(18) CIVPRO – DOCTRINE OF NON INTERFERENCE OR JUDICIAL STABILITY of time and therefore, the assailed decision became final
fore, the assailed decision became final and executory and could no longer be
G.R. No. 127371 April 25, 2002
PHILIPPINE SINTER CORPORATION and PHIVIDEC INDUSTRIAL AUTHORITY, petitioners,
vs.
CAGAYAN ELECTRIC POWER and LIGHT CO., INC., respondent.
SANDOVAL-GUTIERREZ, J.:
Before this Court is a petition for review1 questioning the Decision2 of the Court of Appeals dated
July 23, 1996 in CA-G.R. SP No. 36943, "Cagayan Electric Power and Light Co., Inc. vs. Hon. Cesar M.
Ybañez, et al." which reversed the decision of the Regional Trial Court of Cagayan de Oro City,
Branch 17, in Civil Case No. 94-186 for injunction.
The antecedents are:
On January 21, 1987, President Corazon C. Aquino and her Cabinet approved a Cabinet Reform
Policy for the power sector and issued a Cabinet Memorandum, Item No. 2 of which provides:
"Continue direct connection for industries authorized under the BOI-NPC Memorandum
of Understanding of 12 January 1981, until such time as the appropriate regulatory board
determines that direct connection of industry to NPC is no longer necessary in the
franchise area of the specific utility or cooperative. Determination shall be based in the
utility or cooperatives meeting the standards of financial and technical capability with
satisfactory guarantees of non-prejudice to industry to be set in consultation with NPC
and relevant government agencies and reviewed periodically by the regulatory board."
(emphasis ours)
Pursuant to such Cabinet Memorandum, respondent Cagayan Electric Power and Light, Co.
(CEPALCO), grantee of a legislative franchise3 to distribute electric power to the municipalities of
Villanueva, Jasaan and Tagoloan, and the city of Cagayan de Oro, all of the province of Misamis
Oriental, filed with the Energy Regulatory Board (ERB) a petition entitled "In Re: Petition for
Implementation of Cabinet Policy Reforms in the Power Sector," docketed as ERB Case No. 89-430.
The petition sought the "discontinuation of all existing direct supply of power by the National Power
Corporation (NPC, now NAPOCOR) within CEPALCO's franchise area."4
The ERB issued a notice of public hearing which was published in the newspapers and posted in the
affected areas. It likewise furnished NAPOCOR and the Board of Investments (BOI) copies of the
petition and directed them to submit their comments.
After hearing, the ERB rendered a decision5 granting the petition, the dispositive portion reads:
"WHEREFORE, in view of the foregoing premises, where the petitioner has been proven
to be capable of distributing power to its industrial consumers and having passed the
secondary considerations with a passing mark of 85%, judgment is hereby rendered
granting relief prayed for. Accordingly, it is hereby declared that all direct connection of
industries to NPC within the franchise area of CEPALCO is no longer necessary. Therefore,
all existing NPC (now NAPOCOR) direct supply of power to industrial consumers within
the franchise area of CEPALCO is hereby ordered to be discontinued. x x x."6
NAPOCOR filed a motion for reconsideration, which the ERB denied. Thereafter, NAPOCOR filed a
petition for review with the Court of Appeals. On October 9, 1992, the Court of Appeals dismissed
the petition, holding that the motion for reconsideration filed by NAPOCOR with the ERB was out
subject of a petition for review.1âwphi1.nêt
On a petition for review on certiorari,7 this Court affirmed the Resolution of the Court of Appeals.
Judgment was entered on September 22, 1993, thus rendering final the decision of the ERB.8
To implement the decision in ERB Case No. 89-430, CEPALCO wrote Philippine Sinter Corporation
(PSC), petitioner, and advised the latter of its desire "to have the power supply of PSC, directly taken
from NPC (NAPOCOR), disconnected, cut and transferred" to CEPALCO.9 PSC is an entity operating
its business within the PHIVIDEC10 Industrial Estate (located in the Municipalities of Tagoloan and
Villanueva, Misamis Oriental, covered by CEPALCO's franchise). The Estate is managed and operated
by the PHIVIDEC Industrial Authority (PIA).11 PSC refused CEPALCO's request, citing its contract for
power supply with NAPOCOR effective until July 26, 1996.
To restrain the execution of the ERB Decision, PSC and PIA filed a complaint for injunction against
CEPALCO with the Regional Trial Court of Cagayan de Oro City, Branch 17, docketed as Civil Case No.
94-186. They alleged, inter alia, that there exists no legal basis to cut-off PSC's power supply with
NAPOCOR and substitute the latter with CEPALCO since: (a) there is a subsisting contract between
PSC and NAPOCOR; (b) the ERB decision is not binding on PSC since it was not impleaded as a party
to the case; and (c) PSC is operating within the PHIVIDEC Industrial Estate, a franchise area of PIA,
not CEPALCO, pursuant to Sec. 4 (1) of P.D. 538. Moreover, the execution of the ERB decision would
cause PSC a 2% increase in its electrical bills.
On April 11, 1994, the trial court rendered judgment12 in favor of PSC and PIA, thus:
"WHEREFORE, premises considered, judgment is hereby rendered, by preponderance of
evidence, in favor of plaintiffs PSC and PIA and against defendant CEPALCO and the
petition for injunction should be, as it is hereby, GRANTED. Accordingly, the defendant
CEPALCO, its agents and/or representative, and all those acting in its behalf, are hereby
ordered to refrain, cease and desist from cutting and disconnecting and/or causing to be
cut and disconnected the direct electric power supply of the plaintiff PSC from the NPC
and from transferring the same to defendant CEPALCO, now and until July 26, 1996, when
the contract between plaintiff PSC and the NPC for direct power supply shall have expired.
The counter-claim filed by defendant CEPALCO is DISMISSED. No pronouncement as to
costs.
SO ORDERED."13
CEPALCO filed a motion for reconsideration but was denied by the trial court in its order dated
December 13, 1994. Aggrieved, CEPALCO appealed to the Court of Appeals. On July 23, 1996, the
Court of Appeals rendered its decision,14 the dispositive portion of which reads:
"WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby GRANTED. The assailed
Decision dated April 11, 1994 and the Order dated December 13, 1994 are SET ASIDE. The
writ of preliminary injunction earlier issued is DISSOLVED. No pronouncement as to costs.
SO ORDERED."15
PSC and PIA filed a motion for reconsideration, which was denied in a Resolution16 dated December
2, 1996. Hence the instant petition.
Petitioners submit the following issues for our resolution:
I. THE DECISION OF THE ERB IS CONTRARY TO THE CABINET POLICY REFORM.
 II. THE ERB DECISION INVOLVED ADJUDICATION OF RIGHTS TO THE PREJUDICE OF
PETITIONERS PIA AND PSC.
III. THE CABINET POLICY REFORM CANNOT AMEND THE CHARTER OF PIA, PD 538, AS
AMENDED.
IV. PETITIONERS PIA AND PSC WERE NOT NOTIFIED BY CEPALCO OF ITS PETITION WITH
THE ERB.
V. CIVIL CASE NO. 91-383 ENTITLED PHIVIDEC INDUSTRIAL AUTHORITY VS. CEPALCO
BEFORE BRANCH 17, REGIONAL TRIAL COURT OF CAGAYAN DE ORO CITY REINFORCES THE
ISSUE THAT THE ERB DECISION MUST NECESSARILY BE ENJOINED FROM BEING ENFORCED
AGAINST PIA AND PSC.
VI. THE ERB DECISION IS NOT FINAL AND EXECUTORY.17
Petitioners contend that the ERB decision is contrary to the Cabinet Policy Reform since PIA, one of
the relevant government agencies referred to in the Cabinet Memorandum, was not consulted,
much less notified by the ERB before it rendered its decision; that since PIA is not a party in ERB
Case No. 89-430, then the decision therein does not bind it; that P.D. 538 (the charter of PIA)
excluded the municipalities of Tagoloan and Villanueva, Misamis Oriental, from the franchise area
of CEPALCO and transferred the same to PIA; and that the ERB decision is not final and executory
since the same is subject to periodic review under the Cabinet Memorandum.
For its part, respondent CEPALCO maintains that the ERB decision shows that it has met the
requirements of the Cabinet Policy Reforms on financial and technical capability of the utility or
cooperative. Anent petitioners' argument that the ERB decision does not bind them for lack of
personal notice, respondent explains that such notice is not required since the proceedings in the
ERB are in rem. Besides, the only issue in the ERB case is whether or not CEPALCO has met the
standards mandated by the Cabinet Policy Reforms. Lastly, respondent contends that what is
subject to periodic review under the Cabinet Memorandum is only the capability standards.
This is not the first time that a controversy arose involving the franchise of CEPALCO vis-à-vis the
authority of NAPOCOR to supply power directly. In National Power Corporation vs. Court of
Appeals,18 this Court held that CEPALCO is the lawful provider of the increased power supply to the
Philippine Packing Corporation under PD 4019 promulgated on November 7, 1972. The Court ruled
that distribution of electric power, whether an increase in existing voltage or a new and separate
electric service, shall be undertaken by cooperatives, private utilities (such as CEPALCO), local
governments and other entities duly authorized subject to state regulation.
Subsequently, this Court, in Cagayan Electric Power and Light Company, Inc. vs. National Power
Corporation,20 sustained the decision of the trial court ordering NAPOCOR to permanently desist
from continuing the direct supply, sale and delivery of electricity to Ferrochrome Philippines, Inc.,
an industry operating its business within the PHIVIDEC Industrial Estate, Tagoloan, Misamis Oriental,
because it violates the right of CEPALCO under its legislative franchise. The Court stressed that the
statutory authority (PD 395) given to NAPOCOR with respect to sale of energy in bulk directly to
BOI-registered enterprises should always be subordinate to the "total-electrification-of-the-entire-
country-on-an-area-coverage-basis policy" enunciated in P.D. No. 40.
In National Power Corporation vs. Court of Appeals,21 this Court struck down as irregular the
determination by the NAPOCOR on whether or not it should supply power directly to the PIA or the
industries within the PHIVIDEC Industrial Estate-Misamis Oriental (PIE-MO); and held that such
authority pertains exclusively to the ERB which was transferred to the Department of Energy (DOE)
pursuant to Republic Act No. 7638. Consequently, the Court remanded the case to the DOE to
determine whether it is CEPALCO or the NAPOCOR, through the PIA, which should supply electric
power to the industries in the PIE-MO.
In the present case, the only issue for our determination is whether or not injunction lies against
the final and executory judgment of the ERB.
We rule in the negative.
In Bachrach Corporation vs. Court of Appeals,22 this Court, through Mr. Justice Jose C. Vitug,
pertinently held:
"The rule indeed is, and has almost invariably been, that after a judgment has gained
finality, it becomes the ministerial duty of the court to order its execution. No court,
perforce, should interfere by injunction or otherwise to restrain such execution. The rule,
however, concededly admits of exceptions; hence, when facts and circumstances later
transpire that would render execution inequitable or unjust, the interested party may ask
a competent court to stay its execution or prevent its enforcement. So, also, a change in
the situation of the parties can warrant an injunctive relief."
Clearly, an injunction to stay a final and executory decision is unavailing except only after a showing
that facts and circumstances exist which would render execution unjust or inequitable, or that a
change in the situation of the parties occurred. Here, no such exception exists as shown by the facts
earlier narrated. To disturb the final and executory decision of the ERB in an injunction suit is to
brazenly disregard the rule on finality of judgments. In Camarines Norte Electric Cooperative, Inc.
vs. Torres,23 we underscored the importance of this principle, thus:
"We have stated before, and reiterate it now, that administrative decisions must end
sometime, as fully as public policy demands that finality be written on judicial
controversies. Public interest requires that proceedings already terminated should not be
altered at every step, for the rule of non quieta movere prescribes that what had already
been terminated should not be disturbed. A disregard of this principle does not commend
itself to sound public policy."
Corollarily, Section 10 of Executive Order No. 172 (the law creating the ERB) provides that a review
of its decisions or orders is lodged in the Supreme Court. 24 Settled is the rule that where the law
provides for an appeal from the decisions of administrative bodies to the Supreme Court or the
Court of Appeals, it means that such bodies are co-equal with the Regional Trial Courts in terms of
rank and stature, and logically, beyond the control of the latter. 25 Hence, the trial court, being co-
equal with the ERB, cannot interfere with the decision of the latter. It bears stressing that this
doctrine of non-interference of trial courts with co-equal administrative bodies is intended to
ensure judicial stability 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.26
Granting that the ERB decision has not attained finality, or that the ERB is not co-equal with the RTC,
still injunction will not lie. As a rule, to justify the injunctive relief prayed for, the movant must show:
(1) the existence of a right in esse or the existence of a right to be protected; and (2) the act against
which injunction is to be directed is a violation of such right. 27 In the case at bar, petitioners failed
to show any clear legal right which would be violated if the power supply of PSC from the NAPOCOR
is disconnected and transferred to CEPALCO. If it were true that PSC has the exclusive right to
operate and maintain electric light within the municipalities of Tagoloan and Villanueva pursuant to
its charter (PD 538), then this Court would have made such pronouncement in National Power
Corporation vs. Court of Appeals.28 Exclusivity of any public franchise has not been favored by this
Court such that in most, if not all, grants by the government to private corporations, the
interpretation of rights, privileges or franchises is taken against the grantee. 29 More importantly,
the Constitution prohibits monopoly of franchise.30 Another significant fact which militates against
the claim of PIA is that it previously allowed CEPALCO to distribute electric power to industries
operating within the PHIVIDEC Industrial Estate. This, to our mind, sufficiently indicates PIA's
recognition of CEPALCO's franchise. Indeed, it is unimaginable that an implementation of a long-
standing government policy which had been sustained by this Court31 can be stalled by an injunctive
writ.

Likewise, petitioners' assertion that the ERB decision contradicts the Cabinet Reform Policy is
misplaced. On the contrary, we find the decision to be in accord with the policy that direct
connection with the NAPOCOR is no longer necessary when a cooperative or utility, such as
CEPALCO, operating within a franchise proves to be capable of distributing power to the industries
therein. In this regard, it is apt to reiterate the pronouncement of this Court in Cagayan Electric
Power and Light Company, Inc. vs. National Power Corporation:32

"It is likewise worthy of note that the defunct Power Development Council, in
implementing P.D. 395, promulgated on January 28, 1977 PDC Resolution No. 77-01-02,
which in part reads:

'1) At any given service area, priority should be given to the authorized
cooperative or franchise holder in the right to supply the power requirement
of existing or prospective industrial enterprises (whether BOI-registered or
not) that are located or plan to locate within the franchise area or coop service
area as shall be determined by the Board of Power or National Electrification
Administration whichever the case may be.'

The statutory authority given to respondent-appellant NPC in respect of sales of energy

in bulk direct to BOI registered enterprises should always be subordinate to the "total-
electrification-of-the-entire-country-on-an-area-coverage-basis policy" enunciated in
P.D. No. 40. Thus, in NPC vs. CEPALCO, supra, this Court held:

'x x x The law on the matter is clear. PD 40 promulgated on 7 November 1973

expressly provides that the generation of electric power shall be undertaken
solely by the NPC. However, Section 3 of the same decree also provides that the
distribution of electric power shall be undertaken by cooperatives, private
utilities (such as CEPALCO), local governments and other entities duly
authorized, subject to state regulation. x x x.'" (emphasis ours)

WHEREFORE, the petition is DENIED. The challenged Decision of the Court of Appeals in CA-G.R. SP
No. 36943 is hereby AFFIRMED.

SO ORDERED.
(19) CIVPRO – DOCTRINE OF PRIMARY JURISDICTION
G.R. No.148004 January 22, 2007
VINCENT E. OMICTIN, Petitioner,
vs.
HON. COURT OF APPEALS (Special Twelfth Division) and GEORGE I. LAGOS, Respondents.
DECISION
AZCUNA, J.:
This is a petition for certiorari1 with prayer for a writ of preliminary injunction seeking the
nullification of the decision rendered by the Court of Appeals (CA) on June 30, 2000, and its
resolution, dated March 5, 2001 in CA-G.R. SP No. 55834 entitled "George I. Lagos v. Hon. Reinato
G. Quilala, Presiding Judge of RTC, Br. 57, Makati, Hon. Elizabeth Tayo Chua, Asst. City Prosecutor,
Makati City, and Vincent E. Omictin."
In its assailed decision, the CA declared the existence of a prejudicial question and ordered the
suspension of the criminal proceedings initiated by petitioner Vincent E. Omictin on behalf of Saag
Phils., Inc. against private respondent George I. Lagos, in view of a pending case before the Securities
and Exchange Commission (SEC) filed by the latter against the former, Saag Pte. (S) Ltd., Nicholas
Ng, Janifer Yeo and Alex Y. Tan.
The facts are as follows:
Petitioner Vincent E. Omictin, Operations Manager Ad Interim of Saag Phils., Inc., filed a complaint
for two counts of estafa with the Office of the City Prosecutor of Makati against private respondent
George I. Lagos. He alleged that private respondent, despite repeated demands, refused to return
the two company vehicles entrusted to him when he was still the president of Saag Phils., Inc..
On February 26, 1999, public prosecutor Alex G. Bagaoisan recommended the indictment of private
respondent, and on the same day, respondent was charged with the crime of estafa under Article
315, par. 1(b) of the Revised Penal Code before the Regional Trial Court (RTC), Branch 57 of Makati
City. The case was docketed as Criminal Case No. 99-633, entitled "People of the Philippines v.
George I. Lagos."
On June 4, 1999, private respondent filed a motion to recuse praying that Presiding Judge Reinato
G. Quilala inhibit himself from hearing the case based on the following grounds:
a) In an order, dated May 28, 1999, the presiding judge summarily denied respondent’s
motion: 1) to defer issuance of the warrant of arrest; and 2) to order reinvestigation.
b) Immediately before the issuance of the above-mentioned order, the presiding judge
and Atty. Alex Y. Tan, SAAG Philippines, Inc.’s Ad Interim President, were seen together.2
On June 24, 1999, private respondent filed a motion to suspend proceedings on the basis of a
prejudicial question because of a pending petition with the Securities and Exchange Commission
(SEC) involving the same parties.
It appears that on January 7, 1999, private respondent filed SEC Case No. 01-99-6185 for the
declaration of nullity of the respective appointments of Alex Y. Tan and petitioner as President Ad
Interim and Operations Manager Ad Interim of Saag Phils., Inc., declaration of dividends, recovery
of share in the profits, involuntary dissolution and the appointment of a receiver, recovery of
damages and an application for a temporary restraining order (TRO) and injunction against Saag (S)
Pte. Ltd., Nicholas Ng, Janifer Yeo, Tan and petitioner. 3
In the action before the SEC, private respondent averred that Saag (S) Pte. Ltd. is a foreign
corporation organized and existing under the laws of Singapore, and is fully owned by Saag
Corporation (Bhd). On July 1, 1994, he was appointed as Area Sales Manager in the Philippines by
Thiang Shiang Hiang, Manager of Saag (S) Pte. Ltd. Pursuant to his appointment, respondent was
authorized to organize a local joint venture corporation to be known as Saag Philippines, Inc. for the
wholesale trade and service of industrial products for oil, gas and power industries in the
Philippines.
On September 9, 1994, Saag Philippines, Inc. was incorporated with Saag (S) Pte. Ltd. as the majority
stockholder. Private respondent was appointed to the board of directors, along with Rommel I.
Lagos, Jose E. Geronimo, Gan Ching Lai and Thiang Shiang Hiang, and was elected president of the
domestic corporation.
Later, due to intra-corporate disputes, Gan and Thiang resigned and divested their shares in Saag
Corporation (Bhd), thereby resulting in a change in the controlling interest in Saag (S) Pte. Ltd.
Barely three months after, or on June 23, 1998, private respondent resigned his post as president
of Saag Phils., Inc. while still retaining his position as a director of the company.4 According to private
respondent, the joint venture agreement (JVA) between him or Saag Phils., Inc. and Saag (S) Pte.
Ltd. provided that should the controlling interest in the latter company, or its parent company Saag
Corp. (Bhd), be acquired by any other person or entity without his prior consent, he has the option
either to require the other stockholders to purchase his shares or to terminate the JVA and dissolve
Saag Phils., Inc. altogether. Thus, pursuant to this provision, since private respondent did not give
his consent as regards the transfer of shares made by Gan and Thiang, he made several requests to
Nicholas Ng, who replaced Gan as director, and Janifer Yeo, Executive Director of Saag (S) Pte. Ltd.,
to call for a board meeting in order to discuss the following: a) implementation of the board
resolution declaring dividends; b) acquisition of private respondent’s shares by Saag (S) Pte. Ltd.; c)
dissolution of Saag Phils., Inc.; and d) the termination of the JVA.
Ng and Yeo failed to appear, however, in the scheduled board meetings. Instead, on September 30,
1998 they issued a letter appointing Alex Y. Tan as President Ad Interim of Saag Phils., Inc. Tan, in
turn, appointed petitioner Omictin as the company’s Operations Manager Ad Interim.
Citing as a reason the absence of a board resolution authorizing the continued operations of Saag
Phils., Inc., private respondent retained his possession of the office equipment of the company in a
fiduciary capacity as director of the corporation pending its dissolution and/or the resolution of the
intra-corporate dispute. He likewise changed the locks of the offices of the company allegedly to
prevent Tan and petitioner from seizing company property.
Private respondent stressed that Tan’s appointment was invalid because it was in derogation of the
company by-laws requiring that the president must be chosen from among the directors, and
elected by the affirmative vote of a majority of all the members of the board of directors.5 As Tan’s
appointment did not have the acquiescence of the board of directors, petitioner’s appointment by
the former is likewise allegedly invalid. Thus, neither has the power or the authority to represent or
act for Saag Phils., Inc. in any transaction or action before the SEC or any court of justice.
The trial court, in an order dated September 8, 1999, denied respondent’s motion to suspend
proceedings and motion to recuse.
His motion for reconsideration having been denied by the trial court in its order issued on October
29, 1999, respondent filed with the CA the petition for certiorari[6] assailing the aforesaid orders.
On June 30, 2000, the CA rendered its challenged decision. The pertinent portion reads:
In a case for estafa, a valid demand made by an offended party is one of the essential elements. It
appears from the records that the delay of delivery of the motor vehicles by petitioner to Saag
Corporation is by reason of petitioner’s contention that the demand made by Omictin and Atty. Tan
to him to return the subject vehicles is not a valid demand. As earlier mentioned, petitioner filed a
case with the SEC questioning therein private respondents’ appointment.
If the SEC should rule that the dissolution of Saag Phils. is proper, or that the appointments of private
respondents are invalid, the criminal case will eventually be dismissed due to the absence of one of
the essential elements of the crime of estafa.
Based on the foregoing, it is clear that a prejudicial question exists which calls for the suspension of
the criminal proceedings before the lower court.
WHEREFORE, in view of the foregoing, the assailed Order of September 8, 1999 and October 29,
1999, are hereby MODIFIED. The motion to suspend proceedings is hereby GRANTED and
respondent court is hereby enjoined from hearing Criminal Case No. 99-633, entitled "People of the
Philippines v. George I. Lagos," until the termination of the case with the Securities and Exchange
Commission. The denial of the motion to recuse is hereby AFFIRMED.
SO ORDERED.7
Incidentally, on January 18, 2001, the SEC case8 was transferred to the Regional Trial Court (RTC) of
Mandaluyong City, Branch 214, pursuant to A.M. No. 00-11-03-SC9 implementing the Securities and
Regulation Code (Republic Act No. 8799)10 enacted on July 19, 2000, vesting in the RTCs jurisdiction
over intra-corporate disputes.11
Meanwhile, on March 5, 2001, the CA, addressing petitioner’s motion for reconsideration of the
aforementioned decision, issued its assailed resolution:
Considering that the petition for review on certiorari of the 30 June 2000 decision of this Court, filed
by the Office of the Solicitor General before the Supreme Court has already TERMINATED on
November 20, 2000 and a corresponding entry of judgment has already been issued by the High
Court, that the same is final and executory, the private respondent’s motion for reconsideration of
the decision 30 June 2000 before this Court is NOTED for being moot and academic.
SO ORDERED.12
Hence, this petition raises the following issues:
I antecedent of the issue involved therein and the cognizance of which pertains to another tribunal.14
RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION -
A) WHEN IT DECREED THAT A PREJUDICIAL QUESTION EXISTS IN THE SEC CASE FILED BY PRIVATE
RESPONDENT AGAINST SAAG (S) PTE. LTD., A FOREIGN CORPORATION, ALTHOUGH THE PRIVATE
COMPLAINANT IN THE CRIMINAL CASE FOR ESTAFA (WHERE PRIVATE RESPONDENT IS THE ACCUSED
THEREIN) IS ACTUALLY SAAG PHILIPPINES, INC. A DOMESTIC CORPORATION WITH A SEPARATE
JURIDICAL PERSONALITY OF ITS OWN AND WHICH IS NOT EVEN A PARTY IN THE SEC CASE; AND,
B) WHEN IT ORDERED THE SUSPENSION OF THE PROCEEDINGS IN CRIMINAL CASE NO. 99-633
AGAINST PRIVATE RESPONDENT.
II
THIS PETITION FOR CERTIORARI IS THE ONLY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE
PREMISES.
In support of the above, petitioner argues, as follows:
1. The action before the SEC and the criminal case before the trial court do not involve
any prejudicial question.13 SEC Case No. 01-99-6185 mainly involves the dissolution of
Saag (S) Pte. Ltd., the appointment of a receiver, the distribution of profits, and the
authority of petitioner and Tan to represent Saag Phils., Inc. The entity which is being sued
is Saag (S) Pte. Ltd., a foreign corporation over which the SEC has yet to acquire
jurisdiction. Hence, any decision that may be rendered in the SEC case will neither be
determinative of the innocence or guilt of the accused nor bind Saag Phils., Inc. because
the same was not made a party to the action even if the former is its holding corporation;
2. Saag Phils., Inc. has a separate corporate existence and is to be treated as a separate
entity from its holding or parent company, Saag (S) Pte. Ltd. The mere fact that one or
more corporations are owned or controlled by the same or single stockholder is not a
sufficient ground for disregarding separate corporate personalities;
3. Private respondent’s petition with the SEC seeks affirmative relief against Saag (S) Pte.
Ltd. for the enforcement or application of the alleged terms of the joint venture
agreement (JVA) that he purportedly entered into with the foreign corporation while he
was still its Area Sales Manager in the Philippines. The foreign corporation is not licensed
to do business in the Philippines, thus, a party to a contract with a foreign corporation
doing business in the Philippines without a license is not entitled to relief from the latter;
and
4. There is no pending civil or administrative case in SEC against Saag Phils., Inc. that
warrants the application of a prejudicial question and the consequent suspension of the
criminal action it has instituted against private respondent. If any, the action before the
SEC was merely a ploy to delay the resolution of the criminal case and eventually frustrate
the outcome of the estafa case.
In sum, the main issue is whether or not a prejudicial question exists to warrant the suspension of
the criminal proceedings pending the resolution of the intra-corporate controversy that was
originally filed with the SEC.
A prejudicial question is defined as that which arises in a case, the resolution of which is a logical
Here, the case which was lodged originally before the SEC and which is now pending before the RTC
of Mandaluyong City by virtue of Republic Act No. 8799 involves facts that are intimately related to
those upon which the criminal prosecution is based.
Ultimately, the resolution of the issues raised in the intra-corporate dispute will determine the guilt
or innocence of private respondent in the crime of estafa filed against him by petitioner before the
RTC of Makati. As correctly stated by the CA, one of the elements of the crime of estafa with abuse
of confidence under Article 315, par. 1(b) of the Revised Penal Code is a demand made by the
offended party to the offender:
The elements of estafa with abuse of confidence under subdivision No. 1, par. (b) of Art. 315 are as
follows:
 1. That money, goods, or other personal property be received by the offender in trust, or corporation, Saag Phils., Inc., vis-à-vis Saag Pte. Ltd.; and the authority of petitioner to act on behalf
on commission, or for administration, or under any other obligation involving the duty to of the domestic corporation, the determination of which will have a direct bearing on the criminal
make delivery of, or to return the same; case. The law recognizes that, in place of the SEC, the regular courts now have the legal competence
to decide intra-corporate disputes.20
2. That there be misrepresentation or conversion of such money or property by the
offender, or denial on his part of such receipt; In view of the foregoing, the Court finds no substantial basis in petitioner’s contention that the CA
committed grave abuse of discretion amounting to lack or excess of jurisdiction. Absent a showing
3. That such misappropriation or conversion or denial is to the prejudice of another; and of a despotic, whimsical and arbitrary exercise of power by the CA, the petition must fail.
4. That there is a demand made by the offended party to the offender. 15 WHEREFORE, the petition is DISMISSED. The decision and resolution of the Court of Appeals in CA-
G.R. SP No. 55834, dated June 30, 2000 and March 5, 2001, respectively, are AFFIRMED.
Logically, under the circumstances, since the alleged offended party is Saag Phils., Inc., the validity
of the demand for the delivery of the subject vehicles rests upon the authority of the person making No costs.
such a demand on the company’s behalf. Private respondent is challenging petitioner’s authority to
act for Saag Phils., Inc. in the corporate case pending before the RTC of Mandaluyong, Branch 214. SO ORDERED.
Taken in this light, if the supposed authority of petitioner is found to be defective, it is as if no
demand was ever made, hence, the prosecution for estafa cannot prosper. Moreover, the mere
failure to return the thing received for safekeeping or on commission, or for administration, or
under any other obligation involving the duty to deliver or to return the same or deliver the value
thereof to the owner could only give rise to a civil action and does not constitute the crime of estafa.
This is because the crime is committed by misappropriating or converting money or goods received
by the offender under a lawful transaction. As stated in the case of United States v. Bleibel:16

The crime of estafa is not committed by the failure to return the things received for sale on
commission, or to deliver their value, but, as this class of crime is defined by law, by
misappropriating or converting the money or goods received on commission. Delay in the fulfillment
of a commission or in the delivery of the sum on such account received only involves civil liability.
So long as the money that a person is under obligation to deliver is not demanded of him, and he
fails to deliver it for having wrongfully disposed of it, there is no estafa, whatever be the cause of
the debt.

Likewise, by analogy, the doctrine of primary jurisdiction may be applied in this case. The issues
raised by petitioner particularly the status of Saag Phils., Inc. vis-à-vis Saag (S) Pte. Ltd., as well as
the question regarding the supposed authority of the latter to make a demand on behalf of the
company, are proper subjects for the determination of the tribunal hearing the intra-corporate case
which in this case is the RTC of Mandaluyong, Branch 214. These issues would have been referred
to the expertise of the SEC in accordance with the doctrine of primary jurisdiction had the case not
been transferred to the RTC of Mandaluyong.

Strictly speaking, the objective of the doctrine of primary jurisdiction is to guide a court in
determining whether it should refrain from exercising its jurisdiction until after an administrative
agency has determined some question or some aspect of some question arising in the proceeding
before the court.17 The court cannot or will not determine a controversy involving a question which
is within the jurisdiction of the administrative tribunal prior to resolving the same, where the
question demands the exercise of sound administrative discretion requiring special knowledge,
experience and services in determining technical and intricate matters of fact.18

While the above doctrine refers specifically to an administrative tribunal, the Court believes that
the circumstances in the instant case do not proscribe the application of the doctrine, as the role of
an administrative tribunal such as the SEC in determining technical and intricate matters of special
competence has been taken on by specially designated RTCs by virtue of Republic Act No. 8799. 19
Hence, the RTC of Mandaluyong where the intra-corporate case is pending has the primary
jurisdiction to determine the issues under contention relating to the status of the domestic
(19) CIVPRO – DOCTRINE OF PRIMARY JURISDICTION
G.R. No. 158253 March 2, 2007
REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS AND
HIGHWAYS, COMMISSION ON AUDIT and THE NATIONAL TREASURER, Petitioner,
vs.
CARLITO LACAP, doing business under the name and style CARWIN CONSTRUCTION AND
CONSTRUCTION SUPPLY, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court
assailing the Decision1 dated April 28, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 56345
which affirmed with modification the Decision2 of the Regional Trial Court, Branch 41, San Fernando,
Pampanga (RTC) in Civil Case No. 10538, granting the complaint for Specific Performance and
Damages filed by Carlito Lacap (respondent) against the Republic of the Philippines (petitioner).
The factual background of the case is as follows:
The District Engineer of Pampanga issued and duly published an "Invitation To Bid" dated January
27, 1992. Respondent, doing business under the name and style Carwin Construction and
Construction Supply (Carwin Construction), was pre-qualified together with two other contractors.
Since respondent submitted the lowest bid, he was awarded the contract for the concreting of Sitio
5 Bahay Pare.3 On November 4, 1992, a Contract Agreement was executed by respondent and
petitioner.4 On September 25, 1992, District Engineer Rafael S. Ponio issued a Notice to Proceed
with the concreting of Sitio 5 Bahay Pare.5 Accordingly, respondent undertook the works, made
advances for the purchase of the materials and payment for labor costs.6
On October 29, 1992, personnel of the Office of the District Engineer of San Fernando, Pampanga
conducted a final inspection of the project and found it 100% completed in accordance with the
approved plans and specifications. Accordingly, the Office of the District Engineer issued Certificates
of Final Inspection and Final Acceptance.7
Thereafter, respondent sought to collect payment for the completed project.8 The DPWH prepared
the Disbursement Voucher in favor of petitioner.9 However, the DPWH withheld payment from
respondent after the District Auditor of the Commission on Audit (COA) disapproved the final
release of funds on the ground that the contractor’s license of respondent had expired at the time
of the execution of the contract. The District Engineer sought the opinion of the DPWH Legal
Department on whether the contracts of Carwin Construction for various Mount Pinatubo
rehabilitation projects were valid and effective although its contractor’s license had already expired
when the projects were contracted.10
In a Letter-Reply dated September 1, 1993, Cesar D. Mejia, Director III of the DPWH Legal
Department opined that since Republic Act No. 4566 (R.A. No. 4566), otherwise known as the
Contractor’s License Law, does not provide that a contract entered into after the license has expired
is void and there is no law which expressly prohibits or declares void such contract, the contract is
enforceable and payment may be paid, without prejudice to any appropriate administrative liability
action that may be imposed on the contractor and the government officials or employees
concerned.11
In a Letter dated July 4, 1994, the District Engineer requested clarification from the DPWH Legal
Department on whether Carwin Construction should be paid for works accomplished despite an
expired contractor’s license at the time the contracts were executed.12
In a First Indorsement dated July 20, 1994, Cesar D. Mejia, Director III of the Legal Department,
recommended that payment should be made to Carwin Construction, reiterating his earlier legal
opinion.13 Despite such recommendation for payment, no payment was made to respondent.
Thus, on July 3, 1995, respondent filed the complaint for Specific Performance and Damages against
petitioner before the RTC.14
On September 14, 1995, petitioner, through the Office of the Solicitor General (OSG), filed a Motion
to Dismiss the complaint on the grounds that the complaint states no cause of action and that the
RTC had no jurisdiction over the nature of the action since respondent did not appeal to the COA
the decision of the District Auditor to disapprove the claim.15
Following the submission of respondent’s Opposition to Motion to Dismiss, 16 the RTC issued an
Order dated March 11, 1996 denying the Motion to Dismiss.17 The OSG filed a Motion for
Reconsideration18 but it was likewise denied by the RTC in its Order dated May 23, 1996.19
On August 5, 1996, the OSG filed its Answer invoking the defenses of non-exhaustion of
administrative remedies and the doctrine of non-suability of the State.20
Following trial, the RTC rendered on February 19, 1997 its Decision, the dispositive portion of which
reads as follows:
WHEREFORE, in view of all the foregoing consideration, judgment is hereby rendered in favor of the
plaintiff and against the defendant, ordering the latter, thru its District Engineer at Sindalan, San
Fernando, Pampanga, to pay the following:
a) ₱457,000.00 – representing the contract for the concreting project of Sitio 5 road, Bahay Pare,
Candaba, Pampanga plus interest at 12% from demand until fully paid; and
b) The costs of suit.
SO ORDERED.21
The RTC held that petitioner must be required to pay the contract price since it has accepted the
completed project and enjoyed the benefits thereof; to hold otherwise would be to overrun the
long standing and consistent pronouncement against enriching oneself at the expense of another.22
Dissatisfied, petitioner filed an appeal with the CA.23 On April 28, 2003, the CA rendered its Decision
sustaining the Decision of the RTC. It held that since the case involves the application of the principle
of estoppel against the government which is a purely legal question, then the principle of exhaustion
of administrative remedies does not apply; that by its actions the government is estopped from
questioning the validity and binding effect of the Contract Agreement with the respondent; that
denial of payment to respondent on purely technical grounds after successful completion of the
project is not countenanced either by justice or equity.
The CA rendered herein the assailed Decision dated April 28, 2003, the dispositive portion of which
reads:
WHEREFORE, the decision of the lower court is hereby AFFIRMED with modification in that the
interest shall be six percent (6%) per annum computed from June 21, 1995.
SO ORDERED.24
Hence, the present petition on the following ground:
THE COURT OF APPEALS ERRED IN NOT FINDING THAT RESPONDENT HAS NO CAUSE OF ACTION
AGAINST PETITIONER, CONSIDERING THAT:
(a) RESPONDENT FAILED TO EXHAUST ADMINISTRATIVE REMEDIES; AND
(b) IT IS THE COMMISSION ON AUDIT WHICH HAS THE PRIMARY JURISDICTION TO RESOLVE
RESPONDENT’S MONEY CLAIM AGAINST THE GOVERNMENT.25
Petitioner contends that respondent’s recourse to judicial action was premature since the proper
remedy was to appeal the District Auditor’s disapproval of payment to the COA, pursuant to Section
48, Presidential Decree No. 1445 (P.D. No. 1445), otherwise known as the Government Auditing
Code of the Philippines; that the COA has primary jurisdiction to resolve respondent’s money claim
against the government under Section 2(1),26 Article IX of the 1987 Constitution and Section 2627 of
P.D. No. 1445; that non-observance of the doctrine of exhaustion of administrative remedies and
the principle of primary jurisdiction results in a lack of cause of action.
Respondent, on the other hand, in his Memorandum28 limited his discussion to Civil Code provisions
relating to human relations. He submits that equity demands that he be paid for the work
performed; otherwise, the mandate of the Civil Code provisions relating to human relations would
be rendered nugatory if the State itself is allowed to ignore and circumvent the standard of behavior
it sets for its inhabitants.
The present petition is bereft of merit.
The general rule is that before a party may seek the intervention of the court, he should first avail
of all the means afforded him by administrative processes.29 The issues which administrative
agencies are authorized to decide should not be summarily taken from them and submitted to a
court without first giving such administrative agency the opportunity to dispose of the same after
due deliberation.30
Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of primary
jurisdiction; that is, courts cannot or will not determine a controversy involving a question which is
within the jurisdiction of the administrative tribunal prior to the resolution of that question by the
administrative tribunal, where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience and services of the administrative tribunal
to determine technical and intricate matters of fact.31
Nonetheless, the doctrine of exhaustion of administrative remedies and the corollary doctrine of
primary jurisdiction, which are based on sound public policy and practical considerations, are not
inflexible rules. There are many accepted exceptions, such as: (a) where there is estoppel on the
part of the party invoking the doctrine; (b) where the challenged administrative act is patently
illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction
that will irretrievably prejudice the complainant; (d) where the amount involved is relatively small
so as to make the rule impractical and oppressive; (e) where the question involved is purely legal
and will ultimately have to be decided by the courts of justice;32 (f) where judicial intervention is
urgent; (g) when its application may cause great and irreparable damage; (h) where the
controverted acts violate due process; (i) when the issue of non-exhaustion of administrative
remedies has been rendered moot;33 (j) when there is no other plain, speedy and adequate remedy;
(k) when strong public interest is involved; and, (l) in quo warranto proceedings.34 Exceptions (c)
and (e) are applicable to the present case.
Notwithstanding the legal opinions of the DPWH Legal Department rendered in 1993 and 1994 that
payment to a contractor with an expired contractor’s license is proper, respondent remained unpaid
for the completed work despite repeated demands. Clearly, there was unreasonable delay and
official inaction to the great prejudice of respondent.
Furthermore, whether a contractor with an expired license at the time of the execution of its
contract is entitled to be paid for completed projects, clearly is a pure question of law. It does not
involve an examination of the probative value of the evidence presented by the parties. There is a
question of law when the doubt or difference arises as to what the law is on a certain state of facts,
and not as to the truth or the falsehood of alleged facts. 35 Said question at best could be resolved
only tentatively by the administrative authorities. The final decision on the matter rests not with
them but with the courts of justice. Exhaustion of administrative remedies does not apply, because
nothing of an administrative nature is to be or can be done.36 The issue does not require technical
knowledge and experience but one that would involve the interpretation and application of law.
Thus, while it is undisputed that the District Auditor of the COA disapproved respondent’s claim
against the Government, and, under Section 48 37 of P.D. No. 1445, the administrative remedy
available to respondent is an appeal of the denial of his claim by the District Auditor to the COA
itself, the Court holds that, in view of exceptions (c) and (e) narrated above, the complaint for
specific performance and damages was not prematurely filed and within the jurisdiction of the RTC
to resolve, despite the failure to exhaust administrative remedies. As the Court aptly stated in
Rocamora v. RTC-Cebu (Branch VIII):38
The plaintiffs were not supposed to hold their breath and wait until the Commission on Audit and
the Ministry of Public Highways had acted on the claims for compensation for the lands
appropriated by the government. The road had been completed; the Pope had come and gone; but
the plaintiffs had yet to be paid for the properties taken from them. Given this official indifference,
which apparently would continue indefinitely, the private respondents had to act to assert and
protect their interests.39
On the question of whether a contractor with an expired license is entitled to be paid for completed
projects, Section 35 of R.A. No. 4566 explicitly provides:
SEC. 35. Penalties. Any contractor who, for a price, commission, fee or wage, submits or attempts
to submit a bid to construct, or contracts to or undertakes to construct, or assumes charge in a
supervisory capacity of a construction work within the purview of this Act, without first securing a
license to engage in the business of contracting in this country; or who shall present or file the
license certificate of another, give false evidence of any kind to the Board, or any member thereof
in obtaining a certificate or license, impersonate another, or use an expired or revoked certificate
or license, shall be deemed guilty of misdemeanor, and shall, upon conviction, be sentenced to pay
a fine of not less than five hundred pesos but not more than five thousand pesos. (Emphasis
supplied)
The "plain meaning rule" or verba legis in statutory construction is that if the statute is clear, plain
and free from ambiguity, it must be given its literal meaning and applied without interpretation. 40
This rule derived from the maxim Index animi sermo est (speech is the index of intention) rests on
the valid presumption that the words employed by the legislature in a statute correctly express its
intention or will and preclude the court from construing it differently. The legislature is presumed
to know the meaning of the words, to have used words advisedly, and to have expressed its intent
by use of such words as are found in the statute.41 Verba legis non est recedendum, or from the
words of a statute there should be no departure.42
The wordings of R.A. No. 4566 are clear. It does not declare, expressly or impliedly, as void contracts
entered into by a contractor whose license had already expired. Nonetheless, such contractor is
liable for payment of the fine prescribed therein. Thus, respondent should be paid for the projects
he completed. Such payment, however, is without prejudice to the payment of the fine prescribed
under the law.

Besides, Article 22 of the Civil Code which embodies the maxim Nemo ex alterius incommode debet
lecupletari (no man ought to be made rich out of another’s injury) states:

Art. 22. Every person who through an act of performance by another, or any other means, acquires
or comes into possession of something at the expense of the latter without just or legal ground,
shall return the same to him.

This article is part of the chapter of the Civil Code on Human Relations, the provisions of which were
formulated as "basic principles to be observed for the rightful relationship between human beings
and for the stability of the social order, x x x designed to indicate certain norms that spring from the
fountain of good conscience, x x x guides human conduct [that] should run as golden threads
through society to the end that law may approach its supreme ideal which is the sway and
dominance of justice."43 The rules thereon apply equally well to the Government.44 Since
respondent had rendered services to the full satisfaction and acceptance by petitioner, then the
former should be compensated for them. To allow petitioner to acquire the finished project at no
cost would undoubtedly constitute unjust enrichment for the petitioner to the prejudice of
respondent. Such unjust enrichment is not allowed by law.

WHEREFORE, the present petition is DENIED for lack of merit. The assailed Decision of the Court of
Appeals dated April 28, 2003 in CA-G.R. CV No. 56345 is AFFIRMED. No pronouncement as to costs.

SO ORDERED.
(20) CIVPRO – DOCTRINE OF ADHERENCE OF JURSIDICTION OR CONTINUING JURISDICTION
G.R. No. L-65505 October 12, 1987
GABRIEL ABAD, PIO AGANON, MARIO ALARCIO, JOSE AQUINO, CESAR AURELIO, SOTERO
BERNARDO, AURELIO CABRAL, JESUS CARREON, ABELARDO CARILLO, ET AL., petitioners,
vs.
REGIONAL TRIAL COURT OF MANILA, BRANCH LII-HON. DAVID G. NITAFAN and THE PHILIPPINE
AMERICAN GENERAL INSURANCE COMPANY, INC., respondents.
PARAS, J.:
The instant petition for certiorari originated from a complaint by the petitioners filed on August 18,
1978 against respondent Philippine American General Insurance Company, Inc. (PHILAMGEN, for
brevity) for the enforcement of contract and recovery of loss of money basically praying for, among
other things, payment of the money value of the respective accumulated sick leave with pay of the
separated employees of respondent company either thru retirement, retrenchment or resignation.
Instead of filing an answer thereto, PHILAMGEN moved to dismiss the complaint, which the trial
court granted in its order 1 dated February 16, 1979. After a denial oil their motion to reconsider
the aforesaid order by the trial court on May 2, 1979, petitioners filed before Us a petition for
Certiorari, docketed as G.R. No. 50563. A decision 2 was rendered by this Court promulgated on
October 30, 1981, the decretal portion of which reads:
WHEREFORE, the orders of the respondent court, dated February 16, 1979 and May 2, 1979, are
hereby set aside, the dismissed complaint is reinstated; and said court is directed to conduct
further proceedings for the disposition of Civil Case No. 117708. No costs.
SO ORDERED.
The case was remanded to the trial court for further proceedings. Unfortunately fire destroyed the
sala wherein the entire records of Civil case No. 117708 were kept. However, the records of the
case were reconstituted on January 21, 1982 and the case was renumbered as Civil Case No. 82-
1324. Thereafter, respondent Philamgen filed its Answer to the complaint. On January, 1983, judicial
reorganization took place by the passage of Executive Order No. 864 and the case at bar was re-
raffled to respondent Regional Trial Court of Manila, which was presided over by Judge David G.
Nitafan. Respondent court motu proprio, dismissed the complaint in Civil Case No. 82-1324.
declaring that it lacked jurisdiction over the subject made being money claims arising from
employer-employee relations. Motion for reconsideration filed by petitioners was denied by
respondent judge. Hence, this petition for certiorari with the following:
ASSIGNMENT OF ERROR
FIRST ASSIGNMENT OF ERROR
Respondent Court erred in reversing motu proprio this Honorable Supreme Court's decision in
G.R. No. L-50563 by dismissing once again petitioners' action on the erroneous ground of lack of
jurisdiction.
SECOND ASSIGNMENT OF ERROR
Respondent Court erred in holding itself a totally different court from the Court of First Instance
whose cases were merely taken over by Respondent Court. (p. 25, Rollo)
By way of reference the entire record and decision of this Court in G.R. No. L-50563 (108 SCRA 717)
were incorporated by petitioners in their petition.
The pertinent portion of the assailed decision of the lower court reads as follows:
Even before receiving the views of the parties, however, this Court has decided to proceed with
and resolve the issue of jurisdiction motu proprio, for the same is so basic as to affect the validity
and propriety of any and all proceedings in this case.
1. It is the perception of this Court that the jurisdictional issue decided and settled in G.R. No.
50563 cannot be considered as the law of the case insofar as this proceeding now pends before
this Court. What was there put to rest was the jurisdiction of the Court of First Instance.
Section 1 of Executive Order No. 864 provides that the Courts of First Instance shall be deemed
automatically abolished upon the constitution and organization of the courts provided in Batasan
Pambansa Big, 129 as of 12:00 o'clock midnight of January 17, 1983, which re-raffled a sentence
in Section 44 of said Act.
With the abolition of the Court of First Instance-which was held in G.R. No. 50563 as having
jurisdiction over the case, the jurisdiction of said court was abolished with it. This is supported by
the replied of Rep. Act No. 296 (defining the jurisdiction of, among others, the Courts of First
Instance) by Section 47 of BETA Blg. 129, and which law (Batas Blg. 129) in turn defining the
jurisdiction of the Regional Trial Courts in its Sections 19, 20, 21 and 22.
2. The postulate that once jurisdiction is acquired by a court, the same lasts until the termination
of the case, notwithstanding changes in the law on jurisdiction, does not apply to this case
because it was the court itself which acquired initial jurisdiction that was abolished so that there
is no more court to continue exercising such initially acquired jurisdiction.
3. Jurisdiction of this Court (the reorganized Regional Trial Court) must be tested by the laws in
force at the time the reorganization took place, and when this case was re-raffled not at the time
of the commencement of the action because the courts then existing were all abolished upon the
reorganization.
What were the relevant laws on jurisdiction in force at the time of declaration of judicial
reorganization?
Of course, insofar as the reorganized courts vested with general jurisdiction, Batasan Pambansa
Blg. 129 was and still is the controlling law. When it comes to labor-related actions, however,
such as the one at bar, initial jurisdiction is vested on "administrative machiner(ies)" provided
"for the expeditious settlement of labor or industrial disputes." (See Art. 211, P.D. 442), which
are the National Labor Relations Commissions and the Labor Arbiters, the jurisdiction of the latter
of which are defined as follows:
Art 217. Jurisdiction of Labor Arbiters and the Commission — (a) The Labor Arbiters shall have
the original and exclusive jurisdiction to hear and decide within thirty (30) working days after
subrogated of the case by the parties for decision, the following cases involving all workers,
whether agricultural or non-agricultural:"
l. Unfair labor practice cases.
2. Those that workers may file involving wages, hours of work and other terms and conditions
of employment;
3. All money claims of workers, including those based on non-payment or underscored of
wages, purchases compensation, separation pay and other benefits provided by law or
appropriate agreement. Except claims for employees compensation, social security, medicare
and maternity benefits;
 4. Cases involving household services; and
5. Cases arising from any violation of article 265 of this Code, including questions involving the
legality of strikes and lockouts.
(This article of the Labor Code was originally Article 216, of PD 442, but subsequently
reorganization to Art. 217, amended by PD 1691 which took effect 1 May 1978, further
amended by PD 1948. which took effect 1 May 1980, then further amended by BP Blg. 130
which took effect on 21 August 1981 and finally amended by BP Blg. 227 which took effect on
1 June 1982; emphasis supplied.)
As last amended by BP Blg. 130 and 23,1981, the above provision was in force on 17 January 1983
when the judicial reorganization took place.
"Note that BP Blg. 130, was considered by the Batasan Pambansa in the same session when it
enacted BP Blg. 129, the judicial reorganization act, so that there could have been no doubt in
the legislative mind at the time that jurisdiction over labor-related claims was being initially
vested, not to the courts but to administrative machineries. Besides the underscored portions of
the above-quoted provisions of the Labor Code are clear and comprehensive enough to include
the claims embodied in the complaint in this action. And what is most important is that the
administrative jurisdiction vested by the law upon the Labor Arbiters is "original and exclusive."
That it was the evident intention of the legislature to divest the courts of general jurisdiction
initial jurisdiction over cases such as that involved in this action is further corroborated by Arts.
292, 293 and 294 of the Labor Code which outline the procedure of "prosecuting all money claims
accuring" both during or prior to the effectivity of the Code.
More particularly, the second paragraph of Art. 293 of the Labor Code provides —
"Pending the final determination of the merit of money claim filed with the appropriate
entrance/exit no civil action arising from the same cause of action shall be filed with any court.
..."
We are not unmindful of the fact that G.R. No. 50563 was decided by the highest Court on the
basis of the provisions of Article 217 of the Labor Code, as amended by BP 1367, which took effect
on 1 May 1978, but as heretofore indicated, subsequent amendments of the same provision took
place. In said decision in G.R. No. 50563, mention was made of the amendment brought about
by PD 1367 having been given retroactive application. Following this rule of retrospective
application, we can not see any reason why the subsequent amendment to Article 217 of the
Labor Code, brought about by PD 169 (1 May 1980), BP Blg. 130 (21 August 1981) and BP Blg. 227
(1 June 1982) may not also be applied to this action which was filed on 28 August 1978.
Neither is this Court unaware of the 10 February 1983 resolution of the Hon. Supreme Court
providing for administrative guidelines in the distribution of cases relative to the implementation
of BP Blg. 129, but said administrative regulation cannot be interpreted to have the effect of
modifying or abrogating substantive provisions of laws on jurisdiction because by express
mandate of the Constitution rule making power of the Supreme Court is limited to procedural
rules mg which may not diminish, increase or modify substantive laws. (Sec. 5[5], Art. X,
Constitution).
This Court is not also unaware of that portion of Section 44 of BP Blg. 129 providing that cases
pending in the abolished courts shall be transferred to the appropriate courts created in the Act,
but it is evident that the phrase "appropriate courts" must have reference to those courts whose
jurisdiction are clearly defined in other parts of the law, otherwise a mere transitory provision
win serve to negate the primary and avowed purpose of the judiciary reorganization act. But be
that as it may, this provision has hardly any application here because this case is being referred
to an administrative machinery ,which has better facilities of adjudicating the claim (MOLE is
furnishing with copies of CBA's) more expended as they are not hamstrung by the strict rules of
procedure and evidence.
In any event, even if limitations of actions are also provided in the Labor Code (Art. 292 thereof),
the pendency of this action before the then Court of Flight Instance of Manila may be deemed to
have suspended the period of limitations if only to give meaning to the social justice spirit and
orientation of the Labor Code. (pp. 40-44, Rollo).
Based on such findings, the respondent court issued the following dispositive portions:
WHEREFORE, without prejudice to plaintiff's pursuing their claims before the appropriate
administrative machineries in the Ministry of Labor & Employment, the complaint in this case is
dismissed. No costs.
SO ORDERED. (p. 45, Rollo, emphasis supplied).
Petitioners' allegations do not deserve merit. One of the important features in the Judiciary
Reorganization effected through B.P. 129 is the addition of paragraph (6), (P155,828.60). Sec. 19, in
defining the jurisdiction of Regional Trial Courts (which took the place of the abolished Courts of
First Instance), which reading as follows:
In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising
judicial or quasi-judicial functions. (emphasis supplied).
A provision not found in Sec. 44 of the Judiciary Act of 1948. It was the intention of the legislative
body to uncluttered the courts of cases which may be adjudicated, in the first instance, by officials
or bodies exercising quasi-judicial adjudicatory powers like the Labor Arbiters or the National Labor
Relations Commission a specialized body or bodies on labor related provisions and are not restricted
by the technical rules of pleading and evidence.
The Regional Trial Courts of today are actually the same courts that functioned as Courts of First
Instance before the Judiciary Reorganization Act (Batas Pambansa Bilang 129). There might have
been a change in the name and in some incidental features but essentially, they are the same.
However, whereas before jurisdiction over money claims of laborers and employees appertained to
Courts of First Instance, the same are now to be taken cognizance of by proper entities in the
Department of Labor and Employment.
The rule of adherence of jurisdiction until a cause is finally resolved or adjudicated does not apply
when the change in jurisdiction is curative in character. Thus in the instant case, there is nothing
wrong in holding that Courts of First Instance /Regional Trial Courts no longer have jurisdiction over
aforesaid monetary claims of labor.
WHEREFORE, premises considered, the petition is hereby DENIED and the ruling of the respondent
court is hereby AFFIRMED. Let the parties file the appropriate action before the proper
administrative bodies in the Department of Labor and Employment.
SO ORDERED.
(21) CIVPRO – DOCTRINE OF ADHERENCE OF JURSIDICTION OR CONTINUING JURISDICTION
G.R. No. 133882 September 5, 2006
ANGELA DELA ROSA and CORAZON MEDINA, petitioners,
vs.
ORFELINA D. ROLDAN, LORNA SAN DIEGO, FLORDELIZA D. CATACUTAN, NORMA Y. LACUESTA,
and ARSENIO DULAY, respondents.
DECISION
CALLEJO, SR., J.:
This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP
No. 45560 affirming, on a petition for review, the Decision of the Regional Trial Court (RTC) of Tarlac
in Civil Case No. 8396, which in turn reversed on appeal the decision of the Municipal Trial Court
(MTC) of Tarlac, Tarlac in Civil Case No. 6089 for unlawful detainer.
The Antecedents
The spouses Adriano Rivera and Aurora Mercado were the owners of two (2) parcels of land located
in Tarlac, Tarlac, both covered by respective titles; the 261-square-meter lot was covered by
Transfer Certificate of Title (TCT) No. 7225, while the 772 sq. m. was covered by TCT No. 7226.
Sometime in 1957, the spouses Rivera executed a deed of sale2 over the properties in favor of the
spouses Arsenio Dulay and Asuncion dela Rosa. Gideon dela Rosa, one of Asuncion's brothers, was
one of the instrumental witnesses in the deed. To pay for the property, the spouses Dulay, who
were members of the Government Service Insurance System (GSIS), secured a P9,500.00 loan and
executed a real estate mortgage over the two lots as security therefor. On September 16, 1957, the
Register of Deeds issued TCT Nos. 29040 and 29041 in the names of the spouses Dulay.
The spouses Dulay forthwith took possession of the lots, except a 500-square-meter portion which
was then occupied by Gideon dela Rosa and his wife Angela and the portion where the house of
Corazon Medina stood. The spouses Dulay declared the property for taxation purposes in their
names and paid the realty taxes therefor.
Sometime in 1982, the spouses Dulay made demands on Gideon, Angela and Corazon to vacate the
premises, as their three daughters would be constructing their respective houses thereon. Gideon,
Angela and Corazon refused to do so, prompting the spouses to file a complaint for recovery of
possession (accion publiciana) against them with the then Court of First Instance (CFI) of Tarlac. The
spouses Dulay alleged, inter alia, that they bought the lots from the spouses Rivera in 1957;
defendants occupied a 370-square-meter portion on the western side, and were claiming ownership
over one-half of the property, as shown by their letter to plaintiffs appended to their complaint;
and they needed the property so that their daughters, who already had their respective families,
could build houses thereon. The spouses Dulay prayed that defendants be evicted from the property
and be required to pay reasonable compensation for their use of the premises.3 The case was
docketed as Civil Case No. 6261.
In their answer to the complaint, defendants alleged the following by way of special and affirmative
defenses: Gideon and his sister Asuncion contributed equally to the purchase price of the property;
plaintiffs secured a GSIS loan of P9,500.00, out of which P6,500.00 was paid to the vendors; Gideon
and Asuncion verbally agreed that plaintiffs would be indicated as the sole vendees in the deed of
sale as they were the GSIS members; defendants had already paid their share of the purchase price
of the property as of 1978, except for the amount of P332.00; and, insofar as the one-half portion
on the western side of the property was concerned, plaintiffs were trustees for defendants, who
likewise owned the same. Defendants interposed counterclaims for damages and prayed that the
said one-half portion be reconveyed to them.4
During the trial, the spouses Dulay adduced in evidence the following: the Deed of Absolute Sale
dated January 16, 1957, with Gideon as an instrumental witness;5 the tax declarations in their names
covering the property; and receipts of realty tax payments made over the property.6
Defendants spouses Dela Rosa adduced in evidence a small notebook containing therein an alleged
list of payments to the spouses Dulay of their share in the purchase price of the property. 7 They
presented an NBI Questioned Documents Expert to prove the authenticity of the signature of
Asuncion Dulay on one of the receipts.8 However, Asuncion denied that she bought the property
with her brother Gideon, and that she received any amount from him and his wife as part of the
purchase price of the property. She likewise denied that it was her signature that appeared on the
purported receipt.
On July 17, 1987, the trial court rendered judgment in Civil Case No. 6261 in favor of the spouses
Dulay and ordered the spouses Dela Rosa and Corazon Medina to vacate the property and turn over
possession to plaintiffs.9 The trial court declared:
ANALYZING THE EVIDENCE, there is no doubt that the registered owners of the lots in question
are the plaintiffs-spouses Arsenio Dulay and Asuncion dela Rosa (Exhibits "A" and "B"). They
bought these lots from the spouses Adriano Rivera and Aurora Mercado (Exhibits "D" and "D-1").
Defendants' claim that they bought from the plaintiffs one-half (1/2) portion of the lots in
question is untenable. Firstly, if it is true as claimed by them that there was such an agreement
to purchase from the plaintiffs a portion of the lots in question, why did they not reduce [the]
same in writing? In fact, it's the defendants, particularly Gideon dela Rosa, who induced and
accompanied the plaintiffs to go to a Notary Public for the execution of Exhibit "D." The amounts
mentioned in Exhibit "5" does (sic) not clearly indicate whether they were payments made for
the purchase price in installment or for monthly rentals for their occupation of Lot 3-B-2. The
defendants were the only ones who made entries; and a perusal of such entries were not
recorded in sequence of alleged monthly payment but merely entries dictated and/or written at
will.
Regarding Exhibit 6 and the alleged signature of plaintiff Asuncion dela Rosa, the report (Exhibit
"7," "7-A" and "7-B") and the testimony of the Chief NBI handwriting expert when presented by
the defendants themselves is very emphatic. Thus:
"However, the question signature was signed over a typewritten carbon or duplicate…."
What we mean by that, Sir, is that there is here a purported receipt with the body typewritten
underlining below the supposed signature Asuncion R. Dulay, it is a little surprising because if
a document is prepared in one occasion, then the body should be in ribbon impression and the
underlining should be in ribbon. The supposed typewritten body above the signature is an
original ribbon impression, that is, it is direct from the typewritten with the ribbon striking the
sheet of paper, the underlining, however, on which the signature is signed is a carbon
impression, that means it is a duplicate impression. (pp. 8-9, tsn., Oct. 30/85).10
The spouses Dela Rosa and Corazon Medina appealed to the CA. The case was docketed as CA-G.R.
CV No. 15455. On June 29, 1990, the appellate court rendered judgment granting the appeal and
reversed the trial court's ruling. According to the appellate court, the complaint was premature on
account of plaintiffs' failure to allege, in their complaint, that there had been earnest efforts to have
the case amicably settled as mandated under Article 222 of the New Civil Code.11
The spouses Dulay filed a Motion for Extension of Time to File a Petition for Review on Certiorari
with this Court which was granted. The motion was recorded as UDK-10069. However, the spouses
Dulay failed to file their petition. Thus, on November 19, 1990, the Court resolved to declare final
and executory the decision of the CA in CA-G.R. CV No. 15455 for failure of plaintiffs-appellees to
file their petition for review.12 The resolution of the Court became final and executory.13
In the meantime, Gideon died. His wife Angela and Corazon Medina continued residing in the
property without paying any rentals therefor. Asuncion Dulay passed away on June 26, 1995,
survived by her husband Arsenio and their children: Orfelina Roldan, Lorna San Diego, Flordeliza
Catacutan, and Norma Lacuesta.
In a letter dated October 2, 1995, Arsenio and his children, through counsel, made demands on
Corazon and Angela to vacate the property within 30 days from receipt thereof, with a warning that
failure to do so would impel them to file the necessary legal action.14 Nevertheless, they suggested
a conference to discuss the amicable settlement of the matter. Corazon and Angela ignored the
letter. This prompted Arsenio and his children to file a complaint for eviction against Angela and
Corazon in the Office of the Barangay Captain. The parties did not arrive at a settlement, and on
December 1, 1995, the Pangkat Secretary issued a certification to file action.15
On January 29, 1996, Arsenio and his children, as plaintiffs, filed a complaint for unlawful detainer
against Corazon and Angela, as defendants, in the MTC of Tarlac, Tarlac. Plaintiffs alleged the
following:
3. Plaintiffs are the co-owners of two adjoining parcels of residential land located at Tarlac, Tarlac,
and more particularly described as follows:
Transfer Certificate of Title No. 29040
"A parcel of land (Lot "B" of the subdivision plan Psd-2284, being a portion of the land described
on the original plan II-5215, G.L.R.O. Record No. 7962), situated in the Barrio of San Roque,
Municipality of Tarlac, Province of Tarlac. Bounded on the N.E., by Lot "C" of the subdivision
plan; on the S.E., by Lot No. "3-B-2" of the subdivision plan and property of Concepcion Cider;
on the W., by property of Timotea Mercado; and on the N.W., by Lot "A" of the subdivision
plan, containing an area of TWO HUNDRED SIXTY-ONE (261) SQUARE METERS, more or less."
Transfer Certificate of Title No. 29041
"A parcel of land (Lot No. "3-B-2" of the subdivision plan Psd-2284, being a portion of Lot No.
"3-B," plan II-2977-Amd., G.L.R.O. Record No. 1955), situated in the Barrio of San Roque,
Municipality of Tarlac, Province of Tarlac. Bounded on the N.E., by Lot 87-C of the subdivision
plan; on the S.E., by Lot No. 3-B-1 of the subdivision plan; on the S.W., by property of
Concepcion Cider; and on the N.W., by Lot B of the subdivision plan, containing an area of
SEVEN HUNDRED SEVENTY-TWO (772) SQUARE METERS, more or less."
Copies of the transfer certificates of title are attached as Annexes "A" and "B," respectively.
The total assessed value of said lands does not exceed Twenty Thousand Pesos (P20,000.00).
4. Said parcels of land were formerly owned by the spouses Asuncion dela Rosa and Arsenio
Dulay. Plaintiffs Orfelina Roldan, Lorna San Diego, Flordeliza Catacutan, and Norma Lacuesta are
the children of the spouses Asuncion dela Rosa and plaintiff Arsenio Dulay. Upon the death of
Asuncion dela Rosa on 26 June 1995, said parcels of land became jointly owned by herein
plaintiffs. A copy of Asuncion dela Rosa's certificate of death is attached as Annex "C."
5. The spouses Dulay bought said parcels of land sometime in 1957. Defendants and their
predecessors-in-interest have occupied and are continuously occupying about five hundred (500)
square meters, more or less, of said parcels of land. Defendants and their predecessors-in-
interest have occupied said parcels of land since 1957 without paying any rent.
6. The occupation by defendants of said parcels of land were at the mere tolerance of the spouses
Dulay and, thereafter, of the plaintiffs. Defendants have promised to vacate the premises if and
when needed by the spouses Dulay and plaintiffs.
7. Demands were made on defendants to vacate the premises, which demands, however, were
ignored and not heeded. Defendants refused and continues to refuse to vacate the premises. A
copy of the final demand letters sent to Angela dela Rosa and Corazon Medina are attached as
Annexes "D" and "E," respectively.
8. In an attempt to arrive at an amicable settlement and in recognition of their being blood
relatives, plaintiffs exerted earnest efforts towards a compromise with defendants. Defendants
were invited to discuss and settle the matter amicably. Defendants, however, refused to meet
and discuss any settlement and ignored the invitation extended by plaintiffs.
9. In compliance with Section 412 of the Local Government Code (R.A. No. 7160) and as a further
attempt to settle the dispute amicably, plaintiffs brought the matter to the lupong tagapamayapa
of their barangay. Defendants, however, refused to discuss an amicable settlement. The
certification to file action issued by the lupon chairman is attached and made an integral part
hereof as Annex "F."
10. Defendants have been occupying and using the premises without paying any rent therefor.
The present reasonable rental value of the premises is Fifty Pesos (P50.00) per month, which
amount defendants should be made to pay from September 1957 until possession is restored to
plaintiffs.
11. By reason of the unjustifiable refusal to vacate and the unlawful detainer of the subject
property by defendants and all persons claiming rights under them, plaintiffs were constrained
to seek redress in court to protect their own rights and interests, thereby causing them to incur
litigation expenses in the amount of not less than Fifty Thousand Pesos (P50,000.00), for which
amount the defendant should be made liable to plaintiffs.16
Plaintiffs therein prayed that, after due proceedings, judgment be rendered in their favor as follows:
WHEREFORE, premises considered, plaintiffs most respectfully pray that, after trial, judgment be
rendered by this Honorable Court in favor of plaintiffs and ordering as follows:
1. Defendants and all persons claiming rights under them to immediately vacate the premises;
2. Defendants to pay all rental arrears at the monthly rate of P50.00 from September 1957 until
possession is restored or a total of P23,000.00;
3. Defendants to pay litigation expenses in the amount of P50,000.00; and
4. Defendants to pay the costs of this suit.
Plaintiffs pray for such other and further reliefs just and equitable under the premises. 17
The case was docketed as Civil Case No. 6089.
In their answer, defendants reiterated their allegations in their answer to the complaint in Civil Case
No. 6261 in the CFI of Tarlac.
On April 30, 1996, Angela filed a complaint against Arsenio and his children in the MTC of Tarlac,
Tarlac for recovery of ownership, reconveyance, cancellation of title, and damages. The case was
docketed as Civil Case No. 6154. Angela, as plaintiff, reiterated her allegations in her answer and
counterclaim in Civil Case No. 6261 as allegations comprising her causes of action. She prayed that,
after due proceedings, judgment be rendered in their favor, thus:
WHEREFORE, it is most respectfully prayed of this Hon. Court that judgment shall issue:
1. Ordering that an immediate temporary restraining order restraining the defendants from
disturbing the possession of the Plaintiff over the property in question until the case is finally
dissolved;
2. Declaring the Plaintiff as owner of the one-half (1/2) property in question, thereby reconveying
the ownership thereof and cancelling the title;
3. Ordering the defendants, jointly and severally, to pay Plaintiff the amount of P30,000.00 as
attorney's fee, plus P1,000.00 per hearing;
4. Ordering the defendants, jointly and severally, to pay Plaintiff the amount of P10,000.00 as
acceptance fee, plus P20,000.00 as litigation expenses;
5. Ordering the defendants, jointly and severally, to pay Plaintiff the amount of P20,000.00 as
exemplary damages;
6. Ordering the defendants, jointly and severally, to pay Plaintiff the amount of P10,000.00 as
moral damages;
7. And granting such other reliefs and remedies just and equitable in the premises. 18
On July 17, 1996, the MTC issued a pre-trial order in Civil Case No. 6089 defining the issue, thus:
Whether or not Unlawful Detainer is proper in the premises considering the claim of ownership
by defendants from the beginning of these litigations sometime in 1982 followed by this case at
bench. Otherwise stated, is the occupation of the land in dispute by the defendants by tolerance
of plaintiffs.19
On September 25, 1996, the MTC rendered judgment in Civil Case No. 6089 in favor of Corazon and
Angela and ordered the dismissal of the complaint on the ground of lack of jurisdiction.20 The court
held that the issue between the parties was one of ownership and not merely possession de facto.
Thus, the possession of the property by defendants was not by mere tolerance, but by virtue of a
claim of ownership; in fact, defendants never recognized the plaintiffs' claim of ownership over the
property. In ruling against Arsenio and his children, the trial court relied on their pleadings, the
decision of the CFI in Civil Case No. 6261, the ruling of the CA in CA-G.R. CV No. 15455, and the
resolution of this Court in UDK-10069.21 It declared that, although the CA reversed the decision of
the CFI in Tarlac, the facts show that the dispute between the parties constitutes possession de jure;
the action of the spouses Dulay in Civil Case No. 6261 which was an accion publiciana cannot be
converted into one for unlawful detainer in Civil Case No. 6089.
Arsenio and his children appealed to the RTC. The case was docketed as Civil Case No. 8396. On June
25, 1997, it reversed the decision of the MTC and ordered the eviction of defendants, holding that
the issue was the entitlement to the physical possession de facto of the property, an issue within
the exclusive jurisdiction of the MTC;22 in contrast, the issue between the parties in Civil Case No.
6261 was possession de jure and not possession de facto. The RTC further declared that the spouses
Dulay had a torrens title over the property which was conclusive against the whole world; as such,
they were entitled to the possession of the property as owners thereof. Citing the ruling of this
Court in Peran v. Espera,23 the RTC ruled that Corazon and Angela possessed the property for a
considerable length of time only through mere tolerance of plaintiffs.
Corazon and Angela moved to reconsider the decision, which the RTC denied in an Order 24 dated
September 22, 1997. They filed a petition for review in the CA, praying that the RTC decision be
reversed and the decision of the MTC be affirmed. Angela claimed that she owned one-half of the
property as co-owner of the spouses Dulay. The case was docketed as CA-G.R. SP No. 45560.
On March 16, 1998, the CA rendered judgment in CA-G.R. SP No. 45560 affirming the decision of
the RTC and dismissing the petition. The CA ruled that, contrary to the claim of Angela, there was
no trust created over one-half of the property in her favor. Since the complaint against Angela and
Corazon in the MTC was one for unlawful detainer, the MTC had exclusive jurisdiction over the case.
Moreover, they had been in possession of the property by tolerance. In any case, their action was
barred by prescription and laches.
Angela and Corazon filed a motion for reconsideration, which the CA denied.
Angela and Corazon, now petitioners, filed the instant petition for review on certiorari, claiming that
the CA erred as follows:
I
THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED IN CONSIDERING THAT THE CASE AT
BAR IS ONE OF UNLAWFUL DETAINER, WHEN IT IS ONE OF RECOVERY OF OWNERSHIP AND
POSSESSION.
II
THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED IN CONSIDERING THAT THERE WAS
NO TRUST CREATED BY AGREEMENT OF THE PARTIES.
III
THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED IN CONSIDERING THAT THE
PETITIONERS' CLAIM HAS BEEN BARRED BY PRESCRIPTION OR LACHES.
IV
THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED IN AWARDING ATTORNEY'S FEE FOR
RESPONDENTS.25
According to petitioners, during the pre-trial in the MTC, the parties stipulated on the following
issues to be resolved by the court: whether or not the action for unlawful detainer of respondents
was proper considering that petitioners claimed ownership over the property in their answer to the
complaint; and whether petitioners possessed the property by mere tolerance of respondents.
Petitioners insist that during the pre-trial conference, respondents admitted that they had filed a
complaint for recovery of possession of property against petitioners in the CFI of Tarlac, docketed
as Civil Case No. 6261.
Petitioners maintain that the principal issue is one of ownership over the property and not merely
whether or not respondents, as plaintiffs, were entitled to possession de facto as the registered
owners thereof; hence, the MTC had no jurisdiction over the action of respondents.
Petitioners are of the view that the trial court and the CA erred in declaring that there was no trust
created over the property. They maintain that there was a verbal agreement between Gideon and
his sister Asuncion that the property would be purchased by them; that the purchase price thereof
would be advanced by Asuncion; that Asuncion would be indicated as the vendee in the deed of
absolute sale to enable her to secure a GSIS loan to pay for the property, with the concomitant
agreement that Gideon would pay one-half of the purchase price for the property; and that the
property will be titled in their name as trustees for the spouses Gideon and Angela dela Rosa over
one-half portion of the lots. They insist that they are not barred from assailing the deed of absolute
sale executed in favor of the spouses Dulay by the spouses Rivera. There is likewise no factual and
legal basis for the award of attorney's fees.
In their comment on the petition, respondents aver that the stay of petitioners in the property after
1982 was by mere tolerance. The MTC had exclusive jurisdiction over their action because it was
filed within one year from petitioners' last demand to vacate the property. The CA correctly ruled
that no trust was created over the property, with petitioners as trustors and respondents as
trustees; whether a trust agreement was created is a question of fact which cannot be raised in this
Court in a petition for review on certiorari.
In any event, petitioners' claim of a constructive trust was barred by prescription since more than
ten years had elapsed from the time the titles over the properties in favor of respondents were
issued on September 16, 1957.
Respondents further point out that the MTC of Tarlac rendered judgment in Civil Case No. 6154
dismissing the complaint on the ground of prescription or laches; on April 6, 2000, the RTC affirmed
the decision on appeal; the CA affirmed the decision in CA-G.R. SP No. 58857 on February 14, 2002;
and on January 22, 2003, this Court denied petitioners' petition for review of the decision of the CA
in G.R. No. 155599.26 Thus, the fact that no constructive trust existed in favor of petitioners has
been laid to rest by the Court.
The Ruling of the Court
The threshold issues are: (1) whether the MTC had jurisdiction over the action of respondents
(plaintiffs therein); (2) whether the CA erred in declaring that there was no trust relationship
between petitioners as trustors and respondents as trustees; (3) whether the appellate court erred
in ruling that the action of petitioners to enforce the trust against respondents had prescribed; and
(4) whether respondents are entitled to attorney's fees.
On the first issue, we agree with the decision of the CA that the action of respondents against
petitioners was one for unlawful detainer, and that the MTC had jurisdiction over the same. Indeed,
petitioners claimed ownership over one-half of the property in their answer to the complaint and
alleged that respondents were merely trustees thereof for their benefit as trustors; and, during the
pre-trial, respondents admitted having filed their complaint for recovery of possession of real
property (accion publiciana) against petitioners before the CFI of Tarlac, docketed as Civil Case No.
6261. However, these did not divest the MTC of its inceptial jurisdiction over the complaint for
unlawful detainer of respondents.
It is settled jurisprudence that what determines the nature of an action as well as which court or
body has jurisdiction over it are the allegations of the complaint and the character of the relief
sought, whether or not plaintiff is entitled to any and all of the reliefs prayed for.27 The jurisdiction
of the court or tribunal over the nature of the action cannot be made to depend upon the defenses
set up in the court or upon a motion to dismiss, for otherwise, the question of jurisdiction would
depend almost entirely on defendant. Once jurisdiction is vested, the same is retained up to the
end of the litigation.28
Jurisdiction cannot be conferred by the voluntary act or agreement of the parties; it cannot be
acquired through or waived, enlarged or diminished by their act or omission. Neither is it conferred
by the acquiescence of the court. It is neither for the court nor the parties to violate or disregard
the rule, this matter being legislative in character. Thus, the jurisdiction over the nature of an action
and the subject matter thereof is not affected by the theories set up by defendant in an answer or
motion to dismiss.29
Section 3 of Republic Act No. 7691, amending Section 33(2) of Batas Pambansa Blg. 129, which was
the law in effect when respondents filed their complaint against petitioners, provides that
"Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts exercise
exclusive original jurisdiction over cases of forcible entry and unlawful detainer; provided that,
when, in such cases, defendant raises the questions of ownership in his pleadings and the question
of possession cannot be resolved without deciding the issue of ownership, the issue of ownership
shall be resolved only to determine the issues of possession."
As gleaned from the averments of the complaint, respondents, as plaintiffs below, alleged that they
were the owners of parcels of land covered by TCT Nos. 29040 and 29041, hence, entitled to the
possession of the property; petitioners (defendants therein) and their predecessors-in-interest had
occupied the said parcels of land since 1957 without paying any rent; their possession over the
property continued even after the spouses Dulay purchased the property; and that their occupation
of the property was by mere tolerance of the spouses Dulay and, after Asuncion died on June 26,
1995, by respondents; petitioners promised to vacate the premises when respondents needed the
property; demands were made by respondents on October 2, 1995 for petitioners to vacate the
property but the latter refused, prompting an action to be filed in the Office of the Pangkat; and,
on December 1, 1995, the Pangkat Secretary issued a certification to file action. As gleaned from
the petitory portion of the complaint, respondents likewise prayed for the eviction of petitioners
from the property with a plea for judgment for reasonable compensation for petitioners' occupation
of the premises. Respondents filed their complaint on January 29, 1996 in the MTC, within the
period of one year from the final demand made against petitioners to vacate the property.
It is true that during the pre-trial, the MTC issued an order defining the issue to be litigated by the
parties – whether or not unlawful detainer is proper in the premises considering defendants' claim
of ownership from 1982; otherwise stated, whether petitioners' occupation of the land in dispute
was by mere tolerance of respondents. As framed by the MTC, the issue before it was basically one
of physical or material possession of the property, although petitioners raised ownership as an
issue. Thus, the MTC erred when it declared that, since defendants claimed ownership over the
property, it was divested of its jurisdiction to take cognizance of and decide the case on its merits.
It bears stressing that in unlawful detainer cases, the only issue for resolution, independent of any
claim of ownership by any party litigant, is: who is entitled to the physical and material possession
of the property involved? The mere fact that defendant raises the defense of ownership of the
property in the pleadings does not deprive the MTC of its jurisdiction to take cognizance of and
decide the case. In cases where defendant raises the question of ownership in the pleadings and
the question of possession cannot be resolved without deciding the issue of ownership, the court
may proceed and resolve the issue of ownership but only for the purpose of determining the issue
of possession. However, the disposition of the issue of ownership is not final, as it may be the subject
of separate proceeding specifically brought to settle the issue. Hence, the bare fact that petitioners,
in their answer to the complaint, raised the issue of whether they owned the property as trustors
of a constructive trust (with the spouses Dulay as the trustees), did not divest the MTC of its
jurisdiction to take cognizance of the case and decide the same on its merits.30
Petitioners were well aware that the issue of ownership over the property had to be resolved in a
proper action for the purpose, separate from and independent of Civil Case No. 6089 in the MTC of
Tarlac. It is for this reason that petitioner Angela filed a complaint for recovery of ownership,
reconveyance, cancellation of title and damages against respondents, docketed as Civil Case No.
6154, wherein she prayed that respondents, as defendants, be ordered to convey to her one-half
portion of the property. However, her claim was rejected by the trial court, which ordered the
complaint dismissed; the RTC likewise dismissed the case on appeal. In affirming this dismissal in
CA-G.R. SP No. 58857 promulgated on February 14, 2002, the CA ratiocinated as follows:
Nevertheless, notwithstanding the foregoing, this Court finds that petitioner's complaint should
be dismissed. This is so because petitioner miserably failed to establish her claim to the property.
It must be stressed that while an implied trust may be established by parol evidence, such
evidence must be as fully convincing as if the acts giving rise to the trust obligation are proven by
an authentic document. (Heirs of Lorenzo Yap v. Court of Appeals, 312 SCRA 603 [1999], at page
609). An implied trust cannot be made to rest on vague and inconclusive proof. (Ibid.)
Unfortunately for petitioner, the evidence she presented in her attempt to establish their so-
called trust agreement is not sufficient or convincing. The list of dates and amounts written by
her purportedly showing payments made to the late Asuncion dela Rosa Dulay cannot even be
given credence as appreciation of such list can be equivocal (see Exhibit "H," page 152, Original
Records). The list was made in petitioner's handwriting and there was no counter-signature made
by Dulay showing acknowledgment of such listing. At best, the list can merely be appreciated as
it is, a list, but definitely, it does not prove payments made on the purchase price of the ½ portion
of the property.
Also, the Court notes the NBI's Questioned Documents Report No. 316-884 (dated Nov. 14, 1984)
finding that the signature of Asuncion Dulay in the receipt allegedly acknowledging partial
payment in the amount of P500.00 was signed over a typewritten carbon or duplicate impression
which is not part of the main entries in the receipt (see Exhibit "7," page 154, Original Records).
Such conclusion shows that the entries made on the receipt were not written on a single occasion
but rather separately executed. Thus, the Court cannot give any evidentiary value on said receipt
considering that its credibility is suspect.
Meanwhile, private respondents have in their favor TCT Nos. 29040 and 29041 in the name of
the spouses Arsenio Dulay and Asuncion dela Rosa (see Exhibits "1" and "2," pages 181-182,
Original Records); the Deed of Absolute Sale executed in 1957 by the spouses Adriano Rivera and
Aurora Mercado (petitioner's paternal grandparents) conveying the entire property to the
spouses Dulay for the price of P7,000 (see Exhibit "3," page 148, Original Records); the tax
declaration receipts showing tax payments made by private respondents on the property (see
Exhibits "3" to "3-b," pages 183-185, Original Records); and the tax declaration of real property
for the year 1974 in the name of the spouses Dulay (see Exhibit "C" to "C-1," pages 150-151,
Original Records).
All told, petitioner failed to discharge that onus incumbent upon her to prove her claim over the
property.31
Angela assailed the decision of the CA in this Court in G.R. No. 155599, and this Court resolved to
deny the petition as follows:
G.R. No. 155599 (Angela dela Rosa v. Orfelina Roldan, et al.). – Considering the allegations,
issues, and arguments adduced in the petition for review on certiorari of the decision and
resolution of the Court of Appeals dated February 14, 2002 and October 14, 2002,
respectively, the Court Resolves to DENY the petition for failure of the petitioner to
sufficiently show that the Court of Appeals committed any reversible error in the
challenged decision and resolution as to warrant the exercise by this Court of its
discretionary appellate jurisdiction in this case.32
The resolution of the Court became final and executory on May 20, 2003. 33 Thus, the issue of
whether or not respondents were trustees of one-half of the property had been finally resolved by
this Court in favor of respondents; in fine, the validity of TCT Nos. 29040 and 29041 in the names of
the spouses Dulay had been affirmed by the trial court, the MTC, the CA and this Court. The claim
of co-ownership of petitioner Angela and possession over the western portion of the property thus
have no factual and legal basis.
We agree with petitioners that the complaint of the spouses Dulay filed in 1982 docketed as Civil
Case No. 6261 was one for recovery of possession of the property (accion publiciana) and that they
likewise later filed a complaint with the MTC, on January 29, 1996, for unlawful detainer in Civil Case
No. 6089 instead of an accion publiciana. However, respondents were not proscribed from filing a
complaint for unlawful detainer five (5) or six (6) years from the dismissal of their complaint for
recovery of possession of real property. The dismissal of respondents' complaint in Civil Case No.
6261 by the CA was not based on the merits of the case, but solely because it was premature on
account of the failure to allege that earnest efforts were made for the amicable settlement of the
cases as required by Article 222 of the New Civil Code. The dismissal of the complaint was thus
without prejudice.34
It bears stressing that, after the Court declared in UDK-10069 on November 19, 1990 that the
decision of the CA in CA-G.R. CV No. 15455 was final and executory, respondents did not
immediately file their complaint for unlawful detainer against petitioners for their eviction.
Respondents filed their complaint only on January 29, 1996, or after the lapse of almost six (6) years,
but barely four (4) months after respondents' final demand to vacate the property on October 2,
1995 and the issuance of the certification of the Pangkat Secretary on December 1, 1995.
We agree with the contention of petitioners that for an action for unlawful detainer based on
possession by mere tolerance to prosper, the possession of the property by defendant must be legal
from the very beginning.35 In this case, petitioners' possession of the property was tolerated by the
former owners, the spouses Rivera, and by the spouses Dulay after they purchased the property.
After all, Angela was the granddaughter of Consolacion Rivera, the sister of Adriano Rivera, and
Gideon was the brother of Asuncion. However, when the spouses Dulay needed the property for
their children's use and requested petitioners to vacate the property, the latter refused. From then
on, petitioners' possession of the property became deforciant. A person who occupies the land of
another on the latter's tolerance, without any contract between them, is necessarily barred by an
implied provision that he will vacate the same upon demand.36 Respondents thus had the option to
file a complaint for unlawful detainer within one year therefrom, or an accion publiciana beyond
the one-year period from the demand of respondents as plaintiffs for petitioners to vacate the
property.
The Court notes that the property was sold to respondents, and that it was titled in their names
(TCT Nos. 29040 and 29041). The said deed and titles support the right of respondents to the
material possession of the property.37 Under all the circumstances and facts in this case, petitioners'
claim, that they had the right to the material possession of the property, has no factual and legal
basis. We quote with approval the decision of the CA in CA-G.R. SP No. 45560:
Private respondents are entitled to its possession from the time title was issued in their
favor as registered owners. "An action for unlawful detainer may be filed when possession
by a landlord, vendor, vendee or other person against whom the possession of any land
or building is unlawfully withheld after the expiration or termination of their right to hold
possession, by virtue of a contract, express or implied."
 Second. "The age-old rule is that 'the person who has a torrens title over a land is entitled
to possession thereof'." Except for the claim that the title of private respondents is not
conclusive proof of ownership, petitioners have shown no right to justify their continued
possession of the subject premises.38
On the issue of whether the RTC acted in excess of its appellate jurisdiction in awarding P50,000.00
as attorney's fees in favor of respondents, petitioners aver that under the Rules on Summary
Procedure, respondents are entitled to a maximum amount of only P20,000.00; hence, the RTC
acted in excess of its jurisdiction when it awarded P50,000.00 as attorney's fees, as it is in excess of
the maximum amount under the said Rules. Besides, petitioners aver, the amount of P50,000.00 is
unjust and inequitable. Moreover, the RTC ordered petitioners to pay attorney's fees of P50,000.00
without even supporting the award with its finding and citing legal provisions or case law.
For its part, the CA ruled that the award of P50,000.00 as attorney's fees under the Rules on
Summary Procedure does not apply in a case where the decision of the MTC is appealed to the RTC.
The latter court may award an amount beyond the maximum amount of P20,000.00 under the Rules
on Summary Procedure as attorney's fees for the reason that, on appeal in the RTC, the regular rules
of civil procedure apply. According to the CA, there was factual and legal basis for the award of
P50,000.00 as respondents' attorney's fees:
Second. Decisional law states –
"The Rule on Summary Procedure applies only in cases filed before the
Metropolitan Trial Court and Municipal Trial Courts pursuant to Section 36 of
Batas Pambansa Blg. 129. x x x Hence, when the respondents appealed the
decision of the Municipal Trial Court to the Regional Trial Court, the applicable
rules are those of the latter court."
Thus, the award of the amount of fifty thousand pesos (P50,000.00) as attorney's fees is
justified considering that the jurisdictional amount of twenty thousand pesos
(P20,000.00) under Section 1, paragraph (A), subparagraph (1) of the Revised Rule on
Summary Procedure applies only to the Metropolitan Trial Courts, Municipal Trial Courts
in Cities, Municipal Trial Courts and Municipal Circuit Trial Courts.39
We agree with the ruling of the CA. The ceiling of P20,000.00 applies only in the MTC where the
Rules on Summary Procedure are applied. On appeal to the RTC, the RTC may affirm, modify or even
reverse the decision of the MTC; as such, the RTC may increase the award for attorney's fees in
excess of P20,000.00 if there is factual basis therefor.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. Costs against the petitioners.
SO ORDERED.

"There is no question that a court may, whenever it deems just and equitable,
allow the recovery by the prevailing party of attorney's fees. In determining the
reasonableness of such fees, this Court in a number of cases has provided
various criteria which, for convenient guidance, we might collate, thusly: a) the
quantity and character of the services rendered; b) the labor, time and trouble
involved; c) the nature and importance of the litigation; d) the amount of money
or the value of the property affected by the controversy; e) the novelty and
difficulty of questions involved; f) the responsibility imposed on counsel; g) the
skill and experience called for in the performance of the service; h) the
professional character and social standing of the lawyer; i) the customary
charges of the bar for similar services; j) the character of employment, whether
casual or for established client; k) whether the fee is absolute or contingent (it
being the rule that an attorney may properly charge a higher fee when it is
contingent than when it is absolute; and l) the results secured."

In view thereof, the award of attorney's fees is justified. That is, in addition to the
provisions of Article 2208 of the New Civil Code which reads –

"In the absence of stipulation, attorney's fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:

xxxx

(2) When the defendant's act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest;"

xxxx

considering that petitioners refused to vacate the subject premises despite demands by
the private respondents.

Finally, the Supreme Court has explained –