GENERAL PRINCIPLES/RULE 1: DOCTRINE OF NON-INTERFERENCE OR After hearing, the ERB rendered a decision5 granting the petition, the dispositive portion

the petition, the dispositive portion reads:

JUDICIAL STABILITY
G.R. No. 127371      April 25, 2002
PHILIPPINE SINTER CORPORATION and PHIVIDEC INDUSTRIAL
AUTHORITY, petitioners,  connection of industries to NPC within the franchise area of CEPALCO is no longer
vs.
CAGAYAN ELECTRIC POWER and LIGHT CO., INC., respondent.  industrial consumers within the franchise area of CEPALCO is hereby ordered to be
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  On April 11, 1994, the trial court rendered judgment12 in favor of PSC and PIA, thus:
"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
necessary. Therefore, all existing NPC (now NAPOCOR) direct supply of power to
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 of time and therefore, the assailed decision became final and executory and
could no longer be 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.

The ERB issued a notice of public hearing which was published in the newspapers and posted "WHEREFORE, premises considered, judgment is hereby rendered, by
in the affected areas. It likewise furnished NAPOCOR and the Board of Investments (BOI) preponderance of evidence, in favor of plaintiffs PSC and PIA and against defendant
copies of the petition and directed them to submit their comments.  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  Cabinet Memorandum.
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:  or cooperative. Anent petitioners' argument that the ERB decision does not bind them for lack
"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  vis the authority of NAPOCOR to supply power directly. In National Power Corporation vs.
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
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
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-
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.  CEPALCO. If it were true that PSC has the exclusive right to operate and maintain electric
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  1973 expressly provides that the generation of electric power shall be
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
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 Court 31 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
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)  "People of the Philippines v. George I. Lagos."
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.
GENERAL PRINCIPLES/RULE 1: 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
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.  vesting in the RTCs jurisdiction over intra-corporate disputes.11
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-SC 9 implementing
the Securities and Regulation Code (Republic Act No. 8799) 10 enacted on July 19, 2000,
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
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 antecedent of the issue involved therein and the cognizance of which pertains to another
tribunal.14 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 on commission, or for administration, or under any other obligation involving the
duty to make delivery of, or to return the same;
2. That there be misrepresentation or conversion of such money or property by the
offender, or denial on his part of such receipt;
3. That such misappropriation or conversion or denial is to the prejudice of another;
and
4. That there is a demand made by the offended party to the offender.15
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 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. 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 SO ORDERED.
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 corporation, Saag Phils., Inc., vis-à-vis Saag Pte. Ltd.; and the authority
of petitioner to act on behalf of the domestic corporation, the determination of which will have
a direct bearing on the criminal case. The law recognizes that, in place of the SEC, the regular
courts now have the legal competence to decide intra-corporate disputes.20

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 of a despotic, whimsical and arbitrary exercise of power by the CA, the petition must
fail.

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.

No costs.
GENERAL PRINCIPLES/RULE 1: 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,  Contractor’s License Law, does not provide that a contract entered into after the license has
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
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 Memorandum 28 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.34Exceptions (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.
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:

Thus, while it is undisputed that the District Auditor of the COA disapproved respondent’s
claim against the Government, and, under Section 4837 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
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.

On the question of whether a contractor with an expired license is entitled to be paid for WHEREFORE, the present petition is DENIED for lack of merit. The assailed Decision of the
completed projects, Section 35 of R.A. No. 4566 explicitly provides: Court of Appeals dated April 28, 2003 in CA-G.R. CV No. 56345 is AFFIRMED. No
pronouncement as to costs.
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 SO ORDERED.
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
GENERAL PRINCIPLES/RULE 1: DOCTRINE OF ADHERENCE OF
JURISDICTION 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.  medicare and maternity benefits;
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.  1 May 1980, then further amended by BP Blg. 130
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,
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
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).  The Regional Trial Courts of today are actually the same courts that functioned as Courts of
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.  jurisdiction over aforesaid monetary claims of labor.
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. 
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
 
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.
G.R. No. 133882             September 5, 2006
ANGELA DELA ROSA and CORAZON MEDINA, petitioners,  Dulay prayed that defendants be evicted from the property and be required to pay reasonable
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 sale 2 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
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. 8However, 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.9The 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
Order24 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 PangkatSecretary 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.37Under 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 –
"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 –

"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.