentation of the argument in support of
each issue; and

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 each issue; and
5. The "Relief," which is a specification of the order or judgment 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) days from the lapse of
the period to file the memoranda, with or without said pleading having been filed.

RULE 6
ELECTION CONTESTS
SECTION 1. Cases covered. – The provisions of this rule shall apply to election contests in stock and non-
stock corporations.
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, and the qualifications of candidates, including the proclamation of winners, to the office of
director, trustee or other officer directly elected by the stockholders in a close corporation or by
members of a non-stock corporation where the articles 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 election 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 provide for a procedure for resolution of the controversy, or within
fifteen (15) days 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 election cases as provided for in
the by-laws of the corporation.
SEC. 4. Duty of the 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, together 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 summons and the complaint. The answer shall contain the
matters required in section 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 witnesses, documentary and other evidence in support thereof, if any.

Acting on the Memorandum of the Committee on SEC Cases submitting for this Court’s consideration
and approval the Proposed Interim Rules of Procedure for Intra-Corporate Controversies, 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 circulation.
March 13, 2001, Manila.
(Sgd.) HILARIO G. DAVIDE, JR., Chief Justice
(Sgd.) JOSUE N. BELLOSILLO, Associate Justice
(Sgd.) JOSE A. R. MELO, Associate Justice
(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.) LEONARDO A. QUISUMBING, Associate Justice

(Sgd.) (Sgd.)
BERNARDO P. PARDO ARTURO B. BUENA
Associate Justice Associate Justice

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

(Sgd). (Sgd.)
SABINO R. DE LEON, JR. ANGELINA SANDOVAL-GUTIERREZ
Associate Justice Associate Justice
The Lawphil Project - Arellano Law Foundation

Pasted from <http://www.lawphil.net/courts/supreme/am/am_2_04_2001.html>

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A.M. 00-8-10-SC Interim Rules of Procedure on Corporate
Rehabilitation (note FRIA)
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
RULES OF PROCEDURE ON CORPORATE REHABILITATION
RESOLUTION
Acting on the recommendation of The Subcommittee on Special Rules for Special Commercial Courts,
submitting 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 REHABILITATION (2008)
RULE 1
COVERAGE
SECTION 1. Scope.—These Rules shall apply to petitions for rehabilitation of corporations, partnerships
and associations pursuant to Presidential Decree No. 902-A, as amended.
SEC. 2. Applicability to Rehabilitation Cases Transferred from the Securities and Exchange
Commission. — Cases for rehabilitation transferred from the Securities and Exchange Commission to the
Regional Trial Courts pursuant to Republic Act No. 8799, otherwise known as The 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 expenses that are incurred in
connection with the filing of the petition; (b) expenses incurred in the ordinary course of business after
the issuance of the stay order, excluding interest payable to the creditors for loans and credit
accommodations existing at the time of the issuance of the stay order; and (c) other expenses that are
authorized under these Rules.
“Affidavit of General Financial Condition” shall refer to a verified statement on the general financial
condition of the 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 money, such as cash at the bank or amounts
owed; fixed assets such as property or equipment; or intangibles including intellectual property, the
book value of which 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 operation, it is sufficient that the book
value is based on the audited financial statement/s for the two years or year immediately preceding the
filing of the petition, 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, whether for money or otherwise.
“Control” is the power of a parent corporation to direct or govern the financial and operating policies of
an enterprise so as to obtain benefits from its activities. Control is presumed to exist when the parent

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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 one–half (1/2) of the voting power of an
enterprise unless, in exceptional circumstances, it can clearly be demonstrated that such ownership
does not constitute control. Control also exists even when the parent owns one-half (1/2) or less 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 under a statute or an
agreement;
(c) To appoint or remove the majority of the members of the board of directors or equivalent governing
body; or
(d) To cast the majority 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 Rules.
“Days” shall refer to calendar days unless otherwise provided in these Rules.
“Debtor” shall mean any corporation, partnership or association or a group of companies, whether
supervised or regulated by the Securities and Exchange Commission or other government agencies, on
whose behalf a petition for rehabilitation has been filed under these Rules.
“Foreign court” means a judicial or other authority competent to control or supervise a foreign
proceeding.
“Foreign proceeding” means a collective judicial or administrative proceeding in a foreign State,
including an interim 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 representative” means a person or entity, including one appointed on an interim basis,
authorized in a foreign proceeding to administer the reorganization or rehabilitation of the debtor or to
act as a representative of the foreign proceeding.
“Group 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 “debtor” shall
include and apply to the group of companies.
“Liabilities” shall refer to monetary claims against the debtor, including stockholder’s advances that
have been recorded in the debtor’s audited financial statements as advances for future subscriptions.
“Parent” is a corporation which has control over another corporation directly or indirectly through one
or more intermediaries.
“Rehabilitation” shall mean the 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 its creditors can
recover by way of the present value of payments projected in the plan, more if the corporation
continues as a going concern than if it is immediately liquidated.
“Secured claim” shall refer to any claim whose payment or fulfillment 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 the Labor Code of the Philippines.
“Subsidiary” means a corporation more than fifty percent (50%) of the voting stock of which is owned or
controlled directly or indirectly 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 to carry out the objectives of Sections
5(d), 6(c) and 6(d) of Presidential Decree No. 902-A, as amended, and to assist the parties in obtaining a
just, expeditious and inexpensive determination of cases. Where applicable, the Rules of Court shall
apply suppletorily to proceedings under these Rules.
RULE 3
GENERAL PROVISIONS
SEC. 1. Nature of Proceedings.—Any proceeding initiated under these Rules shall be considered in rem.
Jurisdiction over all persons affected by the proceedings shall be considered as acquired upon

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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 prescribed by these Rules.
The proceedings shall also be summary and non-adversarial in nature. The following pleadings are
prohibited:
(a) Motion to dismiss;
(b) Motion for a bill of particulars;
(c) Petition for relief;
(d) Motion for extension;
(e) Motion for postponement;
(f) Third-party complaint;
(g) Intervention;
(h) Motion to hear affirmative defenses; and
(i) Any pleading or motion which is similar to or of like effect as any of the foregoing.
Any pleading, motion, opposition, defense or claim filed by any interested party shall be supported by
verified 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 records, 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 court may decide matters on the basis of affidavits and other documentary evidence.
Where necessary, the court shall conduct clarificatory hearings before resolving any matter submitted to
it for resolution.
SEC. 2. Venue. — Petitions for rehabilitation pursuant to these Rules shall be filed in the regional trial
court which has jurisdiction over the principal office of the debtor as specified in its articles of
incorporation or partnership. Where the principal office of the corporation, 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 jurisdiction
over the principal office of the parent company, as specified in its Articles of Incorporation.
SEC. 3. Service of Pleadings and Documents.— When so authorized by the court, any pleading and/or
document required by these Rules may be filed with the court and/or served upon the other parties by
facsimile transmission (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 voluminous, 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 court and is made available for examination and reproduction by any party, and
provided, further, that a notice of such filing and availability is duly served on the parties.
SEC. 4. Trade Secrets and Other Confidential Information. — Upon motion, 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 execution of the order unless restrained or
enjoined by the appellate court. Unless otherwise 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 speedy manner.
SEC. 6. Nullification of Illegal Transfers and Preferences. — Upon motion 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 these 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 filing 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; provided, that the stay order shall not
cover claims against letters of credit and similar security arrangements issued by a third party to secure
the payment of the debtor’s 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,

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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 owner shall be entitled to the benefit of excussion as such guarantor; (c)
prohibiting the debtor from selling, encumbering, transferring, or disposing in any manner any of its
properties except in the ordinary course of business; (d) prohibiting the debtor from making any
payment of its liabilities except as provided in items (e), (f) and (g) of this Section or when ordered by
the court pursuant to Section 10 of Rule 3; (e) prohibiting the debtor’s suppliers of goods or services
from withholding supply 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; (f)
directing the payment in full of all administrative expenses incurred after the issuance of the stay order;
(g) directing the payment of new loans or other forms of credit accommodations obtained for the
rehabilitation of the debtor with prior court approval; (h) fixing the dates 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 petitioner to publish the Order in a newspaper of general circulation in the Philippines
once a week for two (2) consecutive weeks; (j) directing the petitioner to 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
Sentral ng Pilipinas, the Insurance Commission, the National Telecommunications Commission, the
Housing and Land Use Regulatory Board and the Energy Regulatory Commission; (k) directing the
petitioner that foreign creditors with no known addresses in the Philippines be individually given a copy
of the stay order at their foreign addresses; (l) directing all creditors and all interested parties (including
the regulatory agencies concerned) to file and serve on the debtor a verified comment on or opposition
to the petition, with supporting affidavits and documents, not later than fifteen (15) days before the
date of the first initial hearing and putting them on notice that their failure to do so will bar them from
participating in the proceedings; and (m) directing the creditors and interested parties to secure from
the court copies of the petition and its annexes within such time as to enable themselves to file their
comment on or opposition to the petition 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 Stay Order on Rehabilitation Receiver. — The petitioner shall immediately serve a copy
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 than ten (10) days from receipt of the order.
SEC. 9. Period of Stay Order. — The stay 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, terminate, modify, or set conditions for the continuance of the stay
order, or relieve a claim from the coverage thereof upon showing that (1) any of the allegations 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 debtor’s secured
obligation is more than 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 creditor’s 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 protection 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 debtor fails or refuses to take commercially reasonable steps to maintain the property; or
(3) The property has depreciated to an extent that the creditor is undersecured.
(c) Upon showing of the creditor’s 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 otherwise 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 claim 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 implementation of

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continuation of the debtor as a going concern or otherwise prevent the approval and implementation of
a rehabilitation plan.
SEC. 11. Qualifications of Rehabilitation Receiver. —
(a) In the appointment of the rehabilitation receiver, the following qualifications shall be taken into
consideration by the court:
(1) Expertise 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 suspension of payments or rehabilitation, and
general understanding of the duties and obligations of a rehabilitation receiver;
(4) Good moral character, independence 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 determined by the court.
(b) Without limiting the generality of the following, a rehabilitation receiver may be deemed to have a
conflict of interest if:
(1) He is a creditor or stockholder of the debtor;
(2) He is engaged in a line of business which competes with the debtor;
(3) He is, or was within two (2) years from the filing of the petition, a director, officer, or employee of
the debtor or any of its present creditors, or the auditor or accountant of the debtor;
(4) He is or was within two (2) years from the filing of the petition, an underwriter of the outstanding
securities of the debtor;
(5) He is related by consanguinity or affinity within the fourth civil degree to any creditor, stockholder,
director, officer, employee, or underwriter of the debtor; or
(6) He has any other direct or indirect material interest in the debtor or any creditor.
SEC. 12. Powers and Functions of Rehabilitation Receiver. — The rehabilitation receiver shall not take
over 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 purpose, 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 court. He shall be primarily tasked to
study the best way to rehabilitate the debtor and to ensure that the value of the debtor’s property is
reasonably maintained pending the determination of whether or not the debtor should be rehabilitated,
as well as implement the rehabilitation plan after its approval. Accordingly, he shall 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 and the Inventory of Assets submitted in support of the petition;
(b) To accept and incorporate, when justified, amendments to the Schedule of Debts and Liabilities;
(c) To recommend to the court the disallowance of claims and rejection of amendments 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 acts, 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 rehabilitation 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 the 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 pertaining to the causes of the debtor’s problems,
fraud, preferences, dispositions, encumbrances, misconduct, mismanagement and irregularities
committed by the stockholders, directors, management, or any other person against the debtor;
(i) To employ such person or persons such as lawyers, accountants, appraisers and staff as are necessary
in performing his functions and duties as rehabilitation receiver;
(j) To monitor the operations of the debtor and to immediately report to the court any material adverse
change in the debtor’s business;

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change in the debtor’s business;
(k) To evaluate the existing assets and liabilities, 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, stockholders and the general public;
(m) To study the rehabilitation plan proposed by the debtor or any rehabilitation plan submitted during
the proceedings, together with any comments made thereon;
(n) To prohibit and report to the court any encumbrance, transfer or disposition of the debtor’s property
outside of the ordinary 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 have unlimited access to the debtor’s employees, premises, books, records and financial
documents during business hours;
(q) To inspect, copy, photocopy or photograph any document, paper, book, account or letter, whether in
the possession of the debtor or other persons;
(r) To gain entry into any property for the purpose of inspecting, measuring, surveying or photographing
it or any designated relevant object or operation thereon;
(s) To take possession, control and custody of the debtor’s 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 debtor;
(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 change affecting the debtor’s ability to meet the
obligations under the rehabilitation 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 determines
that the continuance in business of such entity is no longer feasible or profitable or no longer works to
the best interest of the stockholders, parties-litigants, creditors or the general public;
(z) To apply to the court for any order or directive that he may deem necessary or desirable to aid him in
the exercise of his powers and performance of his duties and functions; and
(aa) To exercise 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 must post a bond executed in favor of the
debtor in such sum as the court may direct, to guarantee that he will faithfully discharge his duties and
obey the orders of the court. If necessary, he shall also declare under oath that he will perform the
duties of a trustee of the assets of the debtor, will act honestly and in good faith, and deal with the
assets of the debtor in a commercially reasonable manner.
SEC. 14. Fees and Expenses. — The rehabilitation receiver and the persons hired by him shall be entitled
to reasonable professional fees and reimbursement of expenses which shall be considered as
administrative
expenses.
SEC. 15. Immunity 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 faith 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 the debtor. The report shall
include, at the minimum, interim financial statements 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 and coverage of the rehabilitation; (b) the terms and conditions of such
rehabilitation 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-impairment of their security liens or
interests; (c) the material financial commitments to support the rehabilitation plan; (d) the means for

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interests; (c) the material financial commitments to support the rehabilitation plan; (d) the means for
the execution of the rehabilitation plan, which may include debt to equity conversion, restructuring of
the debts, dacion en pago or sale or exchange or any disposition of assets or of the interest of
shareholders, partners or members; (e) a liquidation analysis setting out for each creditor that the
present value of payments it would receive under the plan is more than that which it would receive if
the assets of the debtor were sold by a liquidator within 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
informed decision on the feasibility of the rehabilitation plan.
SEC. 19. Repayment Period. — If the rehabilitation plan extends the period for the debtor to pay its
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 rehabilitation 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 affected
thereby, including the creditors, whether or not such persons have participated in the proceedings or
opposed the plan or whether or not their claims have been scheduled;
(b) The debtor shall comply with the provisions of the plan and shall take all actions necessary to carry
out the plan;
(c) Payments shall be made 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 provisions 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 not the plan is successfully implemented.
SEC. 21. Revocation of Rehabilitation Plan 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 the
approval thereof on the ground that the same was secured through fraud.
SEC. 22. Alteration or Modification of Rehabilitation Plan. — An approved rehabilitation 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) Failure of the debtor to submit the rehabilitation plan;
(c) Disapproval of the rehabilitation plan by the court;
(d) Failure to achieve the desired targets or goals as set forth in the rehabilitation plan;
(e) Failure of the debtor to perform its obligations under the plan;
(f) Determination that the rehabilitation plan may no longer be implemented in accordance with its
terms, conditions, restrictions or assumptions; or
(g) Successful implementation of the rehabilitation plan.
SEC. 24. Discharge of Rehabilitation Receiver. — Upon termination of the rehabilitation proceedings, the
rehabilitation receiver shall submit his final report and accounting within such period of time as the
court will allow him. Upon approval of his report and accounting, the court shall order his discharge.
RULE 4
DEBTOR-INITIATED REHABILITATION
SEC. 1. Who May Petition. — Any debtor who foresees the impossibility of meeting its debts when they
respectively fall due, may petition the proper regional trial court for rehabilitation.
A group of companies may 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 affect 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.
SEC. 2. Contents of Petition. —
(a) The petition filed by the debtor must be verified and must set forth with sufficient particularity all
the following material facts: (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 pay its debts; (5) all the pending

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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 the 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 creditors,
employees and stockholders.
(b) The petition shall be accompanied by the following documents:
(1) An audited financial statement of the debtor at the end 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 Liabilities which lists all the creditors of the debtor, indicating the name and
last address of record of each creditor; the amount of each claim as to principal, interest, or penalties
due as of the date of filing; the nature of the claim; and any pledge, lien, mortgage judgment or other
security given for the payment thereof;
(4) An Inventory of Assets which must list with reasonable specificity all the assets of the debtor, stating
the nature of each asset, the location and condition thereof, the book value or market value of the
asset, and attaching the corresponding certificate of title therefor in case of real property, or the
evidence 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 maturity and the degree of collectibility categorizing them as highly collectible to remotely
collectible;
(5) A rehabilitation plan which conforms with the minimal requirements set out in Section 18 of Rule 3;
(6) A Schedule of Payments and Disposition of Assets which the debtor may have effected within three
(3) months immediately 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, and a detailed schedule of the projected cash flow for the succeeding three (3) months;
(8) A Statement of Possible Claims by or against the debtor which must contain a brief statement of the
facts which might give rise to the claim and an estimate of the probable amount thereof;
(9) An Affidavit of General Financial Condition which shall contain answers to the questions or matters
prescribed in Annex “A” hereof;
(10) At least three (3) nominees for the position of rehabilitation receiver as well as their qualifications
and addresses, including but not limited to their telephone numbers, fax numbers and e-mail address;
and
(11) A certificate attesting under oath that (i) the filing of the petition has been duly authorized; and (ii)
the directors and stockholders of the debtor have irrevocably approved and/or consented to, in
accordance with existing laws, all actions or matters necessary and desirable to rehabilitate the debtor
including, but not limited to, amendments to the articles of incorporation and by-laws or articles of
partnership; increase or decrease in the authorized capital stock; issuance of bonded indebtedness;
alienation, transfer, or encumbrance of assets of the debtor; and modification of shareholders’ rights.
(c) Five (5) copies of the petition shall be filed with the court.
SEC. 3. Verification by Debtor. — The petition filed by the debtor must be verified by an affidavit of a
responsible officer of the debtor and shall be in a form substantially as follows:
“I, _________________, (position) of (name of petitioner), do solemnly swear that the petitioner has
been duly authorized to file the petition and that the stockholders and board of directors (or governing
body) have approved and/or consented to, in accordance with law, all actions or matters necessary or
desirable to rehabilitate the debtor. The petition is being filed to protect the interests of the debtor, the
stockholders, 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 description of all debts and liabilities and of all goods, effects, estate
and property of whatever kind or class belonging to petitioner. The Inventory also contains 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 contracts whereby any money may hereafter become due
or payable to petitioner or by or through which any benefit or advantage may accrue to petitioner. The
petition contains a concise statement of the facts giving rise, or which might give rise, to any cause of
action in favor of petitioner. Petitioner has no land, money, stock, expectancy, or property of any kind,

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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. Petitioner has, in no instance, created or
acknowledged a debt for a greater sum than the true and correct amount. Petitioner, its officers,
directors and stockholders have not, directly or indirectly, concealed, fraudulently sold or otherwise
fraudulently disposed of, any part of petitioner’s real or personal property, estate, effects or rights of
action, and petitioner, its officers, directors and stockholders 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 advantage therefrom, or to defraud or deceive in any manner any creditor to whom petitioner
is indebted. Petitioner, its officers, directors, and stockholders have been acting in good faith and with
due diligence.
SEC. 4. Opposition to or Comment 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 such time, no creditor or interested party shall be
allowed to file any comment thereon 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 its
comment or opposition a verified statement of the obligations allegedly due it.
SEC. 5. Initial Hearing. —
(a) On or before the initial hearing set in the order mentioned in Section 7 of Rule 3, the petitioner shall
file a publisher’s affidavit showing that the publication requirements and a petitioner’s 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 above had been complied with. After finding that such requirements are met,
the court shall ensure that the parties consider in detail all of the following:
(1) Amendments to the rehabilitation plan proposed by the debtor;
(2) Simplification of the issues;
(3) The possibility of obtaining stipulations and admission of facts 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 accounting, financial and other technical issues to an expert;
(6) The possibility of submitting the petition for decision on the basis of the comments, opposition,
affidavits and other documents on record;
(7) The possibility of a new rehabilitation plan voluntarily agreed upon by the debtor and its creditors;
and
(8) Such other 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 initial hearing
contemplated in these Rules but the initial hearing must be concluded 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 annexes 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 merit 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 actions 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 on 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 details of the
plan and submit it for the approval of the court not later than sixty (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 the last initial hearing upon concurrence of the following:
(1) Approval or endorsement 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

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debtor including secured creditors holding more than fifty percent (50%) of the total secured claims of
the debtor and unsecured creditors holding more than fifty percent (50%) of the total unsecured claims
of the debtor;
(2) The rehabilitation plan complies with the requirements specified in Section 18 of Rule 3;
(3) The rehabilitation plan would provide the objecting class of creditors with payments 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 within a six (6)-month period from the date of filing of the
petition; and
(4) The 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, the rehabilitation receiver, at any time before he submits his evaluation on the debtor-
proposed 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 Rehabilitation Plan. — Any creditor or interested party of record
may file comments on or opposition to the proposed rehabilitation plan, with a copy given to the
rehabilitation 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 receive evidence, if necessary, in hearing the
comments on and opposition to the plan.
SEC. 10. Modification of Proposed Rehabilitation Plan. — The debtor may modify its rehabilitation plan
in the light of the comments of the rehabilitation receiver and creditors or any interested party and
submit a revised or substitute rehabilitation 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 the 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 of the debtor if, in its judgment, the rehabilitation of the debtor is feasible and
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 Rule 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 that which they would have received if the assets of
the debtor were sold by a liquidator within a six (6)month period from the date of filing of the petition;
and
(c) The rehabilitation receiver has recommended approval of the plan.
In approving the rehabilitation plan, the court shall ensure that the rights of the secured creditors are
not impaired. The court shall also issue the necessary orders or processes for its immediate and
successful implementation. It may impose such terms, conditions, or restrictions as the effective
implementation and monitoring thereof may reasonably require, or for the protection and preservation
of the interests of the creditors should the plan fail.
SEC. 12. Period to Decide Petition. — 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 secure an extension of
the period from the Supreme Court.
RULE 5
CREDITOR-INITIATED REHABILITATION
SEC. 1. Who May Petition. — Any creditor or creditors holding at least twenty percent (20%) of the
debtor’s 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-Initiated Petitions. — Where the petition is filed by a creditor or
creditors under this Rule, it is sufficient that the petition is accompanied by a rehabilitation plan 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 petition 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 interests of

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the debtor, the stockholders, the investors and the creditors of the debtor.
SEC. 3. Applicability of Provisions Relating to Debtor-Initiated Rehabilitation. — The provisions of
Sections 5 to 12 of Rule 4 shall apply to rehabilitation under this Rule.
RULE 6
PRE-NEGOTIATED REHABILITATION
SEC. 1. Pre-negotiated Rehabilitation 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 petition for the
approval of a pre-negotiated rehabilitation plan. The petition shall comply with Section 2 of Rule 4 and
be supported by an affidavit showing the written approval or endorsement 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 the debtor and unsecured 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 sufficient 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 service by personal delivery of a copy of the petition on each creditor who is not a
petitioner holding at least five percent (5%) of the total liabilities of the debtor, as determined in the
schedule attached to the petition, within three (3) days;
(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 copies of the petition and the rehabilitation plan are available for examination and copying
by any interested party;
(f) Direct creditors and other parties interested (including the Securities and Exchange Commission and
the relevant regulatory agencies such as, but not limited to, the Bangko Sentral ng Pilipinas, the
Insurance 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 comments thereon within a period of not later than twenty
(20) days from the second publication of the order, with a warning that failure to do so will bar them
from participating in the proceedings;
(g) Appoint the rehabilitation receiver named in the plan, unless the court finds that he is not qualified
under these Rules in which case it may appoint a qualified rehabilitation receiver of its choice;
(h) Stay 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; provided, that the stay order shall not cover claims against letters of credit and similar security
arrangements issued by a third party to secure the payment of the debtor’s 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, however, that where the owner of such property
sought to be foreclosed is also 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 selling, encumbering, transferring, or disposing in any manner any of its
properties 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 petition;
(k) Prohibit the debtor’s suppliers of goods or services from withholding supply 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 incurred 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 Section 2 of this Rule, the court shall approve the rehabilitation plan unless a creditor or

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referred to in Section 2 of this Rule, the court shall approve the rehabilitation 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 Petition 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 rehabilitation plan or their attachments contain material omissions or are
materially false or misleading;
(b) The terms of rehabilitation are unattainable; or
(c) The approval 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 plan 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 petition or rehabilitation plan. If the court finds that the
objection is in accordance 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 plan 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 effect as approval of a rehabilitation plan under Section 20 of Rule 3.
SEC. 8. Revocation of Approved Rehabilitation Plan. — Not later than thirty (30) days from the 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 secured by fraud or that the petitioner has failed to cure
the defect ordered by the court pursuant to Section 5 of this Rule.
SEC. 9. Effect of Rule on Pending Petitions. — Any pending petition for rehabilitation that has not
undergone the initial hearing prescribed under the Interim Rules of Procedure for Corporate
Rehabilitation at the time of the effectivity of these Rules may be converted into a rehabilitation
proceeding under this Rule.
RULE 7
RECOGNITION OF FOREIGN PROCEEDINGS
SEC. 1. Scope of Application. — This Rule applies where (a) assistance is sought in a Philippine court by a
foreign court or a foreign representative in connection 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 fact that a petition is filed pursuant to this Rule does not subject the foreign representative 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-Recognition of Foreign Proceeding. — Nothing in this Rule prevents the court from refusing
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 that the country of which the petitioner is a national does
not grant recognition to a Philippine rehabilitation proceeding in a manner substantially in accordance
with this Rule.
SEC. 3. Petition for Recognition of Foreign Proceeding. — A foreign representative may apply with the
Regional Trial Court where the debtor resides for recognition of the foreign proceeding in which the
foreign representative 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 affirming 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 foreign proceeding and of the appointment of the foreign
representative.

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representative.
SEC. 4. Recognition of Foreign Proceeding. — A foreign proceeding shall be recognized if:
(a) The proceeding is a foreign proceeding as defined herein;
(b) The person or body applying for recognition is a foreign representative 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 recognition 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 petition for recognition of the foreign
proceeding, the foreign representative shall inform the court promptly of:
(a) Any substantial change in the status of the foreign proceeding or the status of the foreign
representative’s appointment; and
(b)Any other foreign proceeding regarding the same debtor that becomes known to the foreign
representative.
SEC. 7. Provisional Relief that May be Granted upon Application for Recognition of Foreign
Proceeding. — From the time of filing a petition 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
assets of the debtor or the interests of the creditors, grant relief of a provisional nature, including:
(a) Staying execution against the debtor’s assets;
(b) Entrusting the administration or realization of all or part of the debtor’s assets located in the
Philippines to the foreign representative or another person designated by the court in order to protect
and preserve the value of assets that, by their nature or because of other circumstances, are perishable,
susceptible to devaluation 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 individual actions or individual proceedings concerning the
debtor’s 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 debtor’s assets is stayed; and
(c) The right to transfer, encumber or otherwise dispose of any assets of the debtor is suspended.
SEC. 9. Relief That May be Granted After Recognition of Foreign Proceeding. —
(a) Upon recognition of a foreign proceeding, where necessary to protect the assets of the debtor or the
interests of the creditors, the court may, upon motion of the foreign representative, grant any
appropriate relief including:
(1) Staying the commencement or continuation of individual actions or individual proceedings
concerning the debtor’s assets, rights, obligations or liabilities to the extent they have not been stayed
under Section 8(a) of this Rule;
(2) Staying execution against the debtor’s assets to the extent it has not been stayed under Section 8(b)
of this Rule;
(3) Suspending the right to transfer, 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 information
concerning the debtor’s assets, affairs, rights, obligations or liabilities;
(5) Entrusting the administration or realization of all or part of the debtor’s assets located in the
Philippines to the foreign representative or another person 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 rehabilitation receiver under these laws.
(b) Upon recognition of a foreign proceeding, the court may, at the request of the foreign
representative, entrust the distribution of all or part of the debtor’s 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 protected.
SEC. 10. Protection of Creditors and Other Interested Persons. —
(a) In granting or denying relief under this Rule or in modifying or terminating the relief under paragraph
(c) of this Section, the court must be satisfied that the interests of the creditors and other interested
persons, including the debtor, are adequately protected.

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persons, including the debtor, are adequately protected.
(b) The court may subject 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 representative 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. Actions to Avoid Acts Detrimental to Creditors. — Upon recognition of a foreign proceeding, the
foreign representative acquires the standing to initiate actions to avoid or otherwise render ineffective
acts detrimental to creditors that are available under these Rules.
SEC. 12. Intervention by Foreign Representative in Philippine Proceedings. — Upon recognition of a
foreign proceeding, the foreign representative 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 Courts and Foreign Representatives. — In
matters covered by this Rule, the court shall cooperate to the maximum extent possible with foreign
courts or foreign representatives.
The court is entitled to communicate directly with, or request information 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 administration and supervision of the debtor’s assets and affairs;
(d) Approval or implementation by courts of agreements concerning the coordination of proceedings;
(e) Coordination of concurrent proceedings regarding the same debtor;
(f) Suspension of proceedings against the debtor;
(g) Limiting the relief to assets that should 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-main
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
representative under other applicable laws.
SEC. 15. Commencement of Local Proceeding after Recognition of Foreign Proceeding. — After the
recognition of a foreign proceeding, a local proceeding under these Rules may be commenced only if the
debtor 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 extent 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 regarding the same debtor, the court shall seek cooperation and coordination under
Sections 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
PROCEDURAL 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 rehabilitation plan. No relief can be extended to the party
aggrieved by the court’s order on the motion through a special civil action for certiorari under Rule 65 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 approving or disapproving the rehabilitation plan.
An order issued after the approval of the rehabilitation plan can be reviewed only through a special civil
action for 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
rehabilitation plan can only be reviewed through a petition for review to the Court of Appeals under
Rule 43 of the Rules of Court within fifteen (15) days from notice of the decision or order.
RULE 9
FINAL PROVISIONS
SEC. 1. Severability. — If any provision or section of these Rules is held invalid, the other provisions or

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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. Transitory Provision. — Unless the court orders otherwise to prevent manifest injustice, any
pending petition for rehabilitation that has not undergone the initial hearing 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-rehabilitation-2008/>

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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 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 26, 2004 in CA-G.R. SP No. 74970. The CA Decision affirmed the Order of the
Regional Trial Court (RTC), Branch 142, Makati City dated November 29, 2002[2] in Civil Case No. 00-1553 (entitled
"Accounting of All Corporate Funds and Assets, and Damages") which denied petitioner Oscar C. Reyes' (Oscar) Motion
to Declare Complaint as Nuisance or Harassment Suit.

BACKGROUND FACTS

Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the four children of the spouses Pedro and Anastacia
Reyes. Pedro, Anastacia, Oscar, and Rodrigo each owned shares of stock of Zenith Insurance Corporation (Zenith), a
domestic corporation established by their family. Pedro died in 1964, while Anastacia died in 1993. Although Pedro's
estate was judicially partitioned among his heirs 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 owned 8,715,637 and 4,250 shares, respectively.[3]

On May 9, 2000, Zenith and Rodrigo 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 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 fraudulently
appropriated [by Oscar] for himself [and] which were not collated and taken into account in the partition, 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 took these shares of stock, and should now deliver to his brothers and sisters their just and respective
shares."[5] [Emphasis supplied.]

In his Answer with Counterclaim,[6] Oscar denied the charge that he illegally acquired 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
that the suit is not a bona fide derivative suit because the requisites therefor have not been complied with. He thus
questioned the SEC's jurisdiction to entertain the complaint because it pertains to the settlement of the estate of
Anastacia Reyes.

When Republic Act (R.A.) No. 8799[7] took effect, the SEC's exclusive and original 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 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, according to the Interim 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 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 action, namely: a) a derivative 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 Oscar] with prayer to appoint a management committee; and b) an action for
determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its

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determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its
accounting and the corresponding delivery of these shares to the parties' brothers and sisters. The latter is not a
derivative suit and should properly be threshed out in a petition for settlement of estate.
Accordingly, the motion is denied. However, only the derivative suit consisting 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 the 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 26, 2004. It likewise denied
Oscar's motion for reconsideration in a Resolution dated October 21, 2004.

Petitioner now comes before us on appeal through a petition for review on certiorari 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 be dismissed under the Interim Rules of
Procedure of Intra-Corporate Controversies; 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, he prays 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 allegations of the complaint, irrespective of
whether 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 over which the SEC (now the RTC acting as a special commercial court) exercises
exclusive jurisdiction:
SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over
corporations, partnership, and other forms of associations registered with it as expressly granted under existing laws and
decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:
a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners,
amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the
stockholders, partners, members of associations or organizations registered with the Commission.

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

c) Controversies in the election or appointment of directors, trustees, officers, or managers of such corporations,
partnerships, or associations.
The allegations set 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. Our focus in examining the allegations 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 specify the relief sought.[13] Section 5, Rule 8 of the Revised Rules of Court provides
that in all averments of fraud 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 fraud or misrepresentation detrimental to the public and/or to the stockholders.

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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 and fraudulently appropriated for himself [herein petitioner 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 from the time he took these shares 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 plus interest thereon from 1978 representing his obligations 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 misrepresentation, unilaterally, and for his
own benefit, capriciously transferred and took possession and control of the management of Zenith Insurance
Corporation which is considered as a family corporation, and other properties and businesses belonging to Spouses
Pedro and Anastacia Reyes.

xxxx

4.1. During the increase of capitalization of Zenith Insurance Corporation, sometime in 1968, the property covered by
TCT No. 225324 was illegally and fraudulently used by respondent as a collateral.

xxxx

5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their
deceased mother, Doña 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 dividends, had been transferred solely in the name of
respondent. 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 portion of said shares must be distributed equally amongst the brothers and sisters of the
respondent 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 petitioner Oscar] name and installed himself as a
majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and sisters 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 [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be
properly collated and/or distributed equally amongst the children, including the complainant Rodrigo C. Reyes herein,
to their damage and prejudice.

xxxx

11.1 By continuous refusal of the respondent to account of his [sic] shareholding with Zenith Insurance Corporation[,]
particularly the number of shares of stocks illegally and fraudulently transferred to him from their deceased parents Sps.
Pedro and Anastacia Reyes[,] which are all subject for collation and/or partition in equal shares among their children.
[Emphasis supplied.]
Allegations of deceit, machination, 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 the opposing party to controvert the particular facts allegedly
constituting such fraud or mistake.[16]

Tested against these standards, we find that the charges of fraud against Oscar were not properly supported by the
required factual allegations. While the complaint contained allegations of fraud purportedly committed by him, these
allegations are not particular enough to bring the controversy within the special commercial court's jurisdiction; they are
not statements of ultimate facts, but are mere conclusions of law: how and why the alleged appropriation of shares can

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not statements 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 not 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 special commercial court's jurisdiction. To fall within this jurisdiction, there must be sufficient nexus showing that the
corporation's nature, structure, 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, Oscar, as an individual and without reference to his corporate personality, was alleged to
have 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
particularly demonstrated under the following allegations:
5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased
mother, Doña 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 dividends, had been transferred solely in the name of respondent. 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 portion of said
shares must be distributed equally amongst the brothers and sisters of the respondent 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 petitioner Oscar] name and installed himself as a
majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and 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 can be cured by a bill of particulars. In cases governed by the Interim Rules of Procedure on Intra-Corporate
Controversies, however, a bill of particulars is a prohibited 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 complainant wishes to invoke the court's
special commercial jurisdiction.

We note that twice in the course of this case, Rodrigo had been given the opportunity to study the propriety of
amending or withdrawing the complaint, but he consistently refused. The court's function in resolving issues of
jurisdiction is limited to the review 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 in classifying what constitutes an intra-
corporate controversy. Initially, the main 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 under Section 5(b), as declared in the case of Union Glass & Container Corp. v.
SEC,[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 stockholders, partners, or associates themselves. [Emphasis supplied.]

The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC, regardless of
the subject matter of the 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 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 test alone will divest the regular courts of their
jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw
that there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to
the dispute.

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the dispute.

Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of
ascertaining whether the controversy 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 to the enforcement of the parties' correlative rights
and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If
the relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate controversy exists.

The Court then combined the two tests and declared that jurisdiction should be determined 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
adopted in the recent case of Speed Distribution, Inc. v. Court of Appeals:[24]
To 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 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 first element requires that the controversy must arise out of intra-corporate or partnership relations between any or
all of the parties and the corporation, partnership, or association of which they are stockholders, members or associates;
between any or all of them and the corporation, partnership, or association of which they are stockholders, members, or
associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns
their individual franchises. The second element requires that the dispute among the parties be intrinsically connected
with the regulation of the corporation. 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 Test

Is there 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 Rodrigo 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 her name. What is material in resolving the issues of this case under the allegations 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 Anastacia, not on Rodrigo's personally-owned shares 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 of the deceased
Anastacia and the parties' interest therein as her heirs.

Article 777 of the Civil Code declares that the successional rights are transmitted from the moment of death of the
decedent. Accordingly, upon Anastacia's death, her children acquired legal title to her estate (which title includes her
shareholdings in Zenith), and they are, prior to the estate's partition, deemed co-owners 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 transferring shares, the heirs do not
become registered stockholders of the corporation. Section 63 provides:
Section 63. Certificate of stock and transfer of shares. - The capital stock of stock corporations shall be divided into
shares for which certificates signed by the president or vice-president, 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 the certificate or certificates indorsed by the owner
or his attorney-in-fact or other person legally authorized to 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 to show the names
of the parties to the transaction, the date of the transfer, the number of the certificate or certificates, and the number
of shares transferred. [Emphasis supplied.]
No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the
corporation.

Simply stated, the transfer of title by means of succession, 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 parties. The transfer must be
registered in the books of the corporation to make the transferee-heir a stockholder 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

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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 registration of the transfer before considering the transferee a stockholder of the
corporation (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 intra-corporate controversy). A marked difference, however, exists between these
cases and the present one.

In Abejo and TCL Sales, the transferees held definite and uncontested titles to a specific number of shares of the
corporation; after the transferee had established prima facie ownership over the shares of stocks 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 undivided 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 the debts 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 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 debts left by the decedent shall have
been made and all his creditors are fully paid. Until a final liquidation is made and all the debts are paid, the right of the
heirs 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
supplied.]
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 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 shares. Without the settlement of Anastacia's estate, there can be no definite partition and
distribution of the estate to the heirs. Without the partition and distribution, there can be no registration of the transfer.
And without the registration, we cannot consider the transferee-heir a stockholder who may invoke the existence of an
intra-corporate relationship as premise for an intra-corporate controversy 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 Section 5(b) of PD 902-A,
as amended. Rodrigo's complaint, therefore, fails the relationship 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 examination of the complaint
yields the conclusion that, more than anything else, the complaint is about the protection and enforcement of
successional rights. The controversy it presents is purely civil rather than corporate, although 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 for 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 not constitute a separate cause of action but is, as correctly
claimed by Oscar, only an incident to the "action for determination of the shares of stock of deceased spouses Pedro and
Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the
parties' brothers and sisters." There can be no mistake of the relationship between the "accounting" mentioned in the
complaint and the objective of partition and distribution when Rodrigo claimed in paragraph 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
transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be
properly collated and/or distributed equally amongst the children including the complainant Rodrigo C. Reyes herein to
their damage and prejudice.
We particularly note that the complaint contained no sufficient allegation that justified the need for an accounting other
than to determine the extent of Anastacia's shareholdings for purposes of distribution.

Another significant 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
allegedly fraudulent acts as basis for his demand for the collation and distribution of Anastacia's shares to the heirs.
These claims tell us unequivocally that the present controversy arose from the parties' relationship as heirs of Anastacia
and 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
rights) and not by the corporation nor by Rodrigo as a shareholder on record.

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

More than the matters of injury and redress, what Rodrigo clearly aims to accomplish through his allegations of illegal
acquisition by Oscar is the distribution of Anastacia's shareholdings without a prior settlement of her estate - an
objective that, by law and established jurisprudence, cannot be done. The RTC of Makati, acting as a special commercial
court, has no jurisdiction to settle, partition, 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 decedent held by one of the heirs declares:
Questions as to advancement made or alleged 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 the heir. [Emphasis supplied.]
Worth noting are this Court's statements 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 limited jurisdiction.
xxxx
It is clear that trial courts trying an ordinary action 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 Anastacia's shareholdings will
be undertaken by a probate court and not by a special commercial court is completely consistent with the probate
court's limited jurisdiction. It has the power to enforce an accounting 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 (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 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 First Instance in the exercise of
its general jurisdiction or of its limited probate 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 general rule, the question as to title to property should not be passed upon in the testate or intestate proceeding.
That question should be ventilated in a separate action. That general rule has qualifications or exceptions justified by
expediency and convenience.

Thus, the probate court may provisionally pass upon in an intestate or testate proceeding the question of inclusion in, or
exclusion from, the inventory of a piece of property without prejudice to its final determination 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 assumption of jurisdiction by the
probate court and the rights of third parties are not impaired, the probate court is competent to decide the question of
ownership. [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 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 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 being material;
b. the party has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the
appropriate relief, but the latter 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 complaint 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 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 corporation, he must allege with some

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Second, in order that a stockholder may show a right to sue on behalf of the corporation, he must allege with some
particularity in his complaint that he has exhausted his remedies within the corporationby making a sufficient demand
upon the 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 this requirement since what the rule contemplates is the exhaustion of remedies
within 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 dispute 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 done to the corporation due to Oscar's acts. If
indeed he illegally and fraudulently transferred Anastacia's shares in his own name, then the damage is not to the
corporation but to his co-heirs; the wrongful transfer did not affect the capital stock or the assets of Zenith. As already
mentioned, neither has Rodrigo alleged any particular cause or wrongdoing against the corporation that he can
champion 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 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 Anastacia Reyes. Rodrigo's proper remedy, under the circumstances, is to institute a special
proceeding for the settlement of the estate of the 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 Regional Trial Court, Branch 142, Makati, docketed as Civil Case No.
00-1553, is ordered DISMISSED for lack of jurisdiction.

SO ORDERED.

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BP 129, as amended by RA 7691, Secs. 2 to 4
Sunday, November 14, 2010
11:31 PM

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?Sps Fajardo v. Anita Flores GR 167891 Jan 15, 2010
Sunday, November 14, 2010
11:31 PM

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 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 JOHNNY OCO, JR.,

PETITIONERS, VS. HEIRS OF VICENTE LEGASPI, REPRESENTED BY PEDRO
LEGASPI, 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-petitioners herein, Fernanda Geonzon vda. de Barrera
and Johnny Oco. Jr. to return possession of the subject property to the plaintiffs-herein
respondents, Heirs of Vicente Legaspi.

On October 1, 1996, petitioner Johnny Oco Jr. (Oco), said to be a "peace officer connected
with the PNP," accompanied by "unidentified CAFGU members," forced his way into
respondents' 0.9504-hectare irrigated farmland located at Liloan, Bonifacio, Misamis
Occidental. After dispossessing respondents of the property, Oco and company used a
tractor to destroy the planted crops, took 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 thereof to Eleuterio Geonzon who, in turn, sold 1.1148
thereof to his sister petitioner Fernanda Geonzon vda. de Barrera (Fernanda). [4 ]

Respondents, on the other hand, asserted that the land was occupied, possessed and
cultivated by their predecessor-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 this
discovery, they never filed any action to recover ownership thereof since they were left
undisturbed in their possession,[7 ] until October 1, 1996 when petitioners 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 assessed 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 respondents, disposing as
follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs [herein respondents]
and against the defendants [-herein petitioners]:
1. Ordering the latter to return the possession of the land in question to the plaintiffs and
2. Ordering the latter to desist from further depriving and disturbing plaintiffs' peaceful
possession thereof, unless there be another court judgment to the contrary.
SO ORDERED.

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SO ORDERED.
On the issue of jurisdiction over the subject matter, the trial court, 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 jurisdiction 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 land in question was described as a riceland "situated
at Liloan, Bonifacio, Misamis 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 Lot No. 007 and on the west also by Lot No. 007 which tax declaration cancels former
[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 ] (Emphasis and underscoring supplied)
Petitioners thereupon appealed to the Court of Appeals which affirmed the trial court's
disposition of the issue of jurisdiction over the subject matter.

On the merits, the appellate court affirmed too the trial court's decision, finding that "both
testimonial and documentary evidence on record established that appellees, through their
predecessors-in-interest, have 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 possession de jure.[1 3 ]

Hence, the present petition for review which raises the following 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 NATURE OF THE ACTION AS WELL AS THE JURISDICTION OF THE
COURT DEPEND ON THE FACTS AS ALLEGED IN THE COMPLAINT.[1 4 ]
For obvious reasons, the issue of lack of jurisdiction over the subject matter shall be first
considered.

Section 33 of Batas Pambansa Bilang 129, (the Judiciary Reorganization Act of 1980), as
amended by Republic Act No. 7691 provides for the jurisdiction of metropolitan trial courts,
municipal trial courts and municipal circuit trial courts, to wit:
xxx x

(3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value of
the property or interest therein does not exceed Twenty thousand pesos
(P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not
exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses and costs: Provided, That in cases of land not declared
for taxation purposes, the value of such property shall be determined by the assessed value
of the adjacent lots. (Emphasis, italics and underscoring supplied)
Before the amendments introduced by Republic Act No. 7691, the plenary action of accion
publiciana was to be brought before the regional trial 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 jurisdiction 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 reivindicatoria
where the assessed value of the real property does not exceed the aforestated amounts.
Accordingly, the jurisdictional element is the assessed value of the property.

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

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Assessed value is understood to be "the worth or value of property established by taxing
authorities on the basis of which the tax rate is applied. Commonly, however, it does not
represent the true or market value of the property."[1 6 ]

The 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 exclusive original jurisdiction of the
municipal trial court.

It was error then for the RTC to take cognizance of the complaint based on the allegation
that "the present estimated value [of the land is] P50,000," which allegation is, oddly,
handwritten on the printed pleading. The estimated value, commonly referred to as fair
market value,[1 7 ] is entirely different from the assessed value of the property.

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 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 jurisdiction 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 respondents' cause of action - accion publiciana is a wrong
mode. The dispossession took place on October 1, 1996 and the complaint was filed four
months thereafter 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 fine, 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 null and void. The
complaint should perforce be dismissed. This leaves it unnecessary 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. The 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.

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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.
SANDOVAL-GUTIERREZ, J.:
PGTT International Investment Corporation (PGTT), respondent, is a corporation duly organized under existing laws, with
address at YASCO Bldg., M. J. Cuenco Ave., Cebu City.
On December 11, 1997, PGTT filed with the Regional Trial Court (RTC), Branch 20, Cebu City, a verified complaint against
Jovenal Ouano, petitioner, docketed as Civil Case No. CEB- 21319, entitled "PGTT INTERNATIONAL INVESTMENT
CORPORATION, Plaintiff, vs. JUVENAL OUANO, Defendant," for "Recovery of Ownership and Possession of Real Property
and Damages."1 In its complaint, PGTT alleged that it is the owner of Lot Nos. 1-10, Block 2 of the Sunnymeade Crescent
Subdivision located at Pit-os, Talamban, Cebu City. Sometime in October of 1996, PGTT found that Ouano uprooted the
concrete monuments of the said lots, plowed them and planted corn thereon. Despite PGTT’s demand that he vacate the
lots and restore them to their original condition, Ouano refused, claiming he is the owner and lawful possessor of the
380 square meters he occupied. Due to Ouano’s wrongful act, PGTT was deprived of the use of its property and suffered
damages in the amount of P100,000.00 a year. Likewise, PGTT was constrained to file the subject action and hired the
services of his counsel for P100,000.00. PGTT prayed:
"WHEREFORE, in view of all the foregoing, it is most respectfully prayed that after due notice and hearing,
judgment be rendered ordering defendant (Jovenal Ouano) to vacate the premises and restore the lots to their
original condition; pay plaintiff (PGTT) P100,000.00 as damages per year, beginning October, 1996 until he shall
have vacated the premises and restored the lots to their original condition; pay P100,000.00 as attorney's fees;
and pay P50,000.00 as expenses of litigation.
"Plaintiff prays for such other reliefs and remedies, just and equitable under the premises." 2
On February 5, 1998, Ouano filed a motion to dismiss the complaint on the ground that it is the Municipal Trial Court
(MTC), not the RTC, which has jurisdiction over it considering that the assessed value of the lots involved is only P2,910,
as indicated in the latest tax declaration,3 citing Section 19 (paragraph 2) and Section 33 (paragraph 3) of Batas
Pambansa Bilang 129 (The Judiciary Reorganization Act of 1980), as amended by Republic Act No. 7691.4
In its opposition to Ouano’s motion, PGTT contends that the RTC has jurisdiction since the market value of the lots is
P49,760.00.5 Besides, the complaint is not only an action for recovery of ownership and possession of real property, but
also for damages exceeding P100,000.00, over which claim the RTC has exclusive original jurisdiction under Section 19
(paragraph 8) of the same law.
On March 6, 1998, the RTC, presided by Judge Ramon G. Codilla, Jr., issued an Order denying the motion to dismiss,
holding that:
"This court believes that this court has jurisdiction to try this case considering that the real properties consist of
ten parcels of land in a subdivision and the court takes note that there is a discrepancy somewhere by the Office
of the City Assessor in the Assessment of the parcels of land for only less than P2,000.00 and that the government
is very much at a loss by these unrealistic valuation." 6
Ouano filed a motion for reconsideration but was likewise denied by the RTC in its Order dated May 27, 1998. The trial
court ruled it has jurisdiction over the case because "(i)t is of judicial knowledge that the real properties situated in Cebu
City command a higher valuation than those indicated in the tax declaration. The observation of plaintiff’s (PGTT’s)
counsel as to the issue on damages is likewise sustained considering that, being a corporation, it may have incurred
damages in the form of unrealized profits."7
Hence the present petition for certiorari filed by Ouano under Rule 65 of the 1997 Rules of Civil Procedure, as amended,
assailing the Orders of respondent judge dated March 6, 1998 and May 27, 1998 as having been issued with grave abuse
of discretion amounting to lack or excess of jurisdiction.
At the outset, it is necessary to stress that a direct recourse to this Court is highly improper, for it violates the established
policy of strict observance of the judicial hierarchy of courts.8 We need to reiterate, for the guidance of petitioner, that
this Court’s original jurisdiction to issue a writ of certiorari (as well as prohibition, mandamus, quo warranto, habeas
corpus and injunction) is concurrent with the Court of Appeals (CA), as in the present case, and with the RTCs in proper
cases within their respective regions.9 However, this concurrence of jurisdiction does not grant a party seeking any of the
extraordinary writs the absolute freedom to file his petition with the court of his choice. This Court is a court of last
resort, and must so remain if it is to satisfactorily perform the functions assigned to it by the Constitution and
immemorial tradition.10 The hierarchy of courts determines the appropriate forum for such petitions. Thus, petitions for
the issuance of such extraordinary writs against the first level ("inferior") courts should be filed with the RTC, and those
against the latter, with the CA.11 A direct invocation of this Court’s original jurisdiction to issue these writs should be
allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This

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allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This
is the established policy. It is a policy that is necessary to prevent inordinate demands upon this Court’s time and
attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-
crowding of its docket.12 Unfortunately, the instant petition does not allege any special and compelling reason to justify a
direct recourse to this Court. However, we deem it more appropriate and practical to resolve the controversy in order to
avoid further delay, but only in this instance.
The lone issue for our resolution is whether the RTC has jurisdiction over Civil Case No. CEB-21319.
The complaint seeks to recover from private respondent the ownership and possession of the lots in question and the
payment of damages. Since the action involves ownership and possession of real property, the jurisdiction over the
subject matter of the claim is determined by the assessed value, not the market value, thereof, pursuant to Batas
Pambansa Blg. 129, as amended by R.A. 7691. Section 33 (paragraph 3) of the said law provides:
"Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil
Cases. – Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:
x x x.
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any
interest therein where the assessed value of the property or interest therein does not exceed Twenty Thousand
Pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty Thousand
Pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses and
costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be
determined by the assessed value of the adjacent lots.
x x x." (Emphasis ours)
Likewise, Section 19 (paragraph 2) of the same law reads:
"Sec. 19. Jurisdiction in civil cases. - The Regional Trial Court shall exercise exclusive original jurisdiction:
x x x.
(2) In all civil actions, which involve the title to, or possession of, real property, or any interest therein, where the
assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or, for civil actions in
Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) except actions for forcible entry into
and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan
Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;
x x x." (Emphasis ours)
It is undisputed that the assessed value of the property involved, as shown by the corresponding tax declaration, is only
P2,910.00. As such, the complaint is well within the MTC’s P20,000.00 jurisdictional limit.
The finding of respondent judge that the value of the lots is higher than that indicated in the tax declaration and that,
therefore, the RTC has jurisdiction over the case is highly speculative. It is elementary that the tax declaration indicating
the assessed value of the property enjoys the presumption of regularity as it has been issued by the proper government
agency.
Respondent judge further held that since the complaint also seeks the recovery of damages exceeding P100,000.00, then
it is within the competence of the RTC pursuant to Section 19 (paragraph 8) of Batas Pambansa Blg. 129, as amended by
R.A. 7691, which states:
"SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction:
xxx
"(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney’s fees,
litigation expenses, and costs or the value of the property in controversy exceeds One Hundred Thousand Pesos
(P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the above mentioned
items exceeds Two hundred thousand pesos (P200,000.00)." (Emphasis ours)
The above provision does not apply to the instant case. It is applicable only to "all other cases" other than an action
involving title to, or possession of real property in which the assessed value is the controlling factor in determining the
court’s jurisdiction. Besides, the same provision explicitly excludes from the determination of the jurisdictional amount
the demand for "interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs". The exclusion of
such damages is reiterated in Section 33, paragraph 3 of the same Batas Pambansa Blg. 129, as amended, quoted earlier.
The said damages are merely incidental to, or a consequence of, the main cause of action for recovery of ownership and
possession of real property. In this connection, this Court issued Administrative Circular No. 09-94 setting the guidelines
in the implementation of R.A. 7691. Paragraph 2 states:
"2. The exclusion of the term ‘damages of whatever kind’ in determining the jurisdictional amount under
Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. 7691, applies to cases where the damages
are merely incidental to or a consequence of the main cause of action. However, in cases where the claim for
damages is the main cause of action, or one of the causes of action, the amount of such claim shall be considered
in determining the jurisdiction of the court." (Emphasis ours)
We thus find that in issuing the assailed orders denying petitioner’s motion to dismiss, thus taking cognizance of the
case, the RTC committed grave abuse of discretion.
WHEREFORE, the instant petition is GRANTED. The assailed Orders issued by respondent RTC on March 6, 1998 and May
27, 1998 in Civil Case No. CEB-21319 are SET ASIDE. Accordingly, the complaint is ordered DISMISSED.
SO ORDERED.

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SO ORDERED.

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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 to as the
lupon, composed of the punong barangay, as chairman and ten (10) to twenty (20) members. The lupon
shall be constituted every three (3) years in the manner provided herein.
(b) Any person actually residing or working, in the barangay, not otherwise expressly disqualified by law,
and possessing integrity, impartiality, independence of mind, sense of fairness, and reputation for
probity, may be appointed a member of the lupon.
(c) A notice to constitute the lupon, which shall include the names of proposed members who have
expressed their willingness 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 three (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 opposition to the proposed appointment or any
recommendations for appointment as may have been made within the period of posting, shall within
ten (10) days thereafter, appoint as members those whom he determines to be suitable therefor.
Appointments 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 three (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 their councils of datus or elders shall be recognized without
prejudice to the applicable provisions of this Code.
Section 400. Oath and Term of Office. - Upon appointment, each lupon member shall take an oath of
office before the punong barangay. He shall hold office until a new lupon is constituted on the third year
following his appointment unless sooner terminated by resignation, transfer of residence 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. Vacancies. - Should a vacancy occur in the lupon for any cause, the punong barangay shall
immediately appoint a qualified person who shall hold office only for the unexpired portion of the term.
Section 402. Functions of the Lupon. - The lupon shall:
(a) Exercise administrative supervision over the conciliation panels provided 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 settlement of disputes, and to enable various conciliation
panel members to share with one another their observations and experiences in effecting speedy
resolution 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 punong 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 conciliation 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 parties 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 drawn
by the lupon chairman.
(b) The three (3) members constituting the pangkat shall elect from among themselves the chairman
and the secretary. The secretary shall prepare the minutes of the pangkat proceedings and submit a
copy duly attested 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 city or municipal court.
He shall issue and cause to be served notices to the parties concerned.
The lupon secretary shall issue certified true copies of any public record in his custody that is not by law
otherwise declared confidential.
Section 405. Vacancies in the Pangkat. - Any vacancy in the pangkat shall be chosen by the parties to the
dispute from among the other lupon members. Should the parties fail to agree on a common choice, the
vacancy shall be filled by lot to be drawn by the lupon chairman.
Section 406. Character of Office and Service of Lupon 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 defined in the Revised Penal Code.
(b) The lupon or pangkat members shall serve without 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 granting economic or
other incentives to the lupon or pangkat members who adequately demonstrate the ability to
judiciously and expeditiously resolve cases referred to them. While in the performance of their duties,
the lupon or pangkat members, whether in public or private employment, shall be deemed to be on
official time, and shall not suffer from any diminution in compensation or allowance from said
employment by reason thereof.
Section 407. Legal Advice on Matters Involving Questions of Law. - The provincial, city legal officer or
prosecutor or the municipal legal officer shall render legal advice on matters involving questions of law
to the punong barangay or any lupon or pangkat member whenever necessary in the exercise of his
functions in the administration of the katarungang pambarangay.
Section 408. Subject Matter for Amicable Settlement; Exception Thereto. - The lupon of each barangay
shall have authority to 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 government, or any subdivision or instrumentality thereof;
(b) Where one party is a public officer or employee, and the dispute relates to the performance of his
official functions;
(c) Offenses punishable by imprisonment exceeding one (1) year or 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 located in different cities or municipalities unless the
parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except
where such barangay units adjoin each other and the parties thereto agree to submit their differences
to amicable settlement by an appropriate 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.
The court in which non-criminal 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 actually residing in the same barangay shall be brought for amicable
settlement before 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 therein shall be brought in the barangay where the
real property or the larger portion 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 study, shall be brought in the barangay where such workplace or
institution is located.
Objections to venue shall be raised in the mediation proceedings before the punong barangay;
otherwise, the same shall be deemed waived. Any legal question which may confront the punong
barangay in resolving objections to venue herein referred to may be submitted to the Secretary of

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barangay in resolving objections to venue herein referred to may be submitted to the Secretary of
Justice, or his duly designated representative, whose ruling thereon shall be binding.
Section 410. Procedure for Amicable Settlement. -
(a) Who may initiate proceeding - Upon payment of the appropriate filing fee, any individual 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 lupon chairman of the barangay.
(b) Mediation by lupon chairman - Upon receipt of the complaint, the lupon chairman shall within the
next working day summon the respondent(s), with notice to the complainant(s) for them and their
witnesses to appear 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 parties before him, he shall forthwith set a
date for the constitution of the pangkat in accordance with the provisions of this Chapter.
(c) Suspension of prescriptive period of offenses - While the dispute is under mediation, conciliation, or
arbitration, the prescriptive periods for offenses and cause of action under existing laws shall be
interrupted upon filing the complaint with the punong barangay. The prescriptive periods shall resume
upon receipt by the complainant of the complainant or the certificate of repudiation or of the
certification to file action issued by the lupon or pangkat secretary: Provided, however, That such
interruption shall not exceed sixty (60) days from the filing of the complaint with the punong barangay.
(d) Issuance of summons; hearing; grounds for disqualification - The pangkat shall convene not later
than three (3) days from its constitution, on the day and hour set by the lupon chairman, to hear both
parties and their witnesses, simplify issues, and explore all possibilities for amicable settlement. For this
purpose, the pangkat may issue summons for the personal appearance of parties and witnesses before
it. In the event that a party moves to disqualify any member of the pangkat by reason of relationship,
bias, interest, or any other similar grounds discovered after the constitution of the pangkat, the matter
shall be resolved by the affirmative vote of the majority of the pangkat whose decision shall be final.
Should disqualification be decided upon, the resulting vacancy shall be filled as herein provided for.
(e) Period to arrive at a settlement - 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 section. This period shall, at the
discretion of the pangkat, be extendible for another 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 attested 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
settlement shall be written in the language known to them.
Section 412. Conciliation. -
(a) Pre-condition to Filing of Complaint 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, and 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 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 calling for habeas corpus
proceedings;
(3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment,
delivery of personal property and support pendente lite; and
(4) Where the action may otherwise be barred by the statute of limitations.
(c) Conciliation among members of indigenous cultural communities. - The customs and traditions of
indigenous cultural communities shall be applied in settling disputes between members of the cultural
communities.
Section 413. Arbitration. -
(a) The parties may, at any stage of the proceedings, agree in writing that they shall abide by the
arbitration award of the lupon chairman or the pangkat. Such agreement to arbitrate may be repudiated
within five (5) days from the date thereof for the same grounds and in accordance with the procedure

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within five (5) days from the date thereof for the same grounds and in accordance with the procedure
hereinafter prescribed. The arbitration award shall be made after the lapse of the period for repudiation
and within ten (10) days thereafter.
(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.
Section 414. Proceedings Open to the Public; Exception. - All proceedings for settlement 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 of a party, exclude the public from the proceedings in the interest of
privacy, decency, 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. Effect of Amicable Settlement and Arbitration Award. - The amicable settlement and
arbitration award shall have the force and effect of a final judgment of a court upon 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 apply to court cases settled by the lupon under the last paragraph of
Section 408 of this Code, in which case the compromise or the pangkat chairman shall be submitted to
the court and upon approval thereof, have the force and effect of a judgment of said court.
Section 417. Execution. - The amicable settlement or arbitration 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. Repudiation. - Any party to the dispute may, within ten (10) days from the date of the
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, violence, or intimidation. Such repudiation shall be
sufficient basis for the issuance of the certification for filing a complaint as hereinabove provided.
Section 419. Transmittal of Settlement and Arbitration. - Award to the Court. - The secretary 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 award or from the lapse of the ten-day period repudiating the
settlement and shall 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 chairman of the lupong
tagapamayapa, and the members of the pangkat are hereby authorized to administer oaths in
connection with any matter relating to all proceedings in the implementation of the katarungang
pambarangay.
Section 421. Administration; Rules and Regulations. - The city or municipal mayor, as the case may be,
shall see to the efficient and effective implementation and administration of the 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
katarungang pambarangay shall be provided for in the annual budget of the city or municipality
concerned.

Pasted from <http://www.lawphil.net/statutes/repacts/ra1991/ra_7160_1991.html>

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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
MARTINIANA 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 No. 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 Castro 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), Branch 54, Alaminos City,
Pangasinan; and, ruling in favor of the respondents, ordered the petitioner to vacate the
subject property. In its assailed Resolution dated 25 January 2007, the Court of Appeals
refused to reconsider its earlier Decision of 19 September 2006.

In their Complaint [5 ] filed on 1 July 2002 with the MTC of Alaminos City, docketed as Civil
Case No. 1990, respondents alleged that 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 follows:
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. along line 2-3 by Vericiano
St.; on the SE. along line 3-4 by Lot 13033-D-2 of the subdivision plan; on the SW. along
line 4-1 by Lot 575, Numeriano Rabago. It is 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 of 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 effective 1 October 2001, the rental
payment shall be increased from P9,000.00 to P15,000.00. Petitioner, however, failed or
refused to pay the corresponding increase 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, Alaminos, Pangasinan, in an attempt to amicably settle the
matter but the parties failed 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, respondent George de Castro sent a letter to petitioner terminating their lease
agreement and demanding that the latter vacate and turn over the subject property to
respondents. Since petitioner stubbornly refused to comply with said demand letter,
respondent George de Castro, together with his siblings and co-respondents, Annie de
Castro, Felomina de Castro Uban and Jesus de Castro, filed the Complaint 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 Verification and the Certificate of Non-Forum Shopping were
signed by respondent George de Castro alone. He would subsequently attach to his position
paper filed before the MTC on 28 October 2002 the Special Powers of Attorney (SPAs)
executed by his sisters Annie de Castro and Felomina de Castro Uban dated 7 February

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executed by his sisters Annie de Castro and Felomina de Castro Uban dated 7 February
2002 and 14 March 2002 respectively, authorizing him to institute the ejectment case
against petitioner.

Petitioner, on the other hand, countered that there was no agreement between the parties
to increase the monthly rentals and respondents' demand for an increase was exorbitant.
The agreed monthly rental was only 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 jurisdictional requirement of conciliation before the Barangay Lupon prior to the
filing of Civil Case. No. 1990, meriting the dismissal of their Complaint therein. The
Certification to file action issued by the Barangay Lupon appended to the respondents'
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 that there was an "unlawful
withholding" of the subject property by the petitioner. [8 ]

During the Pre-Trial Conference[9 ] held before the MTC, the parties stipulated that in May
2002, petitioner tendered to respondents the sum of P9,000.00 as rental payment for the
month of January 2002; petitioner paid rentals for the months of October 2001 to January
2002 but only in the amount of P9,000.00 per month; respondents, thru counsel, sent a
letter to petitioner on 10 June 2002 terminating their lease agreement which petitioner
ignored; and the Barangay Lupon 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 Position Papers, the MTC, on 21
November 2002, rendered a Decision[1 0 ] dismissing respondents' Complaint in Civil Case No.
1990 for failure to comply with the prior conciliation requirement before the Barangay
Lupon. The decretal portion of the MTC Decision reads:
WHEREFORE, premised considered, judgment is hereby rendered 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 dismissal of respondents'
Complaint for ejectment after finding that the appealed MTC 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 only the sum of P9.000.00 per month for the rent of
the subject property, and no concession was reached by the parties to increase such
amount to P15.000.00, petitioner cannot be faulted for paying only the originally agreed
upon monthly rentals. Adopting petitioner's position, the RTC declared that respondents'
failure to refer the matter to the Barangay court for conciliation process barred the
ejectment case, conciliation before the Lupon being a condition sine qua non in the filing of
ejectment suits. The RTC likewise agreed with petitioner in ruling that the allegation in the
Complaint was flawed, since respondents failed to allege that there was an "unlawful
withholding" of possession of the subject property, taking out Civil Case No. 1990 from the
purview of an action for unlawful detainer. Finally, the RTC decreed that respondents'
Complaint failed to comply with 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 AFFIRMED IN
TOTO.[1 2 ]
Undaunted, respondents filed a Petition for Review on Certiorari[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 Complaint, since it is only respondent George de Castro who
resides in Alaminos City, Pangasinan, while respondent Annie de Castro resides in
Pennsylvania, United States of America (USA); respondent Felomina de Castro Uban, in
California, USA; and respondent Jesus de Castro, now substituted by his wife, Martiniana,
resides in Manila. Respondents further claimed that the MTC was not divested of jurisdiction
over their Complaint for ejectment because of the mere absence therein of the term
"unlawful withholding" of their subject property, considering that they had sufficiently

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"unlawful withholding" of their subject property, considering that they had sufficiently
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 Complaint was irrelevant since the other
respondents already executed Special Powers of Attorney (SPAs) authorizing him to act as
their attorney-in-fact in the institution of the ejectment suit against the petitioner.

On 19 September 2006, the Court of Appeals rendered a Decision granting the respondents'
Petition and ordering petitioner to vacate the subject property and turn over the same to
respondents. 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 is hereby rendered ordering [herein petitioner] Leo
Wee to SURRENDER and VACATE the 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 possession 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,
with 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 likewise hereby
ordered to pay petitioners the amount of P20,000.00 as and for attorney'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 petitioner 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 APPEALS GRAVELY ERRED IN DECLARING THAT CONCILIATION

PROCESS IS NOT A JURISDICTIONAL REQUIREMENT THAT NON-COMPLIANCE THEREWITH
DOES NOT AFFECT THE JURISDICTION IN EJECTMENT CASE;
II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE SUFFICIENCY

OF THE ALLEGATIONS IN THE COMPLAINT FOR EJECTMENT DESPITE THE WANT OF
ALLEGATION OF "UNLAWFUL WITHOLDING PREMISES" (sic) QUESTIONED BY PETITIONER;
III.

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-OWNERS OVER THE SUBJECT PROPERTY IS PROPER;
IV.

THE HONORABLE COURT OF APPEALS GRAVELY 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 process before the
Barangay Lupon, a jurisdictional defect that bars the legal action 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 confrontation between the parties on the matter of rental
increase but not on unlawful detainer of the subject property by the petitioner. If it was the
intention of the respondents 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 justice system was established primarily as a means of easing up the
congestion of cases in the judicial courts. This could be accomplished through a proceeding
before the barangay courts which, according to the one who conceived of the system, the

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late Chief Justice Fred Ruiz Castro, is essentially arbitration in character; and to make it
truly effective, it should also be compulsory. With this primary objective of the barangay
justice system in mind, it would be wholly in keeping with the underlying philosophy of
Presidential Decree No. 1508 (Katarungang Pambarangay Law), which would be better
served if an out-of-court settlement of the case is reached voluntarily by the parties. [1 6 ] To
ensure this objective, Section 6 of Presidential Decree No. 1508 requires the parties to
undergo a conciliation process before the Lupon Chairman or the Pangkat ng
Tagapagkasundo as a precondition to filing a complaint in court subject to certain
exceptions. The said section has been declared compulsory in nature. [1 7 ]

Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160 (The Local
Government Code), which took effect on 1 January 1992.

The pertinent provisions of the Local Government Code making conciliation a precondition to
the filing of complaints in court are reproduced below:
SEC. 412. Conciliation.- (a) Pre-condition to filing of complaint 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, and 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 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 calling for habeas
corpus proceedings;

(3) Where actions are coupled with provisional remedies such as preliminary injunction,
attachment, delivery of personal property, and support pendente lite; and

(4) Where the action may otherwise be barred by the statute of limitations.

(c) Conciliation among members of indigenous cultural communities. - The customs and
traditions of indigenous cultural communities shall be applied in settling disputes between
members of the cultural communities.

SEC. 408. Subject Matter for Amicable Settlement; Exception Thereto. - The lupon of each
barangay shall have authority to 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 government or any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the
performance of his official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or 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 located in different cities or municipalities
unless the parties thereto agree to submit their differences to amicable settlement by an
appropriate lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or

REMLAW Page 259

 (f) Disputes involving parties who actually reside in barangays of different cities or
municipalities, except where such barangay units adjoin each other and the parties thereto
agree to submit their differences to amicable settlement by an appropriate 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 question that the parties to this case appeared before the Barangay Lupon for
conciliation proceedings. There is also no dispute that the only matter referred to the
Barangay Lupon for conciliation was the rental increase, and not the ejectment of petitioner
from the subject property. This is apparent 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

This is to certify that:

1. There was personal confrontation between parties before the barangay Lupon regarding
rental increase of a commercial building but conciliation failed;
2. Therefore, the corresponding dispute of the above-entitled case may now be filed in
Court/Government Office.[1 8 ] (Emphasis ours.)
The question now to be resolved by this Court is whether the Certification dated 18 January
2002 issued by the Barangay Lupon stating that no settlement was reached by the parties
on the matter of rental increase sufficient to comply with the prior conciliation requirement
under the Katarungang Pambarangay Law to authorize the respondents to institute the
ejectment suit against petitioner.

The Court rules affirmatively.

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 ejectment of petitioner from the subject
property, the submission of the same for conciliation before the Barangay Lupon constitutes
sufficient compliance with the provisions of the Katarungang Pambarangay Law. Given the
particular circumstances of the case at bar, the conciliation proceedings for the amount of
monthly rental should logically and reasonably include also the matter of the possession of
the 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 contract of lease between the parties did not stipulate a fixed period. Hence, the parties
agreed to the payment of rentals on a monthly basis. On this score, Article 1687 of the Civil
Code provides:
Art. 1687. If the period for the lease has not 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 courts may fix a longer term for the lease after the lessee has occupied the
premises 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 case 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 paid monthly, the period of such lease is deemed terminated at the end of
each month. Thus, respondents have every right to demand the ejectment of petitioners at
the end of each month, the contract having expired by operation of law. Without a lease
contract, petitioner has no right of possession to the subject property 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 property from petitioner.

Corollarily, petitioner's ejectment, in this case, is only the reasonable consequence of his
unrelenting refusal to comply with the respondents' demand for the payment of rental
increase agreed upon by both parties. Verily, the lessor's right to rescind the contract of

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lease for non-payment of the demanded increased rental was recognized by this Court 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 general remedy of rescission granted under Article 1191 of the Civil
Code, there is an independent provision granting the remedy of rescission for breach of any
of the lessor or lessee's statutory obligations. Under Article 1659 of the Civil Code, the
aggrieved party may, at his option, ask for (1) the rescission of the contract; (2) rescission
and indemnification for damages; or (3) only indemnification for damages, allowing the
contract to remain in force.

Payment of the rent is one of a lessee's statutory obligations, and, upon non-
payment 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 next argues that respondent George de Castro cannot maintain an action for
ejectment 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 bring an action in ejectment.
This article covers all kinds of action for the recovery of possession, i.e., forcible entry and
unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and
recovery of ownership (accion 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 plaintiff alone, such that he claims
possession for himself and not for the co-ownership, the action will not prosper. (Emphasis
added.)
In the more recent case of Carandang v. Heirs of De Guzman,[21] this Court declared that a
co-owner is not 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 not
indispensable parties. They are not even necessary parties, for a complete relief can be
afforded in the suit even without their participation, since the suit is presumed to have been
filed for the benefit of all co-owners.
Moreover, respondents Annie de Castro and Felomina de Castro Uban each executed a
Special Power of Attorney, giving respondent George de Castro the authority to initiate Civil
Case No. 1990.

A power of attorney is an instrument in writing by which one person, as principal, appoints

another as his agent and confers upon him the authority to perform certain specified acts or
kinds of acts on behalf of the principal. The written authorization itself is the power of
attorney, and this is clearly 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 instituted by respondent
George de Castro. This also disposes of petitioner's contention that respondent George de
Castro lacked the authority to sign the Verification 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-in-fact, who has authority to file,
and who actually filed the complaint as the representative 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 Court includes the representative of the owner in an ejectment suit

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Rule 70 of the Rules of Court includes the representative of the owner in an ejectment suit
as one of the parties authorized to institute the proceedings.(Emphasis 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 sisters the authority to file the
action for ejectment against petitioner prior to the institution of Civil Case No. 1990. The
SPAs in his favor were respectively executed by respondents Annie de Castro and Felomina
de Castro Uban on 7 February 2002 and 14 March 2002; while Civil Case No. 1990 was
filed by respondent George de Castro on his own behalf and on behalf of his siblings only on
1 July 2002, 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 Appeals:
Moreover, records show that [herein respondent] George de Castro was indeed authorized
by his sisters Annie de Castro and Felomina de Castro Uban, to prosecute the case in their
behalf as shown by the Special Power of Attorney dated February 7, 2002 and March 14,
2002. That these documents were appended only to [respondent 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 sign 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. Specialized Packaging Development Corporation,[2 6 ] the Court ruled that
the personal 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 undoubtedly have
sufficient knowledge and belief to swear to the truth of the allegations 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 subject
property was fatal to their cause of action.

It is apodictic that what determines 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 defendant, which was legal in
the beginning, having no other source than a contract, express or implied, and which later
expired as a right and is being withheld by defendant. [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 demand.

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 refused to accede to respondents' demand
for rental increase; the respondents sent petitioner a letter terminating the lease agreement
and demanding that petitioner vacate and turn over the possession of the subject property
to respondents; and despite such demand, petitioner failed to surrender the subject
property to respondents.[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 terminology 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 to attach the Official Receipt of his updated payment of
Integrated Bar of the Philippines (IBP) dues is now moot and academic, since respondents'
counsel has already duly complied therewith. It must be stressed that judicial cases do not
come and go through the portals of a court of law by the mere mandate of technicalities. [3 1 ]

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come and go through the portals of a court of law by the mere mandate of technicalities. [3 1 ]
Where a rigid application of the rules will result in a manifest failure or miscarriage of
justice, technicalities should be disregarded in order to resolve the case. [3 2 ]

Finally, we agree in the ruling of the Court of Appeals 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 income from the subject property on account of petitioner's
refusal to vacate the leased premises.

WHEREFORE, premises considered, the instant Petition is DENIED. The 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 against petitioner.

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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. AURE1, respondent.
DEC I SI O N
CHICO-NAZARIO, J.:
Before this Court is a Petition 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 aside 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 assailed Decision and Resolution, reversed the
Decision5 of the Regional Trial Court (RTC) of Quezon City, Branch 88, affirming the Decision6 of the
Metropolitan Trial Court (MeTC) of Quezon City, Branch 32, which dismissed respondent Ernesto
Aure’s (Aure) complaint for ejectment on the ground, inter alia, of failure to comply with barangay
conciliation proceedings.
The subject of the present controversy 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 and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a Complaint for ejectment against
Aquino before the MeTC docketed as Civil Case No. 17450. In their Complaint, Aure and Aure
Lending alleged that they acquired the subject property from 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 substantial consideration for the sale of the subject property, they refused
to vacate the same.9
In her Answer,10 Aquino countered that the Complaint in Civil Case No. 17450 lacks cause of action
for Aure and Aure Lending do not have any legal right over the subject property. Aquino admitted
that there was a sale but such 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 his own
name using the subject property as collateral and turn over the proceeds thereof to the spouses
Aquino. However, even after Aure successfully secured a loan, the spouses Aquino did not receive
the proceeds thereon or benefited therefrom.
On 20 April 1999, the MeTC rendered a Decision in Civil Case No. 17450 in favor 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 there 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 ownership 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 ordered DISMISSED.
[Aquino’s] 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 therewith constitutes sufficient cause for the dismissal of the action.
The RTC likewise validated the ruling of the MeTC that the main issue involved in Civil Case No.
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
Aure’s Motion for Reconsideration was denied by the RTC in an Order 14 dated 27 February 2001.
Undaunted, Aure appealed the adverse RTC Decision with the Court of Appeals arguing that the
lower court erred 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 and that the MeTC
should have only ordered the exclusion of Aure Lending as plaintiff without prejudice to the

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continuation of the proceedings in Civil Case No. 17450 until the final determination 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 defenses and objections raised by the parties. Finally, Aure contended that the MeTC
erred in dismissing his Complaint with prejudice on the ground of non-compliance with barangay
conciliation process. He was not given the opportunity to rectify the procedural defect by going
through the barangay mediation proceedings and, thereafter, refile the Complaint. 15
On 17 October 2001, the Court of Appeals rendered a Decision, reversing the MeTC and RTC
Decisions and remanding the case to the MeTC for further proceedings and final determination of
the substantive rights of the parties. The appellate court declared that the failure of Aure to subject
the matter to barangay conciliation is not a jurisdictional flaw and it will not affect the sufficiency of
Aure’s Complaint since Aquino failed to seasonably raise such issue in her Answer. The Court of
Appeals further ruled that mere allegation of ownership does not deprive the MeTC of jurisdiction
over the ejectment case for jurisdiction over the subject matter is conferred by law and is determined
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 of Appeals Decision reads:
WHEREFORE, premises considered, the petition is hereby GRANTED - and the decisions of the
trial courts below REVERSED and SET ASIDE. Let the records be remanded back to the court a
quo for further proceedings – for an eventual decision of the substantive rights of the disputants.16
In a Resolution 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 her previous pleadings
which were already considered and passed upon by the appellate court in its assailed Decision.
Aquino is now before this Court via the Petition 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 system was established primarily as a means of easing up the congestion of
cases in the judicial courts. This could be accomplished through a proceeding before the barangay
courts which, according to the conceptor of the system, the late Chief Justice Fred Ruiz Castro, is
essentially arbitration in character, and to make it truly effective, it should also be compulsory. With
this primary objective of the barangay justice system in mind, it would be wholly in keeping with the
underlying philosophy of Presidential Decree No. 1508, otherwise known as the Katarungang
Pambarangay Law, and the policy behind it would be better served if an out-of-court settlement of
the case is reached voluntarily by the parties.17
The primordial objective of Presidential Decree No. 1508 is to reduce the number of court 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 this 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
Tagapagkasundo as a precondition to filing a complaint in court subject to certain exceptions 20 which
are inapplicable to this case. The said section has been declared compulsory in nature. 21
Presidential Decree No. 1508 is now incorporated 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 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, and
that no conciliation or settlement has been reached as certified by the lupon secretary or
pangkat secretary as attested to by the lupon chairman 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 calling for habeas corpus
proceedings;
(3) Where actions are coupled with provisional remedies such as preliminary injunction,
attachment, delivery of personal property, and support pendente lite; and

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 attachment, delivery of personal property, and support pendente lite; and
(4) Where the action may otherwise be barred by the statute of limitations.
(c) Conciliation among members of indigenous cultural communities. – The customs and
traditions of indigenous cultural communities shall be applied in settling disputes between
members of the cultural communities.
SEC. 408. Subject Matter for Amicable Settlement; Exception Therein. – The lupon of each
barangay shall have authority to 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 government or any subdivision or instrumentality thereof;
(b) Where one party is a public officer or employee, and the dispute relates to the performance
of his official functions;
(c) Offenses punishable by imprisonment exceeding one (1) year or 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 located in different cities or municipalities unless
the parties thereto agree to submit their differences to amicable settlement by an appropriate
lupon;
(f) Disputes involving parties who actually reside in barangays of different cities or
municipalities, except where such barangay units adjoin each other and the parties thereto
agree to submit their differences to amicable settlement by an appropriate 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 Barangay Lupon for
conciliation before Aure and Aure Lending instituted Civil Case No. 17450. In fact, no allegation of
such barangay conciliation proceedings was made in Aure and Aure Lending’s Complaint before the
MeTC. The only issue to be resolved is whether non-recourse to the barangay conciliation process is
a jurisdictional flaw that warrants the dismissal of the ejectment suit filed with the MeTC.
Aquino posits that failure to resort to barangay conciliation makes the action for ejectment premature
and, hence, dismissible. She likewise avers that this objection was timely raised during the pre-trial
and even subsequently in her Position 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
the Local Government Code on barangay conciliation (previously contained in Section 5 of
Presidential Decree No. 1508) is much the same effect produced by non-exhaustion of
administrative remedies -- the complaint becomes afflicted with the vice of pre-maturity; and the
controversy there alleged is not ripe for judicial determination. The complaint becomes vulnerable to
a motion to dismiss.22 Nevertheless, the conciliation process is not a jurisdictional
requirement, so that non-compliance therewith cannot affect the jurisdiction which the court
has otherwise acquired over the subject matter or over the person of the defendant.23
As enunciated in the landmark case of Royales v. Intermediate Appellate Court24:
Ordinarily, non-compliance with the condition precedent prescribed by P.D. 1508 could affect
the sufficiency of the plaintiff's cause of action and make his complaint 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 exercising 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 and even during the entire proceedings a quo.
While petitioners could have prevented the trial court from exercising jurisdiction over the case
by seasonably taking exception thereto, they instead invoked the very same jurisdiction by
filing an answer and seeking affirmative relief from it. What is more, they participated in the trial
of the case by cross-examining respondent Planas. Upon this premise, petitioners cannot
now be allowed belatedly to adopt an inconsistent posture by attacking the jurisdiction
of the court to which they had submitted themselves voluntarily. 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
scrupulously examined Aquino’s Answer before the MeTC in Civil Case No. 17450 and there 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 disquisition of the Court of Appeals:
Moreover, the Court takes note that the defendant [Aquino] herself did not raise in defense the
aforesaid lack of conciliation proceedings in her answer, which raises the exclusive affirmative
defense of simulation. By this acquiescence, defendant [Aquino] is deemed to have waived
such objection. As held in a case of similar circumstances, the failure of a defendant [Aquino]

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 such objection. As held in a case of similar circumstances, the failure of a defendant [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 Aquino’s failure to seasonably object to the deficiency in the Complaint, she is deemed to have
already acquiesced or waived any defect attendant thereto. Consequently, Aquino cannot thereafter
move for the dismissal of the ejectment suit for Aure and Aure Lending’s failure to resort to the
barangay conciliation process, since she is already precluded from doing so. The fact that Aquino
raised such objection during the pre-trial and in her Position Paper is of no moment, for the issue of
non-recourse to barangay mediation proceedings 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 answer are deemed waived. However, when it appears
from the pleadings or the evidence on record that the court has no jurisdiction over the subject
matter, that there is another action pending between the same parties for the same cause, or
that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss
the claim. (Emphasis supplied.)
While the aforequoted provision applies to a pleading (specifically, an Answer) or a motion to
dismiss, a similar or identical rule is provided for all other motions in Section 8 of Rule 15 of the
same Rule which states:
Sec. 8. Omnibus Motion. - Subject to the provisions of Section 1 of Rule 9, a motion attacking
a pleading, order, judgment, or proceeding shall include all objections then available, and all
objections not so included shall be deemed waived.
The spirit that surrounds the foregoing statutory norm is to require the party filing a pleading or
motion to raise all available 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 of 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 rule 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
been our consistent ruling, where the law speaks in clear and categorical language, there is no
occasion for interpretation; there is only room for application. 28 Thus, although Aquino’s defense of
non-compliance with Presidential Decree No. 1508 is meritorious, procedurally, such defense is no
longer available for failure to plead the same in the Answer as required by the omnibus motion rule.
Neither could the MeTC dismiss Civil Case No. 17450 motu proprio. The 1997 Rules of Civil
Procedure provide only three instances when the court may motu proprio dismiss 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) where 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 not 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 instant case cannot be resolved by the
MeTC without first adjudicating the question of ownership, since the Deed of Sale vesting Aure with
the legal right over the subject property is simulated.
Again, we do not agree. Jurisdiction in ejectment cases is determined by the allegations pleaded in
the complaint. As long as these 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 cause of action thus alleged, in which
instance the court -- after acquiring jurisdiction -- 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 proceedings, and when. – Subject to the provisions of the next
succeeding section, a person deprived of the possession of any land or building by force,
intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person may at
any time within one (1) year after such unlawful deprivation or withholding of possession, bring
an action in the proper Municipal Trial 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.
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 and lot located at No. 37 Salazar

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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 and lot located at No. 37 Salazar
Street corner Encarnacion Street, B.F. Homes, Quezon 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 Ernesto 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 attached
and made an integral part hereof as Annex A;
3. However, despite the sale thus transferring ownership of the subject premises to [Aure and
Aure Lending] as above-stated and consequently terminating [Aquino’s] right of possession
over the subject property, [Aquino] together with her family, is continuously occupying the
subject premises notwithstanding several demands made by [Aure and Aure Lending] against
[Aquino] and all persons claiming right under her to vacate the subject premises and surrender
possession thereof to [Aure and Aure Lending] causing damage and prejudice to [Aure and
Aure Lending] and making [Aquino’s] occupancy together with those actually occupying the
subject premises claiming right under her, illegal. 29
It can be inferred from the foregoing that Aure, together with 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. Aure’s
assertion 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 Aure’s title over the subject
property and claimed that the Deed of Sale was simulated 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. Court 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 pleadings and the question of possession
cannot be resolved without deciding the issue of ownership, the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts nevertheless have the undoubted
competence to resolve the issue of ownership albeit only to determine the issue of possession.
x x x. The law, as revised, now provides instead that when the question of possession
cannot 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 new Rule on
Summary Procedure was extended to include within the jurisdiction of the 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 issue 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 is 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 ejectment but one for recovery of ownership.
Apropos thereto, this Court ruled in Hilario v. Court of Appeals32:
Thus, an adjudication made therein regarding the issue of ownership should be regarded as
merely provisional and, therefore, would not bar or prejudice an action between the same
parties involving title to the land. The foregoing doctrine is a necessary consequence of the
nature of forcible entry and unlawful detainer cases where the only issue to be settled is the
physical or material possession over the real property, that is, possession de facto and not
possession de jure."
In other words, inferior courts are now "conditionally vested with adjudicatory power over the issue of
title or ownership raised by 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 thereof is necessary
for a proper and complete adjudication of the issue of possession. 33
WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision
dated 17 October 2001 and its ResolutioResolution dated 8 May 2002 in CA-G.R. SP No. 63733 are
hereby AFFIRMED. Costs against the petitioner.

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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 26, 2004 in CA-G.R. SP No. 74970. The CA Decision
affirmed the Order of the Regional Trial Court (RTC), Branch 142, Makati City dated November 29,
2002[2] in Civil Case No. 00-1553 (entitled "Accounting of All Corporate Funds and Assets, and Damages")
which denied petitioner Oscar C. Reyes' (Oscar) Motion to Declare Complaint as Nuisance or Harassment
Suit.

BACKGROUND FACTS

Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the four children of the spouses
Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar, and Rodrigo each owned shares of stock of Zenith
Insurance Corporation (Zenith), a domestic corporation established by their family. Pedro died in 1964,
while Anastacia died in 1993. Although Pedro's estate was judicially partitioned among his heirs
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 owned 8,715,637 and 4,250 shares, respectively.[3]

On May 9, 2000, Zenith and Rodrigo 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 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 fraudulently appropriated [by Oscar] for
himself [and] which were not collated and taken into account in the partition, 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 took these shares of stock, and should now deliver to his brothers and sisters
their just and respective shares."[5] [Emphasis supplied.]

In his Answer with Counterclaim,[6] Oscar denied the charge that he illegally acquired 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 that the suit is not a bona fide derivative suit because the
requisites therefor have not been complied with. He thus questioned the SEC's jurisdiction to entertain
the complaint because it pertains to the settlement of the estate of Anastacia Reyes.

When Republic Act (R.A.) No. 8799[7] took effect, the SEC's exclusive and original 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 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, according to the Interim
Rules of Procedure for Intra-Corporate 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 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 action, namely: a) a
derivative 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 Oscar] with prayer to appoint a
management committee; and b) an action for determination of the shares of stock of deceased spouses
Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery
of these shares to the parties' brothers and sisters. The latter is not a derivative suit and should properly
be threshed out in a petition for settlement of estate.
Accordingly, the motion is denied. However, only the derivative suit consisting 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 the 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 26, 2004. It likewise denied Oscar's motion for reconsideration in a Resolution dated October
21, 2004.

Petitioner now comes before us on appeal through a petition for review on certiorari 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 be dismissed under the Interim
Rules of Procedure of Intra-Corporate Controversies; 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, he prays 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
allegations of the complaint, irrespective of whether 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 over which the SEC (now the RTC acting as a special commercial
court) exercises exclusive jurisdiction:
SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnership, and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear
and decide cases involving:
a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers
or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the
public and/or of the stockholders, partners, members of associations or organizations registered with
the Commission.

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the Commission.

b) Controversies arising out of intra-corporate or partnership relations, between and among

stockholders, members, or associates; between any or all of them and the corporation, partnership or
association of which they are stockholders, members, or associates, respectively; and between such
corporation, partnership or association and the State insofar as it concerns their individual franchise or
right to exist as such entity; and

c) Controversies in the election or appointment of directors, trustees, officers, or managers of such

corporations, partnerships, or associations.
The allegations set 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. Our focus in examining the
allegations 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 specify the relief sought.[13] Section 5, Rule 8 of the
Revised Rules of Court provides that in all averments of fraud 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 fraud or
misrepresentation detrimental to the public and/or to the stockholders.

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 and fraudulently appropriated for himself [herein petitioner 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 from the time he took these shares 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 plus
interest thereon from 1978 representing his obligations 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 misrepresentation,
unilaterally, and for his own benefit, capriciously transferred and took possession and control of the
management of Zenith Insurance Corporation which is considered as a family corporation, and other
properties and businesses belonging to Spouses Pedro and Anastacia Reyes.

xxx x

4.1. During the increase of capitalization of Zenith Insurance Corporation, sometime in 1968, the
property covered by TCT No. 225324 was illegally and fraudulently 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, Doña 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 dividends, had been transferred solely
in the name of respondent. 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 portion of said shares must be distributed
equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant
herein.

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xxx x

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 petitioner
Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and]
thereby deprived his brothers 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 company, he illegally and
fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia
C. Reyes [which] must be properly collated and/or distributed equally amongst the children, including
the complainant Rodrigo C. Reyes herein, to their damage and prejudice.

xxx x

11.1 By continuous refusal of the respondent to account of his [sic] shareholding with Zenith Insurance
Corporation[,] particularly the number of shares of stocks illegally and fraudulently transferred to him
from their deceased parents Sps. Pedro and Anastacia Reyes[,] which are all subject for collation and/or
partition in equal shares among their children. [Emphasis supplied.]
Allegations of deceit, machination, 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 the opposing party to controvert the particular facts allegedly constituting such fraud
or mistake.[16]

Tested against these standards, we find that the charges of fraud against Oscar were not properly
supported by the required factual allegations. While the complaint contained allegations of fraud
purportedly committed by him, these allegations are not particular enough to bring the controversy
within the special commercial court's jurisdiction; they are not statements 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 not 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 special commercial court's jurisdiction. To fall within this jurisdiction, there must be
sufficient nexus showing that the corporation's nature, structure, 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, Oscar, as an
individual and without reference to his corporate personality, was alleged to have 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
particularly demonstrated under the following allegations:
5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings
of their deceased mother, Doña 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 dividends, had been transferred solely in
the name of respondent. 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 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

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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 petitioner
Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and]
thereby deprived his brothers and 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 can be cured by a bill of particulars. In cases governed by the Interim Rules of
Procedure on Intra-Corporate Controversies, however, a bill of particulars is a prohibited 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 complainant wishes to invoke the court's special commercial jurisdiction.

We note that twice in the course of this case, Rodrigo had been given the opportunity to study the
propriety of amending or withdrawing the complaint, but he consistently refused. The court's function in
resolving issues of jurisdiction is limited to the review 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 in classifying what
constitutes an intra-corporate controversy. Initially, the main 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 under
Section 5(b), as declared in the case of Union Glass & Container Corp. v. SEC,[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 stockholders, partners, or associates themselves. [Emphasis supplied.]

The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the
SEC, regardless of the subject matter of the 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
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 test alone will divest the regular courts of their jurisdiction for the sole reason that the
dispute involves a corporation, its directors, officers, or stockholders. We saw that there is no legal
sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the
dispute.

Under the nature of the controversy test, the incidents of that relationship must also be considered for
the purpose of ascertaining whether the controversy 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 to the
enforcement of the parties' correlative rights and obligations under the Corporation Code and the
internal and intra-corporate regulatory rules of the corporation. If the relationship and its incidents are
merely incidental to the controversy or if there will still be conflict even if the relationship does not
exist, then no intra-corporate controversy exists.

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exist, then no intra-corporate controversy exists.

The Court then combined the two tests and declared that jurisdiction should be determined 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 adopted in the recent case of Speed Distribution, Inc. v. Court of
Appeals:[24]
To 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 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 first element requires that the controversy must arise out of intra-corporate or partnership relations
between any or all of the parties and the corporation, partnership, or association of which they are
stockholders, members or associates; between any or all of them and the corporation, partnership, or
association of which they are stockholders, members, or associates, respectively; and between such
corporation, partnership, or association and the State insofar as it concerns their individual franchises.
The second element requires that the dispute among the parties be intrinsically connected with the
regulation of the corporation. 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 Test

Is there 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 Rodrigo 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 her name. What is material in
resolving the issues of this case under the allegations 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
Anastacia, not on Rodrigo's personally-owned shares 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 of the
deceased Anastacia and the parties' interest therein as her heirs.

Article 777 of the Civil Code declares that the successional rights are transmitted from the moment of
death of the decedent. Accordingly, upon Anastacia's death, her children acquired legal title to her
estate (which title includes her shareholdings in Zenith), and they are, prior to the estate's partition,
deemed co-owners 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 transferring shares, the heirs do not become registered
stockholders of the corporation. Section 63 provides:
Section 63. Certificate of stock and transfer of shares. - The capital stock of stock corporations shall be
divided into shares for which certificates signed by the president or vice-president, 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 the certificate or certificates indorsed by the owner or his attorney-in-fact or other person
legally authorized to 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 to show the names of the
parties to the transaction, the date of the transfer, the number of the certificate or certificates, and
the number of shares transferred. [Emphasis supplied.]
No shares of stock against which the corporation holds any unpaid claim shall be transferable in the
books of the corporation.

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Simply stated, the transfer of title by means of succession, 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 parties. The transfer must be registered in the books of the corporation to make the transferee-
heir a stockholder 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 registration of the transfer before considering the transferee
a stockholder of the corporation (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 intra-corporate
controversy). A marked difference, however, exists between these cases and the present one.

In Abejo and TCL Sales, the transferees held definite and uncontested titles to a specific number of
shares of the corporation; after the transferee had established prima facie ownership over the shares of
stocks 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 undivided 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 the debts 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 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 debts left by the
decedent shall have been made and all his creditors are fully paid. Until a final liquidation is made and
all the debts are paid, the right of the heirs 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 supplied.]
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 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
shares. Without the settlement of Anastacia's estate, there can be no definite partition and distribution
of the estate to the heirs. Without the partition and distribution, there can be no registration of the
transfer. And without the registration, we cannot consider the transferee-heir a stockholder who may
invoke the existence of an intra-corporate relationship as premise for an intra-corporate controversy
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 Section 5(b) of PD 902-A, as amended. Rodrigo's complaint, therefore, fails the
relationship 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 examination
of the complaint yields the conclusion that, more than anything else, the complaint is about the
protection and enforcement of successional rights. The controversy it presents is purely civil rather than
corporate, although 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 for 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 not
constitute a separate cause of action but is, as correctly claimed by Oscar, only an incident to the "action

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constitute a separate cause of action but is, as correctly claimed by Oscar, only an incident to the "action
for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken
by respondent, its accounting and the corresponding delivery of these shares to the parties' brothers
and sisters." There can be no mistake of the relationship between the "accounting" mentioned in the
complaint and the objective of partition and distribution when Rodrigo claimed in paragraph 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 transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C.
Reyes [which] must be properly collated and/or distributed equally amongst the children including the
complainant Rodrigo C. Reyes herein to their damage and prejudice.
We particularly note that the complaint contained no sufficient allegation that justified the need for an
accounting other than to determine the extent of Anastacia's shareholdings for purposes of distribution.

Another significant 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 allegedly fraudulent acts as basis for his demand for the collation
and distribution of Anastacia's shares to the heirs. These claims tell us unequivocally that the present
controversy arose from the parties' relationship as heirs of Anastacia and 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 rights) and
not by the corporation nor by Rodrigo as a shareholder on record.

More than the matters of injury and redress, what Rodrigo clearly aims to accomplish through his
allegations of illegal acquisition by Oscar is the distribution of Anastacia's shareholdings without a prior
settlement of her estate - an objective that, by law and established jurisprudence, cannot be done. The
RTC of Makati, acting as a special commercial court, has no jurisdiction to settle, partition, 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 decedent held by one of the heirs declares:
Questions as to advancement made or alleged 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 the heir. [Emphasis
supplied.]
Worth noting are this Court's statements 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 limited jurisdiction.
xxx x
It is clear that trial courts trying an ordinary action 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 Anastacia's
shareholdings will be undertaken by a probate court and not by a special commercial court is completely
consistent with the probate court's limited jurisdiction. It has the power to enforce an accounting 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 (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 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 First Instance
in the exercise of its general jurisdiction or of its limited probate 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 general rule, the question as to title to property should not be passed upon 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. That general rule has
qualifications or exceptions justified by expediency and convenience.

Thus, the probate court may provisionally pass upon in an intestate or testate proceeding the question
of inclusion in, or exclusion from, the inventory of a piece of property without prejudice to its final
determination 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 assumption of jurisdiction by the probate court and the rights of third parties are not
impaired, the probate court is competent to decide the question of ownership. [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 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 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 being material;
b. the party has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of
directors for the appropriate relief, but the latter 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 complaint 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
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 corporation, he must allege
with some particularity in his complaint that he has exhausted his remedies within the corporation by
making a sufficient demand upon the 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 this
requirement since what the rule contemplates is the exhaustion of remedies within 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 dispute 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 done to the corporation due to
Oscar's acts. If indeed he illegally and fraudulently transferred Anastacia's shares in his own name, then
the damage is not to the corporation but to his co-heirs; the wrongful transfer did not affect the capital
stock or the assets of Zenith. As already mentioned, neither has Rodrigo alleged any particular cause or
wrongdoing against the corporation that he can champion 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
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 Anastacia Reyes. Rodrigo's proper remedy,
under the circumstances, is to institute a special proceeding for the settlement of the estate of the
deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of his present complaint.

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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 Regional Trial Court, Branch 142,
Makati, docketed as Civil Case No. 00-1553, is ordered DISMISSED for lack of jurisdiction.

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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, respondent.
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 Rural Bank of the Seven Lakes (RBSL), seeking to reverse and set aside the Decision1 dated
21 October 2002 and its Resolution2 dated 7 August 2006 of the Court of 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 Commission (SEC) en banc, which upheld the dismissal by the SEC Hearing
Officer of SEC Case 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 as 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 discovered that Dan committed unsound banking practices, which included the
granting 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 disobedience to the lawful order of the employer; (e) willful breach of trust; and
(f) incompetence. On 30 September 1998, Dan was preventively suspended from employment by the
RBSL pending the investigation of the charges against her. After the hearing held before the RBSL, Dan
was determined to have committed the offenses charged. Consequently, Dan’s appointment as bank
manager was revoked by the RBSL Board 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 suspension 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
before the Regional Trial Court (RTC) of San Pablo City, Branch 32, docketed as Civil Case SP No.
5734-2000. In her Complaint in said civil case, Dan alleged that she suffered serious anxiety as a result of
her wrongful separation from employment by RBSL. RBSL filed a motion to dismiss Civil Case SP No.
5734-2000 on the ground of forum shopping, averring that the said case was based exactly on the same
cause of action as that in SEC Case No. 03-99-6229 pending before the SEC, namely, the wrongful
termination of Dan’s employment. The RTC, in its Order dated 4 September 2000, granted the motion of
RBSL and dismissed Civil Case SP No. 5734-2000. The RTC denied Dan’s 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 Appeals.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, the SEC Hearing Officer was prompted to reset
the hearing to 29 November 1999, with a warning that should Dan again fail to appear on the date set,
the SEC Hearing Officer would already be constrained to dismiss the case.10 On 24 November 1999,
Dan’s counsel filed an Urgent Motion for Cancellation of the 29 November 1999 hearing, since he had
another hearing scheduled on the same date. In an Order11 dated 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 entertain further postponement. Notwithstanding the explicit warning of the SEC
Hearing Officer, Dan’s 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 failure to prosecute.12

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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, affirming the Order dated 6
December 1999 of the SEC Hearing Officer, which dismissed SEC Case No. 03-99-6229 for non-suit.
Unyielding, Dan filed before the Court of Appeals a Petition for Review14 under Rule 43 of the Revised
Rules of Court assailing the Decision dated 9 May 2000 of the SEC en banc. Dan invoked in her Petition
equitable justice to justify her counsel’s several postponements of the hearing before the SEC Hearing
Officer. Dan urged the appellate court to afford her ample 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
technicality. Dan also argued that the issue involving the postponements of the hearing was rendered
moot and academic, considering the issuance by the SEC Hearing Officer, with the conformity of RBSL, of
the orders granting her counsel’s motions for postponement. Lastly, Dan asserted that the failure of her
counsel to appear on the hearing scheduled on 6 December 1999 constituted gross and inexcusable
neglect which should not bind her.15
In response, the RBSL underscored the procedural lapses flagrantly committed by Dan. RBSL alleged that
Dan violated the rule against 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 involving 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 Dan’s appeal before the SEC En Banc lacked verification as required by Section 2,
Rule II of the 1999 SEC Rules of Procedure. Aside from these procedural flaws, RBSL further contended
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 Dan, thus, reversing the
Decision dated 9 May 2000 of the SEC en banc. According to the appellate court, the rules of procedure
should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid
application, which would result in technicalities that tend to frustrate rather than promote substantial
justice, must always be avoided. In the highest interest of justice and equity, the Court of Appeals
directed the SEC Hearing Officer to allow Dan to complete the presentation of her evidence.
The Motion for Reconsideration of RBSL was denied by the Court of Appeals in its Resolution18 dated 7
August 2006.
Hence, this instant Petition for Review on Certiorari19 filed by RBSL assigning the following errors:
I.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING 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
VERIFICATION IN APPEALS BEFORE THE SEC CAN BE RELAXED.
III.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DISREGARDING *DAN’S+ FAILURE TO
PROSECUTE HER CASE.
RBSL accuses Dan of forum shopping in instituting SEC Case No. 03-99-6229 before the 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 several cases from the same cause of action.
Forum shopping is a deplorable practice of litigants of resorting to two different fora for the purpose of
obtaining the 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 not 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 related causes and/or to grant the same or substantially the same relief, in the process
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 against 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 different fora
until a favorable result is reached. To avoid the resultant confusion, this Court adheres strictly to the
rules against forum shopping, and any violation of these rules results in the dismissal of a case.21
To stamp out this abominable practice which seriously impairs the efficient administration of justice, this
Court promulgated Administrative Circulars No. 28-91 and No. 04-94, which are now embodied as

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Court promulgated Administrative Circulars No. 28-91 and No. 04-94, which are now embodied as
Section 5, Rule 7 of the Rules of Court, which reads:
SEC. 5. Certification 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 therewith: (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, to 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 present status thereof; and (c) if he should thereafter learn that
the same or similar action or claim has been filed or is pending, he shall report that fact within five (5)
days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice,
unless otherwise provided, upon motion and after hearing. The submission of a false certification or
non-compliance with any of the undertakings therein shall constitute indirect contempt of court,
without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his
counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary
dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative
sanctions.
The test for determining the existence of forum 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 the 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 successful, amount to res
judicata in the action under consideration; said requisites are also constitutive of the requisites for auter
action pendant or lis pendens.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. Dan’s
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 revocation 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 revocation of her appointment as bank manage of RBSL, she also prayed in the same Petition for
the payment of the moral damages she suffered by reason thereof. Undeniably, the damages Dan seeks
to recover in these two cases arose from the same set 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 either SEC Case No. 03-99-6229 and Civil Case No. SP No. 5734-2000 shall constitute res
judicata on the other. Before they could award the moral damages Dan prayed for, both the SEC and the
RTC must first resolve the issue of whether the revocation of Dan’s appointment was valid. Should the
SEC determine that the revocation of Dan’s 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 consequence of Dan’s violation of the prohibition
against forum shopping. As discussed in Sps. Ong v. Court of Appeals23:
The distinction between the prohibition against forum shopping and the certification requirement
should by now be too elementary to be misunderstood. To reiterate, compliance with the certification
against forum shopping is separate from and independent of the avoidance of the act of forum shopping
itself. There is a difference in the treatment between failure to comply with the certification
requirement and violation of the prohibition against forum shopping not only in terms of imposable
sanctions but also in the manner of enforcing them. The former constitutes sufficient cause for the
dismissal without prejudice of the complaint or initiatory pleading upon motion and after hearing,
while the latter is a ground for summary dismissal thereof and for direct contempt. x x x. (Emphasis
supplied.)
Dan committed another procedural faux pas in filing an appeal before the SEC en banc without the
required verification.

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required verification.
The SEC Rules of Procedure on verification under Section 2, Rule III thereof states:
SECTION 2. Verification. – All pleadings filed with the Commission shall be verified by an affidavit that
the affiant has read the pleading and the allegations therein are true and correct of his own knowledge
and belief. A pleading which "contains a verification based on information and belief," or upon
"knowledges, information and belief," or which lacks a proper verification, shall be treated as an
unsigned pleading and shall not be considered as filed.
It is not controverted that Dan’s appeal was not verified at all. The Court of Appeals, however, held that
the absence of verification in Dan’s appeal before the SEC en banc is excusable and does not warrant the
dismissal of the same. Echoing the ruling of the appellate court, Dan pleads for the liberal interpretation
of the procedural rules in the interest of substantial justice.
The Court is not persuaded.
The Court cannot sanction Dan’s utter disregard of procedural rules. It must be emphasized that
procedural rules are designed to facilitate the adjudication 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
application of the rules, it never intends to forge a weapon for erring litigants to violate the rules with
impunity. The liberal interpretation and application of rules apply only in proper cases of
demonstrable merit and under justifiable causes and circumstances. While it is true that litigation is
not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy administration of justice. Party litigants and their
counsel are well advised to abide by, rather than flaunt, procedural rules, for these rules illumine the
path of the law and rationalize the pursuit of justice.24 It is this symbiosis between form and substance
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 suspend procedural rules. Procedural rules are not to be belittled or dismissed, simply because their
non-observance may have resulted in prejudice to a party’s substantive rights. Like all rules, they are
required to be followed except only for the most persuasive of reasons, when they may be relaxed to
relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not
complying with the procedure prescribed.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 benefit of all and should not be made dependent upon a suitor’s sweet time
and own bidding.27
Considering the circumstances in the instant case, the Court finds no justification for the relaxation of
the procedural rules. Other than invoking the Court’s liberality, Dan miserably failed to give any reason
for her failure to comply 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 erred in pronouncing that the dismissal of SEC Case No.
03-99-6229 for failure to prosecute by the SEC Hearing Officer, as affirmed by the SEC en banc, was
unjustified. It cannot sustain the reasoning of the appellate court that the postponements 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 fault on the part of the SEC Hearing Officer when it finally decided to
dismiss SEC Case No. 03-99-6229 after the repeated non-appearance of Dan and/or her counsel on the
scheduled dates for the hearing of her case.
The true test for the exercise of the power to dismiss a case on the ground of failure to prosecute is
whether, under the prevailing circumstances, the plaintiff is culpable for want of due diligence in failing
to proceed with reasonable promptitude. 28
It must be recalled that the hearing of SEC Case No. 03-99-6229 was originally set on 3 November 1999.
It was reset to 24 November 1999 for non-appearance of Dan’s counsel. However, the hearing was
postponed again upon motion of Dan’s 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, Dan’s counsel still failed to appear before the Hearing Officer on 6 December
1999. Neither Dan nor her counsel provided an explanation for their latest absence. These events
demonstrate a total lack of regard and respect for the proceedings taking place before the SEC on the
part of Dan and her counsel.
Dan blames her counsel for being negligent in handling her case before SEC Case No. 03-99-6229.

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Dan blames her counsel for being negligent in handling her case before SEC Case No. 03-99-6229.
However, other than her counsel’s failure to attend the scheduled hearings, Dan did not allege or
present evidence demonstrative of her counsel’s gross or inexcusable negligence, sufficient to release
her from the binding effects of her counsel’s acts.
It is a well-settled rule that a client is bound by his counsel’s 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 proceeded 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
process of law, or when the application of the rule results in the outright deprivation of one’s property
through a technicality.30 None of the exceptions exist in the instant case.
Moreover, Dan herself is guilty of some measure of negligence. If only she kept herself updated as to the
developments in SEC Case No. 03-99-6229, 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 be stressed that a
plaintiff is bound to prosecute his complaint with assiduousness. 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
justify 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 of Dan and her counsel concerning SEC Case No. 02-99-6229 are replete with negligence,
laxity, and truancy, which justify the dismissal of the said case. The evident complacency, if not
delinquency, of Dan and her counsel in SEC Case No. 02-99-6229 does not merit the Court’s sympathy
and consideration. For failure to diligently 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 finding 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 basic principle in law that he who comes to court must come with clean hands.34
A final word. Equitable relief is not the supremacy but the entitlement of due process previously denied
the litigant.35 There was no denial of due process in the instant 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 instant 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 SET 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 REINSTATED. No costs.
SO ORDERED.

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?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 of cause of action
hypothetically admits all the averments thereof. The test of sufficiency of the facts found in a complaint
as constituting a cause of action is whether or not admitting the facts alleged the court can render a
valid judgment upon the same in accordance with the prayer thereof. The hypothetical admission
extends to the relevant and material facts well pleaded in the complaint and inferences fairly deducible
therefrom. Hence, if the allegations in the complaint furnish sufficient basis by which the complaint can
be maintained, the same should not be dismissed regardless of the defense that may be assessed by the
defendants.

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?Camarines Sur Electric v. Aquino GR 167691 Sep 23, 2008
Sunday, November 14, 2010
11:32 PM

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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 officers 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
constitute an individual wrong only when a person can show that, in the public duty, 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-performance.2
By this token, the Court reconsiders its June 19, 2007 Decision3 in this 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 'Champion," "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 locally 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 RMC 37-93 to Fortune Tobacco but it was addressed to no one in particular. On July 15, 1993,
Fortune Tobacco received, by ordinary mail, a certified xerox copy of RMC 37-93. On July 20, 1993,
respondent filed a motion for reconsideration requesting 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 10 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 August 10, 1994, the CTA ruled that RMC 37-93 is defective, invalid, and
unenforceable and further enjoined petitioner from collecting the deficiency tax assessment issued
pursuant to RMC No. 37-93. This ruling was affirmed by the Court of Appeals, and finally by this Court in
Commissioner of Internal Revenue v. Court of Appeals. It was held, among others, that RMC 37-93, has
fallen short of the requirements for a valid administrative issuance.
On April 10, 1997, respondent filed before the RTC a complaint for damages against petitioner in her
private capacity. Respondent contended that the latter should be held liable for damages under Article
32 of the Civil Code considering that the issuance of RMC 37-93 violated its constitutional right against
deprivation of property without due process of law and the right to equal protection of the laws.
Petitioner filed a motion 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 within 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 party 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 be to prematurely decide the merits of the case without allowing the
parties to present evidence. It further held that the defect in the certification against forum shopping
was cured by respondent's submission of the corporate secretary's certificate authorizing its counsel to
execute the certification against forum shopping. x x x x
xxx x

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execute the certification against forum shopping. x x x x
xxx x
The case was elevated to the Court of Appeals via a petition for certiorari under Rule 65. However, same
was dismissed on the ground that under Article 32 of the Civil Code, liability may arise even if the
defendant did not act with malice or bad faith. The appellate court ratiocinated that Section 38, Book I
of the Administrative Code 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 forum shopping was cured by the submission of the corporate secretary's certificate
giving authority to its counsel to execute the same.4 [Citations and underscoring omitted.]
In the aforesaid June 19, 2007 Decision, we affirmed the disposition 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, subsequently moved for the reconsideration of the said decision.6 After
respondent filed its comment, the Court, in its April 14, 2008 Resolution,7 denied with finality
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 contends that the petition raises a legal question that is novel and is of paramount
importance. The earlier decision rendered by the Court will send a chilling effect to public officers, and
will adversely affect the performance of duties of superior public officers in departments or agencies
with rule-making and quasi-judicial powers. With the said decision, the Commissioner of Internal
Revenue will have reason to hesitate or refrain from performing his/her official duties despite 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 Decision.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 the "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 individual; who act
for the public at large, and who are ordinarily paid out of the public treasury.
The officers whose duties fall wholly or partially within this 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, that fit and competent officials are appointed by him, that unworthy and ill-considered 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 to him alone. So, members of the legislature owe a duty to the public to pass only 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 will be governed only by considerations of the
public good in deciding upon the opening 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 believed that they are sufficient to define the
general doctrine.
2. Of Duties to Individuals. - The second class above referred to includes those who, while they owe 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 obligation to him as an individual. They serve individuals chiefly and usually
receive their compensation from fees paid by each individual who employs them.
A sheriff or constable in serving civil process for a private suitor, a recorder of deeds in recording the
deed or mortgage of an individual, a clerk of court in entering up a private judgment, a notary public in
protesting negotiable paper, an inspector of elections in passing upon the qualifications of an elector,
each owes 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 peculiar interest in his due performance.12
In determining whether a public officer is liable for an improper performance or non-performance of a
duty, it must first be determined which of the two classes of duties is involved. For, indeed, as the
eminent Floyd R. Mechem instructs, "[t]he liability of a public officer to an individual or the public is

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eminent Floyd R. Mechem instructs, "[t]he liability of a public officer to an individual or the public is
based upon and is co-extensive with his duty to the individual 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 "duty 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 individual 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 political.15
The exception to this rule occurs when the complaining individual suffers a particular or special injury on
account of the public officer's improper performance or non-performance of his public duty. An
individual can never be suffered 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 and peculiar injury, can still institute an action
against a public officer on account 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 of the Civil Code, the principle may now translate into the rule that an
individual 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 particular wrong or injury to the former. This is
consistent with this Court's pronouncement in its June 19, 2007 Decision (subject of petitioner's motion
for reconsideration) 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 plaintiff to maintain an action for damages for the injuries of
which he complains, he must establish that such injuries resulted from a breach of duty which the
defendant owed the plaintiff, meaning a concurrence of injury to the plaintiff and legal 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 seizure thereof. In
Cojuangco, Jr. v. Court of Appeals,23 we upheld the right of petitioner 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 instant case, what is involved is a public officer's duty owing to the public in general. 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 she issued without the requisite notice, hearing
and publication, and which, in Commissioner of Internal Revenue v. Court of Appeals,24 we declared as
having "fallen short of a valid and effective administrative issuance."25 A public officer, such as the
petitioner, vested with quasi-legislative or rule-making power, owes a duty to the public to promulgate
rules which are compliant with the requirements of valid administrative regulations. But it is a duty
owed not to the respondent alone, but to the entire body politic who would be affected, directly or
indirectly, by the administrative rule.
Furthermore, as discussed above, to have a cause of action for damages against the petitioner,
respondent must allege that it suffered a particular or special injury on account of the non-performance
by petitioner of the public duty. A careful reading of the complaint filed with the trial court reveals that
no particular injury is alleged to have been sustained by the respondent. The phrase "financial and
business difficulties"26 mentioned in the complaint is a vague notion, ambiguous in concept, and cannot
translate into a "particular injury." In contrast, the facts of the case eloquently demonstrate 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, therefore, no delict or wrongful act or
omission attributable to the petitioner that would violate the primary rights of the respondent. Without
such delict or tortious act or omission, the complaint then fails to state a cause of action, because a

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such delict or tortious act or omission, the complaint then fails to state a cause 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 elements are present: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of the
named defendant to respect or not to violate such right; and (3) an act or omission on the part of such
defendant violative of the right of the plaintiff or constituting a breach of the obligation of 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 "relevant and material facts well-pleaded in the complaint and
inferences deducible 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 judicial notice."29
The complaint may also be dismissed for lack of cause of action 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 reiterates that under Article 32 of the Civil Code, the
liability of the public officer may accrue even if he/she acted in good faith, as long as there is a violation
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 officer acted with malice or bad faith. To
be liable, it is enough that there was a violation of the constitutional rights of petitioners, even on the
pretext of justifiable 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, paragraph 2.02 thereof) for
damages under Article 32 of the Civil Code would be premised 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 petitioner in her capacity as Commissioner of Internal Revenue, had "fallen short of a valid and
effective administrative issuance." This is a logical inference. Without the decision in CIR v. CA, the bare
allegations in the complaint that respondent's rights to due process of law and to equal protection of
the laws were violated by the petitioner's administrative issuance would be conclusions of law, hence
not hypothetically admitted by petitioner in her motion to dismiss.
But in CIR v. CA, this Court did not declare RMC 37-93 unconstitutional; certainly not from 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 rule, cited an earlier Revenue Memorandum Circular (RMC
No. 10-86) requiring prior 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 aspect of equal
protection, CIR v. CA said: "Not insignificantly, RMC 37-93 might have likewise infringed on uniformity of
taxation;" a statement that does not amount to a positive indictment of petitioner for violation of
respondent's constitutional right. Even if one were to ascribe a constitutional infringement by RMC
37-93 on the non-uniformity of tax provisions, the nature of the constitutional transgression falls under
Section 28, Article VI-not Section 1, Article III-of the Constitution.
This Court's own summation in CIR v. CA: "All taken, the Court is convinced that the hastily promulgated
RMC 37-93 has fallen short of a valid and effective administrative issuance," does not lend itself to an
interpretation that the RMC is unconstitutional. Thus, the complaint's reliance on CIR v. CA-which 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, from the foregoing discussion, it is obvious that paragraph 2.02 of respondent's complaint
loses the needed crutch to sustain a valid cause of action against the petitioner, for what is left of the
paragraph is merely the allegation that only respondent's "Champion", "Hope" and "More" cigarettes
were reclassified.
If we divest the complaint of its reliance on CIR v. CA, what remains of respondent's cause of action for
violation of constitutional rights would be paragraph 2.01, which 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 specifically "Champion", "Hope" and "More" as locally
manufactured cigarettes bearing 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 implementation resulted in

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made an integral part hereof as ANNEX "A". The issuance of a circular and its implementation resulted in
the "deprivation of property" of plaintiff. They were done 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
right of plaintiff to the equal protection of the laws" are conclusions of law. They are not hypothetically
admitted in petitioner's motion to dismiss and, for purposes of the motion to dismiss, are not deemed
as facts.
In Fluor Daniel, Inc. Philippines 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 of 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 case, since what remains of the complaint which is hypothetically admitted, is only 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 prayer in the complaint.
Furthermore, in an action for damages under Article 32 of the Civil Code premised on violation of due
process, it may be necessary to harmonize the Civil Code provision with subsequent legislative
enactments, particularly 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 respondent-without even having to pay the assessment under protest-as recounted by
this Court in CIR v. CA, viz.:
In a letter, dated 19 July 1993, addressed to the appellate 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 day, or on 30 July 1993, the CIR assessed Fortune Tobacco for ad valorem tax
deficiency amounting to P9,598,334.00.
On 03 August 1993, Fortune Tobacco filed a petition for review with the CTA.35
The availability of the remedies against the assailed administrative action, the opportunity to avail of the
same, and actual recourse to these remedies, contradict the respondent's claim of due process
infringement.
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, regulation, custom, usage, or any State or
Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the
jurisdiction thereof to the deprivation of any rights, privileges or immunities secured by the Constitution
and laws, shall be liable to the party injured in an action at law, suit in equity or other proper proceeding
for redress.
This provision has been employed 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 Investigation,36 has emerged as the
leading case on the victim's entitlement to recover money damages for any injuries suffered as a result
of flagrant and unconstitutional abuses of administrative power. In this case, federal narcotics officers
broke into Bivens' home at 6:30 a.m. without a search warrant and in the absence of probable cause.
The agents handcuffed Bivens, searched his premises, employed excessive force, threatened to arrest
his family, subjected him to a visual strip search in the federal court house, fingerprinted, photographed,
interrogated 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 gives rise to a cause of action for
damages consequent upon his constitutional conduct," 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
Amendment.
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 Governor James Rhodes by petitioners who
represented three students who had been killed by Ohio National Guard troops at Kent State University
as they protested against U.S. involvement in Vietnam. In Wood v. Strickland,38 local school board
members were sued by high school students who argued that they had been deprived of constitutional

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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 having spiked a punch bowl at a school
function without the benefit of a full hearing. In Butz v. Economou,39 Economou, whose registration
privilege as a commodities futures trader was suspended, without prior warning, by Secretary of
Agriculture 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 number of other cases40 with virtually the
same conclusion followed.
However, it is extremely dubious whether a Bivens action against government tax officials and
employees 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 appropriate 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 Internal Revenue Service (IRS) who
alleged that he (Vennes) owed $250,000 in tax liability, instituted a jeopardy assessment, confiscated
Vennes' business, forced 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 dismissed these claims on the ground that a taxpayer's remedies under the Internal
Revenue Code preclude such a Bivens action. Vennes cites to us no contrary authority, and we have
found none. Though the Supreme Court has not addressed this precise question, it has strongly
suggested that the district court correctly applied Bivens:
When the design of a Government program suggests that Congress has provided what it considers
adequate remedial mechanisms for constitutional violations that may occur in the course of its
administration, we have not created additional Bivens remedies.
xxx x
Congress has provided specific and meaningful remedies for taxpayers who challenge overzealous tax
assessment and collection activities. A taxpayer may challenge a jeopardy assessment both
administratively and judicially, and may sue the government for a tax refund, and have authorized
taxpayer actions against the United States to recover limited damages resulting from specific types of
misconduct by IRS employees. These carefully crafted legislative remedies confirm that, in the politically
sensitive realm of taxation, Congress's refusal to permit unrestricted damage action by taxpayers has
not been inadvertent. Thus, the district court correctly dismissed Vennes's Bivens claims against IRS
agents for their tax assessment and collection activities.
In still another Bivens action, instituted by a taxpayer against IRS employees for alleged violation of due
process rights concerning a tax dispute, the U.S. District Court of Minnesota said:
In addition, the (Tax) Code provides taxpayers with remedies, judicial and otherwise, for correcting and
redressing wrongful acts taken by IRS employees in connection with any collection activities. Although
these provisions do not provide taxpayers with an all-encompassing remedy for wrongful acts of IRS
personnel, the rights established under the Code illustrate that it provides all sorts of rights against the
overzealous officialdom, including, most fundamentally, 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 bypass the
remedies provided by Congress simply by bringing a damage suit against IRS 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 against 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 action 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 Commissioner, 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
negligently or in bad faith, or with willful oppression.
Because the respondent's complaint does not impute negligence or bad faith to the petitioner, any
money judgment by the trial court against her will have to be assumed by the Republic of the

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money judgment by the trial court against her will have to be assumed by the Republic of the
Philippines. As such, the complaint is in the nature of a suit against the State.46
WHEREFORE, premises considered, we GRANT petitioner's motion for 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, pending with the Regional Trial Court of Marikina City, is DISMISSED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:

REYNATO S. PUNO
Chief Justice
LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO
Associate Justice Associate Justice
ANTONIO T. CARPIO MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice Associate Justice
*RENATO C. CORONA CONCHITA CARPIO MORALES
Associate Justice Associate Justice
ADOLFO S. AZCUNA DANTE O. TINGA
Associate Justice Associate Justice
MINITA V. CHICO-NAZARIO PRESBITERO J. VELASCO, JR.
Associate Justice Associate Justice
RUBEN T. REYES TERESITA J. LEONARDO-DE CASTRO
Associate Justice Associate Justice
ARTURO D. BRION
Associate Justice
CERTIFICATION
Pursuant 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 case was assigned to the writer of the opinion
of the Court.
REYNATO S. PUNO
Chief Justice
Footnotes
* On leave.
1 Cruz, The Law of Public Officers, 2007 ed., p. 223.
2 Moss v. Cummins, 44 Mich. 359, 360-361, 6 N.W. 843, 844 (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 12, at 390-391.
17 Butler v. Kent, 19 Johns. 223, 10 Am. Dec. 219 (1821).

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16
Supra note 12, at 390-391.
17 Butler v. Kent, 19 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 latter for damages:
(1) Freedom of religion;
(2) Freedom of speech;
(3) Freedom to 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 deprivation of property without due process of law;
(7) The right to a just compensation when private property is taken for public use;
(8) The right to the equal protection of the laws;
(9) The right to be secure in one's person, house, papers, and effects against unreasonable searches and
seizures;
(10) The liberty of abode and of changing the same;
(11) The privacy of communication and correspondence;
(12) The right to become a member of associations or societies for purposes not contrary to law;
(13) The right to take part in a peaceable assembly to petition 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 excessive bail;
(16) The right of the accused to be heard by himself and counsel, to be informed of the nature and cause
of the accusation against him, to have a speedy and public trial, to meet witnesses face to face, and to
have compulsory process 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
guilt, or from being induced by a promise of immunity or reward to make such confession, except when
the person confessing becomes a State witness;
(18) Freedom from excessive fines, or cruel and unusual punishment, unless the same is imposed or
inflicted in accordance with a statute which has not been judicially declared unconstitutional; and
(19) Freedom of access to the courts.
In any of the cases referred to in this article, whether or not the defendant's act or omission constitutes
a criminal offense, the aggrieved party has a right to commence an entirely separate and distinct civil
action for damages, and for other relief. Such civil action shall proceed independently of any criminal
prosecution (if the latter be instituted) and may be proved by preponderance of evidence.
The indemnity shall include moral damages. Exemplary damages may also be adjudicated.
The responsibility 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 Vinzons-Chato v. Fortune Tobacco Corporation, supra note 3.
21 Sps. Custodio v. Court of Appeals, 323 Phil. 575 (1996), cited in Laynesa v. Uy, G.R. No. 149553,

February 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 Appeals, G.R. No. 106922, April 20, 2001.
28 Id.
29
Id.
30 Fluor Daniel, Inc. Philippines 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. 119761, August 29, 1996.
34 G.R. No. 159648, July 27, 2008.
35 Commissioner of Internal Revenue v. Court of Appeals, G.R. No. 119761, August 29, 1996, 261 SCRA

236, 244.

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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. Wallace, 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 See Veterans Manpower and Protective Services, Inc. v. Court of Appeals, 214 SCRA 286.

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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, Respondent.
DE C I S I O N
CALLEJO, SR., J.:
Assailed before this Court is a Petition 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 respondent’s petition for certiorari, and its
resolution denying petitioner’s motion for reconsideration.
The Antecedents
Respondent Margarita Coscolluela and her husband Oscar Coscolluela obtained an agricultural sugar
crop loan from the Far East Bank & Trust Co. (FEBTC) Bacolod 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 P13,592,492.00 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. Date Amount
(in Phil. Peso)
1. 02-052-960971 29 August 1996 148,000
2. 02-052-961095 23 September 1996 1,200,000
3. 02-052-961122 27 September 1996 550,000
4. 02-052-961205 11 October 1996 180,000
5. 02-052-961231 18 October 1996 155,000
6. 02-052-961252 24 October 1996 190,000
7. 02-052-961274 30 October 1996 115,000
8. 02-052-961310 8 November 1996 90,000
9. 02-052-961373 21 November 1996 125,000
10. 02-052-961442 6 December 1996 650,000
11. 02-052-961464 12 December 1996 240,000
12. 02-052-961498 19 December 1996 164,000
13. 02-052-961542 27 December 1996 200,000
14. 02-052-970018 3 January 1997 120,000
15. 02-052-970052 10 January 1997 185,000
16. 02-052-970078 15 January 1997 80,000
17. 02-052-970087 17 January 1997 170,000
18. 02-052-970131 23 January 1997 180,000
19. 02-052-970163 31 January 1997 220,000
20. 02-052-970190 7 February 1997 110,000
21. 02-052-970215 13 February 1997 170,000
22. 02-052-970254 20 February 1997 140,000
23. 02-052-970293 28 February 1997 130,000

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23. 02-052-970293 28 February 1997 130,000
24. 02-052-970345 7 March 1997 90,000
25. 02-052-970367 13 March 1997 50,000
26. 02-052-970402 21 March 1997 160,000
27. 02-052-970422 26 March 1997 190,000
28. 02-052-970453 4 April 1997 82,000
29. 02-052-970478 11 April 1997 150,000
30. 02-052-970502 17 April 1997 80,000
31. 02-052-970539 25 April 1997 145,000
32. 02-052-970558 30 April 1997 135,000
33. 02-052-970589 8 May 1997 54,000
34. 02-052-970770 25 June 1997 646,492
35. 02-052-970781 27 June 1997 160,000
36. 02-052-970819 4 July 1997 250,000
37. 02-052-970852 11 July 1997 350,000
38. 02-052-970926 1 August 1997 170,000
39. 02-052-970949 5 August 1997 200,000
40. 02-052-970975 8 August 1997 120,000
41. 02-052-970999 15 August 1997 150,000
42. 02-052-971028 22 August 1997 110,000
43. 02-052-971053 29 August 1997 130,000
44. 02-052-971073 4 September 1997 90,000
45. 02-052-971215 12 September 1997 160,000
46. 02-052-971253 19 September 1997 190,000
47. 02-052-971280 26 September 1997 140,000
48. 02-052-971317 2 October 1997 115,000
49. 02-052-971340 10 October 1997 115,000
50. 02-052-971351 15 October 1997 700,000
51. 02-052-971362 16 October 1997 90,000
52. 02-052-971394 24 October 1997 185,000
53. 02-052-971407 29 October 1997 170,000
54. 02-052-971449 6 November 1997 105,000
55. 02-052-971464 13 November 1997 170,000
56. 02-052-971501 20 November 1997 150,000
57. 02-052-971527 25 November 1997 620,000
58. 02-052-971538 28 November 1997 130,000
59. 02-052-971569 4 December 1997 140,000
60. 02-052-971604 12 December 1997 220,000
61. 02-052-971642 18 December 1997 185,000
62. 02-052-971676 23 December 1997 117,000

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62. 02-052-971676 23 December 1997 117,000
63. 02-052-971688 29 December 1997 100,000
64. 02-052-980019 7 January 1998 195,000
65. 02-052-980032 8 January 1998 170,000
66. 02-052-980064 15 January 1998 225,000
67. 02-052-980079 23 January 1998 176,000
The promissory notes listed under Nos. 1 to 33 bear the maturity date of February 9, 1998, with a 30-
day extension of up to March 11, 1998, while those listed under 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 FEBTC
over their parcel of land located in Bacolod City covered by Transfer Certificate of Title (TCT) No.
T-109329 as security of loans on credit accommodation obtained 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
then outstanding, shall become immediately due; upon such breach or violation of the 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 with 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 power 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.
The mortgage was registered with the Registry of Deeds of Bacolod and was annotated 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 outstanding obligation on the maturity dates, FEBTC sent a final demand letter7
to respondent 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 Respondent failed to settle her obligation.
On June 10, 1999, FEBTC filed a petition for the extrajudicial foreclosure of the mortgaged property,
significantly only for 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 extrajudicial foreclosure proceeding was pending, petitioner FEBTC filed a complaint10 with
the Regional Trial Court (RTC) of Makati City, Branch 64, against respondent for the collection of the
principal amount of P8,794,492.00 plus interest and penalty, or the total amount of P12,672,000.31,
representing the amounts indicated in the rest of the promissory notes, specifically Promissory Note
Nos. 34 to 67, as well as those dated December 6, 1996 and September 23, 1996:
PN No. Date Amount Annex
2-052-980079 January 02, 1998 176,000.00 A
2-052-980064 January 15, 1998 225,000.00 B
2-052-980032 January 08, 1998 170,000.00 C
2-052-980019 January 07, 1998 195,000.00 D
2-052-971688 December 29, 1997 100,000.00 E
2-052-971676 December 23, 1997 117,000.00 F
2-052-971642 December 18, 1997 185,000.00 G
2-052-971604 December 12, 1997 220,000.00 H

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2-052-971604 December 12, 1997 220,000.00 H
2-052-971569 December 04, 1997 140,000.00 I
2-052-971538 November 28, 1997 130,000.00 J
2-052-971527 November 25, 1997 620,000.00 K
2-052-971501 November 20, 1997 150,000.00 L
2-052-971464 November 13, 1997 170,000.00 M
2-052-971449 November 06, 1997 105,000.00 N
2-052-971407 October 29, 1997 170,000.00 O
2-052-971394 October 24, 1997 185,000.00 P
2-052-971362 October 16, 1997 90,000.00 Q
2-052-971351 October 15, 1997 700,000.00 R
2-052-971340 October 15, 1997 115,000.00 S
2-052-971317 October 02, 1997 115,000.00 T
2-052-971280 September 26, 1997 140,000.00 U
2-052-971253 September 19, 1997 190,000.00 V
2-052-971215 September 12, 1997 160,000.00 W
2-052-971073 September 04, 1997 90,000.00 X
2-052-971053 August 29, 1997 130,000.00 Y
2-052-971028 August 22, 1997 110,000.00 Z
2-052-970999 August 15, 1997 150,000.00 AA
2-052-970975 August 08, 1997 120,000.00 BB
2-052-970949 August 05, 1997 200,000.00 CC
2-052-970926 August 01, 1997 170,000.00 DD
2-052-970852 July 11, 1997 350,000.00 EE
2-052-970819 July 04, 1997 250,000.00 FF
2-052-970781 June 27, 1997 160,000.00 GG
2-052-970770 June 25, 1997 646,492.00 HH
2-052-961442 December 06, 1996 650,000.00 II
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 rendered 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, until fully paid;
b. Expense of litigation amounting to P50,000.00;
c. The amount of P500,000.00 as attorney’s fees.
Other reliefs just and equitable in the premises are similarly prayed for.12
In her answer, respondent alleged, by way of special and affirmative defense, that the complaint was
barred by litis pendentia, specifically, the pending petition for the extrajudicial foreclosure of the real
estate mortgage, thus:
8) That plaintiff is guilty of forum shopping, in that some of the promissory notes attached to plaintiff’s
complaint are also the same promissory notes which were made the basis of the plaintiff in their
extrajudicial foreclosure of mortgage filed against the defendant-spouses and also marked in evidence in

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extrajudicial foreclosure of mortgage filed against the defendant-spouses and also marked in evidence in
support of their opposition to the issuance of the preliminary injunction in Civil Case No. 99-10864;
9) That plaintiff-bank has not only 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 collectible 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 the
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 plaintiff’s complaint has either been waived, abandoned or
otherwise extinguished.13
Petitioner presented Emmanuel Ganuelas, its loan officer in its Bacolod City Branch, as sole witness. He
testified that the spouses Coscolluela were granted an agricultural sugar loan which is designed to
finance the cultivation and plantation of sugar 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 that the loan
account of the spouses was a "single loan account."16
After petitioner rested its case, respondent filed a demurrer to evidence17 contending, among others,
that, with Ganuelas’ admission, there is only one loan account secured by the real estate mortgage, that
the promissory notes were executed as evidence of the loans. Plaintiff was thus barred from instituting a
personal action for collection of the drawdowns evidenced by Promissory Note Nos. 2, 10, and 34 to 67
after instituting a petition for extrajudicial foreclosure of the real estate mortgage for the amount
covered by Promissory Note Nos. 1, 3 to 9, and 11 to 33. Respondent insisted that by filing a complaint
for a sum of money, petitioner thereby split its cause of action against her; hence, the complaint must
perforce be dismissed on the ground of litis pendentia.
Petitioner opposed the demurrer arguing that while the loans were considered as a single account, each
promissory note executed by respondent constituted a separate contract. It reiterated that its petition
for the extrajudicial and foreclosure of the real estate mortgage before 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 foreclosure 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 foreclosure
petition.18
In its Order19 dated January 10, 2002, the trial court denied the demurrer on the ground that the
promissory notes executed by respondent and her deceased husband contained different amounts, and
each note covered a loan 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 collection. Petitioner, thus, merely opted to institute an action for
collection of the debt 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 10,
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 EXCESS OF
JURISDICTION IN HOLDING THAT THE RESPONDENT BANK CAN FILE SIMULTANEOUS ACTIONS FOR
FORECLOSURE AND FOR COLLECTION.
Meanwhile, on January 6, 2003, the parcel of land subject of the aforementioned real estate mortgage
was sold at public auction where petitioner emerged as the highest bidder.23
On September 30, 2004, the CA rendered its Decision24 granting the petition, holding, under prevailing
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
splitting of a single cause of action. Thus, in denying her Demurrer to Evidence, the RTC committed

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grave abuse of discretion as it overruled settled judicial pronouncements. The dispositive part of the
decision states:
WHEREFORE, the instant petition is GRANTED. The assailed Orders dated January 10, 2002 and February
19, 2002 are SET ASIDE.
SO ORDERED.
The CA cited the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icarañgal and Oriental
Commercial Co., Inc.25
Aggrieved, petitioner filed a motion for reconsideration26 on October 12, 2004. Respondent filed her
opposition27 to the motion on October 26, 2004. The CA thereafter denied the motion in a resolution
promulgated on April 6, 2005.28
Petitioner filed the instant petition for review on certiorari, alleging that:
I.
THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI OF RESPONDENT ON
THE GROUND OF GRAVE ABUSE 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 Judicial Foreclosure of the Mortgage of respondents based on 31 promissory notes executed by
respondents and another action to collect on a separate set of 36 promissory notes, did not split their
cause of action.
xxx x
The trial court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when
it denied respondents’ Demurrer to Evidence. In this wise, the Petition for Certiorari filed by
respondents should not have been granted.29
During the pendency of this appeal, petitioner filed with this Court on December 2, 2005 a manifestation
and joint motion for substitution, informing the court that petitioner bank has assigned to the Philippine
Asset Investment, Inc. all its rights, title and interest over its non-performing loan accounts pursuant to
Republic Act No. 9182 entitled "The Special Purpose Vehicle Act of 2002."
The issues raised in this 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 January 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 RTC 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. Petitioner maintains
that respondent executed 67 separate loan obligations evidenced by 67 separate promissory notes, with
different amounts and maturity dates. It avers that each of the loans, as evidenced by each of the
promissory notes, may properly be the subject of a separate action; thus, each promissory note is an
actionable document. Moreover, the real estate mortgage executed by the spouses secured an
obligation only to a fixed amount of P7,000,000.00 which is covered by Promissory Note Nos. 1 to 31,
whereas the loans secured by the spouses covered by the 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 file the petition for extrajudicial foreclosure of the real estate mortgage only for respondent’s
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 collection of the P12,672,000.31 against respondent in the RTC for
the drawdowns as evidenced by Promissory Note Nos. 34 to 67. What should apply, petitioner asserts, is
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 respondent and her husband had a joint account with it, they had
separate loan obligations as evidenced by the promissory notes; hence, it had separate causes of action
for each and every drawdown evidenced by a promissory note.
For her part, respondent 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 extrajudicial foreclosure of the real estate mortgage, also for the entire amount of the

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account or for the extrajudicial foreclosure of the real estate mortgage, also for the entire amount of the
loan. Petitioner cannot split her single loan account by filing a simple collection suit and a petition for
extrajudicial foreclosure of the real estate mortgage without violating the rule against splitting a single
cause of action.
Respondent asserts that the real estate mortgage executed by respondent and her deceased husband
was a security not only of their loan account in the amount of P7,000,000.00 but for all other loans that
may have been extended to them in excess of that amount.
The petition is unmeritorious.
On the first issue, we agree with petitioner’s 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 evidence, and appeal, in due course, from an adverse decision
of the trial court. However, the rule admits of exceptions. Where the denial by the trial court of a
motion to dismiss or demurrer to evidence is tainted with grave abuse of discretion amounting to excess
or lack of jurisdiction, the aggrieved party may assail the 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 Court held in Preferred
Home Specialties, Inc. v. Court of Appeals:34
It bears stressing that a writ of certiorari is of the highest utility and importance for curbing excessive
jurisdiction and correcting errors and most essential to the safety of the people and the public welfare.
Its scope has been broadened and extended, 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 destroy its
comprehensiveness and limit its usefulness.
The appropriate function of a certiorari writ is to relieve aggrieved parties from the injustice arising from
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 sense of justice, to release against wrongs
otherwise irreconcilable, wrongs which go 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 to excess or lack of jurisdiction in denying a motion to dismiss a complaint on the
ground of litis pendentia. An appeal while available eventually is cumbersome and inadequate for it
requires the parties to undergo a useless and time-consuming 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 discretion
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 Court. Although respondent had the right to appeal the
decision of the trial court 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 decision.
Section 3, Rule 2 of the 1997 Rules of Civil Procedure provides that a party 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 filing 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
liberty to split up his demands and prosecute it by piecemeal, or present only a portion 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 the same action, they must be joined; and if the demands
or causes of action be split up, and a suit brought for part only, and subsequently a second suit for the
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 altogether one of original legal right but is one of

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The rule against splitting causes of action is not altogether one of original legal 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 unnecessary litigation.42
It is not always easy to determine whether in a particular case under consideration, the cause of action
is single and entire or separate. The question must often be determined, not by the general rules but by
reference to the facts and circumstances of the particular case. Where deeds arising out of contract are
distinct and separate, they give rise to separate cause of action for which separate action may be
maintained; but it is also true that the same contract may give rise to different causes of action either by
reason of successive 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 single 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 suits, 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 causes 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 following 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 accounts. 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
action will be a bar to a several or other actions brought to recover one or more claims 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 circumstances, an open or
continuous running account between the same parties constitutes a single and indivisible demand, the
aggregate of all the items of the account 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 be, even between the
same parties, distinct and separate actions upon which separate actions may be maintained.46 In fine,
what is decisive is that there be either 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 times, a
single or entire demand or cause of action.47
Decisive of the principal issue is the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icarañgal
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 with execution of the suit. In a mortgage credit transaction, the credit gives
rise to a personal action for collection of the money. The mortgage is the guarantee which gives rise to a
mortgage foreclosure suit to collect from the very property that secured the debt.49
The action of the creditor is anchored on one and the same cause: the nonpayment by the debtor of the
debt to the creditor-mortgagee. Though the debt may be covered by a promissory note or several
promissory notes and is covered by a real estate mortgage, the latter is subsidiary to the former and
both refer to one and the same obligation.
A mortgage creditor may institute two alternative remedies against the mortgage debtor, either a
personal action 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 creditor may
institute against the mortgage debtor either a personal action for debt or a real action to foreclose the
mortgage. In other words, he may pursue either 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. Thus, an
election to bring a personal action will leave open to him all the properties of the debtor for attachment
and execution, even including the mortgaged property itself. And, if he waives such personal action and
pursues his remedy against the mortgaged property, an unsatisfied judgment thereon would still give
him 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 the satisfaction of the deficiency. In either case,
his remedy is complete, his cause 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 election. On the other

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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 lies.50
If the mortgagee opts to foreclose the real estate mortgage, he thereby waives the action for the
collection of the debt and vice versa.51 If the creditor 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 the present case, petitioner opted to file a petition for extrajudicial foreclosure 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 notes. 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. This is so because when petitioner
filed its petition before the Ex-Oficio Provincial Sheriff on June 10, 1999, the entirety of the loan account
of respondent under the 67 promissory notes was already due. The obligation of respondent under
Promissory 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 foreclosure of the real estate mortgage for the recovery of the
entire obligation of respondent, 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, exclusive of interest
and penalties, petitioner thereby waived recovery of the rest of respondent’s 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
principal, interest, penalties and other charges then outstanding shall become immediately due, payable
and defaulted," thus:
3. The terms and conditions of the Mortgage have been violated when the Mortgagors failed and/or
refused to pay, notwithstanding repeated demands, the installment and/or maturity amount of the
Mortgage obligation which became due and payable on the said date;
4. Under the terms 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 entire principal, interest,
penalties and other charges then outstanding, shall, without need for demand, notice, or any other act
or deed, become immediately due, payable and defaulted;
5. The Mortgage Agreement provides that upon such breach or violation of the terms and conditions
thereof, the Mortgagee 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 the
Mortgagee as its attorney-in-fact with 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 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
foreclosure of the real estate mortgage for the principal amount of P4,687,006.68 covered by the first
set of promissory notes, and a personal action for the collection of the principal amount of
P12,672,000.31 covered by the second set of promissory notes without violating the proscription against
splitting a single cause of action against respondent.
The contention of petitioner that respondent’s loan account that was secured by the real estate
mortgage was limited only to those covered 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 deed, the mortgage was to secure the payment of a credit accommodation already obtained
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 interest and expenses, to wit:
That for and in consideration of credit accommodation obtained from the MORTGAGEE, and to secure

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that may be extended to respondent, including interest and expenses, to wit:
That 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 (P7,000,000.00), Philippine Currency, as well as those that
the MORTGAGEE may extend to the MORTGAGOR, including interest and expenses or any other
obligation owing to the MORTGAGEE, whether direct or indirect, principal or secondary, as appears in
the accounts, books and records of the MORTGAGEE, the MORTGAGOR does hereby transfer and
convey by way of mortgage unto the MORTGAGEE, its successors or assigns, 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 improvements now existing or which may hereafter be erected or constructed
thereon, of which the MORTGAGOR declares that he/it is the absolute owner free from all liens and
encumbrances. However, if the MORTGAGOR shall pay to the MORTGAGEE, its successors or assigns, the
obligation secured by this mortgage when due, together with interest, and shall keep and perform all
and singular the covenants and agreements herein contained for the MORTGAGOR to keep and
perform, then this mortgage shall be void, otherwise, it shall remain in full force and effect.54 (Emphasis
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 consideration 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
only 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 correct?
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 spouses 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 respectfully request that this phrase: "that for and in consideration of
the credit accommodation obtained from the mortgagee" be bracketed and mark as Exhibit 6-B. (Acting
court interpreter marking said phrase as Exhibit 6-B.)
Q Now in accordance with the terms of this real estate mortgage, this real estate mortgage was
executed by the defendant spouses not only to secure the loan already obtained by the said 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 portion of the real estate mortgage which we quote: "to secure the payment
as and those that may hereafter be obtained," is that correct?
A Yes, Sir.
Q So from your 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 thereafter, 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
continuing security liable for future advancements or obligations beyond the amount of P7,000,000.00.
The mortgage partakes of the nature of contract for future advancements. As explained by this Court in
the early case of Lim Julian v. Lutero:56
The rule, of course, is well settled that an action to foreclose a mortgage must 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 amount 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 security, if, from the four
corners of the document, the intent to secure future indebtedness or future advancements is apparent.
Where the plain terms, of the mortgage, evidence such an intent, they will control as against a

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Where the plain terms, of the mortgage, evidence such an intent, they will control 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. (Citizens’ 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 hereafter 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 the amount named in the mortgage. The court held that the amount
named as consideration 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 indebtedness 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, sec. 373; Keyes v. Bump’s Administrator, 59 Vt. 391; Fisher v. Otis, 3 Pin. 78;
Brown v. Kiefer, 71 N.Y. 610; Douglas v. Reynolds, 7 Peters [U.S.] 113; Shores v. Doherty, 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 full enough to direct attention to the sources of correct
information in regard to it, and be such as not to mislead or deceive as to the amount of it, by the
language 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 amount due. The mortgage recites that it is given
to secure the sum of P12,000, interest, 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 parties who may
have occasion to deal with the property mortgaged upon inquiry. The parties themselves from the very
terms of the mortgage could not be in ignorance at 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 paid to the mortgagor "little by
little" and repayments are made from time to time, the advancements and the repayments must be
considered together for the purpose of ascertaining the amount due upon the mortgage at maturity.
Courts of equity will not permit the consideration of the repayments only for the purpose of
determining the balance due upon the mortgage. (Luengo & Martinez v. Moreno, 26 Phil. 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 time are greatly in excess of the repayments; especially is this true
when the contract 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 added to the contract of
advancements or mortgage for the express purpose of covering advancements in excess of the amount
mentioned in the mortgage. (Luengo & Martinez v. Moreno, supra)
The sum found to be owing by the debtor at the termination of the contract of advancements between
him and the mortgagee, during continuing credit, is still secured by the mortgage on the debtor’s
property, and the mortgagee 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. (Luengo & Martinez v. Moreno,
supra; Russell v. Davey, 7 Grant Ch. 13; Patterson First National Bank v. Byard, 26 N.J. Equity 225)
Under a mortgage to secure the payment of future advancements, the mere fact that the repayments
on a particular day equal the amount of the mortgage will not discharge the mortgage before maturity
so long as advancements may be demanded and are being received. (Luengo & Martinez v. Moreno,
supra) 57
Moreover, the series of loan advancements herein cannot be likened to the credit line discussed in
Caltex Philippines, Inc. v. Intermediate Appellate Court,58 as petitioner posited in its reply59 filed before
this Court. In Caltex, unlike the instant case, the real estate mortgage executed did not contain a
"dragnet" clause 60 that would subsume all past and future debts. The mortgage therein specifically
secured only the loans extended prior to the 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, the Court deemed
the loan transactions as separate, considering that those were two 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 cause of action

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In fine, for the failure of respondent to pay her loan obligation, petitioner had only one cause of action
arising from such non-payment. This single cause of action consists in the recovery of the credit with
execution of the security.62 Petitioner is proscribed from splitting its single cause of action by filing an
extrajudicial foreclosure proceedings on June 10, 1999 with respect to the amounts in the 31 promissory
notes, and, during the pendency thereof, file a collection case on June 23, 1999, with respect to the
amounts in the remaining 36 promissory notes.
Considering, therefore, that, in the case at bar, petitioner had already 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 DISMISSED for lack of merit. Costs against
petitioner.
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice
WE CONCUR:
ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson
CONSUELO 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
Pursuant 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 case was assigned to the writer of the opinion
of the Court’s Division.
ARTEMIO V. PANGANIBAN
Chief Justice
Footnotes
1 Penned by Associate Justice Vicente S.E. Veloso, with Associate Justices Roberto A. Barrios and Amelita

G. Tolentino, concurring.
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 280-281.
13 Id. at 355-363.
14 TSN, August 17, 2001, p. 8.
15 Id. at 9.
16 Id. at 7.
17 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.

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23
CA rollo, p. 108.
24 Rollo, pp. 43-59.
25
68 Phil. 287 (1939).
26 CA rollo, p. 247-249.
27
Id. at 253-255.
28
Rollo, p. 61-62.
29
Id. at 22, 28.
30 Tadeo v. People, G.R. No. 129774, December 29, 1998, 300 SCRA 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 Id. 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 Icarañgal and 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. Rommel’s Estate, 49 S.W.2d 1081 (1932).
45 Fidelity & Deposit Co. of Maryland v. Brown, supra.
46
Meyerotto v. Rommel’s 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 Icarañgal and Oriental Commercial Co., Inc., supra note 25, at
294-295.
51
Industrial Finance Corporation v. Apostol, G.R. No. 35453, September 15, 1989, 177 SCRA 521.
52 Bachrach Motor Co., Inc. V. Esteban Icarañgal 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. 9-13.
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. Court of Appeals, G.R. No. 118552, February 5, 1996, 253 SCRA

241, 253.
61
114 Phil. 401 (1962).
62 Danao v. Court of Appeals, G.R. L-48276, September 30, 1987, 154 SCRA 447, 457.

Pasted from <http://www.lawphil.net/judjuris/juri2006/jun2006/gr_167724_2006.html>

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?UCPB v. Sps. Beluso GR 159912 Aug 17, 2007
Sunday, November 14, 2010
11:34 PM

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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 CARLOS, and TEOFILO CARLOS II, respondents.
DECIS ION
REYES, R.T., J.:
ONLY a spouse can initiate an action to sever the marital bond for marriages solemnized during 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 these 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 Court (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 events that led to the institution of the instant suitare unveiled as follows:
Spouses 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 Carlos. The lots are particularly described as follows:
Parcel No. 1
Lot No. 162 of the MUNTINLUPA ESTATE SUBDIVISION, Case No. 6137 of the Court of Land Registration.
Exemption from the provisions of Article 567 of the Civil Code is specifically 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, Municipality
of Muntinlupa, Province of Rizal, x x x containing an area of Thirteen 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, Muntinlupa Estate; on the SE, point 4 to 5 by Lot 159-B-5;
on the S, points 5 to 1 by 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, being 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 lines 1-2 by Lot 27, Muntinlupa Estate; on the East & SE, along lines 2 to 6 by Mangangata
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 marcado 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 el 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 el plano, el cual se halla at S. 43 gds. 01'E, 82.50 mts. Desde el
punto 1 de esta manzana, que es un mojon de concreto de la Ciudad de Manila, situado on el esquina E.

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que forman las Calles Laong Laan y Dos. Castillas, continiendo una extension superficial de CIENTO
CINCUENTA (150) METROS CUADRADOS.3
During the lifetime of Felix Carlos, he agreed to transfer his estate to Teofilo. The agreement was made
in order to avoid the payment of inheritance taxes. Teofilo, in turn, undertook to deliver and turn over
the share of the other legal heir, petitioner Juan De Dios 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 Transfer Certificate of Title (TCT) No. 234824 issued by the
Registry of Deeds of Makati 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 registered in the name of petitioner. The lot is now covered by TCT No. 160401 issued
by the Registry of Deeds of Makati City.
On May 13, 1992, Teofilo died intestate. 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 respondents 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
compromise 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 6,691-
square-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 entitled 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 portion was later
divided between petitioner and respondents.
The division was incorporated in a supplemental compromise agreement executed on August 17, 1994,
with respect to Civil Case No. 94-1964. The parties submitted the supplemental compromise agreement,
which was approved accordingly.
Petitioner and respondents entered into two more contracts in August 1994. Under the contracts, the
parties equally 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
respondents before the court a quo with the following causes of action: (a) declaration 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 Branch 256 of the RTC in Muntinlupa.
In his complaint, petitioner asserted that the marriage between his late brother Teofilo and respondent
Felicidad was a nullity in view of the absence of the required marriage license. He likewise maintained
that his deceased brother was neither the natural nor the adoptive father of respondent Teofilo Carlos
II.
Petitioner likewise sought the avoidance of the contracts he entered into with respondent Felicidad with
respect to the subject real properties. He also prayed for the cancellation of the certificates of title
issued in the name of respondents. He argued that the properties covered by such certificates of title,
including the sums received by respondents as proceeds, should be reconveyed to him.
Finally, petitioner claimed indemnification as and by way of moral and exemplary damages, attorney's
fees, litigation expenses, and costs of suit.
On October 16, 1995, respondents submitted their answer. They denied the material averments of
petitioner's complaint. Respondents contended that the dearth of details regarding the requisite
marriage license did not invalidate Felicidad's marriage to Teofilo. Respondents declared that Teofilo II
was the illegitimate child of the deceased Teofilo Carlos with another woman.
On the grounds of lack of cause of action and lack of jurisdiction over the subject matter, 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-trial, respondents moved for summary judgment.
Attached to the motion was the affidavit of the justice of the peace who solemnized the marriage.
Respondents also submitted the Certificate of Live Birth of respondent Teofilo II. In the certificate, the
late Teofilo Carlos and respondent Felicidad were designated as parents.

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late Teofilo Carlos and respondent Felicidad were designated as parents.
On January 5, 1996, petitioner opposed the motion for summary judgment on the ground of irregularity
of the contract evidencing the marriage. In the same breath, petitioner lodged his own motion for
summary judgment. Petitioner presented a certification from the Local Civil Registrar of Calumpit,
Bulacan, certifying that there is no record of birth of respondent Teofilo II.
Petitioner also incorporated in 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 Carlos v. Gorospe,
before the RTC Branch 255, Las Piñas. In her testimony, respondent Felicidad narrated that co-
respondent Teofilo II is her child with Teofilo.5
Subsequently, the Office of the City Prosecutor of Muntinlupa submitted to the trial court its report and
manifestation, discounting the possibility of collusion between the parties.
RTC and CA Dispositions
On April 8, 1996, the RTC rendered judgment, disposing as follows:
WHEREFORE, premises considered, defendant's (respondent'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 between defendant Felicidad Sandoval and Teofilo Carlos solemnized at Silang,
Cavite 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. Declaring that the defendant minor, Teofilo S. Carlos II, is not the natural, illegitimate, or legally
adopted child of the late Teofilo E. Carlos;
3. Ordering defendant 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 complaint until fully paid;
4. Declaring plaintiff as the sole and exclusive owner of the parcel of land, less the portion adjudicated
to plaintiffs in Civil Case 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 title in the sole name of
plaintiff herein;
5. Declaring the Contract, Annex "K" of complaint, between plaintiff and defendant Sandoval null and
void, and ordering the Register of Deeds of Makati City to cancel TCT No. 139058 in the name of Teofilo
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 defendant Sandoval null and
void;
7. Ordering the cancellation of TCT No. 210877 in the names of defendant Sandoval and defendant
minor Teofilo S. Carlos II and ordering the Register of Deeds of Manila to issue another title in the
exclusive name of plaintiff herein;
8. Ordering the cancellation of TCT No. 210878 in the name of defendant Sandoval and defendant Minor
Teofilo S. Carlos II and ordering the Register of Deeds of Manila to issue another title in the sole name of
plaintiff herein.
Let this case be set for hearing for the reception of plaintiff's evidence on his claim for moral damages,
exemplary damages, attorney's fees, appearance fees, and litigation expenses on June 7, 1996 at 1:30
o'clock in the afternoon.
SO ORDERED.6
Dissatisfied, respondents appealed to the CA. In the appeal, respondents argued, inter alia, that the trial
court acted without or in excess of jurisdiction in rendering summary judgment annulling the marriage
of Teofilo, Sr. and Felicidad and in declaring Teofilo II as not an illegitimate child of Teofilo, Sr.
On October 15, 2002, the CA reversed and set aside the RTC ruling, disposing as follows:
WHEREFORE, the summary judgment appealed from is REVERSED and 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 to 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 not justify the grant thereof in favor of appellee. Not being
an action "to recover upon a claim" or "to obtain a declaratory relief," the rule on summary judgment
apply (sic) to an action to annul a marriage. The mere fact that no genuine issue was presented and the

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apply (sic) to an action to annul a marriage. The mere fact that no genuine issue was presented and the
desire to expedite the disposition of the case cannot justify 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 affidavits annexed to the
petition for summary judgment practically amount to these methods explicitly proscribed by the law.
We are not unmindful of appellee's argument that the foregoing safeguards have traditionally been
applied to prevent collusion 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 annulment of their marriage is the very means by which the latter is
sought to be deprived of her participation in the estate left by the former call for a closer and 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, the rule is to the effect that the material facts
alleged in the complaint for annulment of marriage should always be proved. Section 1, Rule 19 of the
Revised Rules 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 adverse 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 separation, the
material facts alleged in the complaint shall always be proved." (Underscoring supplied)
Moreover, even if We were to sustain the applicability of the rules on summary judgment to the case at
bench, Our perusal of the record shows that the finding of the court a quo for appellee would still not be
warranted. While 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 initio pursuant to Article 80(3) in
relation to Article 58 of the Civil Code the failure to reflect the serial number of the marriage license on
the marriage contract evidencing the marriage between Teofilo Carlos and appellant Felicidad Sandoval,
although irregular, is not as fatal as appellee represents it to be. Aside from the dearth of evidence to
the contrary, appellant Felicidad Sandoval's affirmation of the existence of said marriage license is
corroborated by the following statement in the affidavit executed by Godofredo Fojas, then Justice of
the Peace who officiated the impugned marriage, to wit:
"That as far as I could remember, there was a marriage license issued at Silang, Cavite on May 14, 1962
as basis of the said marriage contract executed by Teofilo Carlos and Felicidad Sandoval, but the number
of said marriage license was inadvertently not placed in the marriage contract for the reason that it was
the Office Clerk who filled up the blanks in the Marriage Contract who in turn, may have overlooked the
same."
Rather 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 the case on the merits.
If the non-presentation of the marriage contract - the primary evidence of marriage - is not proof that a
marriage did not take place, neither should appellants' non-presentation of the subject marriage license
be taken as proof that the same was not procured. The burden of proof to show the nullity of the
marriage, it must be emphasized, rests upon the plaintiff and any doubt 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 particular
party, the same may be said of the trial court's rejection of the relationship between appellant Teofilo
Carlos II and his putative father on the basis of the inconsistencies in appellant Felicidad Sandoval's
statements. Although it had effectively disavowed appellant's prior claims regarding the legitimacy of
appellant Teofilo Carlos II, the averment in the answer that he is the illegitimate son of appellee's
brother, to Our mind, did not altogether foreclose the possibility of the said appellant's illegitimate
filiation, his right to prove the same or, for that matter, his entitlement to inheritance rights as such.
Without 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 indigent 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 putative filiation. Inconsistent though it may be to her previous statements, appellant
Felicidad Sandoval's declaration regarding the illegitimate filiation of Teofilo Carlos II is more credible

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when considered in the light of the fact that, during the last eight years of his life, Teofilo Carlos allowed
said appellant the use of his name and the shelter of his household. The least that the trial court could
have done in the premises was to conduct a trial on the merits in order to be able to thoroughly resolve
the issues pertaining to the filiation of appellant Teofilo Carlos II.8
On November 22, 2006, petitioner moved for reconsideration and for the inhibition of the ponente,
Justice Rebecca De Guia-Salvador. The CA denied the twin motions.
Issues
In this petition under Rule 45, petitioner hoists the following issues:
1. That, in reversing and setting aside the Summary Judgment under the Decision, Annex A hereof, and
in denying petitioner's Motion for reconsideration under the Resolution, Annex F hereof, with respect to
the nullity of the impugned marriage, petitioner respectfully submits that the Court of Appeals
committed a grave reversible error in applying Articles 88 and 101 of the Civil Code, despite the fact that
the circumstances of this case are different from that contemplated and intended 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 accord with law or with the applicable decisions of this Honorable
Court;
2. That in setting aside and reversing the Summary Judgment and, in lieu thereof, entering another
remanding the case to the court of origin for further proceedings, petitioner 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
governing Summary Judgments;
3. That in reversing and setting aside the Summary Judgment and, in lieu thereof, entering another
remanding the case to the court of origin for further proceedings, petitioner most respectfully submits
that the Court of Appeals committed grave abuse of discretion, disregarded judicial admissions, made
findings on ground of speculations, surmises, and conjectures, or otherwise committed misapplications
of the laws and misapprehension of the facts.9 (Underscoring supplied)
Essentially, the Court is tasked to resolve whether a marriage may be declared void ab initio through a
judgment on the pleadings or a summary 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 summary judgment is allowed. So is confession of judgment disallowed.
Petitioner faults the CA in applying Section 1, Rule 1910 of the Revised Rules of Court, which provides:
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 pleading, the court may, on motion of that party, direct
judgment on such pleading. But in actions for annulment of marriage or for legal separation, the
material facts alleged in the complaint shall always be proved.
He argues that the CA should have applied Rule 35 of the Rules of Court governing summary judgment,
instead of the rule on judgment on the pleadings.
Petitioner is misguided. The CA did 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 perusal 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 pleadings 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 summary judgments have no place in cases of declaration of absolute nullity of marriage
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 Annulment 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 Rule, which took effect on March 15,
200312 is found in Section 17, viz.:

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200312 is found in Section 17, viz.:
SEC. 17. Trial. - (1) The presiding judge shall personally conduct the trial of the case. No delegation of
evidence to a commissioner shall be allowed except as to matters involving property relations of the
spouses.
(2) The grounds for declaration of absolute nullity or annulment of marriage must be proved. No
judgment on the pleadings, summary judgment, or confession of judgment shall be allowed.
(Underscoring supplied)
Likewise instructive is the Court's pronouncement in Republic v. Sandiganbayan.13 In that case, We
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 judgment 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 right and duty to
intervene in the case. The participation of the State is not terminated by the declaration of the public
prosecutor that no collusion exists between the parties. The State should have been given the
opportunity to present controverting 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
appear and intervene for the State. It is at this stage when the public prosecutor sees to it that there is
no suppression of evidence. Concomitantly, even if there is no suppression of evidence, the public
prosecutor has to make sure that the 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 Declaration of Absolute
Nullity of Void Marriages reiterates the duty of the public prosecutor, 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 prosecutor to intervene for the State
during the trial on the merits to prevent suppression or fabrication of evidence. (Underscoring supplied)
Truly, only the active participation of the public prosecutor or the Solicitor General will ensure that the
interest of the State is represented and protected in proceedings for declaration 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. 02-11-10-
SC; and (2) Marriages celebrated during the effectivity of the Civil Code.
Under the Rule on Declaration 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 of void marriage may be filed solely by
the husband or the wife. (Underscoring supplied)
Section 2(a) of the Rule makes it the sole right of the husband or the wife 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 spouse may file a petition for annulment of voidable marriages or
declaration of absolute nullity of void marriages. Such petition cannot be filed by compulsory or
intestate heirs of the spouses or by the State. The Committee is of the belief that 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, hence, can only question the validity of the marriage of the spouses upon the
death of a spouse in a proceeding for the settlement of the estate of the deceased spouse filed in the
regular courts. On the other hand, the concern of the State is 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 when and how to build the foundations of
marriage. The spouses alone are the engineers 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
when to take a cut, but only in accordance with the grounds allowed by law.
The innovation incorporated in A.M. No. 02-11-10-SC sets forth a demarcation line between marriages
covered by the Family Code and those solemnized under the Civil Code. The Rule extends only to
marriages entered into during the effectivity of the Family Code which took effect on August 3, 1988.18

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marriages entered into during the effectivity of the Family Code which took effect on August 3, 1988.18
The advent of the Rule on Declaration of Absolute Nullity 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 spouse. But the Rule never intended to deprive the compulsory or intestate heirs of 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 husband or the wife, it does not mean that the compulsory or intestate heirs are
without 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 Marriages 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 proceeding for the
settlement of the estate of the deceased spouse filed in the regular courts.19
It is emphasized, however, that the Rule does not apply to cases already commenced before March 15,
2003 although the marriage involved is within the coverage of the Family Code. This is so, as the new
Rule which became effective 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 prospective in its application.22 (Underscoring supplied)
Petitioner commenced the nullity of marriage case against respondent Felicidad in 1995. The marriage in
controversy was celebrated on May 14, 1962. Which law would govern depends upon when the
marriage took place.23
The marriage having been solemnized prior to the effectivity of the Family Code, the applicable law is
the Civil Code which was the law in effect at the time of its celebration.24 But the Civil Code is silent as to
who may bring an action to declare the marriage void. Does this mean that any person can bring an
action for the declaration of nullity of marriage?
We respond in the negative. The absence of a provision in the Civil Code cannot be construed 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 Elsewise stated, plaintiff must be the real party-in-interest. For it is basic in procedural 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 the case, as distinguished from mere curiosity about the question involved or
a mere 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 cause of action.27
Illuminating on this point is Amor-Catalan v. Court of Appeals,28 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 marriage; 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, must be prosecuted or defended in the name of
the real party-in-interest and must be based on a cause of action. Thus, in Niñal v. Badayog, the Court
held that the children have the personality to file the petition to declare the nullity of marriage of their
deceased father to their stepmother as it affects their successional rights.
xxx x
In fine, petitioner's personality to file the petition to declare 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 the trial court for reception of additional evidence is necessary to determine
whether respondent Orlando was granted a divorce decree and whether the foreign law 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 bigamous 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 contrary, if it is proved
that a valid divorce decree was obtained which allowed Orlando to remarry, then the trial court must
dismiss the instant petition to declare nullity of marriage on the ground that petitioner Felicitas Amor-
Catalan lacks legal personality to file the same.29 (Underscoring supplied)

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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-party-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 1992, his only surviving
compulsory heirs are respondent Felicidad and their son, Teofilo II. Under the law on succession,
successional rights are transmitted from the moment of death of the decedent and the compulsory heirs
are called to succeed by operation of law.30
Upon Teofilo's death in 1992, all his property, rights 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 descendants, with respect to their legitimate parents and ascendants;
(2) In default of the foregoing, legitimate parents and ascendants, with respect to their legitimate
children and descendants;
(3) The widow or widower;
(4) Acknowledged natural children, 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 as 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 provide:
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 and the brothers and sisters or their children to the other
half.
ART. 1003. If there are no descendants, ascendants, illegitimate children, or a surviving spouse, the
collateral relatives shall succeed to the entire estate of the deceased in accordance with the following
articles. (Underscoring supplied)
Indeed, only the presence of descendants, ascendants or illegitimate children excludes collateral
relatives from succeeding to the estate of the decedent. The presence of legitimate, illegitimate, or
adopted child or children of the deceased precludes succession by collateral relatives.32 Conversely, if
there are no descendants, ascendants, illegitimate children, or a surviving spouse, the collateral relatives
shall succeed to the entire estate of the decedent.33
If respondent Teofilo II is 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, considering 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 parents. He had no other siblings but petitioner.
Thus, if Teofilo II is finally found and proven to be not a legitimate, illegitimate, or adopted son of
Teofilo, petitioner 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. This makes petitioner a real-party-interest to
seek the declaration of absolute nullity of marriage of his deceased brother with respondent Felicidad. If
the subject marriage is found to be void ab initio, petitioner succeeds to the entire estate.
It bears stressing, however, that the legal personality of petitioner to bring the nullity of marriage case is
contingent upon the final declaration that Teofilo II is not a legitimate, adopted, or illegitimate son of
Teofilo.
If Teofilo II is proven to be a legitimate, illegitimate, or legally adopted son of Teofilo, 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 that he has no successional right to be protected, hence, does not have
proper interest. For although the marriage in controversy may be found to be void from the beginning,
still, petitioner would not inherit. This is because the presence of descendant, illegitimate,34 or even an
adopted child35 excludes the collateral relatives from inheriting from the decedent.
Thus, the Court finds that a remand of the case for trial on the merits to determine the validity or nullity
of the 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 evidence that Teofilo II is a legitimate, illegitimate, or
legally adopted son of Teofilo Carlos, the deceased brother of petitioner.

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legally adopted son of Teofilo Carlos, the deceased brother of petitioner.
IV. Remand of the case regarding the question of filiation of respondent Teofilo II is proper and in
order. There is a need to vacate the disposition of the trial court as to the other causes of action before
it.
Petitioner did not assign as error or interpose as issue the ruling of the CA on the remand of the case
concerning the filiation of respondent Teofilo II. This notwithstanding, We should not leave 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 consideration 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, petitioner'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 that the declaration of respondent Felicidad as to the illegitimate filiation of
respondent Teofilo II is more credible. For the guidance of the appellate court, such declaration of
respondent Felicidad should not be afforded credence. We remind 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 considered legitimate although the mother may have declared against its
legitimacy or may have been sentenced as an adulteress. (Underscoring supplied)
It is stressed 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 of her child cannot affect the legitimacy of a child born or conceived
within a valid marriage.37
Finally, the disposition of the trial court in favor of petitioner 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
initio.
WHEREFORE, the appealed Decision is MODIFIEDas follows:
1. The case is REMANDED to the Regional Trial Court in regard to the action on the status and filiation of
respondent Teofilo Carlos II and the validity or nullity of marriage between respondent Felicidad
Sandoval and the late Teofilo Carlos;
2. If Teofilo Carlos II is proven to be the legitimate, or illegitimate, or legally adopted son of 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 RTC in Nos. 1 to 8 of the fallo of its decision is VACATED AND SET ASIDE.
The Regional 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.

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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, LORNA
DOTE, CRESENCIANA CLEOPAS, TRINIDAD TEVES, SONIA PENILLA, ANITA GOMINTONG, CHING
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 possession without the necessity of joining all the other co-owners as co-
plaintiffs since the suit is deemed to be instituted for the benefit of all; and that Section 2 of Presidential
Decree (P.D.) No. 2016, reinforced by P.D. No. 1517, which prohibits the eviction of qualified
tenants/occupants, extends only to landless 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 without the
benefit of contract, those who enter the land by force or deceit, or those whose possession is under
litigation.
Respondents filed with the Regional Trial Court (RTC), Branch 216, Quezon City, a case for Recovery of
Possession against petitioners, claiming ownership of the property subject of dispute located in E.
Rodriguez Avenue and La Filonila Streets in Quezon City, by virtue of Transfer 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, petitioners 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 respondents' 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 be a registered owner thereof. Petitioners also
contended that their occupation of the property was lawful, having leased the same from the
Magdalena Estate, and later on from Alvarez. Lastly, petitioners asserted that the property has already
been proclaimed by the Quezon City Government as an Area for Priority Development under P. D. Nos.
1517 and 2016, which prohibits the eviction of lawful tenants 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 against defendants ordering the latter and all persons claiming rights
under them to immediately 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 until the subject
property is surrendered to plaintiffs as reasonable compensation for the use and possession thereof;
2. The amount of P20,000.00 by way of exemplary 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 hereby 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 appeal and affirmed in toto the RTC Decision.
Hence, the present petition for review under Rule 45 of the Rules of Court, on the following grounds:
I
THE HONORABLE 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
JUDGMENT OR THE PARTY ENTITLED TO THE AVAILS OF THE SUIT.
II
THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER AND DECIDE THE RELEVANT

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 THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER AND DECIDE THE RELEVANT
QUESTIONS 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 COPIED
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 that the Court’s role in a petition under Rule 45 is limited to reviewing or
reversing errors of law allegedly committed by the appellate court. Factual findings of the trial court,
especially when affirmed by the CA, are conclusive on the parties. Since such findings are generally not
reviewable, this Court is not duty-bound to analyze and weigh all over again the evidence already
considered in the proceedings below, unless the factual findings complained of are devoid of support
from the evidence on record or the assailed judgment is based on a misapprehension of facts. 6
The Court then finds that the petition is without merit.
Respondents are real parties-in-interest in the suit below and may, therefore, commence the complaint
for accion publiciana. On the part of Ysmael, he is a named co-owner of the subject property under TCT
No. 41698, together with Julian Felipe Ysmael, 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) Decision dated
August 30, 1974 rendered by the Regional Trial Court of Quezon City, Branch 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 notarized 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 of the Civil Code, reasserted the rule that
any one of the co-owners may bring any kind of action for the recovery of co-owned properties since the
suit is presumed 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 possession (accion publiciana), and recovery of ownership (accion de
reivindicacion), thus:
In the more recent case of Carandang v. Heirs of De Guzman,this Court declared that a co-owner is not
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 not indispensable parties. They are not even necessary parties, for a
complete relief can be afforded in the suit even without their participation, since the suit is presumed to
have been filed for the benefit of all co-owners. (Emphasis supplied)
Petitioners persistently question the validity of the transfer of ownership to Alvarez. They insist that
Alvarez failed to establish any right over the property since the Deed of Absolute Sale was not inscribed
on TCT No. 41698. Interestingly, petitioners debunked their own argument when they themselves
claimed in their Answer with Counter-claim that they derived their right to occupy the property from a
lease agreement with, first, the Magdalena Estate, and thereafter, Alvarez herself.12 More importantly,
the fact that the sale was not annotated or inscribed on TCT No. 41698 does not make it any less 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 certain contracts in a public instrument, is only for convenience; and registration of
the instrument only adversely affects third parties, and non-compliance therewith 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 property, 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 several 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 meters. In the Decision dated August 30, 1974 rendered by the RTC of Quezon City, Branch
9, in Civil Case No. Q-8426, the ownership of 200 square meters of Lot 2, Block 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

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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 Agreement dated May 2, 1991 was subsequently
entered into by the Ysmael Heirs and Alvarez, whereby all three apportioned parcels of land allocated to
Alvarez under the RTC Decision dated August 30, 1974, were finally sold, transferred and conveyed to
her. Evidently, while the title was yet to be registered in the name of Alvarez, for all intents and
purposes, however, the subject property was already owned by her. The Ysmael Heirs are merely naked
owners of the property, while Alvarez 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 existence 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 Certification of the Register of Deeds dated
March 1, 1994, and which reads:
At the instance of RUY ALBERTO S. RONDAIN, I, SAMUEL C. CLEOFE, Register of Deeds of Quezon City, do
hereby certify that TCT No. 41698, covering Lot 19, Blk. 8 of the cons.-subd. plan Pos-817, with an area
of Three Hundred Seventy Five (375) Square Meters, registered in the name of VICTORIA M.
PANGANIBAN; and TEODORO M. PANGANIBAN, 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 presented by Ruy Alberto S. Rondain covering Lot 3, Blk. 2 of
the subd. Plan PSD-3309, with an area of Nine Hundred Ninety Six (996) Square Meters, issued on June
10, 1958 and registered in the name of JUAN FELIPE YSMAEL, TERESA YSMAEL, RAMON YSMAEL, LUIS
MIGUEL YSMAEL, which is also an existing title is different and distinct 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 that after the fire of
June 11, 1988, the Quezon City Registry issued new title numbers beginning with TCT No. 1.14
(Emphasis supplied)
Finally, petitioners' claim that they are entitled to the protection against eviction and demolition
afforded by P.D. Nos. 2016, 15 1517,16 and Republic Act (R.A.) No. 7279, 17 is not plausible.
Section 6 of P.D. No. 1517 grants preferential rights to landless tenants/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 Dimaculangan 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 Development
and Urban Land Reform Zone; and d) they have resided on the land continuously for the last 10 years or
more.
Section 3(f) of P.D. No. No. 1517 defines the term "tenant" covered by the said decree as the "rightful
occupant of land and its structures, but does not include those whose presence on the land is merely
tolerated and without the benefit of contract, those who enter the land by force or deceit, or those
whose possession is under litigation." It has already been ruled that occupants of the land whose
presence therein is devoid of any legal authority, 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 been terminated by respondents, clearly do
not qualify as "tenants" covered by these social legislations.
Finally, petitioners failed to demonstrate that they qualify for coverage under R. A. No. 7279 or the
Urban Development and Housing Act of 1992.
R. A. No. 7279 provides for the procedure to be undertaken by the concerned 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 Regulatory Board, the National Mapping Resource Information Authority, and the Land
Management Bureau; identify lands for socialized housing and resettlement areas 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 of the program. 20 While there is a Certification that the area bounded
by E. Rodriguez, Victoria Avenue, San Juan River and 10th Street of Barangay. Damayang Lagi, Quezon
City is included in the list of Areas for Priority Development under Presidential Proclamation No. 1967, 21

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City is included in the list of Areas for Priority Development under Presidential Proclamation No. 1967, 21
there is no showing that the property has already been acquired by the local government for this
purpose; or that petitioners have duly 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 Decision dated March 14, 2005 of the Court of
Appeals is AFFIRMED.
SO ORDERED.

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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
CORONA, J.:
Petitioner Robert G. de Galicia was a business partner in RCL Enterprises. 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 without his knowledge and consent, Arciaga rediscounted the check with
respondent Mely Mercado at 8% interest. Respondent gave Arciaga the sum of P46,000, representing
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 filed a complaint for estafa and for violation of Batas Pambansa Blg. (BP) 221 against petitioner and
Carmen Arciaga. Petitioner countered by filing in the Regional 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 void for
being contrary to public policy.
After trial, the RTC, in an order dated November 21, 2000, dismissed petitioner’s case for lack of
jurisdiction. In another order dated January 15, 2001, it also denied his motion for reconsideration.
Treating the complaint as one for recovery of a sum of money, the trial court ruled:
Even granting in arguendo, that the action seeks to have the agreement (?) between 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 one 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% or 5%, it is still within the rate of P50,000
and way below the jurisdictional amount vested in the Regional Trial Court.
The present action is treated by this Court 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 nullity. Hence, capable of pecuniary estimation, the so-called
agreement merely an 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 order (dated November 21, 2000).
WHEREFORE, the assailed Order (supra) [D]ismissing this case, [S]tands. The Motion for Reconsideration,
for lack of merit, is hereby DENIED.2
Via this petition for review under Rule 45 of the 1997 Rules of Civil Procedure, on a pure question of law,
petitioner assigns this error to the abovementioned order:
THE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT FOR LACK OF JURISDICTION OVER ITS SUBJECT
MATTER SIMPLY BECAUSE THE AMOUNT INVOLVED [WAS] ONLY 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 within the jurisdiction of the RTC. According to petitioner, the
subject matter of the 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 which 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 dismissal by the RTC of the complaint was warranted since the
action essentially involved the nullification of the check amounting to P50,000. She insisted that the
amount was outside the RTC’s jurisdiction, thus, it could not possibly take cognizance of the case.
Respondent added that the RTC did not err in dismissing the complaint because Arciaga, as an

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indispensable party, was not impleaded.
Under BP 129,5 the RTC shall exercise exclusive 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 any 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, where such value exceeds Fifty [T]housand [P]esos (P50,000.00) except
actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which
is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts.
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 following 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 recovery of a sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first
instance (now 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 money claim is purely incidental
to, or a consequence of, the principal relief sought, this Court has considered such actions as cases
where the subject of the litigation may not be estimated in terms of money, and are cognizable by the
courts of first instance (RTC). (emphasis supplied)
Based on the foregoing criterion, the subject of the action before the trial court was indeed incapable of
pecuniary estimation and therefore cognizable by the RTC.
A perusal of the complaint7 reveals that it primarily sought to annul the agreement under which Arciaga
obligated herself to pay respondent interest on the amount of the rediscounted check. What was being
assailed was the payment of interest. Petitioner was not seeking recovery of a sum of money as found
by the trial court. The records do not show 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
who gave P46,000 to petitioner’s business partner, Arciaga.
Nevertheless, notwithstanding the RTC’s jurisdiction on the subject case, this Court sustains the
dismissal of the subject complaint for its failure to implead an indispensable party.
Under Rule 3, Section 7 of the 1997 Rules of Civil Procedure, an indispensable party 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 indispensable party’s
interest in the subject matter is such that a complete and efficient 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 the suit filed by petitioner against respondent.
Her interest in the suit was intertwined 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 the re-discounted
check and being privy to the assailed agreement. Had the subject complaint been resolved on the
merits, any judgment made by the trial court was 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 Aracelona v. Court of Appeals,10 the Court held that the joinder of all indispensable parties must be
made under any and all conditions, their presence being a sine 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
It is interesting to note that petitioner filed the subject complaint after respondent initiated a complaint
for estafa and violation of BP 22.12 The filing of the 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 the
outcome of the criminal complaint against him.
WHEREFORE, the petition is hereby DENIED.
No costs.
SO ORDERED.

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SO ORDERED.

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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 Court of Appeals (CA) Decision1 dated July 13, 2005 in CA-G.R. CV No. 56998 affirming
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), Magdalena Catalina (Magdalena), Venancio, and respondent Macaria, all
surnamed Monis, as well as respondent Andrea Monis - Velasco (Andrea), are siblings. Venancio is the
father of petitioners Dionisia Monis Lagunilla and Rafael Monis. During their lifetime, Patricio and
Magdalena acquired several properties which included several parcels of land in the province of La
Union and another one situated in Quezon City, with an area of 208.35 sq. m. (otherwise known as the
Quezon City property).3 The Quezon City property was co-owned by Patricio and Magdalena, together
with Andrea and Pedro Velasco.
After the death of Patricio and Magdalena, or on February 24, 1993, Andrea and Macaria (to the
exclusion of Venancio’s children) executed a Deed of Extrajudicial Settlement with Donation4
(hereinafter referred to as the subject Deed) involving the Quezon City property, and donated the same
to Andrea’s son, Pedro Monis Velasco, Jr. (Pedro). By virtue of said Deed, Transfer Certificate of Title
(TCT) No. RT-60455 (190472)5 was cancelled and a new one (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
Regional Trial Court (RTC) of Balaoan, La Union against respondents. The case was raffled to Branch 34
and was docketed as Civil Case No. 466. In their complaint, petitioners sought the annulment of the
subject Deed, allegedly because of the fraudulent act committed by respondents in executing the same.
They claimed that respondents misrepresented that they were the only surviving heirs of Patricio and
Magdalena when, in fact, they (petitioners) were also surviving heirs by virtue of their right to represent
their deceased father Venancio. In short, being Patricio and Magdalena’s nephew and niece, they were
asserting their rights, as co-heirs, to the Quezon City property. Respondents’ fraudulent act was,
according to petitioners, a ground for the annulment of the subject Deed. As a consequence of the
nullity of the extrajudicial settlement, they further sought the cancellation of 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 claimed to be the only legitimate sisters of the
deceased. They added that annulment of the Deed was not tenable, considering that petitioners already
received advances 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 obtain reparation, if they
are so entitled. Contrary to petitioners’ claim, respondents 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 during the pre-trial; thus, trial on the merits ensued.
After petitioners rested their case, they moved for the amendment of the complaint to implead
additional party and to conform to the evidence presented.9 Petitioners averred that the resolution of
the case would affect the interest of Pedro as donee; hence, he is an indispensable party. The RTC,
however, denied the motion, as the amendment of the complaint would result in the introduction of a
different cause of action prejudicial to respondents. The court further held that the amendment of the
complaint would unduly delay the resolution of the case.
On April 24, 1997, the RTC decided in favor of respondents, disposing, as follows:
WHEREFORE, taken in the above light, the Court hereby orders the case DISMISSED and further orders

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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 the following, thus:
1) P100,000.00 as moral damages;
2) P50,000.00 as exemplary damages;
3) P100,000.00 as attorney’s fees; and
4) To pay the costs of this suit.
SO ORDERED.10
Applying Article 887 of the Civil Code, the RTC ruled that petitioners 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 only surviving heirs of the decedents, the trial court said that it was, in a way, a non-
recognition of petitioners’ claim that they, too, are heirs. The court, likewise, 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 existence of other remedies that may be availed of by petitioners, considering that there were other
properties from which they could obtain reparation, assuming they are entitled.11
On appeal to the Court of Appeals, the appellate court affirmed with modification the trial court’s
decision, viz.:
WHEREFORE, premises considered, the assailed decision dated April 24, 1997 of the Regional Trial Court
of Balao[a]n, La Union in Civil Case No. 466 is hereby AFFIRMED with MODIFICATION, in that the award
of exemplary damages and attorney’s fees is deleted. No pronouncement 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 wanting. While recognizing the doctrine that the subject Deed was not binding
on petitioners 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 properties 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
appellate court likewise found the deletion of the award of exemplary damages and attorney’s fees
proper.141awphi1
Unsatisfied, petitioners come to this Court in this petition for review on certiorari raising the following
issues:
I. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AND
MANIFESTLY OVERLOOKED 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 DEFENDANTS-APPELLEES IN EXCLUDING PLAINTIFFS-APPELLANTS FROM THE DEED
OF EXTRA JUDICIAL SETTLEMENT WITH DONATION.
II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
CONCLUDING THAT "THE MERE ACT OF REPUDIATING THE INTEREST 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 LAW."
III. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
CONCLUDING THAT THERE IS ABSENCE OF FRAUD OR BAD FAITH ON THE PART OF DEFENDANTS-
APPELLEES IN EXCLUDING PLAINTIFFS-APPELLANTS IN THE EXTRA JUDICIAL SETTLEMENT BASED
ON AN INFERENCE THAT IS MANIFESTLY MISTAKEN THAT PLAINTIFFS-APPELLANTS HAVE ALREADY
OBTAINED THEIR ADVANCE OF INHERITANCE FROM THE DECEDENTS.
IV. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW AND
GRAVE ABUSE OF DISCRETION IN CONCLUDING THAT THE ASSAILED EXTRAJUDICIAL SETTLEMENT
CANNOT BE ANNULLED SINCE THE MISREPRESENTATION IS NOT SO GRAVE IN CHARACTER AS TO
AMOUNT TO BAD FAITH (AND) RULE 74, SECTION 1, SECOND PARAGRAPH, DOES NOT DISCOUNT
THE POSSIBILITY THAT SOME HEIRS MAY HAVE BEEN EXCLUDED IN THE EXECUTION OF THE
EXTRAJUDICIAL SETTLEMENT.
V. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO AN ERROR OF LAW IN CONCLUDING THAT THE DEED OF

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 DISCRETION TANTAMOUNT TO AN ERROR OF LAW IN CONCLUDING THAT THE DEED OF
EXTRAJUDICIAL 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 REGIONAL 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 court’s conclusions on the validity of the extrajudicial
settlement with donation and the denial of the 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 on the respective rights of all the parties and
decide, once and for all, their interests over the subject property, we are barred by a jurisdictional issue.
Jurisdiction 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 the case on the merits, it must acquire jurisdiction
over the subject matter and the 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 defendant 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 judgment 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 contemplation of law and can never become final and executory.17
Corollary to the issue of jurisdiction, and equally important, is the mandatory rule on joinder of
indispensable 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 without 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 joinder 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 themselves 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 complaint 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. Logarta20 and Arcelona v. CA,21 we laid down the test to determine if a party is an
indispensable party, viz.:
An indispensable party is a party who has an interest 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
not only an interest in the subject matter of the controversy, but also has an interest of such nature that
a final decree cannot be made without affecting his interest or leaving the controversy in such a
condition that its final determination 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 cannot be a
determination between the parties already before the court which is effective, 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 indispensable party, however, if his interest in the controversy or subject matter is
separable from the interest of the other parties, so that it will not necessarily 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
action, or if he has no interest in the subject matter of the action. It is not a sufficient reason to declare a
person to be an indispensable party that his presence will avoid multiple litigation.22
In upholding the denial of the motion to amend the complaint, the appellate court concluded that the
sole desire of petitioners in instituting the case was the annulment of the extrajudicial settlement.
Effectively, it separated the question of the validity of the extrajudicial settlement from the validity of
the donation. Accordingly, the court said, the latter issue could be threshed out in a separate proceeding

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the donation. Accordingly, the court said, the latter issue could be threshed out 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 decision 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 registered 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 extrajudicial
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 prayed 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 judgment 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 declarations issued pursuant thereto.23
If such prayer and thrust were to be denied (as held 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,
Pedro’s 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 Pedro’s interest.
Verily, Pedro’s interest in the subject matter of the suit and in the relief sought are so inextricably
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 defendant in their complaint. Interestingly,
however, they realized such mistake, albeit 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 renders all subsequent actions
of the court null and void for want of authority to act, not only as to the absent parties but even as to
those present.27 Without the presence of indispensable parties to the suit, the judgment of the court
cannot attain finality.28 One who is not a party to a case is not bound by any decision of the court;
otherwise, he will be deprived of his right to due process.29 That is why the case is generally remanded
to the court of origin for further proceedings. 30
In light of these premises, no final ruling can be had on the validity of the extrajudicial settlement. While
we wish to abide by the mandate on speedy 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
Pedro is necessary for the effective and complete resolution of the case and in order to accord all parties
the benefit of due process and fair play.31
Nevertheless, 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 indispensable 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 order of the court on motion of the party or on its own initiative at any stage of the action
and/or at such times as are just. If the plaintiff refuses to implead an indispensable party despite the
order of the court, then the court may dismiss the complaint for the plaintiff’s failure to comply with a
lawful court order.
In light of the foregoing, a remand of the case to the trial court is imperative.
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 Court for the inclusion of Pedro Velasco, Jr. as an
indispensable party, and for further proceedings.
SO ORDERED.

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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, Petitioners,
vs.
MOISES O. ANACAY Respondent.
DE C I S I O N
BRION, J.:
Before us is the 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 (collectively, 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 Division of the Court of Appeals (CA) in CA-G.R. SP No. 94673. The assailed CA
Decision dismissed the petitioners’ petition for certiorari challenging the Orders dated March 14, 20064
and May 8, 20065 of the Regional Trial Court (RTC), Branch 90, Dasmariñas, Cavite in Civil Case No.
2919-03, while the assailed CA Resolution denied the petitioners’ motion for reconsideration.
FACTUAL BACKGROUND
The facts of 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 of 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 complaint states, among others, that: the respondent is the
bona-fide co-owner, together with his wife, Gloria P. Anacay (now deceased), of a 50-square meter
parcel of land and the house built thereon, located at Blk. 54, Lot 9, Regency Homes, Brgy. Malinta,
Dasmariñas, Cavite, covered by Transfer Certificate of Title (TCT) No. T-815595 of the Register of Deeds
of Cavite; they authorized petitioner Josephine to sell the subject property; petitioner Josephine sold the
subject property 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 installment payments from December
2002 onwards; the respondent subsequently discovered that TCT No. 815595 had been cancelled and
TCT No. T-972424 was issued in petitioner Josephine’s name by virtue of a falsified Deed of Absolute
Sale dated September 20, 2001; petitioner Josephine subsequently transferred her title to petitioner
Danilo; TCT No. T-972424 was cancelled and TCT No. T-991035 was issued in petitioner Danilo’s 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 alternative, he demanded petitioner Danilo’s payment of the
balance of P347,000.00 with interest from December 2002, and the payment of moral damages,
attorney’s fees, and cost of suit.
In her Answer, petitioner Josephine averred, among others, that the respondent’s children, as co-
owners of the subject property, should have been included as plaintiffs because they are indispensable
parties.8 Petitioner Danilo echoed petitioner Josephine’s submission in his Answer.9
Following the pre-trial conference, the petitioners filed a Motion to Dismiss the case for the
respondent’s failure to include his children as indispensable parties.10
The respondent filed an Opposition, arguing that his children are not indispensable parties because the
issue in the case can be resolved without their participation in the proceedings.11
THE RTC RULING
The RTC found the respondent’s argument to be well-taken 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 petitioners 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 respondent
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 to dismiss, noting that

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did not commit any grave abuse of discretion in denying the petitioners’ motion to dismiss, noting that
the respondent’s 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 respondent’s Comment18 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
Meanwhile, on April 24, 2009, the petitioners filed with the RTC a Motion to Suspend Proceedings due
to the pendency of the present petition. The RTC denied the motion to suspend as well as the motion
for reconsideration that followed. The petitioners responded to the denial by filing with us a petition for
the issuance of 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 PETITION and
THE PARTIES’ SUBMISSIONS
The petitioners submit that the respondent’s children, who succeeded their deceased mother as co-
owners of the property, are indispensable parties because a full determination of the case cannot be
made without their presence, relying on Arcelona v. Court of Appeals,22 Orbeta v. Sendiong,23 and
Galicia v. Manliquez Vda. de Mindo.24 They argue that the non-joinder of indispensable parties is a fatal
jurisdictional defect.
The respondent, on the other hand, counters that the respondent’s children are not indispensable
parties because 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 respondent’s children.
THE ISSUE
The core issue is whether the respondent’s children are indispensable parties in Civil Case No. 2919-03.
In the context of the Rule 65 petition before the CA, the issue is whether the CA correctly ruled that the
RTC did not commit any grave abuse of discretion in ruling that the respondent’s children are not
indispensable parties.
OUR RULING
We see no merit in the petition.
General The denial of a motion to dismiss is an interlocutory order which is not the proper subject
Rule: of an 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 disposes of the case, or of a matter therein when declared by the Rules to be
appealable. It explicitly states as well that no appeal may be taken from an interlocutory order.
In law, the word "interlocutory" refers to intervening developments between the commencement of a
suit and its complete termination; hence, it is a development that does not end the whole controversy.26
An "interlocutory order" merely rules on an incidental issue and does not terminate or finally dispose of
the 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 until 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 considered an appropriate
remedy to assail an interlocutory order.28
In the present case, since the petitioners did not wait for the final resolution on the merits of Civil Case
No. 2919-03 from which an appeal could be taken, but opted to immediately 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 the RTC, in issuing its orders, gravely abused its discretion or otherwise acted outside
or in excess of its jurisdiction.
The RTC did not commit grave abuse of discretion in denying the petitioners’ Motion to Dismiss;
the respondent’s co-owners are not indispensable parties.
The RTC grounded its Order dated March 14, 2006 denying the petitioners’ motion to dismiss on the
finding that the respondent’s children, as co-owners of the subject property, are not indispensable
parties to the resolution of the case.

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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-interest
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 final
decree cannot be made without affecting this interest or without placing the controversy in a situation
where the final determination may be wholly inconsistent with equity and good conscience. He is a
person whose absence disallows the court from making an effective, complete, or equitable
determination of the controversy between or among the contending parties. 30
When the controversy involves 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 explained in Vencilao v. Camarenta31 and in Sering v. Plazo32 that the term "action in
ejectment" includes a suit for forcible entry (detentacion) or unlawful detainer (desahucio).33 We also
noted in Sering that the term "action in ejectment" includes "also, an accion publiciana (recovery of
possession) or accion reinvidicatoria34 (recovery of ownership)." Most recently in Estreller v. Ysmael,35
we applied 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 impleading other co-owners,
pursuant to Article 487 of the Civil Code. We made this ruling in Vencilao, where the amended
complaint for "forcible entry and detainer" specified that the plaintiff is one of the heirs who co-owns
the disputed properties. In Sering, and Resuena v. Court of Appeals,37 the co-owners who filed the
ejectment 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 co-owners to pursue the case on the latter’s behalf.
These cases should be distinguished from Baloloy v. Hular40 and Adlawan v. Adlawan41 where the actions
for quieting 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 action will not prosper unless the plaintiff
impleaded the other co-owners who are indispensable parties. In these cases, the absence of an
indispensable party rendered all subsequent actions of the court null and void for want of authority to
act, not only as to the absent parties but even as to those present.
We read these cases to collectively mean that where the suit is brought by a co-owner, without
repudiating the co-ownership, then the suit is presumed to be filed for the benefit of the other co-
owners and may proceed without impleading the other co-owners. However, where the co-owner
repudiates the co-ownership by claiming sole ownership of the property or where the suit is brought
against a co-owner, his co-owners are indispensable parties and must be impleaded as party-
defendants, as the 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 existence 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 questioned property, along with his deceased wife. Moreover
and more importantly, the respondent’s claim in his complaint in Civil Case No. 2919-03 is personal to
him and his wife, i.e., that his and his wife’s signatures in the Deed of Absolute Sale in favor of petitioner
Josephine were falsified. The issue therefore is falsification, an issue which does not require the
participation of the respondent’s co-owners at the trial; it can be determined without their presence
because they 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 and father, respondent Moises O.
Anacay, since the complaint was made precisely to recover ownership and possession of the properties
owned in common, and, as such, will redound to the benefit of all the co-owners.421avvphi1
In sum, respondent’s 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 co-
owners 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 respondent’s

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their participation, since the suit is presumed to be filed for the benefit of all.44 Thus, the respondent’s
children need not be impleaded as party-plaintiffs in Civil Case No. 2919-03.
We cannot subscribe to the petitioners’ reliance on our rulings in Arcelona v. Court of Appeals,45 Orbeta
v. Sendiong46 and Galicia v. Manliquez 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 impleading 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-owners
of a fishpond as party-defendants. We held that a tenant, in an action to establish his status as such,
must implead all the pro-indiviso co-owners as party-defendants since a tenant who fails to implead all
the co-owners as party-defendants cannot establish with finality his tenancy over the entire co-owned
land. Orbeta, on the other hand, involved an action for recovery of possession, quieting of title and
damages wherein the plaintiffs prayed that they be declared "absolute co-owners" of the disputed
property, but we found that there were third parties whose rights will be affected by the ruling and who
should thus be impleaded as indispensable parties. In Galicia, we noted that the complaint for recovery
of possession and ownership and annulment of title alleged that the plaintiffs’ predecessor-in-interest
was deprived of possession and ownership by a third party, but the complaint failed to implead all the
heirs of that third party, who were considered indispensable parties.
In light of these conclusions, no need arises 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 considered, 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, 2008 of the Court
of Appeals in CA-G.R. SP No. 94673, both of which we hereby AFFIRM. Costs against the petitioners.
SO ORDERED.

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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.
CATALINO U. VILLAMATER and/or The Heirs of the Late Catalino U. Villamater, represented 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 certiorari 1 under Rule 45 of the Rules of Court, seeking to annul and set
aside the Decision2 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 follows:
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), as the latter’s 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-Going 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
bleeding and was given a blood transfusion. Thereafter, he again felt weak, lost considerable weight,
and suffered intermittent intestinal pain. He consulted a physician in Hamburg, Germany, who advised
hospital confinement. Villamater was diagnosed with Obstructive Adenocarcinoma of the Sigmoid, with
multiple liver metastases, possibly local peritoneal carcinosis and infiltration of the bladder, possibly
lung metastasis, and anemia; Candida Esophagitis; and Chronic Gastritis. He 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 Villamater’s condition "appears to be not work-related," but suggested a disability grading
of 1.7
In the course of his chemotherapy, when no noticeable improvement occurred, Villamater filed a
complaint8 before the Arbitration Branch of the National Labor Relations Commission (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 amount 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 attorney’s fees.
After the submission of the required position papers, the Labor Arbiter rendered a decision9 dated July
28, 2003 in favor of Villamater, holding that his illness was compensable, but denying his claim for moral
and exemplary damages. The Labor Arbiter disposed as follows—
WHEREFORE, foregoing premises considered, judgment is hereby rendered declaring complainant’s
illness to be compensable and ordering respondents LEONIS NAVIGATION CO., INC. and WORLD MARINE
PANAMA, S.A. liable to pay, jointly and severally, complainant CATALINO U. VILLAMATER, the amount of
US$60,000.00 or its Philippine Peso equivalent at the time of actual payment, representing the latter’s
permanent total disability benefits plus ten percent (10%) thereof as Attorney’s Fees.
All other claims are dismissed for lack of merit.
SO ORDERED.10
Petitioners appealed to the NLRC. Villamater also filed his own appeal, questioning the award 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 & Seamen’s Union of the
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Agreement (CBA) between petitioners and Associated Marine Officers & Seamen’s Union of the
Philippines, which covered the employment contract of Villamater.
On February 4, 2004, the NLRC issued its resolution,11 dismissing the respective appeals of both parties
and affirming in toto the decision of the Labor Arbiter.
Petitioners filed their motion for reconsideration of the February 4, 2004 resolution, but the NLRC
denied the same in its resolution dated June 15, 2004.
Aggrieved, petitioners filed a petition for certiorari under Rule 65 of the Rules of Court before the CA.
After the filing of the required memoranda, the CA rendered its assailed May 3, 2007 Decision,
dismissing the petition. The appellate court, likewise, denied petitioners’ motion for reconsideration in
its July 23, 2007 Resolution.
Hence, this petition based on the following grounds, to wit:
First, the Court of Appeals erroneously held that *the+ Commission’s Dismissal Decision does not
constitute grave abuse of discretion amounting to lack or excess of jurisdiction but mere error of
judgment, considering that the decision lacks evidentiary support and is contrary to both evidence on
record and prevailing law and jurisprudence.
Second, the Court of Appeals seriously erred in upholding the NLRC’s decision 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, and more importantly, when it disregarded undisputed facts and
substantial evidence presented by petitioners which show that seaman Villamater’s illness was not
work-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 executory decisions or resolutions of the
NLRC render appeals to superior courts moot and academic.
Last, the Court of Appeals seriously erred in upholding the award of attorney’s fees considering that the
grant has neither factual nor legal basis.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 the CA dismissed the petition, considering that (1) the June 15, 2004
Resolution of 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 entry of judgment. – a) Finality of the Decisions,
Resolutions or Orders of the Commission. – Except as provided in Section 9 of Rule X, the decisions,
resolutions or orders of the Commission shall become final and executory after ten (10) calendar days
from receipt thereof by the parties.
b) Entry of Judgment. – Upon the expiration of the ten (10) calendar day period provided in paragraph
(a) of this Section, 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 decision, resolution or order as final
and executory after sixty (60) calendar days from date of mailing in the absence of return cards,
certifications from the post office, or other proof of service to parties.
Section 15. Motions for reconsideration. – Motion for reconsideration of any decision, resolution or
order of the Commission shall not be entertained except when based on palpable or patent errors;
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 adverse party; and provided further, that only one such motion from the same
party shall be entertained.
Should a motion for reconsideration be entertained pursuant to this SECTION, the resolution shall be
executory after ten (10) calendar days from receipt thereof.13
Petitioners received the June 15, 2004 resolution of the NLRC, denying their motion for reconsideration,
on June 16, 2004. They filed their petition for certiorari before the CA only on August 9, 2004,14 or 54
calendar days from the date of notice of the June 15, 2004 resolution. Considering that the above-
mentioned 10-day period had lapsed without petitioners filing the appropriate appeal, the NLRC issued
an Entry of Judgment dated June 28, 2004.

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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 Villamater’s widow, Sonia M.
Villamater (Sonia), the amount of P3,649,800.00, with Rizal Commercial and Banking Corporation (RCBC)
Manager’s Check No. 000000855016 dated August 12, 2004, as evidenced by the Acknowledgment
Receipt17 dated August 13, 2004, and the Cheque Voucher18 dated August 12, 2004. Following the
complete satisfaction of the judgment award, the Labor Arbiter issued an Order19 dated September 8,
2004 that reads—
There being complete satisfaction of the judgment award as shown by the record upon receipt of the
complainant of the amount of P3,649,800.00, voluntarily paid by the respondent, as full and final
satisfaction of the Writ of Execution dated July 29, 2004; and finding the same to be not contrary to law,
morals, good 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 hereby ordered DISMISSED with prejudice,
and considered CLOSED and TERMINATED.
SO ORDERED.
Petitioners never moved for a reconsideration of this Order regarding the voluntariness of their
payment to Sonia, as well as the dismissal with prejudice and the concomitant termination of the case.
However, petitioners argued that 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 decisions 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 strict observance of the hierarchy of courts. Under Rule 65,
Section 4,21 petitioners 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 within the 10-day period, petitioners
reasonably filed their petition for certiorari 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 correctness of its
evaluation of the evidence. Errors of judgment, as distinguished from errors 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 of discretion. It is, thus, incumbent upon petitioners to satisfactorily establish
that the NLRC acted capriciously and whimsically in order that the extraordinary writ of certiorari will lie.
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, and it must be shown that the discretion was exercised arbitrarily or
despotically.
The CA, therefore, could grant the petition for certiorari if it finds that the NLRC, in its assailed decision
or resolution, committed grave abuse of discretion by capriciously, whimsically, or arbitrarily
disregarding evidence that is material to or decisive of the controversy; and it cannot make this
determination without looking into the evidence of the parties. Necessarily, the appellate court can only
evaluate the materiality or significance of the evidence, which 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 grants the petition and nullifies the
decision or resolution of the NLRC on the ground 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 void 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 occasion to rule that although
the CA may review the decisions or resolutions of the NLRC on jurisdictional and due process
considerations, particularly when the decisions or resolutions have already been executed, this does not
affect the statutory finality of the NLRC decisions or resolutions in view of Rule VIII, Section 6 of the
2002 New Rules of Procedure of the NLRC, viz.:
RULE VIII
xxx x
SECTION 6. EFFECT OF FILING OF PETITION FOR CERTIORARI ON EXECUTION. – A petition for certiorari
with the Court of Appeals or the Supreme Court shall not stay the execution 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 final and executory decision or resolution of the NLRC shall proceed

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unless a temporary restraining order is issued by the Court of Appeals or the Supreme 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 certiorari, unless it is restrained by the proper court. In the
present case, petitioners already paid Villamater’s widow, Sonia, the amount of P3,649,800.00,
representing the total and permanent disability award plus attorney’s fees, pursuant to the Writ of
Execution issued by the Labor Arbiter. Thereafter, an Order was issued 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 Acknowledgment Receipt she signed
when she received petitioners’ payment was without prejudice to the final outcome of the petition for
certiorari pending before the CA.
Second. We also agree with petitioners in their position that the CA erred in dismissing outright their
petition for certiorari on the ground of non-joinder of indispensable parties. It should be noted that
petitioners impleaded only the then deceased 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 action.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 the subject
matter of the suit and in the relief sought is inextricably intertwined with the other parties’ interest.29
Unquestionably, Villamater’s widow stands as an indispensable party to this case.
Under Rule 3, Section 11 of the Rules of Court, 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 misjoinder 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 claim against a
misjoined party may be severed and proceeded with separately.
The proper remedy is to implead the indispensable party at any stage of the action. The court, either
motu proprio or upon the motion of a party, may order the inclusion of the indispensable party or give
the plaintiff an opportunity to amend his 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 include or to amend is the action dismissed.30
On the merits of this case, the questions to be answered are: (1) Is Villamater entitled to total and
permanent disability benefits by reason of his colon cancer? (2) If yes, would he also be entitled to
attorney’s fees?
As to Villamater’s entitlement to total and permanent disability 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
Vessels (POEA Standard Contract), and that the risk of contracting the same was not increased by
Villamater’s 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 fat 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 what he ate on board the vessels
he was assigned to. Petitioners also cited the supposed declaration of their company-designated
physicians who attended to Villamater that his disease was not work-related.
We disagree.
It is true that under Section 32-A of the POEA Standard Contract, only two types of cancers are listed as
occupational diseases – (1) Cancer of the epithelial lining of the bladder (papilloma 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 the same Contract also states that those illnesses not listed under Section 32 are disputably
presumed as work-related. Section 20 should, however, be read together with Section 32-A on the
conditions to be satisfied for an illness to be compensable,31 to wit:
For an occupational disease and the resulting disability or death to be compensable, all the following
conditions must be established:

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conditions must be established:
1. The seafarer’s work must involve the risk described herein;
2. The disease was contracted as a result of the seafarer’s exposure to the described risks;
3. The disease was contracted within a period of exposure and under such other factors necessary to
contract it;
4. There was no notorious negligence on the part of the seafarer.
Colon cancer, also known as colorectal 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 common 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 adenomatous polyps in the colon. These mushroom-
shaped 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 the inner wall of the large intestine. Benign
tumors of the large intestine are called polyps. Malignant tumors of the large intestine are called
cancers. Benign polyps can be easily removed during colonoscopy and are not life-threatening. If benign
polyps are not removed from the large intestine, they can become malignant (cancerous) over time.
Most of the cancers of the large intestine are believed 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 metastasis 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 cancer varies around the world. It is common in the
Western world and is rare in Asia and in Africa. In countries where the people have adopted western
diets, the incidence of colorectal cancer is increasing.34
Factors that increase a person’s risk 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 ulcerative
colitis.35
Diets high in fat are believed to predispose humans to colorectal 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 believed that the breakdown products of fat metabolism lead to the formation of cancer-
causing chemicals (carcinogens). Diets high in vegetables and high-fiber foods may rid the bowel of
these carcinogens and help reduce the risk of cancer.36
A person’s genetic background is an important factor in colon cancer risk. Among first-degree relatives
of colon-cancer patients, the lifetime risk of developing colon cancer is 18%. Even though family history
of colon cancer is an important risk factor, majority (80%) of colon cancers occur sporadically in patients
with no family history of it. Approximately 20% of cancers are associated with a family 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 of 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 cancer. By the time he signed his employment contract on
June 4, 2002, he was already 58 years old, having been born on October 5, 1943,38 an age at which the
incidence of colon cancer is more likely.39 He had a familial history of colon cancer, 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 dietary provisions while at sea increased his risk of contracting colon cancer because he
had no choice of what to eat on board except those provided on the vessels 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 entitled to great weight and
are binding upon the courts, nonetheless, we find it also worthy to note that even during the
proceedings before the Labor Arbiter, Villamater 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 silent
when they argued that Villamater’s affliction was brought about by diet and genetics. It was only after

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the Labor Arbiter issued his Decision, finding colon cancer to be compensable because the risk was
increased by the victuals provided on board, that petitioners started claiming that the foods available on
the vessels also consisted of fresh fruits and vegetables, not to mention fish and poultry. It is also worth
mentioning that while Dr. Salvador declared that Villamater’s cancer "appears to be not work-related,"
she nevertheless suggested to petitioners Disability Grade 1, which, under the POEA Standard Contract,
"shall be considered or shall constitute total and permanent disability."41 During his confinement in
Hamburg, Germany, Villamater was diagnosed to have colon cancer and was advised to undergo
chemotherapy and medical treatment, including blood transfusions. These findings were, in fact,
confirmed by the findings of the company-designated physicians. The statement of Dr. Salvador that
Villamater’s colon cancer "appears to be not work-related" remained at that, without any medical
explanation to support the same. However, this statement, not definitive as it is, was negated by the
same doctor’s suggestion of Disability Grade 1. Under Section 20-B of the Philippine Overseas
Employment Administration-Standard Employment Contract (POEA-SEC), it is the company-designated
physician who must certify that the seafarer has suffered a permanent 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 Villamater, as it was sufficiently shown that his having contracted colon cancer was,
at the very least, aggravated by his working conditions,43 taking into consideration 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 vessels to ensure voyage safety. Jurisprudence provides that to establish
compensability of a non-occupational disease, reasonable proof of work-connection and not direct
causal relation is required. Probability, not the ultimate degree of certainty, is the test of proof in
compensation proceedings.44
The Labor Arbiter correctly awarded Villamater total and permanent disability benefits, computed on
the basis of the schedule provided under the POEA Standard Contract, considering that 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 Villamater’s entitlement to total and permanent disability benefits, he (or in this case his
widow Sonia) is also entitled to the award of attorney’s fees, not under Article 2208(2) of the Civil Code,
"*w+hen the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest," but under Article 2208(8) of the same Code, involving actions for
indemnity under workmen’s compensation and employer’s 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.

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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 assailing the trial court's order denying petitioner's motion to
dismiss the case against her inclusion as party defendant therein.
The Facts
The facts, as found by the Court of Appeals, are as follows:
"On September 15, 1993, herein private respondent Angelina Mejia Lopez (plaintiff below) filed a
petition for "APPOINTMENT AS SOLE ADMINISTRATIX OF CONJUGAL PARTNERSHIP OF PROPERTIES,
FORFEITURE, ETC.," against defendant Alberto Lopez and petition Imelda Relucio, docketed as Spec.
Proc. 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 legally married to the private respondent,
abandoned the latter and their four legitimate children; that he arrogated unto himself full and exclusive
control and administration 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 illicit relationship and cohabited with herein petitioner since
1976.
"It was further alleged that defendant Lopez and petitioner Relucio, during their period of cohabitation
since 1976, have amassed a fortune consisting mainly of stockholdings in Lopez-owned or controlled
corporations, residential, agricultural, commercial lots, houses, apartments and buildings, cars and other
motor vehicles, bank accounts 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, property and industry of defendant
Lopez with minimal, if not nil, actual contribution 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 fruits 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 private-respondent. He
placed substantial portions of these conjugal properties in the name of petitioner Relucio.1âwphi1.nêt
"It was also averred that in the past twenty five years since defendant Lopez abandoned the private-
respondent, he has sold, disposed of, alienated, transferred, assigned, canceled, removed or stashed
away properties, assets and income belonging to the conjugal partnership with the private-respondent
and either spent the proceeds thereof for his sole benefit and that of petitioner Relucio and their two
illegitimate children or permanently and fraudulently placed them beyond the reach of the private-
respondent and their four 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 against her.
"An Order dated February 10, 1994 was issued by herein respondent Judge denying petitioner Relucio's
Motion to Dismiss on the ground that she is impleaded as a necessary or indispensable party because
some of the subject properties are registered in her name and defendant Lopez, or solely in her name.
"Subsequently thereafter, petitioner Relucio filed a Motion for Reconsideration to the Order of the
respondent Judge dated February 10, 1994 but the same was likewise denied in the Order dated May
31, 1994."3
On June 21, 1994, petitioner filed with the Court of Appeals a petition for certiorari assailing the trial
court's denial of her motion to dismiss.4
On May 31, 1996, the Court of Appeals promulgated 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
petitioner's motion for reconsideration.7
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petitioner's motion for reconsideration.7
Hence, this appeal.8
The Issues
1. Whether respondent's petition for appointment as sole administratrix of the conjugal property,
accounting, etc. against her husband Alberto J. Lopez established a cause of action against petitioner.
2. Whether petitioner's inclusion as party defendant is essential in the proceedings for a complete
adjudication of the controversy.9
The Court's Ruling
We grant the petition. We resolve the issues in seriatim.
First issue: whether a cause of action exists against petitioner in the proceedings below. "A cause of
action is an act or omission of one party the defendant in violation of the legal right of the other."10 The
elements of a cause of 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 on the part of such defendant in violation of the right of the plaintiff or
constituting a breach of the obligation of the defendant to the plaintiff for which the latter may
maintain an action for recovery of damages.11
A cause of action is sufficient if a valid judgment may be rendered thereon if the alleged facts were
admitted or proved.12
In order to sustain a motion to dismiss for lack of cause of action, the complaint must show that the
claim for relief does not exist, rather than that a claim has been merely defectively stated or is
ambiguous, indefinite or uncertain.13
Hence, to determine the sufficiency of the cause of action alleged in Special Proceedings M-3630, we
assays its allegations.
In Part Two on the "Nature of [the] Complaint," respondent Angelina Mejia Lopez summarized the
causes of action alleged in the complaint below.
The complaint is by an aggrieved wife against her husband.
Nowhere in the allegations does it appear that relief is sought against petitioner. Respondent's causes of
action were all against her husband.
The first cause of action is for judicial appointment of respondent 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 with 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 administration of the property of the marriage is entirely between them, to the exclusion 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 exists.
The second cause of action is for an accounting "by respondent husband."14 The accounting of conjugal
partnership arises from or is an incident of marriage.
Petitioner has nothing to do with the marriage between respondent Alberto J. Lopez. Hence, no cause of
action can exist against petitioner on this ground.
Respondent's alternative cause of action is for forfeiture of Alberto J. Lopez' share in the co-owned
property "acquired during his illicit relationship and cohabitation with [petitioner]"15 and for the
"dissolution of the conjugal partnership of gains between him [Alberto J. Lopez] and the [respondent]."
The third cause of 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 co-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 breach of an
obligation to respondent and gives rise to a cause of action.16 Such cause of action, however, pertains to
Alberto J. Lopez, not petitioner.
The respondent also sought support. Support cannot be compelled from a stranger.

REMLAW Page 341

Alberto J. Lopez, not petitioner.
The respondent also sought support. Support cannot 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 against her husband."17 References to petitioner in the common and specific
allegations of fact in the complaint are merely incidental, to set forth facts and circumstances 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 Alberto 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 stands "to be benefited or injured by the judgment of the suit."18 In
this case, petitioner 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 not indispensable. Certainly, the trial court can issue a judgment
ordering Alberto J. Lopez to make an accounting of his conjugal partnership with respondent, and give
support to respondent and their children, and dissolve Alberto J. Lopez' conjugal partnership with
respondent, and forfeit Alberto J. Lopez' share in property 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 in 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 already
parties, or for a complete determination or settlement of the claim subject of the action.20 In the
context of her petition in the lower court, respondent would be accorded complete relief if Alberto J.
Lopez were ordered to account for his alleged conjugal partnership property with respondent, give
support to respondent and her children, turn over his share in the co-ownership with petitioner and
dissolve his conjugal partnership or absolute community property with respondent.
The Judgment
WHEREFORE, the Court GRANTS the petition and REVERSES the decision of the Court of Appeals.21 The
Court DISMISSES Special Proceedings M-3630 of the Regional Trial Court, Makati, Branch 141 as against
petitioner.1âwphi1.nêt
No costs.
SO ORDERED.

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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 CORPORATION 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 Appeals dated 30 June 2004
in CA-G.R. CV No. 62564 which affirmed with modification the Decision2 of the Regional Trial Court (RTC)
of Makati City, Branch 150 in Civil Case No. 95-1584 dated 16 September 1998.
The factual and procedural antecedents of this case are as follows:
On 19 August 1990, petitioner Autocorp Group, represented by its President, petitioner Peter Y.
Rodriguez, secured an ordinary re-export bond, Instrata Bond No. 5770, from private respondent Intra
Strata Assurance 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 1990, petitioners obtained another ordinary re-export bond, Instrata Bond No. 7154,
from ISAC in favor of the BOC, in the amount of P447,671.00, which was eventually increased to
P707,609.00 per Bond Endorsement No. BE-0912/91 dated 10 January 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 Indemnity Agreements with identical stipulations in favor of ISAC,
agreeing to act as surety of the subject bonds. Petitioner Rodriguez signed the Indemnity Agreements
both as President of the Autocorp Group and in his personal capacity. Petitioners thus agreed to the
following provisions:
INDEMNITY: - The undersigned agree at all times to jointly and severally indemnify the COMPANY and
keep it indemnified 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 nature including counsel or
attorney’s fee which the COMPANY shall or may at any time sustain or incur in consequence of having
become surety upon the bond herein above referred to or any extension, renewal, substitution or
alteration thereof, made at the instance of the undersigned or any of them, or any other bond executed
on behalf of the undersigned or any of them, and to pay; reimburse and make good to the COMPANY, its
successors and assigns, alls sums and amounts of money which 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 nature, including 25% of the amount involved in the litigation or other matters growing out of
or connected therewith, for and as attorney’s fees, but in no case less than P300.00 and which shall be
payable whether or not the case be extrajudicially 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 provided without the necessity of
executing another indemnity agreement for the purpose and that we may be granted under this
indemnity agreement.
MATURITY OF OUR OBLIGATIONS AS CONTRACTED HEREWITH AND ACCRUAL OF ACTION: -
Notwithstanding of (sic) the next preceding paragraph where the obligation involves a liquidated
amount for the payment of which the COMPANY has become legally liable under the terms of the
obligation and its suretyship undertaking, or by the demand of the obligee or otherwise and the latter
has merely allowed the COMPANY’s aforesaid liability 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 the 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 said 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 to the capital quarterly, and shall earn the same interest as the capital;
all this without prejudice to the COMPANY’s right to demand judicially or extrajudicially the full payment
REMLAW Page 343
all this without prejudice to the COMPANY’s right to demand judicially or extrajudicially 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 above-mentioned Bond, its renewals, extensions or substitutions,
replacement or novation in the belief either that the COMPANY was obligated to make such payment or
that said payment was necessary in order to avoid greater losses or obligations for which the COMPANY
might be liable by virtue of the terms of the above-mentioned Bond, its renewal, extensions or
substitutions, shall be final and will not be disputed by the undersigned, who bind themselves to jointly
and severally indemnify the COMPANY of any such payments, as stated in the preceding clauses:
WAIVER OF VENUE OF ACTION: - We hereby agree that any question which may arise between the
COMPANY and the undersigned by reason of this document and which has to be submitted for decision
to a court of justice shall be brought before the court of competent jurisdiction in Makati, Rizal, waiving
for this purpose any other venue.
WAIVER: - The undersigned hereby waive all the rights[,] privileges and 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
undersigned so that any of the undersigned may represent all the others in all transactions related to
this Bond, its renewals, extensions, or any other agreements in connection with this Counter-Guaranty,
without the necessity of the knowledge or consent of the others who hereby promise to accept as valid
each and every act done or executed by any of the attorney’s-in-fact by virtue of the special power of
attorney.
OUR LIABILITY HEREUNDER: - It shall not be necessary for the COMPANY to bring suit against the
principal upon his default or to exhaust the property of the principal, but the liability hereunder of the
undersigned indemnitors shall be jointly and severally, a primary one, the same as that of the principal,
and shall be exigible immediately upon the occurrence of such default.
CANCELLATION OF BOND BY THE COMPANY: - The COMPANY may at any time cancel the above-
mentioned Bond, its renewals, extensions or substitutions, subject to any liability which might have
accrued prior to the date of cancellation refunding the proportionate amount of the premium unearned
on the date of cancellation.
RENEWALS, ALTERATIONS AND SUBSTITUTIONS: - The undersigned hereby empower and authorize the
COMPANY to grant or consent to the granting of any extension, continuation, increase, modification,
change, alteration and/or renewal of the original bond herein referred to, and to execute or consent to
the execution of any substitution for said Bond with the same or different, conditions and parties, and
the undersigned hereby hold themselves jointly and severally liable to the COMPANY for the original
Bond herein above-mentioned or for any extension, continuation, increase, modification, change,
alteration, renewal or substitution thereof without the necessary of any new indemnity agreement
being executed until the full amount including principal, interest, premiums, costs, and other expenses
due to the COMPANY thereunder is fully paid up.
SEVERABILITY OF PROVISIONS: - It is hereby agreed that should any provision or provisions of this
agreement be declared by competent public authority to be invalid or otherwise unenforceable, all
remaining provisions herein contained shall remain in full force and effect.
NOTIFICATION: - The undersigned hereby accept due notice of that the COMPANY has accepted this
guaranty, 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.
Petitioner 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 pertaining to the said items despite repeated
demands made by the BOC, as well as by ISAC. 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 the 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 1995 an action against petitioners to recover the sum of P1,034,649.00, plus 25% thereof or
P258,662.25 as attorney’s fees. ISAC impleaded the BOC "as a necessary party plaintiff in order that the

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P258,662.25 as attorney’s fees. ISAC impleaded the BOC "as a necessary party plaintiff in order that the
reward of money or judgment shall be adjudged unto the said necessary plaintiff."4 The case was
docketed as Civil Case No. 95-1584.
Petitioners 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. Petitioners thus
filed their Answer to the Complaint, claiming that they sought permission from the BOC for an extension
of time to re-export the items covered by 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 bonds
are not yet due and demandable.
During the pre-trial conference, petitioners admitted the genuineness and due execution of Instrata
Bonds No. 5770 and No. 7154, 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 petitioners to pay ISAC and/or the BOC
the face value of the subject bonds in the total amount of P1,034,649.00, and to pay ISAC P258,662.25
as attorney’s fees, thus:
WHEREFORE, judgment is hereby rendered in favor of the [herein private respondent ISAC] and as
against the [herein petitioners] who are ordered to pay the [private 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 attorney’s fees.6
Petitioners’ Motion for Reconsideration was denied by the RTC in a Resolution 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 Decision, only modifying the amount of the attorney’s fees awarded:
WHEREFORE, the appealed 16 September 1998 Decision is MODIFIED to reduce the award of attorney’s
fees to One Hundred Three Thousand Four Hundred Sixty Four Pesos & Ninety Centavos (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 reconsider its Decision.
Petitioners thus filed the instant Petition for Review on Certiorari, assigning the following errors
allegedly committed by the Court of Appeals:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RENDERING JUDGMENT AGAINST
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 APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF BRANCH 150,
REGIONAL TRIAL COURT OF MAKATI CITY BASED ON MISAPPREHENSION OF FACTS, UNSUPPORTED BY
EVIDENCE ON RECORD & 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 IMPROPERLY IMPLEADED BY INTRA STRATA.
IV. THE HONORABLE COURT OF APPEALS GRAVELY ERRED [IN] AFFIRMING THE PORTION OF THE
DECISION HOLDING PETITIONER PETER Y. RODRIGUEZ AS JOINTLY LIABLE WHEN AMENDMENTS WERE
INTRODUCED, WITHOUT HIS CONSENT AND 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 yet due and demandable. They cannot be made
liable by ISAC in the absence of an actual forfeiture of the subject bonds by the BOC and/or an explicit
pronouncement 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 Hence, Civil Case No. 95-1584 was prematurely filed by
ISAC. Petitioners further argue that:
Secondly, it bears emphasis that as borne by the records, not only is there no writ of forfeiture against
Surety Bond No. 7154, there is likewise no evidence adduced on record to prove that respondent Intra
Strata has made legal demand 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
The Court of Appeals, in its assailed Decision, already directly addressed petitioners’ arguments by ruling

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The Court of Appeals, in its assailed Decision, already directly addressed petitioners’ 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 Indemnity Agreements.
According to the relevant provision of the Indemnity Agreements executed between petitioner and
ISAC, which reads:
[W]here the obligation involves a liquidated amount for the payment of which [ISAC] has become legally
liable under the terms of the obligation and its suretyship undertaking or by the demand of the [BOC] or
otherwise and the latter has merely allowed the *ISAC’s+ aforesaid 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 action
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 answerable for petitioners’ non-compliance with its undertaking with the BOC. Stated
differently, 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-compliance by petitioners with its undertaking.
The subject bonds, Instrata Bonds No. 5770 and No. 7154, became due and demandable upon the
failure of petitioner Autocorp 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 became 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 Indemnity Agreements, therefore, give ISAC the right to recover from petitioners the face value of
the subject bonds plus attorney’s fees at the time ISAC becomes liable on the said bonds to the BOC,
regardless of whether the BOC had actually forfeited the bonds, demanded payment thereof and/or
received such payment. It must be pointed out that the Indemnity Agreements explicitly provide that
petitioners shall be liable to indemnify ISAC "whether or not payment has actually been made by the
[ISAC]" and ISAC may proceed against petitioners by court action or otherwise "even prior to making
payment to the [BOC] which may hereafter be done by [ISAC]."
Even when the BOC already admitted that it not only made a demand upon ISAC for the payment of the
bond but even filed a complaint against ISAC for such payment,13 such demand and complaint are not
necessary to hold petitioners liable to ISAC for the amount of such bonds. Petitioners’ attempts to prove
that there was no actual forfeiture of the subject bonds are completely irrelevant to the case at bar.
It is worthy to note that petitioners did not impugn the validity of the stipulation in the Indemnity
Agreements allowing ISAC to proceed against 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 be constrained to uphold the validity of such a stipulation for it is but a slightly expanded
contractual expression of Article 2071 of the Civil Code which provides, inter alia, that the guarantor
may proceed against the principal debtor the moment the debt becomes due and demandable. Article
2071 of the Civil Code provides:
Art. 2071. The guarantor, even before having paid, may proceed against the principal debtor:
(1) When he is sued for the payment;
(2) In case of insolvency 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) When the debt has become demandable, by reason of the expiration of the period for payment;
(5) After the lapse of ten years, when the principal obligation has no fixed period for its maturity, unless
it be of such nature that it cannot be extinguished except within a period longer than ten years;
(6) If there are reasonable grounds to fear that the principal debtor intends to abscond;
(7) If the principal 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 demand a
security that shall protect him from any proceedings by the creditor and from the danger of insolvency
of the debtor. (Emphases ours.)
Petitioners also invoke the alleged lack of demand on the part of ISAC on petitioners as regards Instrata
Bond No. 5770 before it instituted Civil Case No. 95-1584. Even if proven true, such a fact does not carry

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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 demandable. A demand is only necessary in order to put an obligor in a due
and demandable 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 stipulated 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 Bureau of Customs as a party to the case
ISAC included the BOC "as a necessary party plaintiff in order that the reward of money or judgment
shall be adjudged unto 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 represented by the Solicitor General. Petitioners also contend that the inclusion of the BOC
as a party in Civil Case No. 95-1584 "is highly improper and should not be countenanced as the net result
would be tantamount to collusion between Intra Strata and the Bureau of Customs which would deny
and deprive petitioners their 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 when the BOC forfeited the subject bonds issued by ISAC, subrogation took place so that
whatever right the BOC had against petitioners were eventually transferred to ISAC. As ISAC merely
steps into the shoes of the BOC, whatever defenses petitioners may have against the BOC would still be
available against ISAC.
The Court likewise cannot sustain petitioners’ position.
The misjoinder of parties does not 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 misjoinder 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 claim against a
misjoined party may be severed and proceeded with separately.
Consequently, the purported misjoinder of the BOC as a party cannot result in the dismissal of Civil Case
No. 95-1584. If indeed the BOC was improperly impleaded as a party 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 and 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 as a necessary party in Civil Case No.
95-1584.
A necessary party is defined in Section 8, Rule 3 of the Rules of Court as follows:
SEC. 8. Necessary party.—A necessary party is one who is not indispensable but who ought to be joined
as a party if complete relief is to be accorded as to those already parties, or for a complete
determination or settlement of the claim subject of the action.
The subject 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 case at bar – the liability of Autocorp Group to the BOC – should
Autocorp Group be merely ordered to pay its obligations with the BOC to ISAC. BOC is, therefore, a
necessary party in the case at bar, and should not be dropped as a party to the present case.
It can only be conceded that there was an irregularity in the manner 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. 95-1584, 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. Unwilling 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 disposition thereof. As the Court already found that the BOC is a necessary party to
Civil Case No. 95-1584, it would be a graver injustice to drop it as a party.
Petitioners’ argument that the inclusion of the BOC as a party to this case would deprive them of their
personal defenses against the BOC is utterly baseless.

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personal defenses against the BOC is utterly baseless.
First, as ruled by the Court of Appeals, petitioners’ defenses against the BOC are completely available
against ISAC, since the right of the latter to seek indemnity from petitioner depends on the right of the
BOC to proceed against the bonds.
The Court, however, deems it essential to qualify that ISAC’s right to seek indemnity from petitioners
does not constitute subrogation under the Civil Code, considering that there has been no payment yet
by ISAC to the BOC. There are indeed cases in the aforementioned 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, Article 2071 of the Civil Code merely grants the guarantor or surety an action "to obtain
release from the guaranty, or to demand a security that shall protect him 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 change of creditor, which "transfers to the person subrogated, the credit and
all the rights thereto appertaining, either against the debtor or against third persons,"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 the BOC, because the BOC still retains said rights
until it is paid. ISAC’s 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 ISAC’s bonds become due
and demandable for the liability of Autocorp Group to the BOC, without need 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 against ISAC because the latter’s 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 present against the BOC to prove
that Autocorp Group’s 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 invoke its defenses against both the BOC and ISAC. Instead of depriving petitioners of
their personal defenses against the BOC, Civil Case No. 95-1584 actually gave them the opportunity to
kill two birds with one stone: to disprove its liability 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 his liability arises only when the
person with whom he guarantees the credit, Autocorp Group in this case, fails to pay the obligation.
Petitioner Rodriguez invokes Article 2079 of the Civil Code on Extinguishment of Guaranty, which states:
Art. 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 constitute any extension of time referred to herein.
Petitioner Rodriguez argues that there was an amendment as to the effectivity of the bonds, and this
constitutes 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 presented any evidence of this alleged
amendment as to the effectivity of the bonds.21 Be that as it may, even if there was indeed such an
amendment, such would not cause the exoneration of petitioner Rodriguez from liability on the bonds.
The Court of Appeals, in its assailed Decision, held that the use of the term guarantee in a contract does
not ipso facto mean that the contract is one of guaranty. 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
following provisions of the Indemnity Agreement:
INDEMNITY: - The undersigned [Autocorp 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
and against any and all damages, losses, costs, stamps, taxes, penalties, charges and expenses of
whatsoever kind and nature including counsel or attorney’s fee which the COMPANY *ISAC+ shall or may
at any time sustain or incur in consequence of having become surety upon the bond herein above
referred to x x x
xxx x
OUR LIABILITY HEREUNDER: - It shall not be necessary for the COMPANY [ISAC] to bring suit against the
principal [Autocorp Group] upon his default or to exhaust the property of the principal [Autocorp
Group], but the liability hereunder of the undersigned indemnitors [Rodriguez] shall be jointly and

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Group], but the liability hereunder of the undersigned indemnitors [Rodriguez] shall 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 petitioner Rodriguez was a surety, Article 2079 of the Civil
Code does not apply. The appellate court further noted that both petitioners authorized ISAC to consent
to the granting of an extension of the subject bonds.
The Court of Appeals committed a slight error on this point. The provisions of the Civil Code on
Guarantee, other than the benefit of excussion, are applicable and available to the surety.22 The Court
finds no reason why the provisions of Article 2079 would not apply to a surety.
This, however, would not cause a reversal of the Decision of the Court 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 to the
granting of any extension, modification, alteration and/or renewal of the subject bonds, as expressly set
out in the Indemnity Agreements:
RENEWALS, ALTERATIONS AND SUBSTITUTIONS: - The undersigned [Autocorp Group and Rodriguez]
hereby empower and authorize the COMPANY [ISAC] to grant or consent to the granting of any
extension, continuation, increase, modification, change, alteration and/or renewal of the original
bond herein referred to, and to execute or consent to the execution of any substitution for said Bond
with the same or different, conditions and parties, and the undersigned [Autocorp Group and
Rodriguez] hereby hold themselves jointly and severally liable to the COMPANY [ISAC] for the original
Bond herein above-mentioned or for any extension, continuation, increase, modification, change,
alteration, renewal or substitution thereof without the necessary of any new indemnity agreement
being executed until the full amount including principal, interest, premiums, costs, and other expenses
due to the COMPANY [ISAC] thereunder is fully paid up.23 (Emphases supplied.)
The foregoing provision in the Indemnity Agreements clearly authorized ISAC to consent to the granting
of any extension, modification, alteration and/or renewal of the subject bonds.
There is nothing illegal in such a provision. In Philippine American General Insurance Co., Inc. v. Mutuc,24
the Court held that an agreement whereby the sureties 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 and without the necessity of being notified of such extension or renewal, is valid; 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 June 2004 in CA-G.R. CV No. 62564 which affirmed with modification the Decision of
the Regional Trial Court of Makati City, in Civil Case No. 95-1584 dated 16 September 1998 is AFFIRMED
in toto. Costs against petitioners.
SO ORDERED.

Pasted from <http://www.lawphil.net/judjuris/juri2008/jun2008/gr_166662_2008.html>

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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 for review 1 of the 18 April 2001 Decision2 of the Court of Appeals in CA-
G.R. CV No. 66236. The Court of Appeals affirmed the Order3 of the Regional Trial Court, Branch 258,
Parañaque City (trial court) dismissing the complaint for sum of money filed by B. Van Zuiden Bros., Ltd.
(petitioner) against GTVL Manufacturing Industries, Inc. (respondent).
The Facts
On 13 July 1999, petitioner filed a complaint 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 corporation, incorporated under the laws of Hong Kong. x x x ZUIDEN is not
engaged in business in the Philippines, but is suing before the Philippine Courts, for the reasons
hereinafter stated.
xxx x
3. ZUIDEN is engaged in the importation and exportation of several products, including lace products.
4. On several occasions, GTVL purchased lace products from [ZUIDEN].
5. The procedure for these purchases, as 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 goods 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.
Insofar as ZUIDEN is concerned, upon delivery of the goods to KENZAR in Hong Kong, the 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 has failed and refused to pay the
agreed purchase price for several deliveries ordered by it and delivered by ZUIDEN, as above-
mentioned.
xxx x
9. In spite [sic] of said demands and in spite [sic] of promises to pay and/or admissions of liability, GTVL
has failed and refused, and continues to fail and refuse, to pay the overdue amount of U.S.$32,088.02
[inclusive of interest].4
Instead of filing an answer, respondent filed a Motion to Dismiss5 on the ground that petitioner has no
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 between the parties, the trial court issued an Order on 10
November 1999 dismissing the complaint.
On appeal, the Court of Appeals sustained the trial court’s dismissal of the complaint.
Hence, this petition.
The Court of Appeals’ Ruling
In affirming the dismissal of the complaint, the Court of Appeals relied on Eriks Pte., Ltd. 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 transfers of goods took place in Singapore, for the Filipino’s 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 Court 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 goods were perfected in Singapore,

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that Eriks has no capacity to sue.
The Court of Appeals noted that in Eriks, while the deliveries of the goods were perfected in Singapore,
this Court still found Eriks to be engaged in business in the Philippines. Thus, the Court of Appeals
concluded that the place of delivery of the goods (or the place where the transaction 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 material are the proponents to the transaction, as well as the parties to be
benefited 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 products to respondent in a series of transactions. While petitioner delivered the
goods in Hong Kong to Kenzar, Ltd. (Kenzar), another Hong Kong company, the party with whom
petitioner transacted was actually respondent, a Philippine corporation, 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 Kong did not exempt petitioner from being considered as doing business in the
Philippines.
The Issue
The sole issue in this case is whether petitioner, an unlicensed foreign corporation, has legal capacity to
sue before Philippine courts. The resolution of this issue depends on whether petitioner is doing
business in the Philippines.
The Ruling of the Court
The petition is meritorious.
Section 133 of the Corporation Code provides:
Doing business without license. — No foreign corporation transacting business in the Philippines without
a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the Philippines; but such corporation may be sued
or proceeded against before Philippine courts or administrative tribunals on any valid cause of action
recognized under Philippine laws.
The law is clear. An unlicensed foreign corporation doing business in the Philippines cannot sue before
Philippine courts. On the other hand, an unlicensed foreign corporation not doing business in the
Philippines can sue before Philippine courts.
In the present controversy, petitioner is a foreign corporation which 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 courts.
Respondent argues otherwise. Respondent insists that petitioner is doing business in the Philippines
without the required license. Hence, petitioner has no legal capacity to sue before Philippine courts.
Under Section 3(d) of Republic Act No. 7042 (RA 7042) or "The Foreign Investments Act of 1991," the
phrase "doing business" includes:
x x x soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches;
appointing representatives or distributors 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 business, firm, entity or corporation in the
Philippines; and any other act or acts that 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
functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and
object of the business organization: Provided, however, That the phrase "doing business" shall not be
deemed to include mere investment as 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 nominee director
or officer to represent its interests in such corporation; nor appointing a representative or distributor
domiciled in the Philippines which transacts business in its own name and for its own account.
The series of transactions between petitioner and respondent cannot be classified as "doing business" in
the Philippines under Section 3(d) of RA 7042. An essential condition to be considered as "doing
business" in the Philippines is the actual performance of specific commercial acts within the territory of
the Philippines for the plain reason that the Philippines has no jurisdiction over commercial acts
performed in foreign territories. Here, there is no showing that petitioner performed within the
Philippine 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, appoint a representative or distributor, or manage,
supervise or control a local business. While petitioner and respondent entered into a series of

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supervise or control a local business. While petitioner and respondent entered into a series of
transactions implying a continuity of commercial dealings, the perfection and consummation of these
transactions were done outside the Philippines.8
In its complaint, petitioner alleged that it is engaged in the importation and exportation of several
products, including lace products. Petitioner asserted that on several occasions, respondent purchased
lace products from it. Petitioner also claimed that respondent instructed it to deliver the purchased
goods to Kenzar, which is a Hong Kong company based in Hong Kong. Upon Kenzar’s receipt of the
goods, the products were considered sold. Kenzar, in turn, had the obligation 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 transactions between petitioner and respondent transpired and were
consummated in Hong Kong.9 We also find no single activity which petitioner performed here in the
Philippines pursuant to its purpose and object as a business organization.10 Moreover, petitioner’s
desire to do business within the Philippines is not discernible from the allegations of the complaint or
from its attachments. Therefore, there is no basis for ruling that petitioner is doing business in the
Philippines.
In Eriks, respondent therein alleged the existence of a distributorship agreement between him and the
foreign corporation. If duly established, such distributorship agreement could support respondent’s
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 classify, for
instance, a series of transactions between a Filipino in the United States and an American company
based in the United States as "doing business in the Philippines," even when these transactions are
negotiated and consummated only within the United States.
An exporter in one country may export its products to many foreign importing countries without
performing in the importing countries specific commercial acts that would constitute doing business in
the importing countries. The mere act of exporting from one’s own country, without doing any specific
commercial act within the territory of the importing country, cannot be deemed as doing business in the
importing country. The importing country does not acquire jurisdiction over the foreign exporter who
has not performed any specific commercial act within the territory of the importing country. Without
jurisdiction over the foreign exporter, the importing country cannot compel the foreign exporter to
secure a license to do business in the importing country.
Otherwise, Philippine exporters, by the mere act alone of exporting their products, could be considered
by the importing countries to be doing business in those countries. This will require Philippine exporters
to secure a business license in every foreign country where they usually export their products, even if
they do not perform any specific commercial act within the territory of such importing countries. Such a
legal concept will have a deleterious effect not only on Philippine exports, but also on global trade.
To be doing or "transacting business in the Philippines" for purposes of Section 133 of the Corporation
Code, the foreign corporation must actually transact business in the Philippines, that is, perform specific
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 jurisdiction over a foreign corporation and thus require the foreign
corporation to secure a Philippine business license. If a foreign corporation does not transact 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 corporation to secure a Philippine business license.
Considering that petitioner is 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 balance of respondent’s
purchases.
WHEREFORE, we GRANT the petition. We REVERSE the Decision dated 18 April 2001 of the Court of
Appeals in CA-G.R. CV No. 66236. No costs.
SO ORDERED.

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Deutsche v CA GR 152318 Apr 16, 2009
Sunday, November 14, 2010
11:40 PM

DEUTSCHE GESELLSCHAFT FÜR TECHNISCHE ZUSAMMENARBEIT, also known as GERMAN AGENCY FOR
TECHNICAL COOPERATION, (GTZ) HANS PETER PAULENZ and ANNE NICOLAY, Petitioners,
vs.
HON. COURT OF APPEALS, HON. ARIEL CADIENTE SANTOS, Labor Arbiter of the Arbitration Branch,
National Labor Relations Commission, and BERNADETTE CARMELLA MAGTAAS, CAROLINA DIONCO,
CHRISTOPHER RAMOS, MELVIN DELA PAZ, RANDY TAMAYO and EDGARDO RAMILLO, Respondents.
DE C I S I O N
TINGA, J.:
On 7 September 1971, the governments of the Federal Republic of Germany and the Republic of the
Philippines ratified an Agreement concerning Technical Co-operation (Agreement) in Bonn, capital of
what was then West Germany. The Agreement affirmed the countries’ "common 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 individual projects of technical co-operation."1 While the Agreement provided for a limited
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 unless either of the two Contracting Parties denounces it in
writing three months prior to its expiry," and that even upon the Agreement’s 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 Secretary Domingo
Siazon, and the German government, agreed to an Arrangement in furtherance of the 1971 Agreement.
This Arrangement affirmed the common commitment of both governments to promote jointly a project
called, Social Health Insurance—Networking and Empowerment (SHINE), which was designed to "enable
Philippine families–especially poor ones–to maintain their health and secure health care of sustainable
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 obligations of the Filipino and German governments. The relevant
provisions of the Arrangement are reproduced as follows:
3. The Government of the Federal Republic 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/months,
- project assistants/guest students as required, who shall work on the project as part of their basic and
further training and assume specific project tasks under the separately financed junior staff promotion
programme of the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ);
(b) provide in situ
- short-term experts to deal with diverse special tasks for a total of up to 27 expert/months,
- five local experts in health economy, health insurance, community health systems, information
technology, information systems, training and community mobilization for a total of up to 240
expert/months,
- local and auxiliary personnel for a total of up to 120 months;
(c) supply inputs, in particular
- two cross-country vehicles,
- ten computers with accessories,
- office furnishings and equipment
up to a total value of DM 310,000 (three hundred and ten thousand Deutsche Mark);
(c) meet

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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 families in so far as this cost is not met
by the seconded experts themselves,
- the cost of official travel by the experts referred to in sub-paragraph (a) above within and outside the
Republic of the Philippines,
- the cost of seminars and courses,
- the cost of transport and insurance to the project site of inputs to be supplied pursuant to sub-
paragraph (c) above, excluding the charges and storage fees referred to in paragraph 4(d) below,
- a proportion of the operating and administrative costs;
xxx
4. The Government of the Republic of the Philippines shall make the following contributions to the
project:
It shall
(a) – provide the necessary Philippine experts for the project, in particular one project coordinator in the
Philippine Health Insurance Corporation (Philhealth), at least three further experts and a sufficient
number of administrative and auxiliary personnel, as well as health personnel in the pilot provinces and
in the other project partners, in particular one responsible expert for each pilot province and for each
association representing the various target groups,
- release suitably qualified experts from their duties for attendance at the envisaged basic and further
training activities; it shall only nominate such candidates as have given an undertaking to work on the
project for at least five years after completing their training and shall ensure that these Philippine
experts receive appropriate remuneration,
- ensure that the project field offices have sufficient expendables,
- make available the land and buildings required for the project;
(b) assume an increasing 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 assigned 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 administrative 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 Government of the Federal Republic of Germany
are exempted from the cost of licenses, harbour 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 the implementing
agencies also apply to inputs procured in the Republic of the Philippines,
- the tasks of the seconded experts are taken over as soon as possible 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 careers, appointments and advancement as are commensurate with their
training.4
In the arraignment, both governments likewise named their respective implementing organizations for
SHINE. The Philippines designated the Department of Health (DOH) and the Philippine Health Insurance
Corporation (Philhealth) with the implementation of SHINE. For their part, the German government
"charge*d+ the Deustche Gesellschaft für Technische Zusammenarbeit*5 ] (GTZ[6 ]) GmbH, Eschborn, with
the implementation of its contributions."7
Private respondents were engaged as contract 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
"information systems manager and project officer of SHINE;"8 Carolina Dionco as a "Project Assistant of
SHINE;"9 Christopher Ramos as "a project assistant and liason personnel of NHI related SHINE activities
by GTZ;"10 Melvin Dela Paz and Randy Tamayo as programmers;11 and Edgardo Ramilo as "driver,
messenger and multipurpose service man."12 The employment contracts of all six private respondents all
specified Dr. Rainer Tollkotter, identified as an adviser of GTZ, as the "employer." At the same time, all

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specified Dr. Rainer Tollkotter, identified as an adviser of GTZ, as the "employer." At the same time, all
the contracts commonly provided that "[i]t is mutually agreed and understood that [Dr. Tollkotter, as
employer] is a seconded GTZ expert who is hiring the Employee on behalf of GTZ and for a Philippine-
German bilateral project named ‘Social Health Insurance—Networking and Empowerment (SHINE)’
which will end at a given time."13
In September of 1999, Anne Nicolay (Nicolay), a Belgian national, assumed the post of SHINE Project
Manager. Disagreements eventually arose between Nicolay and private respondents in matters such as
proposed salary adjustments, and the course Nicolay was taking in the implementation of SHINE
different from her predecessors. The dispute culminated in a letter14 dated 8 June 2000, signed by the
private respondents, addressed to Nicolay, and copies furnished officials of the DOH, Philheath, and the
director of the Manila office of GTZ. The letter raised several issues which private respondents claim had
been brought up several times in the past, but have not been given appropriate response. 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 the national health insurance program and strengthening local
initiatives, as Nicolay had refused to support local partners and new initiatives on the premise that
community and local government unit schemes were not sustainable—a philosophy that supposedly
betrayed Nicolay’s lack of understanding of the purpose of the project. Private respondents further
alleged that as a result of Nicolay’s "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
suffered from "cultural insensitivity" that consequently failed to sustain healthy relations with SHINE’s
partners and staff.
The letter ended with these ominous words:
The issues that we [the private respondents] have stated here are very crucial to us in working for the
project. We could no longer find any reason to stay with the project unless ALL of these issues be
addressed immediately and appropriately.15
In response, Nicolay wrote each of the private respondents a letter dated 21 June 2000, all similarly
worded except for their respective addressees. She informed private respondents that the "project’s
orientations and evolution" were decided in consensus with partner institutions, Philhealth and the
DOH, and thus no longer subject to modifications. More pertinently, she stated:
You have firmly 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 appropriately." 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 merely intended to raise attention to what they
perceived as vital issues.17 Negotiations ensued between private respondents and Nicolay, but for
naught. Each of the private respondents received a letter from Nicolay dated 11 July 2000, informing
them of the pre-termination of their contracts of employment on the grounds of "serious and gross
insubordination, among others, resulting to loss of confidence and trust."18
On 21 August 2000, the private respondents filed a complaint for 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 Motion 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 functions and sovereign acts of the Government of the Federal Republic of Germany. This
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 Foreign Affairs, and that it was GTZ and not the
German government which had implemented the SHINE Project and entered into the contracts of
employment.
On 27 November 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 certification as to its diplomatic status.
On 7 February 2001, GTZ filed with the Labor Arbiter a "Reiterating Motion to Dismiss," again praying
that the Motion to Dismiss be granted on the jurisdictional ground, and reprising the arguments for
dismissal it had earlier raised.20 No action was taken by the Labor Arbiter on this new motion. Instead,

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dismissal it had earlier raised.20 No action was taken by the Labor Arbiter on this new motion. Instead,
on 15 October 2001, the Labor Arbiter rendered a Decision21 granting the complaint for illegal dismissal.
The Decision concluded that respondents were dismissed without lawful cause, there being "a total lack
of due process both substantive and procedural [sic]."22 GTZ was faulted for failing to observe the notice
requirements in the labor law. The Decision likewise proceeded from the premise that GTZ had treated
the letter dated 8 June 2000 as a resignation letter, and devoted some focus in debunking this theory.
The Decision initially offered that it "need not discuss the jurisdictional aspect considering that the same
had already been lengthily discussed in the Order de*n+ying respondents’ Motion to Dismiss."23
Nonetheless, it proceeded to discuss the jurisdictional aspect, in this wise:
Under pain of being repetitious, the undersigned Labor Arbiter has jurisdiction to entertain the
complaint on the following grounds:
Firstly, under the employment contract entered into between complainants and respondents,
specifically Section 10 thereof, it provides that "contract partners agree that his contract shall be subject
to the LAWS of the jurisdiction of the locality in which the service is performed."
Secondly, respondent having entered into contract, they can no longer invoke the sovereignty of the
Federal Republic of Germany.
Lastly, it is imperative to be immune from suit, respondents should have secured from the Department
of Foreign Affairs a certification of respondents’ diplomatic status and entitlement to diplomatic
privileges including immunity from suits. Having failed in this regard, respondents cannot escape liability
from the shelter of sovereign immunity.[sic]24
Notably, GTZ did not file a motion for reconsideration to the Labor Arbiter’s Decision or elevate said
decision for appeal 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 2001, the Court of Appeals promulgated
a Resolution26 dismissing GTZ’s petition, finding 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 resolutions of the Court
of Appeals and of the Labor Arbiter. GTZ’s 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 complaint for illegal dismissal should have been dismissed for lack of jurisdiction on
account of GTZ’s insistence that it enjoys immunity from suit. No special arguments are directed with
respect to petitioners Hans Peter Paulenz and Anne Nicolay, respectively the then Director and the then
Project Manager of GTZ in the Philippines; so we have to presume that the arguments raised in behalf of
GTZ’s alleged 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 dated 7 November 2005, the OSG took the side of GTZ, with the prayer that the petition be
granted on the ground that GTZ was immune from suit, citing in particular its assigned functions in
implementing the SHINE program—a joint undertaking of the Philippine and German governments
which was neither proprietary nor commercial in nature.
The Court of Appeals had premised the dismissal of GTZ’s petition on its procedural misstep in bypassing
an appeal to NLRC and challenging the Labor Arbiter’s 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 Service Cooperative v. Court of Appeals.29 The central issue in
that case was whether a decision of a Labor Arbiter rendered without jurisdiction over the subject
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, that
the Court of Appeals has jurisdiction to review, by way of its original certiorari jurisdiction, decisions
ruling on complaints for illegal dismissal.
Nonetheless, the Court of Appeals is correct in pronouncing the general rule that the proper recourse
from the decision of the Labor Arbiter is to first appeal the same to the NLRC. Air Services is in fact
clearly detrimental to petitioner’s position in one regard. The Court therein noted that on account of the
failure to correctly appeal the decision of the Labor Arbiter to the NLRC, such judgment consequently
became final and executory.30 GTZ goes as far as to "request" that the Court re-examine Air Services, a

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suggestion that is needlessly improvident under the circumstances. Air Services affirms doctrines
grounded in sound procedural rules that have allowed for the considered and orderly disposition of
labor cases.
The OSG points out, citing Heirs of Mayor Nemencio Galvez v. Court of Appeals,31 that even when appeal
is available, 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 recourses, 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 the Court to inquire
directly into what is the main issue–whether GTZ enjoys immunity from suit.
The arguments raised by GTZ and the OSG are rooted in several indisputable facts. The SHINE project
was implemented pursuant to the bilateral agreements between the Philippine and German
governments. GTZ was tasked, under the 1991 agreement, with the implementation of the contributions
of the German government. The activities performed by GTZ pertaining to the SHINE project are
governmental in nature, related as they are to the promotion of health insurance in the Philippines. The
fact that GTZ entered into employment contracts with the private 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 of the inquiry. The logical question is whether the foreign
state is engaged in the activity in the regular course of business. If the foreign state is not engaged
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 an incident thereof, then it is an act jure imperii, especially
when it is not undertaken for gain or profit.33
Beyond dispute is the tenability of the comment points raised by GTZ and the OSG that GTZ was not
performing proprietary functions 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 Republic’s immunity from suit?
The principle of state immunity from suit, whether a local state or a foreign state, is reflected in Section
9, Article XVI of the Constitution, which states that "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 avoid "unduly vexing the
peace of nations."
If the instant suit had been brought directly 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 said 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 the legal personality of GTZ.
Counsel for GTZ characterizes GTZ as "the implementing agency of the Government of the Federal
Republic of Germany," a depiction similarly adopted by the OSG. Assuming that characterization is
correct, it does not automatically invest GTZ with the ability to invoke State immunity from suit. The
distinction lies in whether the agency is incorporated or unincorporated. The 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 ascertainment will depend in the first instance on whether the government
agency impleaded 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 contrast, the
unincorporated agency is so called because it has no separate juridical personality but is merged in the
general machinery of the government, like the Department of Justice, the Bureau of Mines and the
Government Printing Office.
If the agency is incorporated, the test of its suability is found in its charter. The simple rule is that it is
suable if its charter says so, and this is true regardless of the functions it is performing. Municipal
corporations, for example, like provinces and cities, are agencies of the State when they are engaged in
governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless,
they are subject to suit even in the performance of such functions because their charter provides that

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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. Court of Appeals,40 the Court
through Justice Melencio-Herrera explained that by virtue 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 amendability of the SSS to judicial action and legal responsibility for its acts. To 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 separate and distinct from the Government. SSS' own
organic act specifically provides that it can sue and be sued in Court. These words "sue and be sued"
embrace all 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 functions, by virtue of the explicit
provision of the aforecited enabling law, the Government must be deemed to have waived immunity in
respect of the SSS, although it does not thereby concede its liability. That statutory law has given to the
private citizen a remedy for the enforcement and protection of his rights. The SSS thereby has been
required to submit to the jurisdiction of the Courts, subject to its right to interpose any lawful defense.
Whether the SSS performs governmental or proprietary functions thus becomes unnecessary to belabor.
For by that 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, involving 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 Vicente Abad Santos, ruled:
"It is not necessary to write an extended dissertation 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 government 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]). As a government, owned and
controlled corporation, it has a personality of its own, distinct and separate from that of the
Government. Moreover, the charter provision that the NPC can 'sue and be sued in any court' is without
qualification on the cause of action and accordingly it can include a tort claim such as the one 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
agencies 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 enjoy immunity from suit even in the performance of its functions
connected with SHINE, however, governmental in nature as they may be.
Is GTZ an incorporated agency of the German government? There is some mystery surrounding that
question. Neither GTZ nor the OSG go beyond the claim that petitioner is "the implementing agency 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 corporation engaged in the implementation of
development projects."42 The Labor Arbiter accepted that claim in his Order denying the Motion to
Dismiss,43 though he was silent on that point in his Decision. Nevertheless, private respondents argue in
their Comment that the finding that GTZ was a private corporation "was never controverted, and is
therefore deemed admitted."44 In its Reply, GTZ controverts that finding, saying that it is a matter of
public knowledge that the status of petitioner GTZ is that of the "implementing agency," and not that of
a private corporation.45
In truth, private respondents were unable to adduce any evidence to substantiate their claim that GTZ
was a "private corporation," and the Labor Arbiter acted rashly in accepting such claim without
explanation. But neither has GTZ supplied any evidence defining its legal nature beyond that of the bare
descriptive "implementing agency." There is no doubt that the 1991 Agreement designated GTZ as the
"implementing agency" in behalf of the German government. Yet the catch is that such term has no

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"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. Inherently, an agent acts in behalf of a principal,
and the GTZ can be said to act in behalf 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 unincorporated,
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 official Internet website.46 In the
"Corporate Profile" section of the English language version of its site, GTZ describes itself as follows:
As an international cooperation enterprise for sustainable development with worldwide operations, the
federally owned Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH supports the
German Government in achieving its development-policy objectives. It provides viable, forward-looking
solutions for political, economic, ecological and social development in a globalised world. Working under
difficult conditions, GTZ promotes complex reforms and change processes. Its corporate objective is to
improve people’s living conditions on a sustainable basis.
GTZ is a federal enterprise based in Eschborn near Frankfurt am Main. It was founded in 1975 as a
company under private law. The German Federal Ministry for Economic Cooperation and Development
(BMZ) is its major client. The company also operates on behalf of other German ministries, the
governments of other countries and international clients, such as the European Commission, the United
Nations and the World Bank, as well as on behalf of private enterprises. GTZ works on a public-benefit
basis. All surpluses generated are channeled [sic] back into its own international cooperation projects
for sustainable development.47
GTZ’s own website elicits that petitioner is "federally owned," a "federal enterprise," and "founded in
1975 as a company 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 appears that GTZ was actually
organized not through a legislative public charter, but under private law, in the same way that Philippine
corporations can be organized 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 for pause in adopting
petitioners’ argument that GTZ is entitled to immunity from suit because it is "an implementing agency."
The above-quoted statement does not dispute the characterization of GTZ as an "implementing agency
of the Federal Republic 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 Republic 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 (Deutsche
Gesellschaft für Technische Zusammenarbeit GmbH, GTZ) takes on non-profit projects in international
"technical cooperation." The GTZ is a private company owned by the Federal Republic of Germany.49
Again, we are uncertain of the corresponding 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 under the Corporation
Code but owned by the Philippine government, or a government-owned or controlled corporation
without original charter. And it bears notice that 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
corporate 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 deprived 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 Germany. We adhere to the rule
that in the absence of evidence to the contrary,
foreign laws on a particular subject are presumed to be the same as those of the Philippines,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.
This absence of basis in fact leads to another important point, alluded to by the Labor Arbiter in his

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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 Labor Arbiter in his
rulings. Our ruling in Holy See v. Del Rosario52 provided a template on how a foreign entity desiring to
invoke State immunity from suit could 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 sovereign 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 entitled to immunity.
In the United States, the procedure followed is the process of "suggestion," where the foreign state or
the international organization sued in an American court requests the Secretary of State to make a
determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant
is immune from suit, he, in turn, asks the Attorney General to submit to the court a "suggestion" that
the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign
Office issues a certification to that effect instead of submitting a "suggestion" (O'Connell, I International
Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50
Yale Law Journal 1088 [1941]).
In the Philippines, the practice is for the foreign government or the international organization to first
secure an executive endorsement of its claim of sovereign or diplomatic immunity. But 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 Organization 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. Embassy asked the Secretary of Foreign Affairs to request the Solicitor
General to make, in behalf of the Commander of the United States Naval Base at Olongapo City,
Zambales, a "suggestion" to respondent Judge. The Solicitor General embodied the "suggestion" in a
Manifestation and Memorandum as amicus curiae.53
It is to 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 certification of respondents’ diplomatic
status and entitlement to diplomatic privileges 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 least, establish a disputable
evidentiary presumption that the foreign party is indeed 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 endorsement 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 relations, has indeed endorsed GTZ’s claim of immunity. It may be possible that
GTZ tried, 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 GTZ’s claim of State’s immunity from suit before
this Court sufficiently substitute for the DFA certification? Note that the rule in public international law
quoted in 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 Foreign Affairs. Nowhere in the Comment
of the OSG is it manifested that the DFA has endorsed GTZ’s claim, or that the OSG had solicited the
DFA’s 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 not inspire the same degree of
confidence as a certification from the DFA would have 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,
accomplished by way of a Manifestation and Memorandum, that the petitioner therein enjoyed
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 Secretary of Foreign Affairs which directed the OSG to intervene in behalf of the United States

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the Secretary of Foreign Affairs which directed the OSG to intervene in behalf of the United States
government in the Baer case, and such fact is manifest enough of the endorsement by the Foreign
Office. We do not find a similar circumstance that bears here.
The Court is thus holds and so rules that GTZ consistently has been unable to establish with satisfaction
that it enjoys the immunity from suit generally enjoyed by its parent country, the Federal Republic of
Germany. Consequently, both the Labor Arbiter and the Court of Appeals acted within proper bounds
when they refused to acknowledge that GTZ is so immune by dismissing the complaint against it. Our
finding has additional ramifications on the failure of GTZ to properly appeal the Labor Arbiter’s decision
to the NLRC. As pointed out by the OSG, the direct recourse to the Court of Appeals while bypassing the
NLRC could have been sanctioned had the Labor Arbiter’s decision been a "patent nullity." Since the
Labor Arbiter acted properly in deciding the complaint, notwithstanding GTZ’s 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 foregoing the appeal to the NLRC by filing directly with
the Court of Appeals the petition for certiorari. It then follows that the Court of Appeals acted correctly
in dismissing the petition on that ground. As a further consequence, since petitioners failed to perfect an
appeal from the Labor Arbiter’s Decision, the same has long become final and executory. All other
questions related to this case, such as whether or not private respondents were illegally dismissed, are
no longer susceptible to review, respecting as we do the finality of the Labor Arbiter’s Decision.
A final note. This decision should not be seen as deviation from the more common methodology
employed in ascertaining whether a party enjoys State immunity from suit, one which focuses on the
particular functions exercised by the party and determines whether these are proprietary or sovereign
in nature. The nature of the acts performed by the entity invoking immunity remains the most
important barometer for testing whether the privilege of State immunity from suit should apply. At the
same time, our Constitution stipulates that a State immunity from suit is conditional on its withholding
of consent; hence, the laws and circumstances pertaining to the creation and legal personality of an
instrumentality or 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 creating the instrumentality or
agency.
WHEREFORE, the petition is DENIED. No pronouncement as to costs.
SO ORDERED.

Pasted from <http://www.lawphil.net/judjuris/juri2009/apr2009/gr_152318_2009.html>

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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
ANTONIO BELTRAN,
Respondents.August 30, 2005
x---------------------------------------------------------------------x

DECIS ION

Tinga, J.:

The Court settles an issue, heretofore undecided, on whether the absence of the signature in the
required verification and certification against forum-shopping of a party misjoined as a plaintiff is a valid
ground for the dismissal of the complaint. We rule in the negative.

The relevant facts in this Petition for Review are culled from the records.

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 Christine Chua, herein petitioner, impleading
her brother Jonathan Chua as a necessary co-plaintiff. Named as defendants in the suit were herein
respondents Jorge Torres and Antonio Beltran. Torres was the owner of the 9th Avenue Caltex Service
Center (Caltex Service Center), while Beltran was an employee of the said establishment 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 Center
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 dishonored by the drawee bank when presented for payment on
the ground that the account 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 instituted 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 shop 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 petitioner.[4]
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humiliation of petitioner.[4]

Beltran's purported negligence amounted to either malicious prosecution or serious defamation in

prosecuting petitioner resulting from the issuance of a check she herself did not draw, and served cause
for a claim of moral damages. On the other 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 bringing 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 plaintiff to the suit, it was explicitly qualified in the
second paragraph of the complaint that he was being 'impleaded here-in as a necessary party-
plaintiff.[6] There was no allegation in the complaint of any damage or injury sustained by Jonathan,
and the prayer therein expressly named petitioner as the only party to whom respondents were sought
to recompense.[7] Neither did Jonathan Chua sign any verification or certification against forum-
shopping, although petitioner did sign 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-shopping. The RTC stressed that Section 5,
Rule 7 of the Rules' of Civil Procedure, the rule requiring the

certification, makes no distinction whether the plaintiff required to execute the certification is a
principal party, a nominal party or a necessary party. Instead, the provision requires that a plaintiff or
principal 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 mandatory rule requiring the certification against forum-shopping constituted
valid cause for the dismissal of the petition.[11]

After the RTC denied the motion for reconsideration[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 question,[13]
cast, if somewhat unwieldily, as 'whether or not a co-plaintiff impleaded only as a necessary party, who
however has no claim for relief or is not asserting any claim for relief in the complaint, should also make
a certification against forum shopping.[14]

Preliminarily, it bears noting that Jonathan Chua did not sign as well any verification to the complaint,
ostensibly in violation of Section 7, Rule 4 of the Rules 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
refer in passing to the verification requirement[15], but do not place any particular focus thereto. The
verification requirement is separate from the certification requirement.[16] It is noted that as a matter
of practice, the verification is usually accomplished at the same time as the certification against forum-
shopping; hence the customary nomenclature, 'Verification and Certification of Non Forum-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.

The verification requirement is significant, as it is intended to secure an assurance that the allegations in
the pleading are true and correct and not the product 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
pleading as unsigned and dismissible.[18] It would be as well that the Court discuss 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. Our decision
proceeds from the fundamental premise that Jonathan Chua was misjoined as a party plaintiff in this

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proceeds from the fundamental premise that Jonathan Chua was misjoined as a party 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, Rule 3 of the Rules of Civil Procedure, 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 to the
avails of the suit. "Interest" within the meaning of the rule means material interest, an interest in issue
and to be affected by the decree, as distinguished from mere interest in the question involved, or a
mere incidental interest.[20] One having no right or interest to protect cannot invoke the jurisdiction of
the court as a party plaintiff in an action.[21] To qualify a person to be a real party in interest in whose
name an action must be prosecuted, he must appear 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 respondents, present any
rights of his to be enforced, or seek in his behalf any rights 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
dismissed 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-plaintiff in the first place?
Petitioner alleged in her complaint that Jonathan was a necessary party, and remains consistent to that
claim even before this Court. She however fails to demonstrate how Jonathan can be considered as a
necessary party, other than by noting that he was 'the one who really
issued the check in controversy.[23] Such fact, if proven, may establish the malice of respondents in
filing 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 relief is to be accorded as to those
already parties, or for a complete determination or settlement of the claim subject of the action.[24]
Necessary parties are those whose presence is necessary to adjudicate the whole controversy, but
whose interests are so far separable that a final decree can be made in their absence without affecting
them.[25]

An example of a necessary party may be found in Seno 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, who claimed that
the true intent of the first sale was an equitable mortgage, filed a complaint seeking the reformation of
the deed of sale and the annulment of the second sale. The question arose whether the two vendees
who had since disposed of their shares should be considered as indispensable parties or necessary
parties. In concluding that they were only necessary parties, the Court reasoned:

In the present case, there are no rights of defendants Andres Evangelista and Bienvenido
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 Marcos 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 the defendants will have been amply
protected. Defendants-spouses Luzame in any event may enforce their rights against defendant
Marcos Mangubat.[27]

In Seno, the 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 grant the prayer for the reformation

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interests in the property. However, should the lower court therein grant the prayer 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 have received, and on whatever transmission of rights that may have
occurred between 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 due to the nature of the cause of action of the complaint, which
alleges an injury 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 violation 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
circumstance would merely place him in the same class as those witnesses whose testimony 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 complaint. 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 rights under
the law. If there would be any effect to Jonathan of the RTC's ultimate decision on the complaint, it
would be merely emotional, arising from whatever ties of kinship he may retain towards his sister, and
no different from whatever effects that may be similarly sustained on petitioner's immediate family.

Since we are unconvinced by petitioner's basic premise that Jonathan was a necessary party, it is
unnecessary to directly settle the issue as couched by petitioner of 'whether or not a co-plaintiff
impleaded only as a necessary party, who however has no claim for relief or is not asserting any claim
for relief in the complaint, 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 makes 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 rule, such as if the necessary party is impleaded as a plaintiff or counterclaimant
without his knowledge or against his will.[29] But these circumstances relevant to a necessary party are
not present in this case, and thus require no further comment upon for now.

Instead, what the Court may rule upon is whether the absence 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 dismissal of the action. We rule that it is not so, and that the RTC erred in dismissing the instant
complaint. There is no judicial precedent affirming or rejecting such a view, but we are comfortable with
making such a pronouncement. A misjoined 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 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 claim against a misjoined party may be severed
and proceeded with separately. [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 from the adverse party.[32] Section 11, Rule 3 indicates that the misjoinder of parties, while
erroneous, may be corrected with ease through amendment, without further hindrance to the

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erroneous, may be corrected with ease through amendment, without further hindrance to the
prosecution of the suit.

It should then follow that any act or omission 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 should be accorded to
whatever act or omission of
the party.[33] Since the misjoined party plaintiff receives no recognition from the court as either an
indispensable or necessary party-plaintiff, it then follows that whatever action or inaction the misjoined
party may take on the verification or certification against forum-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 the RTC in dismissing the
complaint is not obviated by the fact that the adverse party failed to raise this point. After all, the RTC
could have motu proprio dropped 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 thought 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 brother 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 should 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 Court 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 Trial 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/aug2005/151900.php>

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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
ABAD, J.:
This case is about a court’s annulment of a tax declaration in the names of 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 February 9, 1998 respondents Carlos, Rogelio, and Lourdes Tarona (the Taronas) filed an action
before the Regional Trial Court (RTC) of Balanga, Bataan,1 against petitioner Anicia Valdez-Tallorin
(Tallorin) for the cancellation of her and two other women’s tax declaration over a parcel of land.
The Taronas alleged in their complaint that, unknown to them, in 1981, the Assessor’s Office of Morong
in Bataan cancelled Tax Declaration 463 in the name of their father, Juanito Tarona (Juanito), 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 allegedly executed in favor of petitioner Tallorin and two others,
namely, Margarita Pastelero Vda. de Valdez and Dolores Valdez, who were not impleaded in the action.
In place of the cancelled one, the Assessor’s Office issued Tax Declaration 6164 in the names of the
latter three persons. The old man Tarona’s affidavit had been missing and no copy could be found
among the records of the Assessor’s Office.2
The Taronas further alleged that, without their father’s affidavit on file, it followed that his tax
declaration had been illegally cancelled and a new one illegally issued in favor of Tallorin and the others
with her. The unexplained disappearance of the affidavit from official files, the Taronas concluded,
covered-up the falsification or forgery that caused the substitution.3 The Taronas asked the RTC to annul
Tax Declaration 6164, reinstate Tax Declaration 463, and issue a new one in the name of Juanito’s heirs.
On March 6, 1998 the Taronas filed a motion to declare petitioner Tallorin in default for failing to
answer their complaint within the allowed time.4 But, before the RTC could act on the motion, Tallorin
filed a belated answer, alleging among others that she held a copy of the supposedly missing affidavit of
Juanito who was merely an agricultural tenant of the land covered by Tax Declaration 463. He
surrendered and waived in that affidavit his 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 Tallorin’s affirmative defenses for hearing5 but the Taronas sought
reconsideration, pointing out that the trial court should have instead declared Tallorin in default based
on their earlier motion.6 On June 2, 1998 the RTC denied the Taronas’ motion for reconsideration7 for
the reasons that it received Tallorin’s answer before it could issue a default order and that the Taronas
failed to show proof that Tallorin was notified of the motion three days before the scheduled hearing.
Although the presiding judge inhibited himself from the case on motion of the Taronas, the new judge to
whom the case was re-raffled stood by his predecessor’s previous orders.
By a special civil action for certiorari before the Court of Appeals (CA),8 however, the Taronas succeeded
in getting the latter court to annul the RTC’s March 12 and June 2, 1998 orders.9 The CA ruled that the
RTC gravely abused its discretion in admitting Tallorin’s late answer in the absence of a motion to admit
it. Even if petitioner Tallorin had already filed her late answer, said the CA, the RTC should have heard
the Taronas’ motion to declare Tallorin in default.
Upon remand of the case, the RTC heard the Taronas’ motion to declare 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) annulling the tax declaration in the names of
Tallorin, Margarita Pastelero Vda. de Valdez, and Dolores Valdez; b) reinstating the tax declaration in the

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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
Juanito’s heirs. The trial court also ruled that Juanito’s affidavit authorizing the transfer of the tax
declaration had no binding force since he did not sign it.1avvphi1
Tallorin appealed the above decision to the CA,12 pointing out 1) that the land covered by the tax
declaration in question was titled in her name and in those of her two co-owners; 2) that Juanito’s
affidavit only dealt with the surrender of his tenancy rights and did not serve as basis for canceling Tax
Declaration 463 in his name; 3) that, although Juanito did not sign the affidavit, he thumbmarked and
acknowledged the same 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 Dolores Valdez who were
indispensable parties in the action to annul Juanito’s affidavit and the tax declaration in their favor.13
On May 22, 2006 the CA rendered judgment, affirming the trial court’s decision.14 The CA rejected all of
Tallorin’s arguments. 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 Margarita Pastelero Vda. de Valdez and Dolores Valdez as indispensable party-
defendants, their interest in the cancelled tax declarations having been affected by the RTC judgment.
Questions Presented
The petition presents the following questions for resolution by this Court:
1. Whether or not the CA erred in failing to dismiss the Taronas’ complaint for not impleading Margarita
Pastelero Vda. de Valdez 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 that the Taronas’ complaint was barred by prescription; and
3. Whether or not the CA erred in affirming the RTC’s finding that Juanito’s affidavit had no legal effect
because it was unsigned; when at the hearing of the motion to declare Tallorin in default, it was shown
that the affidavit bore Juanito’s thumbmark.
The Court’s Rulings
The first question, whether or not the CA erred in failing to dismiss the Taronas’ complaint for not
impleading Margarita Pastelero Vda. de Valdez and Dolores Valdez in whose names, like their co-owner
Tallorin, the annulled tax declaration had been issued, is a telling question.
The rules mandate the joinder of indispensable parties. Thus:
Sec. 7. Compulsory joinder of indispensable parties. – Parties in interest without whom no final
determination can be had of an action shall be joined either as plaintiffs and defendants.16
Indispensable parties are those with such an interest in the controversy that a final decree would
necessarily affect their rights, so that the courts cannot proceed without their presence.17 Joining
indispensable parties into an action is mandatory, being a requirement of due process. Without their
presence, the judgment of the court cannot attain real finality.
Judgments do not bind strangers to the suit. The absence of an 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 all
indispensable parties lie? It lies in the plaintiff.18
Here, the Taronas sought the annulment of the tax declaration in the names of defendant Tallorin and
two others, namely, Margarita Pastelero Vda. de Valdez and Dolores Valdez and, in its place, the
reinstatement of the previous declaration in their father Juanito’s name. Further, the Taronas sought to
strike down as void the affidavit in which 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 and interests of such persons over the properties
that the documents cover. The reason is simple: a tax declaration is a primary evidence, if not the
source, of the right to claim title of ownership over real property, a right enforceable against another
person. The Court held in Uriarte v. People 19 that, although not conclusive, a tax declaration is a telling
evidence of the declarant’s possession which 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

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for a property that he did not have in his possession. This honest sense of obligation proves that the
holder claims title over the property against the State and other persons, putting them on notice that he
would eventually seek the issuance of a certificate of title in his name. Further, the tax declaration
expresses his intent to contribute needed revenues to the Government, a circumstance that strengthens
his bona fide claim to ownership.21
Here, the RTC and the CA annulled Tax Declaration 6164 that belonged not only to defendant Tallorin
but also to Margarita Pastelero Vda. de Valdez and Dolores Valdez, which two persons had no
opportunity to be heard as they were never impleaded. The RTC and the CA had no authority to annul
that tax declaration without seeing to it that all three persons were impleaded in the case.
But the Taronas’ action cannot be dismissed outright. As the Court held in Plasabas v. Court of
Appeals,22 the non-joinder of indispensable parties is not a ground for dismissal. Section 11, Rule 3 of
the 1997 Rules of Civil Procedure prohibits the dismissal of a suit on the ground of non-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, despite 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 heard.
In view of the Court’s resolution of the first question, it would serve no purpose to consider the other
questions that the petition presents. The resolution 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 and heard on their evidence.
WHEREFORE, the Court GRANTS the petition and SETS ASIDE the decision of the Regional Trial Court of
Balanga, Bataan in Civil Case 6739 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 Court of
Balanga, Bataan which is DIRECTED to have Margarita Pastelero Vda. de Valdez and Dolores Valdez
impleaded by the plaintiffs as party-defendants and, afterwards, to hear the case in the manner
prescribed by the rules.
SO ORDERED.

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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 LALAINE
LILIBETH A. AGDEPPA, Petitioners,
vs.
HEIRS OF IGNACIO BONETE, represented 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 this Court is a Petition for Review on Certiorari,1 seeking the reversal of the Court of Appeals (CA)
Decision,2 dated December 27, 2002,
which reversed and set aside the Order,3 dated May 21, 1990, issued by the Regional Trial Court (RTC),
Branch 18, of Midsayap, Cotabato.
The factual and procedural antecedents of the case are as follows:
In 1979, respondent Dorotea Bonete (Dorotea), widow of the late Ignacio Bonete and mother of
respondents Hipolito Bonete, Milagros Bonete, Mauricio Bonete, Fernando Bonete, and Ophelia Bonete
(respondents), obtained a loan in the amount of P55,000.00 from Development Bank of the Philippines
(DBP), Cotabato City Branch, in order to buy farm implements. A parcel of agricultural land, 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 collateral 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
and sympathy for them. Consequently, Littie Sarah accompanied Dorotea to DBP and obligated herself
to pay the loan. Thereafter, Dorotea was allegedly made to sign a document as Littie Sarah’s security for
the amount which the latter paid to DBP in connection with the said loan. Further, respondents alleged
that, since 1982, Littie Sarah and her representatives had been gradually easing them out of the subject
property and that they were ordered to stop the cultivation of their respective ricefields. Eventually,
respondents were forcibly ejected from the subject property.
Further, Littie Sarah planted corn and put up duck-raising projects on the subject property.
On this account, respondents inquired from the Register 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
already 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 Complaint5 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 following grounds: 1) that
respondents had no legal capacity to sue; 2) that respondents were not the real parties in interest; 3)
that the Complaint stated no cause of 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 herein petitioners Lynn Sarah Agdeppa, Louella Jeanne
Agdeppa, and Lalaine Lilibeth Agdeppa, together with Littie Sarah, as defendants (petitioners).7
Respondents also filed an Opposition to the Motion to Dismiss. 8
On May 21, 1990, the RTC issued an Order dismissing the Amended Complaint with costs against
respondents. It held that the Amended Complaint did not show the character and representation that
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

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dated January 12, 1991. Therein, the RTC held that respondents lacked the personality to sue; thus, a
valid basis to grant the motion to dismiss on the ground that the complaint did not state a cause of
action.
Aggrieved, respondents went to the CA.11 On December 27, 2002, the CA reversed and set aside the RTC
Order, and remanded the case to the RTC for further proceedings because Dorotea, being the former
owner of the subject property, was a real party in interest.
Petitioners filed their Motion for Reconsideration,12 which the CA denied in its Resolution13 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 THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS; GRAVELY ERRED AND GRAVELY
ABUSED ITS DISCRETION TANTAMOUNT TO LACK OF JURISDICTION; AND LAID DOWN A VERY BAD
PRECEDENT, AS FOLLOWS:
A. BY VIOLATING SPECIFICALLY THE PROVISIONS OF THE RULES OF COURT, PARTICULARLY SECS. 2
AND 3 OF RULE 3 OF THE RULES OF COURT, ON PARTIES-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 THIS 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 SOLD TO HEREIN DEFENDANTS, SUCH THAT IGNACIO BONETE OR THE HEIRS OF
IGNACIO BONETE [HAD] NOTHING TO DO WITH THE SAID PROPERTY- THUS[,] NOT THE REAL
PARTY IN INTEREST 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 THE 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 APPEALS 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 HEIRS 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 THE COMPLAINT, THUS STILL A VIOLATION OF THE
RULES OF COURT;
D. THAT THE REMANDING OF THIS CASE TO THE REGIONAL TRIAL COURT FOR FURTHER
PROCEEDINGS WITH THE PARTY PLAINTIFF "HEIRS OF IGNACIO BONETE" NOT BEING A REAL PARTY
IN INTEREST VIOLATES THE WELL ESTABLISHED "GENERAL RULE [THAT] ONE HAVING NO RIGHT OR
INTEREST TO PROTECT CANNOT INVOKE THE JURISDICTION OF THE COURT AS A PARTY PLAINTIFF
IN AN ACTION. (Ralla v. Ralla, 199 SCRA 495 [1991])" AND "THE GENERAL RULE OF x x x COMMON
LAW x x x THAT EVERY ACTION MUST BE BROUGHT IN THE NAME OF THE PARTY WHOSE LEGAL
RIGHT HAS BEEN INVADED OR INFRINGED";
E. IT WILL CREATE A VERY BAD AND IMPROPER 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 instant Petition is bereft of merit.
While it is true that respondents committed a procedural infraction before the RTC, such infraction does
not justify the dismissal of the case.
Misjoinder of parties does not warrant the dismissal of the action.15 Rule 3, Section 11 of the Rules of
Court clearly provides:
Sec. 11. Misjoinder and non-joinder of parties. — Neither misjoinder 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 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

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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 this fact. However, because
TCT No. T-75454, allegedly issued in favor of Littie Sarah, and the purported deed of sale, allegedly
executed by Dorotea in favor of Littie 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 the apt and judicious ruling of the CA, when it said:
As the former owner of the subject 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 capacity 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 TCT No. T-75454 in the name of Littie Sarah Agdeppa
as the transaction allegedly contemplated was only to secure Dorotea’s loan.
Why the property became the subject 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 their respective
days in
court. As held in Del Bros. Hotel Corporation vs. Court of Appeals, 210 SCRA 33, the complaint is not
supposed to contain evidentiary matters as this will have to be done at the trial on the merits of the
case.
A final note.
A liberal construction of the Rules is apt in situations involving excusable 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 Dorotea, of their claims over the subject property on
the strength of sheer technicality would be a travesty of justice and equity.
WHEREFORE, the instant Petition is DENIED and the assailed Court of Appeals Decision is AFFIRMED. The
Regional Trial Court, Branch 18 of Midsayap, Cotabato, is hereby directed to resolve this case on the
merits with deliberate dispatch. Costs against petitioners.
SO ORDERED.

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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 certiorari 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 denied petitioners’ Motion to Dismiss the
complaint filed by private respondent.
The facts, as culled from records, are as follows:
On March 30, 1999, private respondent Oscar Medalla filed a complaint before the RTC of Mandaluyong
City, docketed as Civil Case No. MC99-666, for collection of a sum of money arising from breach 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 on the following:
1. The period of lease shall be for ten (10) years or from 15 July 1988 to 15 July 1998.
2. The payment of the realty taxes due to the government on the leased premises shall be for the
account of the Lessee.
3. The agreement 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 Medalla.
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, Napoleon Medalla died. Among his heirs is private respondent Oscar Medalla, who
succeeded 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-in-
interest pursuant to the terms thereof. Petitioners Chan and Co, the latter, in his capacity as agent and
general manager, continued to deal with private respondent Medalla in all transactions pertaining to the
contract.
On various occasions, petitioners failed to pay the monthly rentals due on the leased premises. Despite
several Statements of Accounts sent by Medalla, 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 after
its expiration.
Medalla then sent demand letters to petitioners, but the latter 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 P610,019.11. Medalla then asked petitioners to settle the unpaid rentals, pay the unpaid
real estate taxes, and vacate the leased premises.
On January 1999, petitioners vacated the premises but without paying their unpaid rentals and realty
taxes. Aggrieved by petitioners’ refusal to pay the amounts owing, which had reached 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 private 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)
months advance rentals upon signing of the contract and make a guarantee deposit amounting to
P220,000. On the matter of unpaid realty taxes, petitioners alleged that private respondent was
responsible therefor as the owner of the leased premises, notwithstanding any contrary stipulations in
the contract.
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the contract.
On July 19, 1999, petitioners filed a Supplemental Answer with Motion to Dismiss alleging that they
were neither parties nor privies to the Contract 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
Dismiss 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 the 1997 Rules of Civil Procedure.4 He further
alleged that petitioner Chan, as the 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 their continuous
dealings with him in all transactions relating to the contract after 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:
WHEREFORE, in view of the foregoing, the motion to dismiss dated July 19, 1999 filed by defendant
through counsel against plaintiff is hereby DENIED for lack of merit.
SO ORDERED.5
The trial court pointed out that petitioners continued to transact business with private respondent after
the death of Ramon Chan as shown by the communications between the parties. It also declared that
private respondent’s acquiescence to petitioners’ continued occupation and enjoyment of the leased
premises and the latter’s recognition of the former’s ownership of said premises reflected an oral
agreement between the parties to continue the Lease Contract.
Petitioners moved for reconsideration on the ground that any claim should be filed against the estate of
Ramon Chan in an estate proceeding pursuant to Section 5, Rule 86, of the Revised Rules of Court6 since
Ramon Chan’s estate is the real party-in-interest. The court denied said motion and declared that
Section 5, Rule 86 is inapplicable in the case. It pointed out that the unpaid rentals being claimed were
those for the period April 1993 to December 1998. These were incurred by petitioners 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, however, affirmed the RTC Orders,
as follows:
WHEREFORE, foregoing premises considered, the petition having no merit in fact and in law is hereby
DENIED DUE COURSE and ACCORDINGLY ORDERED DISMISSED. The assailed Orders are resultantly
AFFIRMED WITH COSTS TO PETITIONERS.
SO ORDERED.7
Hence, the instant petition submitting as sole issue for our resolution:
whether or not respondent Court of Appeals committed serious error in law in affirming the RTC Orders
denying petitioners’ motion to dismiss and the subsequent motion for reconsideration.8
Petitioners argue that the Court of Appeals erred in affirming the RTC’s Orders because they are not the
real parties-in-interest and hence, were improperly impleaded in the complaint as defendants.
Petitioners insist that they were neither parties nor were they privy to the Contract of Lease between
the late Ramon Chan and Napoleon Medalla. They vigorously assert that any claim for unpaid rentals
should be made against the estate of Ramon Chan pursuant to Section 5, Rule 86 of the Revised Rules 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 in 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 pleading asserting a claim.9 Here, petitioners filed their
Supplemental Answer with Motion to Dismiss almost two months after filing their Answer, in clear
contravention of the aforecited rule.
The Court of Appeals stated that the grant or denial of a Motion to Dismiss is an interlocutory order, and
it cannot be the proper 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 certiorari is not intended to correct
every controversial interlocutory ruling; it is resorted to only to correct a grave abuse of discretion or a
whimsical exercise 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 bounds of its jurisdiction and to relieve
persons from arbitrary acts, acts which courts or judges have no power or authority in law to perform.

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persons from arbitrary acts, acts which courts or judges have no power or authority 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 they are not real parties-in-interest since
they are not parties nor signatories to the contract and hence should not have been impleaded as
defendants. It is undeniable that petitioner Chan is an heir of Ramon Chan and, together with petitioner
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, they are real parties-in-interest in the case filed by
private respondent, notwithstanding that they are not signatories to the Contract of Lease.
A lease contract is not essentially personal in character. Thus, the rights and obligations therein are
transmissible to the heirs.11 The general rule, therefore, is that heirs are bound by contracts entered into
by their predecessors-in-interest except when the rights and obligations arising therefrom are not
transmissible by (1) their nature, (2) stipulation or (3) provision of law.12 In the subject Contract of Lease,
not only were there no stipulations prohibiting any transmission of rights, 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 successors. The contract is the law between the parties. The death of a party does
not 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 contract.13
Finally, as to petitioners’ contention that any claim should have been filed before the estate proceeding
of Ramon Chan pursuant to Section 5 of Rule 86, the trial court found that the unpaid rentals sought to
be claimed were for the period April 1993 to December 1998. Note that Ramon Chan, the original
lessee, died on August 5, 1989. In other words, as the unpaid rentals did not accrue during 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, Rule 86, of the Revised Rules of Court as petitioners urge
respondents to do.
WHEREFORE, 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.

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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 GUZMAN, 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 Decision 1 and Resolution
affirming the Regional Trial Court (RTC) Decision rendering herein petitioners Arcadio and Luisa
Carandang [hereinafter referred to as spouses Carandang] jointly and severally liable for their loan to
Quirino A. de Guzman.
The Court of Appeals summarized the facts as follows:
[Quirino de Guzman] and [the Spouses Carandang] are stockholders as well as corporate officers of
Mabuhay Broadcasting System (MBS for brevity), with equities at fifty four percent (54%) and forty six
percent (46%) respectively.
On November 26, 1983, the capital stock of MBS was increased, from P500,000 to P1.5 million and
P345,000 of this increase was subscribed by [the spouses Carandang]. Thereafter, on March 3, 1989,
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 payment for these subscriptions were paid by him, P293,250 for
the November 26, 1983 capital stock increase and P43,125 for the March 3, 1989 Capital Stock increase
or a total of P336,375. Thus, on March 31, 1992, [de Guzman] sent a demand letter to [the spouses
Carandang] for the payment of said total amount.
[The spouses Carandang] refused to pay the amount, contending that a pre-incorporation agreement
was executed between [Arcadio Carandang] and [de Guzman], whereby the latter promised to pay for
the stock subscriptions of the former without cost, in consideration for *Arcadio Carandang’s+ technical
expertise, his newly purchased equipment, and his skill in repairing and upgrading radio/communication
equipment therefore, there is no indebtedness on their part [sic].
On June 5, 1992, [de Guzman] filed his complaint, seeking to recover the P336,375 together with
damages. 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 Guzman]. Accordingly,
[the spouses Carandang] are ordered to jointly and severally pay [de Guzman], to wit:
(1) P336,375.00 representing *the spouses Carandang’s+ loan to de Guzman;
(2) interest on the preceding amount at the rate of twelve percent (12%) per annum from June 5, 1992
when this complaint was filed until the principal amount shall have been fully paid;
(3) P20,000.00 as attorney’s 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:
WHEREFORE, in view of all the foregoing the assailed Decision is hereby AFFIRMED. No costs. [2]
The Motion for Reconsideration filed by the spouses Carandang was similarly denied by the Court of
Appeals in the 6 October 2003 assailed Resolution:
WHEREFORE, in view thereof, the motion for reconsideration is hereby DENIED and our Decision of April
22, 2003, which is based on applicable law and jurisprudence on the matter is hereby AFFIRMED and
REITERATED. [3]
The spouses Carandang then filed before this Court the instant Petition for Review on Certiorari,
bringing forth the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO
STRICTLY COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE.
II.

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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 THAT THERE
IS AN ALLEGED LOAN FOR WHICH PETITIONERS ARE LIABLE, CONTRARY TO EXPRESS PROVISIONS OF
BOOK IV, TITLE XI, OF THE NEW CIVIL CODE PERTAINING TO LOANS.
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE
RESPONDENTS WERE ABLE TO DISCHARGE THEIR BURDEN OF PROOF, IN COMPLETE DISREGARD OF THE
REVISED RULES ON EVIDENCE.
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT
FAILED TO APPLY SECTIONS 2 AND 7, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE.
V.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE
PURPORTED LIABILITY OF PETITIONERS 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 16, Rule 3 of the Rules of
Court
The spouses Carandang claims that the Decision of the RTC, having been rendered after the death of
Quirino de Guzman, is void for failing to comply with Section 16, Rule 3 of the Rules of Court, which
provides:
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 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 ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator and the court may appoint a guardian ad litem for the
minor heirs.
The court shall forthwith order the legal representative or representatives to appear and be substituted
within a period of thirty (30) days from notice.
If no legal 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 executor or administrator for the estate of the deceased and the
latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such
appointment, 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 the 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 issued 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 substitution 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 representatives 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 representative 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 procured the appointment of such legal representative of the
deceased, including appellant, ever asked to be substituted for the deceased. As a result, no valid
substitution was effected, consequently, the court never acquired jurisdiction over appellant for the
purpose of making her a party to the case and making the decision 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
expressly or impliedly. 10 Implied waiver comes in the form of either voluntary appearance or a failure to
object. [11]
In the cases cited by the spouses Carandang, we held that there had been no valid substitution by the

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In the cases cited by the spouses Carandang, we held that there had been no valid substitution by the
heirs of the deceased party, and therefore the judgment cannot 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 persons; they are actually claiming and embracing such jurisdiction. In doing so, their waiver is
not even merely implied (by their participation in the appeal of said Decision), but express (by their
explicit espousal of such view in both the Court of Appeals and in this Court). The heirs of de Guzman
had no objection to being 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 the party who can thereby waive it by silence.
It also pays to look into the spirit behind the general rule requiring a formal substitution of heirs. The
underlying principle therefor is not really because substitution of heirs is a jurisdictional requirement,
but because non-compliance therewith results in the undeniable 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 rights
are claimed to have been violated, namely the heirs to whom the adverse judgment is sought to be
enforced.
Care should, however, be taken in applying the foregoing conclusions. In People v. Florendo, [13] where
we likewise held that the proceedings that took place after the death of the party are void, we gave
another 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
Guzman’s counsel were conducted before the promulgation of the RTC Decision. Consequently, de
Guzman’s 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 Decision 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 their persons, and because
there had been, before the promulgation of the RTC Decision, no further proceedings requiring the
appearance of de Guzman’s counsel.
Before 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 Carandang on the non-inclusion in the
complaint of an indispensable party.
Whether 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, was not included as a party-plaintiff
The spouses Carandang claim that, since three of the four checks used to pay their stock subscriptions
were issued in the name of Milagros de Guzman, the latter should be considered an indispensable party.
Being such, the spouses Carandang claim, the failure to join Mrs. de Guzman as a party-plaintiff should
cause the dismissal of the action because "(i)f a suit 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
action." [14]
The Court of Appeals held:
We disagree. The joint account of spouses Quirino A de Guzman and Milagros de Guzman from which
the four (4) checks were drawn is part of their conjugal property and under both the Civil Code and the
Family Code the husband alone may institute an action for the recovery or protection of the spouses’
conjugal property.
Thus, in Docena v. Lapesura [355 SCRA 658], the Supreme Court held that "x x x Under the New Civil
Code, the husband is the administrator 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 being joined by the wife. x x x Under the Family
Code, the administration of the conjugal 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 always act together. Each
spouse may validly exercise full power of management alone, subject to the intervention of the court in
proper cases as provided under Article 124 of the Family Code. x x x."
The Court of Appeals is correct. Petitioners erroneously interchange the terms "real party in interest"

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The Court of Appeals is correct. Petitioners erroneously interchange the terms "real party in interest"
and "indispensable party." A real party in interest is the party who stands to be benefited or injured by
the judgment of the suit, or the party entitled to the avails of the suit. [15] On the other hand, an
indispensable party is a party in interest without whom no final determination can be had of an action,
[16] in contrast to a necessary party, which is one who is not indispensable but who ought to be joined
as a party if complete relief is to be accorded as to those already parties, or for a complete
determination or settlement of the claim subject of the action. [17]
The spouses Carandang are indeed correct that "(i)f a suit 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 action." [18] However, what dismissal on this ground entails is an examination of whether the parties
presently pleaded are interested in the outcome of the litigation, and not whether all persons interested
in such outcome are actually pleaded. The latter query is relevant in discussions concerning
indispensable and necessary parties, but not in discussions concerning real parties in interest. Both
indispensable and necessary parties are considered as real parties in interest, since both classes of
parties stand to be benefited or injured by the judgment of the suit.
Quirino and Milagros de Guzman were married before 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 their property relations. [19]
All property acquired during the marriage, whether the 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 that the four checks created a debt for which the spouses Carandang are liable,
such 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-owner 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 the suit was allegedly not brought by a real party in interest, is therefore unwarranted.
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 subsequent 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. Instead, 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. – Whenever 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 omitted. Should the court find the reason for the omission unmeritorious, it may order the
inclusion of the omitted necessary party if jurisdiction over his person may 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 in the action, and
the judgment rendered therein shall be without prejudice to the rights of such necessary party.
Non-compliance with the order for the inclusion 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 specifically provides for the effect of
such non-inclusion: it shall not prevent the court from proceeding in the action, and the judgment
rendered therein shall be without 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 the 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 joined as co-parties in suits by or against another party as may
be provided by the 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 property which he claims to be

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third case occurs if, for example, a husband files an action to recover a property which he claims to be
part of his exclusive property. The wife may have no legal interest in such property, but the rules
nevertheless require that she be joined 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 case
was not a jurisdictional defect. [26] The non-joinder of a spouse does not warrant dismissal as it is
merely a formal requirement which may be cured by amendment. [27]
Conversely, in the instances that the pro-forma parties are also indispensable or necessary parties, the
rules concerning indispensable or necessary parties, 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.
Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses
Carandang, seems to be either an indispensable or a necessary 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 an order for her inclusion in the complaint pursuant to Section 9, Rule 3.
Article 108 of the Family Code provides:
Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership in all
that is not in conflict 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 provision 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 what is expressly determined in this Chapter.
In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other
partners of specific partnership property." Taken with the presumption of the conjugal nature of the
funds used to finance the four checks used to pay for petitioners’ stock subscriptions, and with the
presumption that the credits themselves are part of 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 fairly recent cases of Baloloy v. Hular [28] and Adlawan v. Adlawan, [29]
we held that, in a co-ownership, co-owners may bring actions for the recovery of co-owned property
without the necessity of joining all the other co-owners as co-plaintiffs because the suit is presumed to
have been filed for the benefit of his co-owners. 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-owners
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 real 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 co-
owner who filed the suit 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 accorded in the suit even without their participation, since the suit is presumed to have
been filed for the benefit of all co-owners. [32]
We therefore hold that Milagros de Guzman is not an indispensable party in the action for the recovery
of the allegedly loaned money to the spouses Carandang. As such, she need not have been impleaded in
said suit, and dismissal of the suit is not warranted by her not 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 alleged loan for which the spouses Carandang were held liable. As previously stated,
spouses Quirino and Milagros de Guzman paid for the stock subscriptions of the spouses Carandang,
amounting to P336,375.00. The de Guzmans claim that these payments 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 pre-
incorporation agreement wherein it was agreed that Arcardio Carandang would always maintain his 46%
equity participation in the corporation even if the capital structures were increased, and that Quirino de
Guzman would personally pay the equity shares/stock subscriptions of Arcardio Carandang with no cost
to the latter.

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to the latter.
On this main issue, the Court of Appeals held:
[The spouses Carandang] 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 latter is the alleged pre-incorporation agreement,
to which they offer no clear proof 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 to prove the affirmative allegations in his affirmative defenses and counterclaims. [33]
The spouses Carandang, however, insist that the de Guzmans have not proven the loan itself, having
presented evidence only of the payment in favor of the Carandangs. They claim:
It is an undeniable fact that payment is not equivalent to a loan. For instance, if Mr. "A" decides to pay
for Mr. "B’s" obligation, that payment by Mr. "A" cannot, by any stretch of imagination, possibly mean
that there is now a loan by Mr. "B" to Mr. "A". There is a possibility that such payment by Mr. "A" is
purely out of generosity or that there is a mutual agreement between them. As applied to the instant
case, that mutual agreement is the pre-incorporation agreement (supra) existing between Mr. de
Guzman and the petitioners --- to the effect that the former shall be responsible for paying stock
subscriptions of the latter. Thus, when Mr. de Guzman paid for the stock subscriptions of 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. "B’s" 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 creditor is not bound to accept payment or performance by a third person who has no
interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.
Whoever pays for another may demand from the debtor what he has paid, except that if he paid
without the knowledge or against the will of the debtor, 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 against the will of the latter,
cannot compel the creditor to subrogate him in his rights, 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 payment by a
third person, and even in cases where the third person paid against the will of the debtor, such payment
would produce a debt in favor of the paying third 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 person 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 presumption. By virtue of the parties’ freedom to contract, the
parties could stipulate 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 there was a mutual
agreement between them. But such mutual agreement, being an exception 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 Carandang’s stock
subscriptions. These payments were, in fact, admitted 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 testimony which touched on the existence and
substance of the pre-incorporation agreement, 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
other hand, the testimonies of Romeo Saavedra, [36] Roberto S. Carandang, [37] Gertrudes Z. Esteban,

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other hand, the testimonies of Romeo Saavedra, [36] Roberto S. Carandang, [37] Gertrudes Z. Esteban,
[38] Ceferino Basilio, [39] and Ma. Luisa Carandang [40] touched on matters other than the existence
and substance of the pre-incorporation agreement. So aside from the fact that these witnesses had no
personal knowledge as to the alleged existence of the pre-incorporation agreement, the testimonies of
these witnesses did not even mention the existence of a pre-incorporation agreement.
Worse, the testimonies of petitioners Arcadio Carandang and Ma. Luisa Carandang even contradicted
the existence of a pre-incorporation agreement because when they were asked by their counsel
regarding the matter of the check payments made by the late Quirino A. de Guzman, Sr. in their behalf,
they said that they had already paid for it thereby negating their own defense that there was a pre-
incorporation agreement excusing themselves from paying Mr. de Guzman the amounts he advanced or
loaned to them. This basic and irrefutable fact can be gleaned from their testimonies which the private
respondents are quoting for easy reference:
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 plaintiff
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 anything 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 claimed 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).
I’m showing to you these receipts so marked by the plaintiff as their exhibits which were issued in the
name of Ma. Luisa Carandang, your wife; and also, Arcadio M. Carandang. Will you please go over this
Official Receipt and state for the records, 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 the 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 pre-
incorporation agreement by virtue of paragraphs 13 and 14 of their Answer and paragraph 4 of private
respondents’ Reply.
Paragraphs 13 and 14 of petitioners’ Answer dated 7 July 1992 state in full:
13. Sometime in November, 1973 or thereabout, herein plaintiff invited defendant 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 corporation known as Mabuhay Broadcasting Systems, Inc.
2. Considering the technical expertise and talent of defendant Arcadio M. Carandang and his new
equipments he bought, and his skill in repairing and modifying radio/communication equipments 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 plaintiff would personally pay the equity shares/stock
subscriptions of defendant with no cost to the latter.
4. That because of defendant’s expertise in the trade including the marketing aspects, he would be the
President and General Manager, and plaintiff the Chairman of the Board.
5. That considering their past and trustworthy 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 Broadcasting System, Inc. The
incorporators are plaintiff and his family members/nominees controlling jointly 54% of the stocks and
defendant Arcadio M. Carandang controlling 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
defendant Arcadio M. Carandang organized a corporation known as Mabuhay Broadcasting Systems,

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defendant Arcadio M. Carandang organized a corporation known as Mabuhay Broadcasting Systems,
Inc. Plaintiff specifically denies the other allegations in paragraph 13 of the Answer, the same being
devoid of any legal or factual bases. The truth of the matter is that defendant Arcadio M. Carandang was
not able to pay plaintiff the agreed amount of the lease for a number of months forcing the plaintiff to
terminate lease. Additionally, the records would show that it was the defendant Arcadio M. Carandang
who proposed a joint venture with the plaintiff.
It appears that plaintiff agreed to the formation of the corporation principally because of a directive of
then President Marcos indicating the need to broaden the ownership of radio broadcasting stations. The
plaintiff owned the franchise, the radio transmitter, the antenna tower, the building containing the
radio transmitter 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. Carandang.
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 contained 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 agreed on the above arrangements," seems
to be a mere introduction to the statement that the single proprietorship of Quirino de Guzman had
been converted into a corporation. 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. Instead, Quirino de
Guzman expressly stated the opposite: that "(p)laintiff specifically denies the other allegations of
paragraph 13 of the Answer." [45] The Reply furthermore 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
Guzman and Arcardio Carandang organized Mabuhay Broadcasting Systems, Inc. [46]
All the foregoing considered, we hold that Quirino de Guzman had not admitted the alleged pre-
incorporation agreement. As there was no admission, and as the testimony 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 Carandang’s stock subscription. The payment by the
spouses de Guzman 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 also 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 spouses Carandang] contend that:
"There is absolutely no evidence, testimonial or documentary, showing that the purported obligation of
[the spouses Carandang] is joint 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; their property regime is conjugal partnership under the Civil Code.
It must be noted 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 conjugal partnership and it is the
partnership, which is primarily bound for its repayment. Thus, when the spouses are sued for the
enforcement of the obligation entered into by them, they are being impleaded in their capacity as
representatives of the conjugal partnership and not as independent debtors, such that the concept of
joint and solidary liability, as between them, does not apply. [47]
The Court 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 impleaded in their capacity as representatives of the
conjugal partnership and not as independent debtors. Hence, either of them may be sued for the whole
amount, similar to that of a solidary liability, although the amount is chargeable against their conjugal
partnership property. Thus, in the case cited by the Court of Appeals, Alipio v. Court of Appeals, [48] the
two sets of defendant-spouses therein were held liable for P25,300.00 each, chargeable to their
respective conjugal partnerships.
WHEREFORE, the Decision of the Court of Appeals, affirming the judgment rendered against the spouses
Carandang, is hereby AFFIRMED with the following MODIFICATION: The spouses Carandang are

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Carandang, is hereby AFFIRMED with the following MODIFICATION: The spouses Carandang are
ORDERED to pay the following amounts from their conjugal partnership properties:
(1) P336,375.00 representing the spouses Carandang’s 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 attorney’s fees.
No costs.
SO ORDERED.

Pasted from <http://www.lawphil.net/judjuris/juri2006/nov2006/gr_160347_2006.html>

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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. LITERATO; and MICHAELES MAGLASANG RODRIGO,
respondents.
DECIS ION
CARPIO MORALES, J.:
Before this Court is the Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
Decision1 of the Court of Appeals ("CA") dated June 26, 2001 and its related Resolution2 dated
September 4, 2001 in CA-G.R. SP No. 59712. The assailed Decision dismissed the petition for certiorari
filed by petitioner Judge Antonio C. Sumaljag (the "petitioner") in the interlocutory matter outlined
below in Civil Cases B-1239 and B-1281 before the trial court. The challenged Resolution denied the
petitioner's motion for reconsideration.
ANTECEDENT FACTS
On November 16, 1993, Josefa D. Maglasang ("Josefa") filed with the Regional Trial Court ("RTC"),
Branch 14, Baybay, Leyte a complaint3 (docketed as Civil Case No. B-1239) for the nullity of the deed of
sale of real property purportedly executed between her as vendor and the spouses Diosdidit and
Menendez Literato (the "respondent spouses") as vendees. The complaint alleged that this deed of sale
dated October 15, 1971 of Lot 1220-D is spurious. Josefa was the sister 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 on to them by their parents Cristito and Inecita Diano Maglasang.4 Lot 1220-
D was partitioned to Josefa, while Lot 1220-E was given to Menendez.
The respondent spouses' response to the complaint was an amended answer with counterclaim5
denying that the deed of sale was falsified. They impleaded the petitioner with Josefa as counterclaim
defendant on the allegation that the petitioner, at the instance of Josefa, occupied Lot 1220-D and Lot
1220-E without their (the respondent spouses') authority; Lot 1220-E is theirs by inheritance while 1220-
D 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, 1986 the contract of lease over
the whole of Lot 1220 between all the Maglasang heirs (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 1220-
D.
Civil Case No. 12816 is a complaint that Menendez filed on April 4, 1996 with the RTC for the declaration
of the inexistence of lease contract, recovery of possession of land, and damages against the petitioner
and Josefa after the RTC dismissed the respondent spouses' counterclaim in Civil Case No. 1239. The
complaint alleged that Josefa, who had previously sold Lot 1220-D to Menendez, leased it, together with
Lot 1220-E, to the petitioner. Menendez further averred that the petitioner 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 others, that this lease contract between Josefa and the petitioner be declared null and
void.
Josefa died on May 3, 1999 during the pendency of Civil Case Nos. B-1239 and B-1281.
On August 13, 1999, Atty. Zenen A. Puray ("Atty. Puray") - the petitioner's and Josefa's common
counsel - asked the RTC in Civil Case No. 1239 that he be given an extended period or up to September
10, 1999 within which to file 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 his capacity as plaintiff
and third party counterclaim defendant - be substituted by the petitioner. The submission alleged that
prior to Josefa's death, she executed a Quitclaim Deed9 over Lot 1220-D in favor of Remismundo D.
Maglasang10 who in turn sold this property to the petitioner.
Menendez, through counsel, objected to the proposed substitution, alleging that Atty. Puray filed the
notice of death and substitution of party beyond the thirty-day period provided under Section 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").
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by the latter's full-blood sister, Michaeles Maglasang Rodrigo ("Michaeles").
The RTC denied Atty. Puray's motion for substitution and instead ordered the appearance 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 merit and instead order
the appearance of Mrs. Mechailes Maglasang-Rodrigo of Brgy. Binulho, Albuera, Leyte, as representative
of the deceased Josefa Maglasang.
SO ORDERED.11
The RTC subsequently denied the petitioner's motion for reconsideration in an order12 dated May 25,
2000.
The petitioner went to the CA on a petition for certiorari (docketed as CA-G.R. SP No. 59712) to question
the above interlocutory orders. In a Decision13 dated June 26, 2001, the CA dismissed the petition for
lack of merit. The appellate court similarly denied the petitioner's motion for reconsideration in its
Resolution14 dated September 4, 2001.
The present petition essentially claims that the CA erred in dismissing CA-G.R. No. SP 59712 since: (a)
the property under litigation was no longer part of Josefa's estate 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 appointed by the
lower court no longer had any interest to represent; (d) the notice of 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 who the courts should recognize pursuant to Rule 3, Section 20 of the Rules of
Court.
THE COURT'S RULING
We resolve to deny the petition for lack of merit.
The Governing Rule.
The rule on substitution in case of death of a party is governed by Section 16, Rule 3 of the 1997 Rules of
Civil Procedure, as amended, which provides:
Section 16. Death of a 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 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 ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator and the court may appoint a guardian ad litem for the
minor heirs.
The court shall forthwith order said legal representative or representatives to appear and be substituted
within a period of thirty (30) days from notice.
If no legal 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 executor or administrator for the estate of the deceased, and
the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring
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 intervening death. The deceased litigant is herself or himself protected as
he/she continues to be properly represented in the suit through the duly appointed legal representative
of his estate.15
Application of the Governing Rule.
a. Survival of the pending action
A question preliminary to the application of the above provision is whether Civil Case Nos. B-1239 and
B-1281 are actions that survive the death of Josefa. We said in Gonzalez v. Pagcor:16
"The criteria for determining whether an action survives the death of a plaintiff or petitioner was
elucidated upon 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 the
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 not survive, the injury complained of is to the person, the property and rights
of property affected being incidental. . . .

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of property affected being incidental. . . .
Since the question involved in these 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 Counsel under the Rule.
The duty of counsel under the aforecited provision is to inform 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
representative 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 further 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, of 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" who in turn sold it in favor of JUDGE ANTONIO
SUMALJAG, evidenced by a DEED OF ABSOLUTE SALE, copy of which is hereto attached as Annex "C"."
Further, counsel asked 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 filed late, effectively informed the lower court of the death of litigant Josefa
Maglasang so as to free her counsel of any liability for failure to make a report of death under Section
16, Rule 3 of the Rules of Court. In our view, counsel satisfactorily explained to the lower court the
circumstances of the late reporting, and the latter in fact granted counsel an extended period. The
timeliness of the 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 rule
that he did not. The "legal representatives" that the provision speaks of, refer 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
provides that "the heirs of the deceased may be allowed to be substituted for the deceased, 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 deceased in the litigation prior to her
death.
Under the circumstances, both the lower court and the CA were legally correct in not giving effect to
counsel's suggested substitute.
First, the petitioner is not one of those allowed by the Rules to 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 reflects a claim against the interest of the deceased through the
transfer of her remaining 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 substitute. To state the obvious, the
suggested substitution effectively brings to naught the protection that the Rules intend; plain common
sense tells us that the transferee 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 every authority to manifest to the court changes in interest that transpire in the
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 was alive and while the manifesting counsel was still the effective and
authorized 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 may have actually taken place is
immaterial to this conclusion, if only for the reason that it is not for counsel, after the death of his client,
to make such manifestation because he then has lost the authority to speak for and bind his client. Thus,

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to make such manifestation because he then has lost the authority to speak for and 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 examination of the documents attached to the records disclose that the subject matter of
the Quitclaim allegedly executed by Josefa in favor of Remismundo is Lot 1220-E, while the subject
matter of the deed of sale executed by Remismundo in the petitioner's favor is Lot 1220-D. This
circumstance alone raises the possibility that there is more than meets the eye in the transactions
related to this case.
c. The Heirs as Legal Representatives.
The CA correctly harked back to the plain terms of Section 16, Rule 3 in determining who the
appropriate legal representative/s should be in the absence of an executor or administrator. The second
paragraph of the Section 16, Rule 3 of the 1997 Rules of Court, as amended, is clear - the heirs of the
deceased may be allowed to be substituted for the deceased, without requiring the appointment of an
executor or administrator. Our decisions on this matter have been clear and unequivocal. In San Juan, Jr.
v. Cruz, this 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 executor or administrator) and that it is only in case of
unreasonable delay in the appointment 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 alternative of allowing
the heirs of the deceased to be substituted for the deceased, is 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 instances 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 the heirs as the proper representatives of the deceased.
Josefa's death certificate24 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 Section 16, Rule 3, her heirs are
her surviving sisters (Michaelis, Maria, Zosima, and Consolacion) and the children of her deceased sister,
Lourdes (Manuel, Cesar, Huros and Regulo) who should be her legal representatives. Menendez,
although also a sister, should be excluded for being one of the adverse parties in the cases 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 the deceased Josefa - namely Michaelis M. Rodrigo; Maria
M. Cecilio; Zosima D. Maglasang; Consolacion M. Bag-aw; and the children of Lourdes M. Lumapas,
namely Manuel Lumapas, Cesar Lumapas, Huros Lumapas and Regulo Maquilan - should be her
substitutes 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.html>

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?Domingo v Landicho GR 170015 Aug 29, 2007
Sunday, November 14, 2010
11:41 PM

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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 BARBARONA, respondents.
RESOL UTI ON
NACHURA, J.:
Petitioner Capitolina Vivero Napere interposes this petition for review to assail the Court of Appeals’
Decision1 dated October 9, 2003, which upheld the validity of the Regional Trial Court’s decision despite
failure to formally order the substitution of the heirs of the deceased defendant, petitioner’s husband.
The case stems from the following antecedents:
Respondent Amando Barbarona is the registered owner of Lot No. 3177, situated in Barangay San
Sotero (formerly Tambis), Javier, Leyte and covered by Original 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 latter’s wife, herein petitioner,
planted 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 spouses 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 April 1992, a
relocation survey was conducted which confirmed that the respondents’ property was encroached upon
by the Naperes; that on the basis of the relocation survey, 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 January 1994, the Naperes repeated their acts by encroaching again on the respondents’
property, harvesting the coconuts and appropriating the proceeds thereof, and refusing to vacate the
property on demand.
On November 10, 1995, while the case was pending, Juan Napere died. Their counsel informed the court
of Juan Napere’s death, and submitted the names and addresses of Napere’s heirs.
At the pre-trial, the RTC noted that the Naperes were not contesting the respondents’ right of
possession 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:
WHEREFORE, 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 the 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 THOUSAND (P5,000.00) PESOS in litigation
expenses, and the
c) Cost[s] of suit.
SO ORDERED.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 over the heirs who were not ordered substituted as party-
defendants for the deceased.
On October 9, 2003, the CA rendered a Decision affirming the RTC Decision.3 The appellate court held
that failure to substitute the heirs for the deceased defendant will not invalidate the proceedings and
the judgment in a case which survives the death of such party.
Thus, this petition for review where the only issue is whether or not the RTC decision is void for lack of
jurisdiction over the heirs of Juan Napere. Petitioner alleges that the trial court did not acquire
jurisdiction over the persons of the heirs because of its failure to order their substitution pursuant to
Section 17,4 Rule 3 of the Rule of Court; hence, the proceedings conducted and the decision rendered by
the trial court are null and void.
The petition must fail.

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the trial court are null and void.
The petition must fail.
When a party to a pending case dies and the claim is not extinguished by such death, the Rules require
the substitution of the deceased party by his legal representative or heirs. In such case, counsel is
obliged to inform the court of the death of his client and give the name and address of the latter’s legal
representative.
The complaint for recovery of possession, quieting of title and damages is an action that survives the
death of the defendant. Notably, the counsel of Juan Napere complied with his duty to inform the court
of his client’s death and the names and addresses of the heirs. The trial court, however, failed to order
the substitution of the heirs. Nonetheless, despite this oversight, we hold that the proceedings
conducted and the judgment rendered by the trial court are valid.
The Court has repeatedly declared that failure of the counsel to comply with his duty to inform the court
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 survives the death of such party.5 The trial court’s
jurisdiction over the case subsists despite the death of the party.
Mere failure to substitute a deceased party is not sufficient ground to nullify a trial court’s decision. The
party alleging nullity 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, but a requirement of
due process.7 The rule on substitution was crafted to protect every party’s 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-compliance
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 affected by the decision rendered therein.10 Thus, it
is only when there is a denial of due process, as when the deceased is not represented by any legal
representative or heir, that the court nullifies the trial proceedings and the resulting judgment therein.11
Formal substitution by heirs is not necessary when they themselves 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 due process. The essence of due process is the reasonable opportunity to be heard and to
submit any evidence available in support of one’s defense.13 When due process is not violated, as when
the right of the representative or heir is recognized and protected, noncompliance or belated formal
compliance with the Rules cannot affect the validity of a promulgated decision.14
In light of these pronouncements, 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 Juan’s death. Hence, through counsel, petitioner was able to
adequately defend herself and the deceased in the proceedings below. Due process simply demands an
opportunity to 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 due 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
Appeals, dated October 9, 2003, in CA-G.R. CV No. 56457, is AFFIRMED.
SO ORDERED.

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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, NATHAN 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 litigants—moneyed or poor—equal access to the courts; moreover, it
specifically provides that poverty shall not bar 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 of this constitutional provision. As such, filing fees, though one of the essential elements in
court procedures, should not be an obstacle to poor litigants' opportunity 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 No. 99-4403 entitled Spouses Antonio F.
Algura and Lorencita S.J. Algura v. The Local Government Unit of the City of Naga, et al., dismissing the
case for failure of petitioners Algura spouses to pay the required filing fees.2 Since the instant 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 to the instant petition sanctioned under Section 2(c) of Rule
41 on Appeal from the 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 Government and its officers, arising from the
alleged illegal demolition of their residence and boarding house and for payment of lost income derived
from fees paid by their boarders amounting to PhP 7,000.00 monthly.
Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent Litigants,5 to which petitioner
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 Ninety 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 property declared in their name for
taxation purposes.
Finding that petitioners' motion to litigate as indigent litigants was meritorious, Executive Judge Jose T.
Atienza 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 City Government's demolition of a portion of petitioners'
house, the Alguras allegedly lost a monthly income of PhP 7,000.00 from their boarders' rentals. With
the loss of the rentals, the meager income from Lorencita Algura's sari-sari store 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, respondents 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 spouses' boarding
house blocked the road right of way, and said structure was a nuisance per se.
Praying that the counterclaim of defendants (respondents) be dismissed, petitioners then filed their
Reply with Ex-Parte Request for a Pre-Trial Setting10 before the Naga City RTC on October 19, 1999. On
February 3, 2000, a pre-trial was held wherein respondents asked for five (5) days within which to file a

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February 3, 2000, a pre-trial was held wherein respondents asked for five (5) days 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 addition 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 Bayawas St., Sta.
Cruz, Naga City. Also, respondents claimed that petitioners' second floor was used as their residence and
as a boarding house, from which they earned 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 from several boarders who paid rentals to them. Hence, respondents concluded that petitioners
were not indigent litigants.
On March 28, 2000, petitioners subsequently interposed their Opposition to the Motion12 to
respondents' motion to disqualify 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 that 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 Revised Rules of Court—directing 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 Section 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 then 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 Lorencita 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 provided 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 so, according to her, the meager net income from her small sari-
sari store and the rentals of some boarders, plus the salary of her husband, were not enough to pay the
family's basic necessities.
To buttress their position as qualified indigent litigants, petitioners also submitted the affidavit of
Erlinda Bangate, who attested under oath, that she personally knew spouses Antonio Algura and
Lorencita Algura, who were her neighbors; that they derived substantial income from their boarders;
that they lost said income from their boarders' rentals when the Local 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
Antonio Algura were insufficient for their basic necessities like food and clothing, considering that the
Algura spouses had six (6) children; and that she knew that petitioners did not own any real property.
Thereafter, Naga City RTC Acting Presiding Judge Andres B. Barsaga, Jr. issued his July 17, 200018 Order
denying the 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
mentioned in the first paragraph of Rule 141, Section 18 for pauper litigants residing outside Metro
Manila."19 Said rule provides that the gross income of the litigant 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 immediate
family did not earn a gross income of PhP 3,000.00.
The Issue
Unconvinced of the said ruling, the Alguras instituted the instant petition raising a solitary issue for the
consideration of the Court: whether petitioners should be considered as indigent litigants who qualify
for exemption from paying filing fees.
The Ruling of the Court
The petition is meritorious.
A review of the history of the Rules of Court on suits in forma pauperis (pauper litigant) is necessary
before the Court rules on the issue of the Algura spouses' claim to exemption from paying filing fees.

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before the Court rules on the issue of the Algura spouses' claim to exemption from paying filing fees.
When the Rules of Court took effect on January 1, 1964, the 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 municipal 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 the 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 Administrative 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.—Pauper-litigants include wage earners
whose gross income do not exceed P2,000.00 a month or P24,000.00 a year for those residing in Metro
Manila, and P1,500.00 a month 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 not more than
P18,000.00 as the case may be.
Such exemption shall include exemption 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 pauper-
litigant.
To be entitled to the exemption herein provided, the pauper-litigant shall execute an affidavit that he
does not earn the gross income abovementioned, nor own any real property with the assessed value
afore-mentioned [sic], supported by a certification to that effect by the provincial, city 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 Supreme Court Resolution in Bar Matter No. 803 dated April 8, 1997, which
became effective on July 1, 1997, Rule 3, Section 22 of the Revised Rules of Court was superseded by
Rule 3, Section 21 of said 1997 Rules of Civil Procedure, as follows:
Section 21. Indigent party.—A party may be authorized to litigate his action, claim or defense as an
indigent if the court, upon an ex parte application and hearing, is satisfied that the party is one who has
no money or property sufficient and available for food, shelter and basic necessities for himself and his
family.
Such authority shall include an exemption from payment of docket and other lawful fees, and of
transcripts of stenographic notes which the court may order to be furnished him. The amount of the
docket and other lawful fees which the indigent was exempted from paying shall be a lien on any
judgment rendered in the case 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 rendered by
the trial court. If the court should determine after hearing that the party declared as an indigent is in
fact a person with sufficient 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 fixed by the court,
execution shall issue for the payment thereof, without prejudice to such other sanctions as the court
may impose.
At the time the Rules on Civil Procedure were amended 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 their immediate family do not exceed four thousand (P4,000.00) pesos a month if
residing in Metro Manila, and three thousand (P3,000.00) pesos a month if residing outside Metro

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residing in Metro Manila, and three thousand (P3,000.00) pesos a month if residing outside Metro
Manila, and (b) who do not own real property with an assessed value of more than fifty thousand
(P50,000.00) pesos shall be exempt from the payment of legal fees.
The legal fees shall be a lien on any judgment rendered in the case favorably to the pauper litigant,
unless the court otherwise provides.
To be entitled to the exemption herein provided, the litigant shall execute an affidavit that he and his
immediate family do not earn the gross income abovementioned, 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 the litigant's affidavit.
Any falsity in the affidavit of a litigant or disinterested person shall be sufficient cause to strike out the
pleading of that party, without prejudice to whatever criminal liability may have been incurred.
It can be readily seen that the rule on pauper litigants was inserted in Rule 141 without 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 were two existing rules on pauper litigants; namely, Rule 3,
Section 21 and Rule 141, Section 18.
On August 16, 2004, Section 18 of Rule 141 was further amended in Administrative Matter No. 04-2-04-
SC, which became effective on the same date. It 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 OF 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 litigant
unless the court otherwise provides.
To be entitled to the exemption herein provided, 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
property with the fair value aforementioned, supported by an affidavit of a disinterested person
attesting to the truth of the litigant's affidavit. The current tax declaration, 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, without 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 fees. Specifically, in the August 16, 2004
amendment, the ceiling for the gross income 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
outside Metro Manila, to double the monthly minimum wage of an employee; and the maximum value
of the property owned by the applicant was increased from an assessed value of PhP 50,000.00 to a
maximum market value of PhP 300,000.00, to be able 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 historical backdrop, let us now move on to the sole issue—whether petitioners are exempt
from the payment of filing fees.
It is undisputed that the Complaint (Civil 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, Section
18 on Legal Fees when the applicable rules at that time were Rule 3, Section 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 motion 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 residing in Metro Manila and PhP 1,500.00 a month or PhP 18,000.00 a year
for those residing outside Metro Manila or those who do not own real property with an assessed value
of not more than PhP 24,000.00 or not more than PhP 18,000.00 as the case may be. Thus, there are

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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 requirement—the applicants should not have a gross monthly income of
more than PhP 1,500.00, and b) property requirement––they should not own property with an assessed
value of not more than PhP 18,000.00.
In the case at bar, petitioners Alguras submitted the Affidavits of petitioner Lorencita Algura and
neighbor Erlinda Bangate, the pay slip of petitioner Antonio F. Algura showing a gross monthly income
of PhP 10,474.00,21 and a Certification 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 property 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. Algura and the PhP 3,000.00 income of Lorencita Algura when combined, were
above the 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 therefore correct in
disqualifying petitioners Alguras as indigent litigants although the court should have applied Rule 141,
Section 16 which was in effect at the 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 13,474.00 income of petitioners was
beyond the PhP 3,000.00 monthly income threshold.
Unrelenting, petitioners however argue in their Motion for Reconsideration of the April 14, 2000 Order
disqualifying them as indigent litigants23 that the rules have been relaxed by relying on Rule 3, Section
21 of the 1997 Rules of Civil procedure which authorizes parties to litigate their action as indigents if the
court is satisfied that the party is "one who has no money or property sufficient and 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 applied Rule 141 but ignored Rule 3, Section 21 on Indigent Party.
The position of petitioners on the need to use Rule 3, Section 21 on their application to litigate 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 applications or should the court apply only Rule 141, Section 16 and
discard Rule 3, Section 21 as having been superseded by Rule 141, Section 16 on Legal Fees.
The Court 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 19 on August 16, 2003, which is now
the present rule) are still valid and enforceable rules on indigent litigants.
For one, the history of the two seemingly conflicting rules readily reveals that it was not the intent of the
Court to consider the old Section 22 of Rule 3, which took effect on January 1, 1994 to have been
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, upon the recommendation of the Committee on
the Revision on Rules, could have already deleted Section 22 from Rule 3 when it amended Rules 1 to 71
and approved the 1997 Rules of Civil Procedure, which took effect on July 1, 1997. The fact that 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
intent at all to consider said rule as expunged from the 1997 Rules of Civil Procedure.
Furthermore, Rule 141 on indigent litigants was amended twice: first on March 1, 2000 and the second
on August 16, 2004; and yet, despite these two amendments, 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
litigants 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 unequivocal. It has been consistently ruled that:
(r)epeals by implication are not favored, and will not be decreed, unless it is manifest that the legislature
so intended. As laws are presumed to be passed with deliberation and with full knowledge 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 former law relating to same matter, unless the repugnancy between the
two is not only irreconcilable, but also clear and convincing, and flowing necessarily from the language
used, unless the later act fully embraces the subject matter of the earlier, or unless the reason for the
earlier act is beyond peradventure removed. Hence, every effort must be used to make all acts stand

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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 reconciled, the later act will not operate as a repeal
of the earlier.24 (Emphasis supplied).
Instead of declaring that Rule 3, Section 21 has been superseded and impliedly 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 harmonize 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 Manila Jockey Club, Inc. v. Court of Appeals, this Court enunciated that in the interpretation of
seemingly conflicting laws, efforts must be made to first harmonize them. This Court thus ruled:
Consequently, every statute should be construed in such a way that will harmonize it with existing laws.
This principle is expressed 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 foregoing considerations, therefore, the two (2) rules can stand together and are
compatible with each other. When an application to litigate as an indigent litigant is filed, the court shall
scrutinize the affidavits and supporting documents submitted by the applicant to determine if the
applicant complies with the income and property standards prescribed in the present Section 19 of Rule
141—that 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 applicant does not own real
property with a fair market value of more than Three Hundred 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 indigent 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 necessities for himself and his family." In that hearing, the adverse
party may adduce countervailing evidence to disprove the evidence presented by the applicant; after
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 hearing, that
the party declared as an indigent is in fact a person with sufficient 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 fixed by the court, execution shall issue or the payment of prescribed fees shall be
made, without prejudice to such other sanctions as the court may impose.
The Court 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 exemption. Knowing that the litigants may abuse
the grant of authority, the trial court must use sound discretion and scrutinize evidence strictly in
granting exemptions, 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 litigate 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 their
affidavits and supporting documents showed that petitioners did not satisfy the twin requirements on
gross monthly income and ownership of real property under Rule 141. Instead of disqualifying the
Alguras as indigent litigants, the trial court should have called a hearing as required by Rule 3, Section 21
to enable 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 them 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 the application of the petitioners to litigate as indigent litigants. Since this
Court 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 litigants, 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.

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and property requirements under Section 19 of Rule 141, then the grant of the application is mandatory.
On the other hand, when the application does not satisfy one or both requirements, then the
application should not be denied outright; instead, the court should apply the "indigency test" under
Section 21 of Rule 3 and use its sound discretion in determining the merits of the prayer for exemption.
Access to justice by the impoverished is held sacrosanct under Article III, Section 11 of the 1987
Constitution. The Action Program for Judicial Reforms (APJR) itself, initiated by former Chief Justice
Hilario G. Davide, Jr., placed prime importance on 'easy access to justice by the poor' as one of its six
major components. Likewise, the judicial philosophy of Liberty and Prosperity of Chief Justice Artemio V.
Panganiban makes it imperative that the courts shall not only safeguard but also enhance the rights of
individuals—which are considered sacred under 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
the poor, the underprivileged, and the marginalized.
WHEREFORE, the petition is GRANTED and the April 14, 2000 Order granting the disqualification of
petitioners, the July 17, 2000 Order denying petitioners' Motion for Reconsideration, and the September
11, 2001 Order dismissing the case in Civil Case No. RTC-99-4403 before the Naga City RTC, Branch 27
are ANNULLED and SET ASIDE. Furthermore, the Naga City RTC is ordered to set the "Ex-Parte Motion to
Litigate as Indigent Litigants" for hearing and apply Rule 3, Section 21 of the 1997 Rules of Civil
Procedure to determine whether petitioners can qualify as indigent litigants.
No costs.
SO ORDERED.

Pasted from <http://www.lawphil.net/judjuris/juri2006/oct2006/gr_150135_2006.html>

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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 office is located in Parañaque City, entered into
a Franchise Agreement1 (the agreement) granting respondent, Alexander M. Cruz (Cruz), a five-year
franchise to adopt and use the "Uniwide Family Store System" for the establishment and operation of a
"Uniwide Family Store" along Marcos Highway, Sta. Cruz, Cogeo, Marikina City.
Article 10.22 of the agreement called for Cruz as franchisee to pay UHI a monthly service fee of P50,000
or three percent of gross monthly purchases, whichever is higher, payable within five days after the end
of each month without need of formal billing or demand from UHI. In case of any delay in the payment
of the monthly service fee, Cruz would, under Article 10.33 of the agreement, be liable to pay an interest
charge of three percent per month.
It appears that Cruz had purchased goods from UHI’s affiliated companies First Paragon Corporation
(FPC) and Uniwide Sales Warehouse Club, Inc. (USWCI).
In August 2002, FPC and USWCI executed Deeds of Assignment4 in favor of UHI assigning all their rights
and interests over Cruz’s accounts payable to them.
As of August 13, 2002, Cruz had outstanding 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 five days.
His receipt of the letter notwithstanding, Cruz’s accounts remained unsettled.
Thus UHI filed a complaint5 for collection of sum of money before the Regional Trial Court (RTC) of
Parañaque 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. Peso: 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 this 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 Thousand One
Hundred Sixty Five & 96/100 (P64,165.96) for which defendant should be held liable together with the
legal interest thereon computed from date of receipt of plaintiff’s 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 damages in the total amount of Phil. Peso: One Million Five Hundred
Seventy Nine Thousand Sixty One & 36/100 (P1,579,061.36), computed as of 05 April 2004, inclusive of
the two and a half percent (2.5%) monthly interest, as and by way of penalty, and the three (3%) annual
interest on the unpaid amount, for which defendant 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 defendant’s obstinate refusal or failure to pay his indebtedness, plaintiff was
constrained to file this Complaint and in the process incur expenses by way of attorney’s fees, which
could be reasonably estimated to reach at least Phil. Peso: Two Hundred Fifty Thousand (P250,000.00)
and for which defendant should be held answerable for.6 (Emphasis and underscoring supplied)
To the complaint Cruz filed a motion 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 exclusive jurisdiction of the courts of Quezon

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27.5 of the agreement which reads:
27.5 Venue Stipulation – The Franchisee consents to the exclusive jurisdiction of the courts of Quezon
City, the Franchisee waiving any other venue.8 (Emphasis supplied)
Branch 258 of the Parañaque RTC, by Order9 of December 12, 2005, granted Cruz’s motion to dismiss.
Hence, the present petition before this Court, raising the sole legal issue of:
WHETHER A CASE BASED ON 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 STIPULATION.10 (Underscoring supplied)
Petitioner contends that nowhere in the agreement is there a mention of FPC and USWCI, and neither
are the two parties thereto, hence, they cannot be bound to the stipulation on "exclusive venue."
The petition is impressed with merit.
The general rule on venue of personal actions, as in petitioner’s 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 actions. – All other actions may be commenced and tried 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 nonresident defendant, where he may be found, at the election of the
plaintiff. (Emphasis and underscoring supplied)
The afore-quoted provision is, however, qualified by Section 4 of the same rule which allows parties,
before the filing of the action, to validly agree in writing on 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 one of which does not arise out
of the contract where the exclusive venue was stipulated upon, the complaint, as in the one at bar, may
be brought before other venues provided that such other cause of action falls within the jurisdiction of
the court and the venue lies therein.12
Based on the allegations in petitioner’s complaint, the second and third causes of action are based on
the deeds of assignment executed in its favor by FPC and USWCI. The deeds bear no exclusive venue
stipulation with respect to the causes of action thereunder. Hence, the general rule on venue applies –
that the complaint may be filed in the place where the plaintiff 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 Cruz. They are based on separate, distinct and independent contracts-
deeds of assignment in which UHI is the assignee of Cruz’s obligations to the assignors FPC and USWCI.
Thus, any action arising from the deeds of assignment cannot be subjected to the exclusive venue
stipulation embodied in the agreement. So San Miguel Corporation v. Monasterio14 enlightens:
Exclusive venue stipulation embodied in a contract restricts or confines parties thereto when the suit
relates to breach of said contract. But where the exclusivity clause does not make it necessarily
encompassing, such that even those not related to the enforcement of the contract should be subject
to the exclusive venue, the stipulation designating exclusive venues should be strictly confined to the
specific undertaking or agreement. Otherwise, the basic principles of freedom to contract might work
to the great disadvantage 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 petitioner’s complaint do not relate to a breach of the
agreement it forged with Cruz embodying the exclusive venue stipulation, they should not be subjected
thereto. As San Miguel further enlightens:
Restrictive stipulations are in derogation of the general policy of making it more convenient for the
parties to institute actions arising from or in relation to their agreements. Thus, the restriction should be
strictly construed as relating solely to the agreement for which the exclusive venue stipulation is
embodied. Expanding the scope of such limitation on a contracting party will create unwarranted
restrictions which the parties might find unintended or worse, arbitrary and oppressive.16 (Underscoring
supplied)
WHEREFORE, the petition is GRANTED. The December 12, 2005 Order of Regional Trial Court of
Parañaque 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 ORDERED.
Quisumbing, Chairperson, Carpio, Tinga, Velasco, Jr., JJ., concur.

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Quisumbing, Chairperson, Carpio, Tinga, Velasco, Jr., JJ., concur.
Footnotes
1 Records, 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. Dr. 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 assert, in the alternative or
otherwise, as many causes of action as may have against 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 or
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. Blanco, 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.

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?Infante v. Aran Builders, GR 156594 Aug 24, 2007
Sunday, November 14, 2010
11:41 PM

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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 RTC-
MAKATI, BRANCH 142, HONORIO TORRES & SONS, INC., and ROBERTO H. TORRES, Respondents.
DE C I S I O N
QUISUMBING, J.:
This is a special civil action for certiorari seeking to nullify and set aside the Decision1 dated March 10,
2005 and Resolution2 dated May 26, 2005 of the Court of Appeals in CA-G.R. SP. No. 83919. The
appellate court had dismissed the petition for certiorari and prohibition filed by petitioner and denied its
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, Inc. (HTSI),
filed a Petition for Annulment of Real Estate Mortgage and Foreclosure 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 Torres, the Register of Deeds of Marikina and Quezon City, and petitioner Hi-
Yield Realty, Inc. (Hi-Yield). It was docketed as Civil Case No. 03-892 with Branch 148 of the Regional
Trial Court (RTC) of Makati City.
On September 15, 2003, petitioner moved to dismiss the petition on grounds of improper venue and
payment of insufficient 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 form of a derivative suit cognizable
by a special commercial court pursuant to Administrative Matter No. 00-11-03-SC.5 Petitioner sought
reconsideration, but its motion was denied in an Order6 dated April 27, 2004.
Thereafter, petitioner filed a petition for certiorari and prohibition before the Court of Appeals. In a
Decision dated March 10, 2005, the appellate court agreed with the RTC that the case was a derivative
suit. It further ruled that the prayer for annulment of mortgage 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
Petitioner’s motion for reconsideration8 was denied in a Resolution dated May 26, 2005.
Hence, this petition which raises the following issues:
I.
WHETHER THE HONORABLE COURT 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 DISMISSING THE COMPLAINT AS
AGAINST HI-YIELD EVEN IF THE JOINDER OF PARTIES IN THE COMPLAINT VIOLATED THE RULES ON
VENUE.
III.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE ANNULMENT OF
REAL ESTATE MORTGAGE AND FORECLOSURE SALE 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) whether 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 derivative suit.
Petitioner imputes grave abuse of discretion on the Court of Appeals for not dismissing the case against
it even as the trial court found the same to be a real action. It explains that the rule on venue under the
Rules of Court prevails over the rule prescribing the venue for intra-corporate controversies; hence, HTSI
erred when it filed its suit only in Makati when the lands subjects of the case are in Marikina and
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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 court erred in ruling that the action is mainly a
derivative suit and the annulment 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 relief prayed for
revealed that the main thrust of the action is to recover the lands. Lastly, petitioner asserts that it
should be dropped as a party to the case for it has been wrongly impleaded as a non-stockholder
defendant in the intra-corporate dispute.
On the other hand, respondents maintain that the action is primarily a derivative suit to redress the
alleged unauthorized acts of its corporate officers and major stockholders in connection with the lands.
They postulate that the nullification of the mortgage and foreclosure sale would just be a logical
consequence of a decision adverse to said officers and stockholders.
After careful consideration, we are in agreement that the petition must be dismissed.
A petition for certiorari is proper if a tribunal, board or officer exercising judicial or quasi-judicial
functions acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack
or excess of jurisdiction and there is no appeal, or any plain, speedy and adequate remedy in the
ordinary course of law.10
Petitioner sought a review of the trial court’s Orders dated January 22, 2004 and April 27, 2004 via a
petition for certiorari before the Court of Appeals. In rendering the assailed decision and resolution, the
Court of Appeals was 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 erroneous, the decision and resolution
of the appellate court should properly be assailed 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 errors 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 certiorari 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 impetuously filed a petition for
certiorari before us when a petition for review was available as a speedy and adequate remedy. Notably,
petitioner filed the present petition 5814 days after it received a copy of the assailed resolution dated
May 26, 2005. To our mind, this belated action evidences petitioner’s effort to substitute for a lost
appeal this petition for certiorari.
For the extraordinary remedy of certiorari to lie by reason of grave abuse of discretion, the abuse of
discretion 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 reason 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 issues posed by petitioner rests on a determination of the nature of the
petition filed 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
Corporation 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 permitted 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 stockholder, 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 requisites before a
stockholder can file a derivative suit:
a) the party bringing suit should be a shareholder as of the time of the act or transaction complained of,
the number of his shares not being material;
b) he has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors
for the appropriate relief but the latter 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.19
Even then, not every suit filed on behalf of the corporation is a derivative suit. For a derivative suit to

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being caused to the corporation and not to the particular stockholder bringing the suit.19
Even then, not every suit filed on behalf of the corporation is a derivative suit. For a derivative suit to
prosper, the minority stockholder suing for and on behalf of the corporation must allege in his complaint
that he is suing on a derivative cause of action on behalf of the corporation and all other stockholders
similarly situated who may wish to join him in the suit.20 The Court finds that Roberto had satisfied this
requirement in paragraph five (5) of his petition which reads:
5. Individual petitioner, being a minority stockholder, is instituting the instant proceeding by way of a
derivative suit to redress wrongs done to petitioner corporation and vindicate corporate rights due to
the mismanagement and abuses committed against it by its officers and controlling stockholders,
especially by respondent Leonora H. Torres (Leonora, for brevity) who, without authority from the Board
of Directors, arrogated upon herself the power to bind petitioner corporation from incurring loan
obligations and later allow company properties to be foreclosed as hereinafter set forth;21
Further, while it is true that the complaining stockholder must satisfactorily show that he has exhausted
all means to redress his grievances within the corporation; such remedy is no longer necessary where
the corporation itself is under the complete control of the person against whom the suit is being filed.
The reason is obvious: a demand upon the board to institute an action and prosecute the same
effectively would 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
family members/stockholders before he filed the case. He also maintained that Leonora Torres held 55%
of the outstanding shares while Ma. Theresa, Glenn and Stephanie excluded him from the affairs of the
corporation. Even more glaring was the fact that from June 10, 1992, when the first mortgage deed was
executed until July 23, 2002, when the properties mortgaged were foreclosed, the Board of Directors of
HTSI did nothing to rectify the alleged unauthorized transactions of Leonora. 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, Section 5, Rule 1 of A.M. No. 01-2-04-SC states:
SEC. 5. Venue. - All actions covered by these Rules shall be commenced and tried in the Regional Trial
Court which has jurisdiction over the principal office of the corporation, partnership, or association
concerned. Where the principal office of the corporation, partnership or association is registered in the
Securities and Exchange Commission as Metro 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 discretion 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 any grave abuse of discretion on the part of the Court of Appeals the other
alleged errors will no longer be passed upon as mere errors of judgment are not proper subjects of a
petition for certiorari.
WHEREFORE, the instant petition is hereby 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 pronouncement as to costs.
SO ORDERED.
LEONARDO A. QUISUMBING
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO*
Associate Justice
MINITA V. CHICO-NAZARIO** TERESITA J. LEONARDO-DE CASTRO***
Associate Justice Associate Justice
ARTURO D. BRION
Associate Justice
ATT ES T AT I O N
I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING

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assigned to the writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
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 Chairperson’s Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
* Designated member of the Second Division per Special Order No. 645 in place of Associate Justice

Conchita Carpio Morales 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, pp. 20-31. Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices Lucas P.

Bersamin (now a member of this Court) and Celia C. Librea-Leagogo concurring.

2 Id. at 33.
3
Records, pp. 1-6.
4 Id. at 47-51.
5 Resolution Designating 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, June 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 relates 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 territorial area as defined by the Supreme Court whether or not
the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate
jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, unless otherwise provided by
law or these rules, the petition shall be filed in and cognizable only by the Court of Appeals.
12 Banco Filipino Savings and Mortgage Bank v. Court of Appeals, supra at 316.
13 Id.
14 Petitioner received a copy of the assailed Resolution dated May 26, 2005 on May 31, 2005.
15 Banco Filipino 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, 518 SCRA 453, 471.
18 Id.
19 Id. at 472.
20 Chua v. Court of Appeals, G.R. No. 150793, November 19, 2004, 443 SCRA 259, 268.
21 Rollo, p. 35.
22 Filipinas Port Services, Inc., v. Go, supra at 472.
23
Took effect on April 1, 2001.
24 The Securities Regulation Code, approved on July 19, 2000.
25 SECTION 1.

(a) Cases covered. – These Rules shall govern the procedure to be observed in civil cases involving the
following:
xxx x
(4) Derivative suits; and
xxx x

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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, PETITIONERS,
VS. COURT OF APPEALS, JULITA C. BENEDICTO, AND FRANCISCA BENEDICTO-PAULINO, 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
October 17, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 64246 and its Resolution[2] of June 20,
2002 denying petitioners' motion for reconsideration. The assailed CA decision annulled and set aside
the Orders dated October 9, 2000, December 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 Case Nos.
3341-17 and 3342-17.

The Facts

Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, and his business
associates (Benedicto Group) organized Far East Managers and Investors, Inc. (FEMII) and Universal
Equity Corporation (UEC), respectively. As petitioner Irene Marcos-Araneta would later allege, both
corporations were organized pursuant to a contract or arrangement whereby 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 those 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 instituted before the RTC two similar complaints for conveyance of
shares of stock, accounting and receivership against the Benedicto Group with prayer for the issuance 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, followed later by an Amended Motion to Dismiss. Benedicto, on the other hand, moved to
dismiss[4] Civil Case No. 3342-17, adopting in toto the five (5) grounds raised 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 Commission, not the RTC, has jurisdiction; (2) venue was improperly
laid; and (3) the complaint failed to state a cause of action, as there was no allegation therein 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 Benedicto and Francisca
countered with a Joint Reply to Opposition.

Upon Benedicto's motion, both cases were consolidated.

During the preliminary proceedings on their motions to dismiss, Benedicto and Francisca, by way of
bolstering their contentions on improper venue, presented the Joint Affidavit[5] of Gilmia B. Valdez,
Catalino A. Bactat, and Conchita R. Rasco 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 said

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place as she in fact only visited the mansion twice in 1999; that she did not vote in Batac in the 1998
national elections; and that she was staying at her husband's house in Makati City.

Against the aforesaid unrebutted joint affidavit, Irene 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
Norte.

In the meantime, on May 15, 2000, Benedicto died and was substituted by his wife, Julita C. Benedicto,
and Francisca.

On June 29, 2000, the RTC dismissed both complaints, stating that these partly constituted "real action,"
and that Irene 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 raised in the different Motions to Dismiss
x x x moot and academic."

From the above order, Irene interposed a Motion for Reconsideration[8] which Julita and Francisca duly
opposed.

Pending resolution of her motion for reconsideration, Irene filed on July 17, 2000 a Motion (to Admit
Amended Complaint),[9] attaching therewith 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 plaintiffs.
As stated in the amended complaint, the added plaintiffs, all from Ilocos Norte, were Irene's new
trustees. Parenthetically, the amended complaint stated practically the same cause of action but, as
couched, sought the reconveyance 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 aforementioned, but deferred action on her motion to admit amended complaint and
the opposition thereto.[11]

On October 9, 2000, the RTC issued an Order[12] entertaining the amended complaint, dispositively
stating:
WHEREFORE, the admission of the Amended 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 predicated its order on the following premises:

(1) Pursuant to Section 2, Rule 10 of the Rules of Court,[13] Irene may opt to file, as a matter of right, an
amended complaint.

(2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos Norte resident, in the
amended complaint setting out the same cause of action cured 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 RTC, by Order[14] dated
December 18, 2000, denied the motion and reiterated its directive for the two to answer the amended
complaint.

In said order, the RTC stood pat on its holding on the rule on amendments of pleadings. 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 August 25, 2000 when the court denied Irene's motion for reconsideration of the June 29, 2000

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i.e., on August 25, 2000 when the court denied Irene's motion for reconsideration of the June 29, 2000
order dismissing the original complaints, the court stated 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 thereto. 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 March 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 same 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 complaint;
and the third, denying their motion for reconsideration of the second issuance.

Inasmuch as the verification portion of the joint petition and the certification on non-forum shopping
bore only Francisca's signature, the CA required 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 corresponding authorizing Affidavit[17] executed by Julita in favor of
Francisca.

Later developments saw the CA issuing a TRO[18] and then a writ of preliminary injunction[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 assailed 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 foregoing premises, the petition is hereby GRANTED. The assailed
Orders admitting the amended complaints are SET ASIDE for being null and void, and the
amended complaints a quo are, accordingly, DISMISSED. [20]
Irene and her new trustees' motion for reconsideration of the assailed decision was denied through the
equally assailed June 20, 2002 CA Resolution. Hence, this petition for review is before us.

The 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) ruling on the merits of the trust issue which involves factual and evidentiary
determination, processes not proper in a petition for certiorari under Rule 65 of the Rules of Court; (3)
ruling that the amended complaints in the lower court should be dismissed because, at the time it was
filed, there was no more original complaint 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 and that
none of the principal parties are residents of Ilocos Norte.[21]

The Court'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 Certification 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,
who failed to sign the verification and certification of non-forum shopping. Petitioners thus fault the
appellate court for directing Julita's counsel to submit a written authority for Francisca to represent

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appellate court for directing Julita's counsel to submit a written authority for Francisca to represent
Julita in the certiorari proceedings.

We are not persuaded.

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 the Court articulated
in Kimberly Independent Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized
Labor Associations in Line Industries and Agriculture (OLALIA) v. Court of Appeals:
[V]erification is a formal, not a jurisdictional requisite, as it is mainly intended to secure an
assurance that the allegations therein made are done in good faith or are true and correct and not
mere speculation. The Court may order the correction of the pleading, if not verified, 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 ends 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 authority to sign on Julita's behalf and represent her in the proceedings before the appellate
court.

Signature by Any of the Principal Petitioners is Substantial Compliance

Regarding the certificate of non-forum shopping, the general rule is that all the 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 to promote the orderly administration of justice, do not interdict
substantial compliance with its provisions under justifiable circumstances.[26] As has been ruled by the
Court, the signature of any of the principal petitioners[27] or principal parties,[28] as Francisca is in this
case, would constitute a substantial compliance with the rule on verification and certification of non-
forum shopping. It cannot be overemphasized that Francisca herself was a principal party in Civil Case
No. 3341-17 before the RTC and in the certiorari proceedings before the CA. Besides being an heir of
Benedicto, Francisca, with her mother, Julita, was substituted 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 the 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. Heirs of Clarita Cavile.[29] Like Thomas Cavile, Sr. and the other petitioners in
Cavile, Francisca and Julita, as petitioners before the CA, had filed their petition 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 delve into the issue of trust which, under the premises, cannot be judiciously resolved
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 the 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 falsehood of facts or when the query

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invites the calibration of the whole evidence considering mainly the credibility of the witnesses, the
existence and relevancy of specific surrounding circumstances, as well as their relation to each other
and to the whole, and the probability of the situation.[30]

Clearly then, the CA overstepped its boundaries when, in disposing of private respondents' petition for
certiorari, it did not confine itself to determining whether or not lack of jurisdiction or grave abuse of
discretion tainted the issuance 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 virtually resolved petitioner
Irene's case for reconveyance on its substantive merits even before evidence on the matter could be
adduced. Civil Case Nos. 3341-17 and 3342-17 in fact have not even reached the pre-trial stage. To
stress, the nature of the trust allegedly constituted in Irene's favor and its enforceability, being
evidentiary in nature, are best determined by the trial court. The original complaints and the amended
complaint certainly do not even clearly indicate whether the asserted trust is implied or express. To be
sure, an express trust differs from the implied variety in terms of the manner of proving its existence.[31]
Surely, the onus of factually determining whether the trust allegedly established in favor of Irene, if one
was indeed established, was implied or express properly pertains, at the first instance, to the trial court
and not to the appellate court in a special civil action for certiorari, as here. In the absence of evidence
to prove or disprove the constitution and necessarily the existence of the trust agreement between
Irene, on one hand, and the Benedicto Group, on the other, the appellate court cannot intelligently pass
upon the issue of trust. A pronouncement on said issue of trust rooted on speculation and conjecture, if
properly challenged, must be struck down. So it must be here.

Third Issue: Admission of Amended Complaint Proper

As may be recalled, the CA veritably declared as reversibly 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 ordered with finality
the dismissal of the original complaints. According to petitioners, scoring the CA for its declaration
adverted to and debunking its posture on the finality of the said RTC order, the CA failed to take stock of
their motion 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:
SEC. 2. Amendments as a matter of right. -- A party may amend his pleading once as 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 aforequoted provision makes it abundantly clear that the plaintiff may amend his complaint once
as a matter of right, i.e., without leave of court, before any responsive pleading is filed or served.
Responsive pleadings are those which seek affirmative relief and/or set up defenses,[32] like an answer. A
motion to dismiss is not a responsive pleading for purposes of Sec. 2 of Rule 10.[33] Assayed against the
foregoing perspective, the RTC did not err in admitting petitioners' amended complaint, Julita and
Francisca not having yet answered the original complaints when the amended complaint was filed. At
that precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a matter of right, the option of
amending 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, expounding 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-20124 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 Civil
Case No. C-20124 as a matter of right. Following this Court's ruling in Breslin v. Luzon Stevedoring
Co. considering that respondent has the right to amend her complaint, it is the correlative duty of

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 the trial court to accept the amended complaint; otherwise, mandamus would lie against 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 admit her amended complaint. [34]
It may be argued that the original complaints had 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
filed the amended complaint on July 17, 2000, she having meanwhile seasonably sought reconsideration
thereof. Irene's motion for reconsideration was only resolved on August 25, 2000. Thus, when Irene filed
the amended complaint on July 17, 2000, the order of dismissal was not yet final, implying that there
was strictly no legal impediment to her amending her original complaints.[35]

Fourth Issue: Private Respondents did not Waive Improper Venue

Petitioners maintain that Julita and Francisca were effectively precluded from raising the matter of
improper venue by their subsequent acts of filing numerous pleadings. To petitioners, these pleadings,
taken together, signify a waiver of private respondents' initial objection to improper venue.

This contention is without basis and, at best, tenuous. Venue essentially concerns a rule of procedure
which, in personal actions, is fixed for the greatest convenience possible of the plaintiff and his
witnesses. The ground of improperly laid venue must be raised seasonably, else it is deemed waived.
Where the defendant 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 right 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 filing the answer to the complaint,"[37] the matter of improper venue.
They would thereafter reiterate and pursue their objection on venue, first, in their answer 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 jurisdiction 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 of 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
wordings 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 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-resident 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, as defendants a quo, to
acknowledge holding in trust Irene's purported 65% stockownership 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. In other words, Irene seeks to compel recognition of the trust arrangement she has 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 then only to the extent of their stockownership.

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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 Francisca 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
the real properties instead of against persons.[40] We particularly note that possession 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.

Given the foregoing perspective, we now tackle the determinative question of venue in 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 perceives no compelling
reason to disturb, in the confines of this case, the factual determination of the trial court and the
premises holding it together. Accordingly, 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 any of the principal plaintiffs resides" at the
time she filed her amended complaint. 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, Ilocos is really
of no moment. Let alone the fact that one can easily secure a basic residence certificate practically
anytime in any Bureau of Internal Revenue or treasurer's office and dictate whatever relevant data one
desires entered, Irene procured CTC No. 17019451 and appended the same to her motion for
reconsideration 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 the proper court venue,
asseverate that Batac, Ilocos Norte is where the principal parties reside.

Pivotal to the resolution of the venue issue is a determination 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 to the avails of the suit. Unless otherwise
authorized by law or these Rules, every action must be prosecuted or defended in the name of the
real party in interest.

SEC. 3. Representatives as parties. -- Where the action is allowed to be prosecuted or defended by

a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the
title of the case and shall be deemed to be the real party in interest. A representative may be a
trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law
or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal
may sue or be sued without joining the principal except when the 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 tried 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-resident defendant where he may be found, at the
election of the plaintiff.

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 election of the plaintiff.
Venue is Improperly Laid

There can be no serious dispute that the real party-in-interest plaintiff is Irene. As self-styled beneficiary
of the disputed trust, she stands to be benefited or entitled to the avails of 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-plaintiffs in the amended complaint as Irene's new designated trustees. As trustees,
they 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 plaintiff 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. Feria, "the word `principal' has been added [in the uniform
procedure rule] in order 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 have 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 undisputedly 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 the place where Irene resides.

Principal Plaintiff not a Resident in Venue of Action

As earlier stated, no less than the RTC in Batac declared Irene as not a resident of Batac, Ilocos Norte.
Withal, that court was an improper venue for her conveyance action.

The Court can concede that Irene's three co-plaintiffs are all residents of Batac, Ilocos Norte. But it
ought to be stressed in this regard that not one of the three can be considered as principal party-
plaintiffs in Civil Case Nos. 3341-17 and 3342-17, included as they were in the amended complaint as
trustees of the principal plaintiff. As trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the
right to prosecute a suit, but only on behalf of the beneficiary who must be included in the title of the
case and shall be deemed to be the real party-in-interest. In the final analysis, the residences of Irene's
co-plaintiffs cannot be made the basis in determining the venue of the subject suit. This conclusion
becomes all the more forceful considering that Irene herself initiated and was actively prosecuting her
claim against Benedicto, his heirs, assigns, or associates, virtually rendering the impleading of the
trustees unnecessary.

And this brings us to the final point. Irene was a resident during the period material 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 residences, if such were the established fact. The Court will not speculate on
the reason why petitioner Irene, for all the inconvenience and expenses she and her adversaries would
have to endure by a Batac trial, preferred that her case be heard and decided by the RTC in Batac. On
the heels of the dismissal of the original 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 case
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 keep 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 lack 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 cases 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 concurred 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. at 143.

[6]
Id. at 128, CTC No. 12308513.

[7]
Id. at 152.

[8] Id. at 153-157.

[9] Id. at 345-346.

[10] Id. at 347-357.

[11] Id. at 165-166.

[12] Id. at 167-171.

[13] Sec. 2.
Amendments as a matter of right. - A party may amend his pleading once as a matter of right
at any time before a responsive pleading is served x x x.

[14] Rollo,
pp. 358-365A.

[15] Id. at 238-245 & 246-253, for Civil Case Nos. 3341-17 and 3342-17, respectively.

[16] Id. at 261.

[17] Id. at 258.

[18]
Id. at 262, CA Resolution.

[19] Id. at 300-301.

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[19]
Id. at 300-301.

[20]
Supra note 1, at 316.

[21]
Rollo, p. 677.

[22]
SEC. 4. Verification. -- x x x A pleading is verified by an affidavit that the affiant has read the pleading
and that the allegations therein are true and correct of his personal knowledge or based on authentic
records. x x x

[23] SEC.5. Certification 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 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 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 present status thereof; and (c) if he should thereafter learn that the
same or similar 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 filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice,
unless otherwise provided, upon motion and after hearing.

[24]
G.R. Nos. 149158-59, July 24, 2007, 528 SCRA 45, 60.

[25]
Enopia v. Court of Appeals, G.R. No. 147396, July 31, 2006, 497 SCRA 211, 219.

[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, April 1, 2003, 400 SCRA 255.

[27]
Calo v. Villanueva, G.R. No. 153756, January 30, 2006, 480 SCRA 561, 567.

[28] Condo Suite Travel, Inc. v. NLRC, G.R. No. 125671, January 28, 2000, 323 SCRA 679, 687.

[29] Supra note 26, 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 Cipriano 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 property may be
proved by parol evidence, while Art. 1446 of the Code requires that the beneficiary of an express trust
must accept the trust if it imposes onerous 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, March 5, 1993, 219 SCRA 631, 637.

[33] Alpine Lending Investors v. Corpuz, November 24, 2006, 508 SCRA 45, 48; citations omitted.

[34] Id.
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. 43364, 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.

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400.

[37] RULES OF COURT, Rule 16, Sec. 1.

[38]
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 v. Court of Appeals, G.R. No. 128803, September 25, 1998, 296 SCRA 539, 552.

[41]
Rollo, p. 157.

[42] 1 CIVIL PROCEDURE ANNOTATED 261 (2001).

[43] 1 REMEDIAL LAW COMPENDIUM 108 (8th ed., 2002).

[44] Romualdez-Marcos v. Commission on Elections, G.R. No. 119976, September 18, 1995, 248 SCRA 300,
324.

Pasted from <http://elibrary.judiciary.gov.ph/decisions.php?doctype=Decisions%20/%20Signed%20Resolutions&docid=

122049414865801818>

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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; BRINELL 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 that 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 dismiss the complaint in Civil Case No. 91-3366
entitled "Philippine Banking Corporation 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, petitioner
comes to us on a petition for review on certiorari.
Briefly, the facts show that petitioner, Philippine Banking Corporation, filed a complaint with
prayer for preliminary attachment on December 5, 1991 against private respondents herein,
Brinell Metal Works Corporation and Spouses Jose and Nally Ang, for collection of a loan
evidenced by two (2) promissory notes.
On December 16, 1991, respondent 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 jurisdiction over the persons of the defendants; and (b) improper
venue. They claim that summons was served on defendant corporation's customer who was not
authorized to receive the same for and in behalf of the corporation. They likewise object 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
LEGAL 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
and/or to formally oppose the same notwithstanding a showing of receipt of the subject motion as early as
January 31, 1992.
Finding the motion to be studiously well-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 Rules 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 motion 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 granting 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 Manila 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 Polytrade Corporation v. Blanco. 3
On March 11, 1992, respondent court denied petitioner's motion for reconsideration and
remained steadfast in its position explaining that its dismissal order is predicated on the
doctrinal rule enunciated in Bautista v. Hon. Juan de Borja, et al. 4 that the proper court of
Manila is the venue for an action upon a document stipulating such "in case of any litigation
herefrom, 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 of Court, as would have been

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choose venue as provided for in Section 2(b), Rule 4 of the Rules of Court, as would have been
done had the parties intended to retain such right of election.
Respondent court brushed aside Polytrade v. Blanco 5 stating that Bautista and Polytrade
appear not to square with each other and that perhaps, the clear parameters on the rule vis-a-
vis proper venue should be defined.
Thus, the sole issue to be resolved in this petition is whether or not the respondent court erred
in holding 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 relates to
the place of trial or geographical location in which an action or proceeding should be brought
and not to the jurisdiction of the court. The matter of venue 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 commenced 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 an action may be changed or transferred from one province to another. 8 Besides when
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 matter. 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 convenient 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 early as the case of Central Azucarera de Tarlac v. De Leon, 10 this Court ruled that 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 written 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,
Philippines," this Court held in Bautista v. De Borja, 11 that the parties must reserve their right of
election if they want to file in a place other than the venue agreed upon, thus:
. . . We note that neither party to the contracts reserved the right to choose the venue of action as fixed by
law (i.e., where the plaintiff or defendant resides, 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 granted 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, notwithstanding that neither party is a resident of Manila. . . .
Subsequently, in Polytrade Corporation v. Blanco, 12 this Court expostulated a contrary doctrine
that as long as the stipulation does not set forth qualifying or restrictive words to indicate that
the agreed place alone and none other is the 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 sue 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
would indicate that Manila and Manila alone is the venue are totally absent therefrom. We cannot read
into that clause that plaintiff and defendant bound themselves to file suits with respect to the last two
transactions in question only or exclusively in Manila. For, that agreement did not change or transfer
venue. It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals 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 analogous
stipulation which read: "In case of dispute, both contracting parties agree to submit to the
jurisdiction of the Vienna courts" was interpreted as follows: "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 nothing exclusive in the language used. They do agree to submit to the
Viennese jurisdiction, 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 entirely plain that such agreements
should be strictly construed, and should not be extended by implication."
The doctrine in Polytrade was reiterated in Nicolas v. Reparations Commission 14 where the
issue posed was also whether the stipulation on venue is restrictive or merely permissive. The
Court therein held:
. . . venue in personal is fixed for the convenience of the plaintiff and his witnesses and to promote the
ends of justice. We cannot conceive how the interests of justice may be served by confining the situs of

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the action to Manila, considering that the residences or offices of all the parties, including the situs of the
acts sought to be restrained or required to be done, are all within the territorial jurisdiction of Rizal.
While the parties have 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 shows 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 same doctrine in
Tantoco v. Court of Appeals, 15 to wit:
It is elementary that venue is waivable, since it is a procedural, not a jurisdictional, matter. The record
shows that the parties agreed that the courts of Manila shall have jurisdiction to try this case. The
agreement is evidenced by sales contracts duly presented at the ex parte hearing of March 25, 1966,
whereby the parties submitted themselves to the jurisdiction of the courts of Manila for any legal action
arising out of their transaction. In short, the parties agreed to 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 is 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 case 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 18, 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 condition 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 public policy
on transfers of venue of actions. The Court therein explained that the philosophy underlying the
provisions on transfer of venue of actions is the convenience 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 Cebu City would incur to prosecute a claim in the City of Cebu, he would
most probably decide not to file the action at all, the Court said.
The later cases of Lamis 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 Corporation v. Sherman; 22 Nasser v. Court of
Appeals; 23 and just recently, Surigao Century Sawmill Co. v. Court of Appeals, 24 all treaded the
path blazed by Polytrade. The conclusion to be drawn from all these is that the more recent
jurisprudence shall properly be deemed modificatory of the old ones. Restating the rule, 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 considered 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 based 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 filing its case against private
respondents in Makati where petitioner holds its residence, pursuant to Section 2(b) of Rule 4 of
the Revised Rules of Court.
WHEREFORE, the petition in this case is GRANTED and the orders of respondent Presiding
Judge of the Regional Trial Court Branch 146, at Makati, dated February 28, 1992 and March
11, 1992 dismissing the complaint and denying the motion for reconsideration are hereby
REVERSED and the complaint in the captioned civil case is REINSTATED.
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 parties to agree on the change or transfer of
venue.

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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.
In 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 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 public 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 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; besides, the two (2) venues involved, namely
Makati and Manila, are so geographically close to each other, such that there is no perceivable
reason why there would 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 petition and uphold the decision of the court a quo.

# Separate Opinions
PADILLA, J., dissenting:
Section 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.
In 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 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 public 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 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; besides, the two (2) venues involved, namely
Makati and Manila, are so geographically close to each other, such that there is no perceivable
reason why there would 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 petition 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 the Revised Rules of Court.

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9 Sec. 4, Rule 4 of the Revised Rules of Court.
10 56 Phil. 169.
11 Supra.
12 Supra.
13 151 N.Y.S. 593, 594.
14 G.R. No. L-28649, 64 SCRA 110.
15 G.R. No. L-29345, 77 SCRA 225 (1977).
16 G.R. No. L-44351, 83 SCRA 297.
17 G.R. No. L-37750, 83 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-73913, 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).

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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, THE 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 assailing the orders dated May 15, 2003[1] and September 15, 2003[2] in
Civil Case No. 2002-0555 issued by public respondent, Presiding Judge Jane Aurora C. Lantion, 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 and dollar loans from respondent Planters
Development Bank and executed several real estate mortgages and promissory notes to cover the loans.
They defaulted on the payments so respondent bank foreclosed the mortgaged lots. The foreclosed
properties, in partial satisfaction of petitioners’ debt, were sold at a public auction where the
respondent bank was the winning bidder. On November 8, 2003, petitioners filed against Planters
Development Bank and its officers Elizabeth Umali, Alice Perce and Jelen Mosca (private respondents), a
Complaint for Declaration of Nullity and/or Annulment of Sale and/or Mortgage, Reconveyance,
Discharge of Mortgage, Accounting, Permanent Injunction, and Damages with the RTC of Lipa City,
Batangas. Petitioners alleged that only their peso loans were covered by the mortgages and that these
had already been fully paid, hence, the mortgages should have been discharged. They challenged the
validity of the foreclosure on the alleged non-payment of their dollar loans as the mortgages did not
cover those loans.
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 Manila.
On May 15, 2003, the respondent judge dismissed the case for improper venue.
Petitioners sought reconsideration. They argued that the trial court in effect prejudged the validity of
the loan documents because the trial court based its dismissal on a venue stipulation provided in the
agreement. The motion for reconsideration was denied and the lower court held that the previous order
did not touch upon the validity of the loan documents but merely ruled on the procedural issue of
venue.
Petitioners now come before us alleging that:
I
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION IN HOLDING THAT THE VENUE STIPULATIONS IN THE "REAL ESTATE MORTGAGE" AND
"PROMISSORY NOTES" FALL WITHIN THE PURVIEW OF SECTION 4(B) OF RULE 4 OF THE 1997 RULES 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 OR EXCESS
OF JURISDICTION IN NOT FINDING THAT THE MERE USE OF THE WORD "EXCLUSIVELY" DOES NOT, BY
ITSELF, MEAN THAT SUCH STIPULATIONS AUTOMATICALLY PROVIDE FOR AN "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 STIPULATION CLEARLY PROVIDES OTHERWISE.
III
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION IN DISREGARDING THE FACT THAT HEREIN PETITIONERS’ COMPLAINT INVOLVES
SEVERAL CAUSES OF ACTION WHICH DO NOT ARISE SOLELY FROM THE "REAL ESTATE MORTGAGE" AND
"PROMISSORY NOTES" AND WHICH OTHER CAUSES OF ACTION MAY BE FILED IN OTHER VENUES UNDER

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SECTIONS 1 AND 2 OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE.
IV
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION IN DISREGARDING THE PRINCIPLE THAT THE RULE ON VENUE OF ACTIONS IS
ESTABLISHED FOR THE CONVENIENCE OF THE PLAINTIFFS.[3]
The main issue in the present petition is whether respondent judge committed grave abuse of discretion
when she dismissed the case for improper venue.
Petitioners contend that, since the validity of the loan documents were squarely put in issue, necessarily
this meant also that the validity of the venue stipulation also was at issue. Moreover, according to the
petitioners, the venue stipulation in the loan documents is not an exclusive venue stipulation under
Section 4(b) of Rule 4 of the 1997 Rules of Civil Procedure.[4] The venue in the loan agreement was not
specified with particularity. Besides, petitioners posit, the rule on venue of action was established for
the convenience of the plaintiff, herein petitioners. Further, petitioners also 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 stipulation should not be made to apply.
Private respondents counter that, in their complaint, petitioners did not assail the loan documents, and
the issue of validity was merely petitioners’ afterthought to avoid being bound by the venue stipulation.
They also aver that the venue stipulation was not contrary to the doctrine in Unimasters,[5] which
requires that a venue stipulation employ categorical and 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 exclusive.
At the outset, we must make clear that under Section 4 (b) of Rule 4 of 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 agreed in writing on an exclusive venue. The mere stipulation on the venue of an
action, however, is not enough to preclude parties from bringing a case in other venues. 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 deemed as merely an agreement on an additional forum, not as limiting
venue to the specified 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 bring their causes of auction (sic) exclusively in the
proper court of Makati, Metro Manila or at such other venue chosen by the Mortgagee, the Mortgagor
waiving for this purpose any other venue.[8] (Emphasis supplied.)
I/We further submit that 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 Court.[9] (Emphasis supplied.)
Clearly, the words "exclusively" and "waiving for this purpose any other venue" are restrictive and used
advisedly to meet the requirements.
Petitioners claim that effecting the exclusive venue stipulation would 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 coverage of the mortgage contracts. What petitioners claimed is that their peso loans 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 issues of whether the mortgages should be properly discharged
and whether these also cover the dollar loans, arose out of the said loan documents, the stipulation 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 discretion, as the questioned orders were evidently in accord with law and jurisprudence.
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.

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