JONATHAN Y. DEE v.
HARVEST ALL INVESTMENT LIMITED approving the SRO; and (b) instead, prayed that the Alliance Board be enjoined
GR No. 224834, Mar 15, 2017; PERLAS-BERNABE, J.:
Assailed in these consolidated petitions for review on certiorari are the
Decision dated February 15, 2016 and the Resolution dated May 25, 2016 of the
Court of Appeals (CA) in CA-G.R. SP No. 142213, which reversed the
Resolution dated August 24, 2015 of the Regional Trial Court of Pasig City, Branch
159 (RTC) in COMM'L. CASE NO. 15-234 and, accordingly, reinstated the case and
remanded the same to the court a quo for further proceedings after payment of
the proper legal fees.
The Facts
Harvest All Investment Limited, Victory Fund Limited, Bondeast Private Limited,
Albert Hong Hin Kay, and Hedy S.C. Yap Chua (Harvest All, et al.) are, in their own
capacities, minority stockholders of Alliance Select Foods International, Inc.
(Alliance), with Hedy S.C. Yap Chua acting as a member of Alliance's Board of
Directors. As per Alliance's by-laws, its Annual Stockholders' Meeting (ASM) is
held every June 15. However, in a Special Board of Directors Meeting held at
three (3) o'clock in the afternoon of May 29, 2015, the Board of Directors, over
Hedy S.C. Yap Chua's objections, passed a Board Resolution indefinitely
postponing Alliance's 2015 ASM pending complete subscription to its Stock
Rights Offering (SRO) consisting of shares with total value of Pl Billion which was
earlier approved in a Board Resolution passed on February 17, 2015. As per
Alliance's Disclosure dated May 29, 2015 filed before the Philippine Stock
Exchange, such postponement was made "to give the stockholders of [Alliance]
better representation in the annual meeting, after taking into consideration their
subscription to the [SRO] of [Alliance]." This prompted Harvest All, et al. to file
the instant Complaint (with Application for the Issuance of a Writ of Preliminary
Mandatory Injunction and Temporary Restraining Order/Writ of
Preliminary Injunction) involving an intra-
corporate controversy against Alliance, and its other Board members, namely,
George E. Sycip, Jonathan Y. Dee, Raymund K.H. See, Mary Grace T. Vera- Cruz,
Antonio C. Pacis, Erwin M. Elechicon, and Barbara Anne C. Migallos (Alliance
Board). In said complaint, Harvest All, et al. principally claimed that the
subscription to the new shares through the SRO cannot be made a condition
precedent to the exercise by the current stockholders of their right to vote in the
2015 ASM; otherwise, they will be deprived of their
full voting rights proportionate to their existing shareholdings. Thus, Harvest
All, et al., prayed for, inter alia, the declaration of nullity of the Board Resolution
dated May 29, 2015 indefinitely postponing the 2015 ASM, as well as the Board
Resolution dated February 17, 2015 approving the SR0. The Clerk of Court of the
RTC assessed Harvest All, et al. with filing fees amounting to P8,860.00 which
they paid accordingly. Later on, Harvest All, et al. filed an Amended
Complaint: (a) deleting its prayer to
declare null and void the Board Resolution dated February 17, 2015
from implementing and carrying out the SRO prior to and as a condition for the
holding of the 2015 ASM.
For its part, the Alliance Board raised the issue of lack of jurisdiction on the
ground of Harvest All, et al.' s failure to pay the correct filing fees. It argued that
the latter should have paid P20 Million, more or less, in filing fees based on the
SRO which was valued at P1 Billion. However, Harvest All, et al. did not mention
such capital infusion in their prayers and, as such, were only made to pay the
measly sum of P8,860.00. On the other hand,
Harvest All, et al. maintained that they paid the correct filing fees,
considering that the subject of their complaint is the holding of the 2015 ASM and
not a claim on the aforesaid value of the SRO. Harvest All, et al. likewise pointed
out that they simply relied on the assessment of the Clerk of Court and had no
intention to defraud the government.
The RTC Ruling
In a Resolution dated August 24, 2015, the RTC dismissed the instant
complaint for lack of jurisdiction due to Harvest All, et al.'s failure to
pay the correct filing fees. Citing Rule 141 of the Rules of Court, as
amended by A.M. No. 04-2-04-SC, and the Court's pronouncement in Lu v. Lu
Ym, Sr. (Lu), the RTC found that the basis for the computation of filing fees
should have been the PI Billion value of the SRO, it being the property in
litigation. As such, Harvest All, et al. should have paid filing fees in the amount
of more or less P20 Million and not just P8,860.00. In
this regard, the RTC also found that Harvest All, et al.'s payment of incorrect
filing fees was done in bad faith and with clear intent to defraud the government,
considering that: (a) when the issue on correct filing fees was first raised during
the hearing on the application for TRO, Harvest All, et al. never manifested their
willingness to abide by the Rules by paying additional filing fees when so
required; (b) despite Harvest All, et al.'s admission in their complaint that the
SRO was valued at P1 Billion, they chose to keep mum on the meager assessment
made by the Clerk of Court; and (c) while Harvest All, et al. made mention of the
SRO in the body of their
complaint, they failed to indicate the same in their prayer, thus, preventing
the Clerk of Court from making the correct assessment of filing fees. Aggrieved,
Harvest All, et al. appealed to the CA.
The CA Ruling
In a Decision dated February I5, 20I6, the CA reversed the RTC's order of
dismissal and, accordingly, reinstated the case and remanded the same to the
court a quo for further proceedings after payment of the proper legal fees. Also
citing Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC, and Lu,
the CA held that the prevailing rule is that all intra-corporate
controversies always involve a property in litigation. Consequently,
it agreed with the RTC's finding that the basis for the computation of filing
fees should have been the PI Billion value of the SRO and, thus, Harvest All, et
al. should have paid filing fees in the amount of more or less P20 Million and not
just P8,860.00. However, in the absence of contrary evidence, the CA held that
Harvest All, et al. were not in bad faith and had no
intention of defrauding the government, as they merely relied in the
assessment of the Clerk of Court. Thus, in the interest of substantial justice,
the CA ordered the reinstatement of Harvest All, et al.'s complaint and the
remand of the same to the RTC for further proceedings, provided that they pay
the correct filing fees.
The parties moved for reconsideration, which were, however, denied in a
Resolution dated May 25, 2016. Hence, these consolidated petitions.
The Issues Before the Court
The primordial issues raised for the Court's resolution are: (a)
whether or not Harvest All, et al. paid insufficient filing fees for their
complaint, as the same should have been based on the P1 Billion value of the SRO;
and (b) if Harvest All, et al. indeed paid insufficient filing fees, whether or
not such act was made in good faith and without any intent to defraud the
government.
The Court's Ruling
The petition in G.R. No. 224834 is denied, while the petition in G.R. No.
224871 is partly granted.
I.
At the outset, the Court notes that in ruling that the correct filing fees for Harvest
All, et al.'s complaint should be based on the P1 Billion value of the SRO - and,
thus, essentially holding that such complaint was capable of
pecuniary estimation - both the RTC and the CA heavily relied on the
Court's pronouncement in Lu. In Lu, the Court mentioned that in view of A.M.
No. 04-2-04-SC dated July 20, 2004 which introduced Section 21
(k) to Rule 141 of the Rules of Court, it seemed that "an intra-corporate
controversy always involves a property in litigation" and that "there can be no
case of intra-corporate controversy where the value of the subject matter cannot
be estimated."
However, after a careful reading of Lu, it appears that Harvest All, et al. correctly
pointed out that the foregoing statements were in the nature of an obiter dictum.
To recount, in Lu, the Court ruled, inter alia, that the case involving an intra-
corporate controversy instituted therein, i.e., declaration of nullity of
share issuance, is incapable of pecuniary estimation and, thus, the correct
docket fees were paid. Despite such pronouncement, the Court still went on to
say that had the complaint therein been filed during the effectivity of A.M. No. 04-
2-04-SC, then it would have ruled otherwise because the amendments brought
about by the same "seem to imply that there can be no case of intra-
corporate controversy where the value of the subject matter cannot be
estimated," viz.:
The new Section 21 (k) of Rule 141 of the Rules of Court, as amended by
A.M. No. 04-2-04-SC (July 20, 2004), expressly provides that "[f]or
petitions for insolvency or other cases involving intra-corporate
controversies, the fees prescribed under Section 7 (a) shall apply." Notatu
dignum is that paragraph (b) 1 & 3 of Section 7 thereof was omitted from
the reference. Said paragraph refers to docket fees for filing "[a]ctions where
the value of the subject matter cannot be estimated" and "all other actions not
involving property."
By referring the computation of such docket fees to paragraph (a) only, it denotes
that an intra-corporate controversy always involves a property in litigation, the
value of which is always the basis for computing the applicable filing fees. The
latest amendments seem to imply that there can be no case of intra-corporate
controversy where the value of the subject matter cannot be estimated. Even one
for a mere inspection of corporate books.
If the complaint were filed today, one could safely find refuge in the
express phraseology of Section 21 (k) of Rule 141 that paragraph (a) alone
applies.
In the present case, however, the original Complaint was filed on August
14, 2000 during which time Section 7, without qualification, was the
applicable provision. Even the Amended Complaint was filed on March 31,
2003 during which time the applicable rule expressed that paragraphs (a) and
(b) 1 & 3 shall be the basis for computing the filing fees in intra-
corporate cases, recognizing that there could be an intra-corporate
controversy where the value of the subject matter cannot be estimated,
such as an action for inspection of corporate books. The immediate
illustration shows that no mistake can even be attributed to the RTC clerk
of court in the assessment of the docket fees. (Emphases and underscoring
supplied)
Accordingly, the passages in Lu that "an intra-corporate controversy always
involves a property in litigation" and that "there can be no case of intra-
corporate controversy where the value of the subject matter cannot be
estimated" are clearly non-determinative of the antecedents involved in that
case and, hence, cannot be controlling jurisprudence to bind our courts when
it adjudicates similar cases upon the principle of stare decisis. As it is
evident, these passages in Lu only constitute an opinion delivered by the Court
as a "by the way" in relation to a hypothetical scenario (i.e., if the complaint was
filed during the effectivity of A.M. No. 04-2-04-SC, which it was not) different from
the actual case before it.
In Land Bank of the Philippines v. Santos, the Court had the
opportunity to define an obiter dictum and discuss its legal effects as
follows:
[An obiter dictum] "x x x is a remark made, or opinion expressed, by a judge,
in his decision upon a cause by the way, that is, incidentally or collaterally,
and not directly upon the question before him, or upon a point not
necessarily involved in the determination of the cause, or introduced by
way of illustration, or analogy or argument. It does not
embody the resolution or determination of the court,
and is made without argument, or full consideration of the point. It
lacks the force of an adjudication, being a mere expression of
an opinion with no binding force for purposes of res judicata." (Emphasis
and underscoring supplied)
For these reasons, therefore, the courts a quo erred in applying the case of Lu.
II.
In any event, the Court finds that the obiter dictum stated in Lu was actually
incorrect. This is because depending on the nature of the principal
action or remedy sought, an intra-corporate controversy may involve a
subject matter which is either capable or incapable of pecuniary estimation.
In Cabrera v. Francisco, the Court laid down the parameters in determining
whether an action is considered capable of pecuniary estimation or not:
In determining whether an action is one the subject matter of which is
not capable of pecuniary estimation this Court has adopted the criterion
of first ascertaining the nature of the principal action or remedy sought. If
it is primarily for the recovery of a sum of money, the claim is considered capable
of pecuniary estimation, and whether jurisdiction is in the municipal
courts or in the [C]ourts of [F]irst [I]nstance would depend on the amount of
the claim. However, where the basic issue is something other than the right
to recover a sum of money, where the money claim is
purely incidental to, or a consequence of, the principal relief sought, this
Court has considered such actions as cases where the subject of the
litigation may not be estimated in terms of money, and are cognizable
exclusively by [C]ourts of [F]irst [I]nstance (now Regional Trial
Courts). (Emphases and underscoring supplied)
This case is a precise illustration as to how an intra-corporate controversy
may be classified as an action whose subject matter is incapable of
pecuniary estimation. A cursory perusal of Harvest All, et al.'s
Complaint and Amended Complaint reveals that its main purpose is to have
Alliance hold its 2015 ASM on the date set in the corporation's by laws, or
at the time when Alliance's SRO has yet to fully materialize, so that
their voting interest with the corporation would somehow be preserved.
Thus, Harvest All, et al. sought for the nullity of the Alliance Board
Resolution passed on May 29, 2015 which indefinitely postponed the
corporation's 2015 ASM pending completion of subscription to the
SR0. Certainly, Harvest All, et al.'s prayer for nullity, as well as the concomitant
relief of holding the 2015 ASM as scheduled in the by-laws, do not involve the
recovery of sum of money. The mere mention of Alliance's impending SRO valued
at P1 Billion cannot transform the nature of Harvest All, et al.'s action to one
capable of pecuniary estimation, considering that: (a) Harvest All, et al. do not
claim ownership of, or much less entitlement to, the shares subject of the SRO;
and (b) such mention was merely narrative or descriptive in order to emphasize
the severe dilution that their voting interest as minority shareholders would
suffer if the 2015 ASM were to be held after the SRO was completed. If, in the end,
a sum of money or anything capable of pecuniary estimation would be recovered
by virtue of Harvest All, et al.'s complaint, then it would simply be the
consequence of their principal action. Clearly therefore, Harvest All, et al.'s action
was one incapable of pecuniary estimation.
At this juncture, it should be mentioned that the Court passed A.M. No. 04-02-04-
SC dated October 5, 2016, which introduced amendments to
the schedule of legal fees to be collected in various commercial cases,
including those involving intra-corporate controversies. Pertinent portions of
A.M. No. 04-02-04-SC read:
RESOLUTION
Whereas, Rule 141 of the Revised Rules of Court, as amended by A.M. No. 04-2-
04-SC effective 16 August 2004, incorporated the equitable schedule of legal
fees prescribed for petitions for rehabilitation under Section 21 (i) thereof and,
furthermore, provided under Section 21(k) thereof that the fees prescribed
under Section 7(a) of the said rule shall apply to petitions for insolvency
or other cases involving intra-corporate controversies;
NOW, THEREFORE, the Court resolves to ADOPT a new schedule of filing fees as
follows:
4. Section 21 (k) of Rule 141 of the Revised Rules of Court is
hereby DELETED as the fees covering petitions for insolvency are already
provided for in this Resolution. As for cases involving intra corporate
controversies, the applicable fees shall be those provided under Section
7 (a), 7 (b) (1), or 7 (b) (3) of Rule 141 of the Revised Rules of
Court depending on the nature of the action.
This Resolution shall take effect fifteen (15) days following its publication in the
Official Gazette or in two (2) newspapers of national circulation. The Office of the
Court Administrator (OCA) is directed to circularize the same upon its effectivity.
(Emphases and underscoring supplied)
Verily, the deletion of Section 21 (k) of Rule 141 and in lieu thereof, the
application of Section 7 (a) [fees for actions where the value of the subject
matter can be determined/estimated], 7 (b) (1) [fees for actions where the
value of the subject matter cannot be estimated], or 7 (b) (3) [fees for
all other actions not involving property] of the same Rule to
cases involving intra-corporate controversies for the determination of
the correct filing fees, as the case may be, serves a dual purpose: on the one
hand, the amendments concretize the Court's recognition that the subject matter
of an intra-corporate controversy may or may not be capable of pecuniary
estimation; and on the other hand, they were also made to correct the anomaly
created by A.M. No. 04-2-04-SC dated July 20, 2004 (as advanced by the Lu obiter
dictum) implying that all intra-corporate cases involved a subject matter which is
deemed capable of pecuniary estimation.
While the Court is not unaware that the amendments brought by A.M. No. 04-
02-04-SC dated October 5, 2016 only came after the filing of the
complaint subject of this case, such amendments may nevertheless be given
retroactive effect so as to make them applicable to the resolution of the
instant consolidated petitions as they merely pertained to a procedural rule,
i.e., Rule 141, and not substantive law. In Tan, Jr. v. CA, the Court thoroughly
explained the retroactive effectivity of procedural rules, viz.:
The general rule that statutes are prospective and not retroactive
does not ordinarily apply to procedural laws. It has been held that "a
retroactive law, in a legal sense, is one which takes away or impairs vested rights
acquired under laws, or creates a new obligation and imposes a new duty, or
attaches a new disability, in respect of transactions or considerations already
past. Hence, remedial statutes or statutes relating to remedies or modes
of procedure, which do not create new or take away vested rights,
but only operate in furtherance of the remedy or confirmation of
rights already existing, do not come within the legal conception of
a retroactive law, or the general rule against the retroactive operation of
statutes." The general rule against giving statutes retroactive operation whose
effect is to impair the obligations of contract or to
disturb vested rights does not prevent the application of statutes to
proceedings pending at the time of their enactment where they
neither create new nor take away vested rights. A new statute which
deals with procedure only is presumptively applicable to all actions -
those which have accrued or are pending.
Statutes regulating the procedure of the courts will be construed as applicable
to actions pending and undetermined at the time of their
passage. Procedural laws are retroactive in that sense and to that extent. The
fact that procedural statutes may somehow affect the litigants' rights may not
preclude their retroactive application to pending actions. The retroactive
application of procedural laws is not violative of any right of a person
who may feel that he is adversely affected. Nor is the retroactive
application of procedural statutes constitutionally objectionable.
The reason is that as a general rule no vested right may attach
to, nor arise from, procedural laws. It has been held that "a person has no
vested right in any particular remedy, and a litigant cannot insist on the
application to the trial of his case, whether civil or criminal,
of any other than the existing rules of procedure."
In view of the foregoing, and having classified Harvest All, et al.'s action as
one incapable of pecuniary estimation, the Court finds that Harvest All, et al.
should be made to pay the appropriate docket fees in accordance with the
applicable fees provided under Section 7 (b) (3) of Rule 141 [fees for all other
actions not involving property] of the Revised Rules of Court, in conformity
with A.M. No. 04-02-04-SC dated October 5, 2016. The matter is
therefore remanded to the RTC in order:
(a) to first determine if Harvest, et al.'s payment of filing fees in the amount of
P8,860.00, as initially assessed by the Clerk of Court, constitutes sufficient
compliance with A.M. No. 04-02-04- SC;
(b) if Harvest All, et al.'s payment of P8,860.00 is insufficient, to require
Harvest, et al.'s payment of any discrepancy within a period of
fifteen (15) days from notice, and after such payment, proceed with the regular
proceedings of the case with dispatch; or
(c) if Harvest All, et al.'s payment of P8,860.00 is already sufficient, proceed
with the regular proceedings of the case with dispatch.
WHEREFORE, the petition in G.R. No. 224834 is DENIED, while the petition in
G.R. No. 224871 is PARTLY GRANTED. The Decision dated February 15, 2016
and the Resolution dated May 25, 2016 of the Court of Appeals in CA-G.R. SP No.
142213 are hereby AFFIRMED with MODIFICATION in that COMM'L. CASE NO.
15-234 is hereby REMANDED to the Regional Trial Court of Pasig City,
Branch 159 for further proceedings as stated in the final paragraph of this
Decision.
MANUEL LUIS C. GONZALES v. GJH LAND
GR No. 202664, Nov 20, 2015; PERLAS-BERNABE, J.:
This is a direct recourse to the Court, via a petition for review on certiorari, from
the Orders dated April 17, 2012 and July 9, 2012of the Regional Trial Court (RTC)
of Muntinlupa City, Branch 276 (Branch 276) dismissing Civil Case No. 11-077 for
lack of jurisdiction.
The Facts
On August 4, 2011, petitioners Manuel Luis C. Gonzales and Francis Martin D.
Gonzales (petitioners) filed a Complaint for "Injunction with prayer for Issuance
of Status Quo Order, Three (3) and Twenty (20)-Day Temporary Restraining
Orders, and Writ of Preliminary Injunction with Damages" against respondents
GJH Land, Inc. (formerly known as S.J. Land, Inc.), Chang Hwan Jang, Sang Rak
Kim, Mariechu N. Yap, and Atty. Roberto P. Mallari II (respondents) before the
RTC of Muntinlupa City seeking to enjoin the sale of S.J. Land, Inc.'s shares which
they purportedly bought from S.J. Global, Inc. on February 1, 2010. Essentially,
petitioners alleged that the subscriptions for the said shares were already paid
by them in full in the books of S.J. Land, Inc., but were nonetheless offered for sale
on July 29, 2011 to the corporation's stockholders, hence, their plea for
injunction.
The case was docketed as Civil Case No. 11-077 and raffled to Branch 276, which
is not a Special Commercial Court. On August 9, 2011, said branch issued a
temporary restraining order, and later, in an Order dated August 24, 2011,
granted the application for a writ of preliminary injunction.
After filing their respective answers to the complaint, respondents filed a motion
to dismiss on the ground of lack of jurisdiction over the subject matter, pointing
out that the case involves an intra-corporate dispute and should, thus, be heard
by the designated Special Commercial Court of Muntinlupa City.
The RTC Ruling
In an Order dated April 17, 2012, Branch 276 granted the motion to dismiss filed
by respondents. It found that the case involves an intra-corporate dispute that is
within the original and exclusive jurisdiction of the RTCs designated as Special
Commercial Courts. It pointed out that the RTC of Muntinlupa City, Branch 256
(Branch 256) was specifically designated by the Court as the Special Commercial
Court, hence, Branch 276 had no jurisdiction over the case and cannot lawfully
exercise jurisdiction on the matter, including the issuance of a Writ of Preliminary
Injunction. Accordingly, it dismissed the case.
Dissatisfied, petitioners filed a motion for reconsideration, arguing that they filed
the case with the Office of the Clerk of Court of the RTC of Muntinlupa City which
assigned the same to Branch 276 by raffle. As the raffle was beyond their control,
they should not be made to suffer the consequences of the wrong assignment of
the case, especially after paying the filing fees in the amount of P235,825.00 that
would be for naught if the dismissal is upheld. They further maintained that the
RTC has jurisdiction over intra-corporate disputes under Republic Act No. (RA)
8799, but since the Court selected specific branches to hear and decide such suits,
the case must, at most, be transferred or raffled off to the proper branch.
In an Order dated July 9, 2012, Branch 276 denied the motion for reconsideration,
holding that it has no authority or power to order the transfer of the case to the
proper Special Commercial Court, citing Calleja v. Panday (Calleja); hence, the
present petition.
The Issue Before the Court
The essential issue for the Court's resolution is whether or not Branch 276 of the
RTC of Muntinlupa City erred in dismissing the case for lack of jurisdiction over
the subject matter.
The Court's Ruling
The petition is meritorious.
At the outset, the Court finds Branch 276 to have correctly categorized Civil Case
No. 11-077 as a commercial case, more particularly, an intra-corporate
dispute, considering that it relates to petitioners' averred rights over the shares
of stock offered for sale to other stockholders, having paid the same in full.
Applying the relationship test and the nature of the controversy test, the suit
between the parties is clearly rooted in the existence of an intra-corporate
relationship and pertains to the enforcement of their correlative rights and
obligations under the Corporation Code and the internal and intra-corporate
regulatory rules of the corporation, hence, intra-corporate, which should be
heard by the designated Special Commercial Court as provided under A.M. No.
03-03-03-SC dated June 17, 2003 in relation to Item 5.2, Section 5 of RA 8799.
The present controversy lies, however, in the procedure to be followed when a
commercial case - such as the instant intra-corporate dispute -has been
properly filed in the official station of the designated Special Commercial
Court but is, however, later wrongly assigned by raffle to a regular branch
of that station.
As a basic premise, let it be emphasized that a court's acquisition of jurisdiction
over a particular case's subject matter is different from incidents pertaining to
the exercise of its jurisdiction. Jurisdiction over the subject matter of a case
is conferred by law, whereas a court's exercise of jurisdiction, unless provided
by the law itself, is governed by the Rules of Court or by the orders issued from
time to time by the Court. In Lozada v. Bracewell, it was recently held that the
matter of whether the RTC resolves an issue in the exercise of its general
jurisdiction or of its limited jurisdiction as a special court is only a matter
of procedure and has nothing to do with the question of jurisdiction.
Pertinent to this case is RA 8799 which took effect on August 8, 2000. By virtue
of said law, jurisdiction over cases enumerated in Section 5 of Presidential Decree
No. 902-A was transferred from the Securities and Exchange Commission (SEC)
to the RTCs, being courts of general jurisdiction. Item 5.2, Section 5 of RA 8799
provides:
SEC. 5. Powers and Functionsof the Commission. -
5.2 The Commission's jurisdiction over all cases enumerated under Section
5 of Presidential Decree No. 902-A is hereby transferred to the Courts of
general jurisdiction or the appropriate Regional Trial Court: Provided, that
the Supreme Court in the exercise of its authority may designate the
Regional Trial Court branches that shall exercise jurisdiction over the
cases. The Commission shall retain jurisdiction over pending cases involving
intra-corporate disputes submitted for final resolution which should be resolved
within one (1) year from the enactment of this Code. The Commission shall retain
jurisdiction over pending suspension of payments/rehabilitation cases filed as of
30 June 2000 until finally disposed. (Emphasis supplied)
The legal attribution of Regional Trial Courts as courts of general
jurisdiction stems from Section 19 (6), Chapter II of Batas Pambansa Bilang (BP)
129, known as "The Judiciary Reorganization Act of 1980":
Section 19. Jurisdiction in civil cases.- Regional Trial Courts shall exercise
exclusive original jurisdiction:
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person
or body exercising jurisdiction or any court, tribunal, person or body exercising
judicial or quasi-judicial functions; x x x x
As enunciated in Durisol Philippines, Inc. v. CA:
The regional trial court, formerly the court of first instance, is a court of general
jurisdiction. All cases, the jurisdiction over which is not specifically provided for
by law to be within the jurisdiction of any other court, fall under the jurisdiction
of the regional trial court.
To clarify, the word "or" in Item 5.2, Section 5 of RA 8799 was intentionally used
by the legislature to particularize the fact that the phrase "the Courts of general
jurisdiction" is equivalent to the phrase "the appropriate Regional Trial Court."
In other words, the jurisdiction of the SEC over the cases enumerated under
Section 5 of PD 902-A was transferred to the courts of general jurisdiction, that
is to say (or, otherwise known as), the proper Regional Trial Courts. This
interpretation is supported by San Miguel Corp. v. Municipal Council,wherein the
Court held that:
[T]he word "or" may be used as the equivalent of "that is to say" and gives that
which precedes it the same significance as that which follows it. It is not always
disjunctive and is sometimes interpretative or expository of the preceding word.
Further, as may be gleaned from the following excerpt of the Congressional
deliberations:
Senator [Raul S.] Roco:
The first major departure is as regards the Securities and Exchange Commission.
The Securities and Exchange Commission has been authorized under this
proposal to reorganize itself. As an administrative agency, we strengthened it and
at the same time we take away the quasi-judicial functions. The quasi-judicial
functions are now given back to the courts of general jurisdiction - the
Regional Trial Court, except for two categories of cases.
In the case of corporate disputes, only those that are now submitted for final
determination of the SEC will remain with the SEC. So, all those cases, both
memos of the plaintiff and the defendant, that have been submitted for resolution
will continue. At the same time, cases involving rehabilitation, bankruptcy,
suspension of payments and receiverships that were filed before June 30, 2000
will continue with the SEC. in other words, we are avoiding the possibility, upon
approval of this bill, of people filing cases with the SEC, in manner of speaking, to
select their court.
x x x x (Emphasis supplied)
Therefore, one must be disabused of the notion that the transfer of jurisdiction
was made only in favor of particular RTC branches, and not the RTCs in general.
Consistent with the foregoing, history depicts that when the transfer of SEC cases
to the RTCs was first implemented, they were transmitted to the Executive Judges
of the RTCs for raffle between or among its different branches, unless a specific
branch has been designated as a Special Commercial Court, in which
instance, the cases were transmitted to said branch. It was only on November
21, 2000 that the Court designated certain RTC branches to try and decide said
SEC cases without, however, providing for the transfer of the cases already
distributed to or filed with the regular branches thereof. Thus, on January 23,
2001, the Court issued SC Administrative Circular No. 08-2001 directing the
transfer of said cases to the designated courts (commercial SEC courts). Later, or
on June 17, 2003, the Court issued A.M. No. 03-03-03-SC consolidating the
commercial SEC courts and the intellectual property courts in one RTC branch in
a particular locality, i.e., the Special Commercial Court, to streamline the court
structure and to promote expediency. Accordingly, the RTC branch so
designated was mandated to try and decide SEC cases, as well as those involving
violations of intellectual property rights, which were, thereupon, required to be
filed in the Office of the Clerk of Court in the official station of the designated
Special Commercial Courts, to wit:
1. The Regional Courts previously designated as SEC Courts through the: (a)
Resolutions of this Court dated 21 November 2000, 4 July 2001, 12 November
2002, and 9 July 2002 all issued in A.M. No. 00-11-03-SC; (b) Resolution dated 27
August 2001 in A.M. No. 01-5-298-RTC; and (c) Resolution dated 8 July 2002 in
A.M. No. 01-12-656-RTC are hereby DESIGNATED and shall be CALLED as Special
Commercial Courts to try and decide cases involving violations of Intellectual
Property Rights which fall within their jurisdiction and those cases formerly
cognizable by the Securities and Exchange Commission:
4. The Special Commercial Courts shall have jurisdiction over cases arising within
their respective territorial jurisdiction with respect to the National Capital
Judicial Region and within the respective provinces with respect to the First to
Twelfth Judicial Regions. Thus, cases shall be filed in the Office of the Clerk of
Court in the official station of the designated Special Commercial Court;
x x x x (Underscoring supplied)
It is important to mention that the Court's designation of Special Commercial
Courts was made in line with its constitutional authority to supervise the
administration of all courts as provided under Section 6, Article VIII of the 1987
Constitution:
Section 6. The Supreme Court shall have administrative supervision over all
courts and the personnel thereof.
The objective behind the designation of such specialized courts is to promote
expediency and efficiency in the exercise of the RTCs' jurisdiction over the
cases enumerated under Section 5 of PD 902-A. Such designation has nothing to
do with the statutory conferment of jurisdiction to all RTCs under RA 8799 since
in the first place, the Court cannot enlarge, diminish, or dictate when jurisdiction
shall be removed, given that the power to define, prescribe, and apportion
jurisdiction is, as a general rule, a matter of legislative prerogative. Section
2, Article VIII of the 1987 Constitution provides:
Section 2. The Congress shall have the power to define, prescribe, and apportion
the jurisdiction of the various courts but may not deprive the Supreme Court of
its jurisdiction over cases enumerated in Section 5 hereof.
Here, petitioners filed a commercial case, i.e., an intra-corporate dispute, with the
Office of the Clerk of Court in the RTC of Muntinlupa City, which is the official
station of the designated Special Commercial Court, in accordance with A.M. No.
03-03-03-SC. It is, therefore, from the time of such filing that the RTC of
Muntinlupa City acquired jurisdiction over the subject matter or the nature
of the action. Unfortunately, the commercial case was wrongly raffled to a
regular branch, e.g., Branch 276, instead of being assigned to the sole
Special Commercial Court in the RTC of Muntinlupa City, which is Branch
256. This error may have been caused by a reliance on the complaint's
caption, i.e., "Civil Case for Injunction with prayer for Status Quo Order, TRO and
Damages," which, however, contradicts and more importantly, cannot prevail
over its actual allegations that clearly make out an intra-corporate dispute:
16. To the surprise of MLCG and FMDG, however, in two identical letters both
dated 13 May 2011, under the letterhead of GJH Land, Inc., Yap, now acting as its
President, Jang and Kim demanded payment of supposed unpaid subscriptions of
MLCG and FMDG amounting to P10,899,854.30 and P2,625,249.41, respectively.
16.1 Copies of the letters dated 13 May 2011 are attached hereto and made
integral parts hereof as Annexes "J" and "K", repectively.
17. On 29 July 2011, MLCG and FMDG received an Offer Letter addressed to
stockholders of GJH Land, Inc. from Yap informing all stockholders that GJH Land,
Inc. is now offering for sale the unpaid shares of stock of MLCG and FMDG. The
same letter states that the offers to purchase these shares will be opened on 10
August 2011 with payments to be arranged by deposit to the depository bank of
GJH Land, Inc.
17.1 A copy of the undated Offer Letter is attached hereto and made and made an
integral part hereof as Annex "L".
18. The letter of GJH Land, Inc. through Yap, is totally without legal and factual
basis because as evidenced by the Deeds of Assignment signed and certified by
Yap herself, all the S.J. Land, Inc. shares acquired by MLCG and FMDG have been
fully paid in the books of S.J. Land, Inc.
19. With the impending sale of the alleged unpaid subscriptions on 10 August
2011, there is now a clear danger that MLCG and FMDG would be deprived
of these shares without legal and factual basis.
20. Furthermore, if they are deprived of these shares through the scheduled sale,
both MLCG and FMDG would suffer grave and irreparable damage incapable of
pecuniary estimation.
21. For this reason, plaintiffs now come to the Honorable Court for injunctive
relief so that after trial on the merits, a permanent injunction should be issued
against the defendants preventing them from selling the shares of the plaintiffs,
there being no basis for such sale.
According to jurisprudence, "it is not the caption but the allegations in the
complaint or other initiatory pleading which give meaning to the pleading and on
the basis of which such pleading may be legally characterized." However, so as to
avert any future confusion, the Court requires henceforth, that all initiatory
pleadings state the action's nature both in its caption and the body, which
parameters are defined in the dispositive portion of this Decision.
Going back to the case at bar, the Court nonetheless deems that the erroneous
raffling to a regular branch instead of to a Special Commercial Court is only a
matter of procedure - that is, an incident related to the exercise of jurisdiction -
and, thus, should not negate the jurisdiction which the RTC of Muntinlupa City
had already acquired. In such a scenario, the proper course of action was not for
the commercial case to be dismissed; instead, Branch 276 should have
first referred the case to the Executive Judge for re-docketing as a
commercial case; thereafter, the Executive Judge should then assign said
case to the only designated Special Commercial Court in the
station, i.e., Branch 256.
Note that the procedure would be different where the RTC acquiring jurisdiction
over the case has multiple special commercial court branches; in such a
scenario, the Executive Judge, after re-docketing the same as a commercial case,
should proceed to order its re-raffling among the said special branches.
Meanwhile, if the RTC acquiring jurisdiction has no branch designated as a
Special Commercial Court, then it should refer the case to the nearest RTC with
a designated Special Commercial Court branch within the judicial region. Upon
referral, the RTC to which the case was referred to should re-docket the case as a
commercial case, and then: (a) if the said RTC has only one branch designated as
a Special Commercial Court, assign the case to the sole special branch; or (b) if
the said RTC has multiple branches designated as Special Commercial Courts,
raffle off the case among those special branches.
In all the above-mentioned scenarios, any difference regarding the applicable
docket fees should be duly accounted for. On the other hand, all docket fees
already paid shall be duly credited, and any excess, refunded.
At this juncture, the Court finds it fitting to clarify that the RTC mistakenly relied
on the Calleja case to support its ruling. In Calleja, an intra-corporate
dispute among officers of a private corporation with principal address at Goa,
Camarines Sur, was filed with the RTC of San Jose, Camarines Sur, Branch 58
instead of the RTC of Naga City, which is the official station of the designated
Special Commercial Court for Camarines Sur. Consequently, the Court set aside
the RTC of San Jose, Camarines Sur's order to transfer the case to the RTC of Naga
City and dismissed the complaint considering that it was filed before a court
which, having no internal branch designated as a Special Commercial Court, had
no jurisdiction over those kinds of actions, i.e., intra-corporate disputes. Calleja
involved two different RTCs, i.e., the RTC of San Jose, Camarines Sur and the
RTC of Naga City, whereas the instant case only involves one RTC, i.e., the RTC
of Muntinlupa City, albeit involving two different branches of the same
court, i.e., Branches 256 and 276. Hence, owing to the variance in the facts
attending, it was then improper for the RTC to rely on the Calleja ruling.
Besides, the Court observes that the fine line that distinguishes subject matter
jurisdiction and exercise of jurisdiction had been clearly blurred in Calleja.
Harkening back to the statute that had conferred subject matter jurisdiction, two
things are apparently clear: (a) that the SEC's subject matter jurisdiction over
intra-corporate cases under Section 5 of Presidential Decree No. 902-A was
transferred to the Courts of general jurisdiction, i.e., the appropriate Regional
Trial Courts; and (b) the designated branches of the Regional Trial Court, as per
the rules promulgated by the Supreme Court, shall exercise jurisdiction over
such cases. Item 5.2, Section 5 of RA 8799 provides:
SEC. 5. Powers and Functions of the Commission. -
5.2 The Commission's jurisdiction over all cases enumerated under Section
5 of Presidential Decree No. 902-A is hereby transferred to the Courts of
general jurisdiction or the appropriate Regional Trial Court: Provided,
that the Supreme Court in the exercise of its authority may designate the
Regional Trial Court branches that shall exercise jurisdiction over the
cases, x x x.
In contrast, the appropriate jurisprudential reference to this case would be Tan
v. Bausch & Lomb, Inc., which involves a criminal complaint for violation of
intellectual property rights filed before the RTC of Cebu City but was raffled to a
regular branch thereof (Branch 21), and not to a Special Commercial Court. As it
turned out, the regular branch subsequently denied the private complainant's
motion to transfer the case to the designated special court of the same RTC, on
the ground of lack of jurisdiction. The CA reversed the regular branch and,
consequently, ordered the transfer of the case to the designated special court at
that time (Branch 9). The Court, affirming the CA, declared that the RTC had
acquired jurisdiction over the subject matter. In view, however, of the
designation of another court as the Special Commercial Court in the
interim (Branch 11 of the same Cebu City RTC), the Court accordingly ordered the
transfer of the case and the transmittal of the records to said Special Commercial
Court instead. Similarly, the transfer of the present intra-corporate dispute
from Branch 276 to Branch 256 of the same RTC of Muntinlupa City, subject
to the parameters above-discussed is proper and will further the purposes
stated in A.M. No. 03-03-03-SC of attaining a speedy and efficient
administration of justice.
For further guidance, the Court finds it apt to point out that the same
principles apply to the inverse situation of ordinary civil cases filed before
the proper RTCs but wrongly raffled to its branches designated as Special
Commercial Courts. In such a scenario, the ordinary civil case should then be
referred to the Executive Judge for re-docketing as an ordinary civil case;
thereafter, the Executive Judge should then order the raffling of the case
to all branches of the same RTC, subject to limitations under existing
internal rules, and the payment of the correct docket fees in case of any
difference. Unlike the limited assignment/raffling of a commercial case only to
branches designated as Special Commercial Courts in the scenarios stated above,
the re-raffling of an ordinary civil case in this instance to all courts is permissible
due to the fact that a particular branch which has been designated as a Special
Commercial Court does not shed the RTC's general jurisdiction over ordinary civil
cases under the imprimatur of statutory law, i.e., Batas Pambansa Bilang (BP)
129. To restate, the designation of Special Commercial Courts was merely
intended as a procedural tool to expedite the resolution of commercial cases in
line with the court's exercise of jurisdiction.This designation was not made by
statute but only by an internal Supreme Court rule under its authority to
promulgate rules governing matters of procedure and its constitutional mandate
to supervise the administration of all courts and the personnel thereof. Certainly,
an internal rule promulgated by the Court cannot go beyond the commanding
statute. But as a more fundamental reason, the designation of Special Commercial
Courts is, to stress, merely an incident related to the court's exercise of
jurisdiction, which, as first discussed, is distinct from the concept of jurisdiction
over the subject matter. The RTC's general jurisdiction over ordinary civil cases
is therefore not abdicated by an internal rule streamlining court procedure.
In fine, Branch 276's dismissal of Civil Case No. 11-077 is set aside and the
transfer of said case to Branch 256, the designated Special Commercial Court of
the same RTC of Muntinlupa City, under the parameters above-explained, is
hereby ordered.
WHEREFORE, the petition is GRANTED. The Orders dated April 17, 2012 and
July 9, 2012 of the Regional Trial Court (RTC) of Muntinlupa City, Branch 276 in
Civil Case No. 11-077 are hereby REVERSED and SET ASIDE. Civil Case No. 11-
077 is REFERRED to the Executive Judge of the RTC of Muntinlupa City for re-
docketing as a commercial case. Thereafter, the Executive Judge shall ASSIGNsaid
case to Branch 256, the sole designated Special Commercial Court in the RTC of
Muntinlupa City, which is ORDERED to resolve the case with reasonable
dispatch. In this regard, the Clerk of Court of said RTC shall DETERMINE the
appropriate amount of docket fees and, in so doing, ORDER the payment of any
difference or, on the other hand, refund any excess.
Furthermore, the Court hereby RESOLVES that henceforth, the following
guidelines shall be observed:
1. If a commercial case filed before the proper RTC is wrongly raffled to its regular
branch, the proper courses of action are as follows:
1.1 If the RTC has only one branch designated as a Special Commercial Court,
then the case shall be referred to the Executive Judge for re-docketing as a
commercial case, and thereafter, assigned to the sole special branch;
1.2 If the RTC has multiple branches designated as Special Commercial Courts,
then the case shall be referred to the Executive Judge for re-docketing as a
commercial case, and thereafter, raffled off among those special branches; and
1.3 If the RTC has no internal branch designated as a Special Commercial Court,
then the case shall be referred to the nearest RTC with a designated Special
Commercial Court branch within the judicial region. Upon referral, the RTC to
which the case was referred to should re- docket the case as a commercial case,
and then: (a) if the said RTC has only one branch designated as a Special
Commercial Court, assign the case to the sole special branch; or (b) if the said RTC
has multiple branches designated as Special Commercial Courts, raffle off the case
among those special branches.
2. If an ordinary civil case filed before the proper RTC is wrongly raffled to its
branch designated as a Special Commercial Court, then the case shall be referred
to the Executive Judge for re-docketing as an ordinary civil case. Thereafter, it
shall be raffled off to all courts of the same RTC (including its designated special
branches which, by statute, are equally capable of exercising general jurisdiction
same as regular branches), as provided for under existing rules.
3. All transfer/raffle of cases is subject to the payment of the appropriate docket
fees in case of any difference. On the other hand, all docket fees already paid shall
be duly credited, and any excess, refunded.
4. Finally, to avert any future confusion, the Court requires that all initiatory
pleadings state the action's nature both in its caption and body. Otherwise, the
initiatory pleading may, upon motion or by order of the court motu proprio, be
dismissed without prejudice to its re-filing after due rectification. This last
procedural rule is prospective in application.
5. All existing rules inconsistent with the foregoing are deemed superseded.
FEDMAN DEVELOPMENT CORPORATION, Petitioner, vs. FEDERICO
AGCAOILI, Respondent.
BERSAMIN, J.: G.R. No. 165025 August 31, 2011
The non-payment of the prescribed filing fees at the time of the filing of the
complaint or other initiatory pleading fails to vest jurisdiction over the case in
the trial court. Yet, where the plaintiff has paid the amount of filing fees assessed
by the clerk of court, and the amount paid turns out to be deficient, the trial court
still acquires jurisdiction over the case, subject to the payment by the plaintiff of
the deficiency assessment.
Fedman Development Corporation (FDC) appeals the decision promulgated on
August 20, 2004, whereby the Court of Appeals (CA) affirmed the judgment
rendered on August 28, 1998 by the Regional Trial Court (RTC), Branch 150,
Makati City, in favor of the respondent.
Antecedents
FDC was the owner and developer of a condominium project known as Fedman
Suites Building (FSB) located on Salcedo Street, Legazpi Village, Makati City. On
June 18, 1975, Interchem Laboratories Incorporated (Interchem) purchased
FSB’s Unit 411 under a contract to sell. On March 31, 1977, FDC executed a Master
Deed with Declaration of Restrictions, and formed the Fedman Suite
Condominium Corporation (FSCC) to manage FSB and hold title over its common
areas.
On October 10, 1980, Interchem, with FDC’s consent, transferred all its rights in
Unit 411 to respondent Federico Agcaoili (Agcaoili), a practicing attorney who
was then also a member of the Provincial Board of Quezon Province.As
consideration for the transfer, Agcaoili agreed: (a) to pay Interchem ₱150,000.00
upon signing of the deed of transfer; (b) to update the account by paying to FDC
the amount of ₱15,473.17 through a 90 day-postdated check; and (c) to deliver
to FDC the balance of ₱137,286.83 in 135 equal monthly installments of
₱1,857.24 effective October 1980, inclusive of 12% interest per annum on the
diminishing balance. The obligations Agcaoili assumed totaled ₱302,760.00.
In December 1983, the centralized air-conditioning unit of FSB’s fourth floor
broke down. On January 3, 1984, Agcaoili, being thereby adversely affected,
wrote to Eduardo X. Genato (Genato), vice-president and board member of FSCC,
demanding the repair of the air-conditioning unit. Not getting any immediate
response, Agcaoili sent follow-up letters to FSCC reiterating the demand, but the
letters went unheeded. He then informed FDC and FSCC that he was suspending
the payment of his condominium dues and monthly amortizations.
On August 30, 1984, FDC cancelled the contract to sell involving Unit 411 and cut
off the electric supply to the unit. Agcaoili was thus prompted to sue FDC and
FSCC in the RTC, Makati City, Branch 144 for injunction and damages. The parties
later executed a compromise agreement that the RTC approved through its
decision of August 26, 1985. As stipulated in the compromise agreement, Agcaoili
paid FDC the sum of ₱39,002.04 as amortizations for the period from November
1983 to July 1985; and also paid FSCC an amount of ₱17,858.37 for accrued
condominium dues, realty taxes, electric bills, and surcharges as of March 1985.
As a result, FDC reinstated the contract to sell and allowed Agcaoili to temporarily
install two window-type air-conditioners in Unit 411.
On April 22, 1986, FDC again disconnected the electric supply of Unit
411. Agcaoili thus moved for the execution of the RTC decision dated August 26,
1985. On July 17, 1986, the RTC issued an order temporarily allowing Agcaoili to
obtain his electric supply from the other units in the fourth floor of FSB until the
main meter was restored.
On March 6, 1987, Agcaoili lodged a complaint for damages against FDC and FSCC
in the RTC, which was raffled to Branch 150 in Makati City. He alleged that the
disconnection of the electric supply of Unit 411 on April 22, 1986 had unjustly
deprived him of the use and enjoyment of the unit; that the disconnection had
seriously affected his law practice and had caused him sufferings, inconvenience
and embarrassment; that FDC and FSCC violated the compromise agreement;
that he was entitled to actual damages amounting to ₱21,626.60, as well as to
moral and exemplary damages, and attorney’s fees as might be proven during the
trial; that the payment of interest sought by FDC and FSCC under the contract to
sell was illegal; and that FDC and FSCC were one and the same corporation. He
also prayed that FDC and FSCC be directed to return the excessive amounts
collected for real estate taxes.
In its answer, FDC contended that it had a personality separate from that of FSCC;
that it had no obligation or liability in favor of Agcaoili; that FSCC, being the
manager of FSB and the title-holder over its common areas, was in charge of
maintaining all central and appurtenant equipment and installations for utility
services (like air-conditioning unit, elevator, light and others); that Agcaoili failed
to comply with the terms of the contract to sell; that despite demands, Agcaoili
did not pay the amortizations due from November 1983 to March 1985 and the
surcharges, the total amount of which was ₱376,539.09; that due to the non-
payment, FDC cancelled the contract to sell and forfeited the amount of
₱219,063.97 paid by Agcaoili, applying the amount to the payment of liquidated
damages, agent’s commission, and interest; that it demanded that Agcaoili vacate
Unit 411, but its demand was not heeded; that Agcaoili did not pay his monthly
amortizations of ₱1,883.84 from October 1985 to May 1986, resulting in FSCC
being unable to pay the electric bills on time to the Manila Electric Company
resulting in the disconnection of the electric supply of FSB; that it allowed
Agcaoili to obtain electric supply from other units because Agcaoili promised to
settle his accounts but he reneged on his promise; that Agcaoili’s total obligation
was ₱55,106.40; that Agcaoili’s complaint for damages was baseless and was
intended to cover up his delinquencies; that the interest increase from 12% to
24% per annum was authorized under the contract to sell in view of the adverse
economic conditions then prevailing in the country; and that the complaint for
damages was barred by the principle of res judicata because the issues raised
therein were covered by the RTC decision dated August 26, 1985.
As compulsory counterclaim, FDC prayed for an award of moral and exemplary
damages each amounting to ₱1,000,000.00, attorney’s fees amounting to
₱100,000.00 and costs of suit.
On its part, FSCC filed an answer, admitting that the electric supply of Unit 411
was disconnected for the second time on April 22, 1986, but averring that the
disconnection was justified because of Agcaoili’s failure to pay the monthly
amortizations and condominium dues despite repeated demands. It averred that
it did not repair the air-conditioning unit because of dwindling collections caused
by the failure of some unit holders to pay their obligations on time; that the unit
holders were notified of the electricity disconnection; and that the electric supply
of Unit 411 could not be restored until Agcaoili paid his condominium dues
totaling ₱14,701.16 as of April 1987.
By way of counterclaim, FSCC sought moral damages and attorney’s fees of
₱100,000.00 and ₱50,000.00, respectively, and cost of suit.
On August 28, 1998, the RTC rendered judgment in favor of Agcaoili, holding that
his complaint for damages was not barred by res judicata; that he was justified in
suspending the payment of his monthly amortizations; that FDC’s cancellation of
the contract to sell was improper; that FDC and FSCC had no separate
personalities; and that Agcaoili was entitled to damages. The RTC disposed
thuswise:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and as against
both defendants, declaring the increased rates sought by defendants to be illegal,
and ordering defendant FDC/FSCC to reinstate the contract to sell, as well as to
provide/restore the air-conditioning services/electric supply to plaintiff’s unit.
Both defendants are likewise ordered to pay plaintiff:
a. The amount of ₱21,626.60 as actual damages;
b. ₱500,000.00 as moral damages;
c. ₱50,000.00 as exemplary damages; and
d. ₱50,000.00 as and for attorney’s fees.
and to return to plaintiff the excess amount collected from him for real estate
taxes.
SO ORDERED.
FDC appealed, but the CA affirmed the RTC. Hence, FDC comes to us on further
appeal.
Issues
FDC claims that there was a failure to pay the correct amount of docket fee herein
because the complaint did not specify the amounts of moral damages, exemplary
damages, and attorney’s fees; that the payment of the prescribed docket fee by
Agcaoili was necessary for the RTC to acquire jurisdiction over the case; and that,
consequently, the RTC did not acquire jurisdiction over this case.
FDC also claims that the proceedings in the RTC were void because the
jurisdiction over the subject matter of the action pertained to the Housing and
Land Use Regulatory Board (HLURB); and that both the RTC and the CA erred in
ruling: (a) that Agcaoili had the right to suspend payment of his monthly
amortizations; (b) that FDC had no right to cancel the contract to sell; and (c) that
FDC and FSCC were one and same corporation, and as such were solidarily liable
to Agcaoili for damages.
Ruling
The petition has no merit.
I
The filing of the complaint or other initiatory pleading and the payment of the
prescribed docket fee are the acts that vest a trial court with jurisdiction over the
claim. In an action where the reliefs sought are purely for sums of money and
damages, the docket fees are assessed on the basis of the aggregate amount being
claimed. Ideally, therefore, the complaint or similar pleading must specify the
sums of money to be recovered and the damages being sought in order that the
clerk of court may be put in a position to compute the correct amount of docket
fees.
If the amount of docket fees paid is insufficient in relation to the amounts being
sought, the clerk of court or his duly authorized deputy has the responsibility of
making a deficiency assessment, and the plaintiff will be required to pay the
deficiency. The non-specification of the amounts of damages does not
immediately divest the trial court of its jurisdiction over the case, provided there
is no bad faith or intent to defraud the Government on the part of the plaintiff.
The prevailing rule is that if the correct amount of docket fees are not paid at the
time of filing, the trial court still acquires jurisdiction upon full payment of the
fees within a reasonable time as the court may grant, barring prescription. The
"prescriptive period" that bars the payment of the docket fees refers to the period
in which a specific action must be filed, so that in every case the docket fees must
be paid before the lapse of the prescriptive period, as provided in the applicable
laws, particularly Chapter 3, Title V, Book III, of the Civil Code, the principal law
on prescription of actions.
In Rivera v. Del Rosario, the Court, resolving the issue of the failure to pay the
correct amount of docket fees due to the inadequate assessment by the clerk of
court, ruled that jurisdiction over the complaint was still validly acquired upon
the full payment of the docket fees assessed by the Clerk of Court. Relying on Sun
Insurance Office, Ltd., (SIOL) v. Asuncion, the Court opined that the filing of the
complaint or appropriate initiatory pleading and the payment of the prescribed
docket fees vested a trial court with jurisdiction over the claim, and although the
docket fees paid were insufficient in relation to the amount of the claim, the clerk
of court or his duly authorized deputy retained the responsibility of making a
deficiency assessment, and the party filing the action could be required to pay the
deficiency, without jurisdiction being automatically lost.
Even where the clerk of court fails to make a deficiency assessment, and the
deficiency is not paid as a result, the trial court nonetheless continues to have
jurisdiction over the complaint, unless the party liable is guilty of a fraud in that
regard, considering that the deficiency will be collected as a fee in lien within the
contemplation of Section 2,Rule 141 (as revised by A.M. No. 00-2-01-SC). The
reason is that to penalize the party for the omission of the clerk of court is not fair
if the party has acted in good faith.
Herein, the docket fees paid by Agcaoili were insufficient considering that the
complaint did not specify the amounts of moral damages, exemplary damages
and attorney’s fees. Nonetheless, it is not disputed that Agcaoili paid the assessed
docket fees. Such payment negated bad faith or intent to defraud the
Government. Nonetheless, Agcaoili must remit any docket fee deficiency to the
RTC’s clerk of court.
II
FDC is now barred from asserting that the HLURB, not the RTC, had jurisdiction
over the case. As already stated, Agcaoili filed a complaint against FDC in the RTC
on February 28, 1985 after FDC disconnected the electric supply of Unit 411.
Agcaoili and FDC executed a compromise agreement on August 16, 1985. The RTC
approved the compromise agreement through its decision of August 26, 1985. In
all that time, FDC never challenged the RTC’s jurisdiction nor invoked the
HLURB’s authority. On the contrary, FDC apparently recognized the RTC’s
jurisdiction by its voluntary submission of the compromise agreement to the RTC
for approval. Also, FDC did not assert the HLURB’s jurisdiction in its answer to
Agcaoili’s second complaint (filed on March 6, 1987). Instead, it even averred in
that answer that the decision of August 26, 1985 approving the compromise
agreement already barred Agcaoili from filing the second complaint under the
doctrine of res judicata. FDC also thereby sought affirmative relief from the RTC
through its counterclaim.
FDC invoked HLURB’s authority only on September 10, 1990, or more than five
years from the time the prior case was commenced on February 28, 1985, and
after the RTC granted Agcaoili’s motion to enjoin FDC from cancelling the contract
to sell.
The principle of estoppel, which is based on equity and public policy, dictates that
FDC’s active participation in both RTC proceedings and its seeking therein
affirmative reliefs now precluded it from denying the RTC’s jurisdiction. Its
acknowledgment of the RTC’s jurisdiction and its subsequent denial of such
jurisdiction only after an unfavorable judgment were inappropriate and
intolerable. The Court abhors the practice of any litigant of submitting a case for
decision in the trial court, and then accepting the judgment only if favorable, but
attacking the judgment for lack of jurisdiction if it is not.
III
In upholding Agcaoili’s right to suspend the payment of his monthly
amortizations due to the increased interest rates imposed by FDC, and because
he found FDC’s cancellation of the contract to sell as improper, the CA found and
ruled as follows:
It is the contention of the appellee that he has the right to suspend payments since
the increase in interest rate imposed by defendant-appellant FDC is not valid and
therefore cannot be given legal effect. Although Section II, paragraph d of the
Contract to Sell entered into by the parties states that, "should there be an
increase in bank interest rate for loans and/or other financial accommodations,
the rate of interest provided for in this contract shall be automatically amended
to equal the said increased bank interest rate, the date of said amendment to
coincide with the date of said increase in interest rate," the said increase still
needs to [be] accompanied by valid proofs and not one of the parties must
unilaterally alter what was originally agreed upon. However, FDC failed to
substantiate the alleged increase with sufficient proof, thus we quote with
approval the findings of the lower court, to wit:
"In the instant case, defendant FDC failed to show by evidence that it incurred
loans and /or other financial accommodations to pay interest for its loans in
developing the property. Thus, the increased interest rates said defendant is
imposing on plaintiff is not justified, and to allow the same is tantamount to
unilaterally altering the terms of the contract which the law proscribes. Article
1308 of the Civil Code provides:
Art. 1308 – The contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them."
For this reason, the court sees no valid reason for defendant FDC to cancel the
contract to sell on ground of default or non-payment of monthly amortizations."
(RTC rollo, pp. 79-80)
It was also grave error on the part of the FDC to cancel the contract to sell for non-
payment of the monthly amortizations without taking into consideration
Republic Act 6552, otherwise known as the Maceda Law. The policy of law, as
embodied in its title, is "to provide protection to buyers of real estate on
installment payments." As clearly specified in Section 3, the declared public
policy espoused by Republic Act No. 6552 is "to protect buyers of real estate on
installment payments against onerous and oppressive conditions." Thus, in order
for FDC to have validly cancelled the existing contract to sell, it must have first
complied with Section 3 (b) of RA 6552. FDC should have refund the appellee the
cash surrender value of the payments on the property equivalent to fifty percent docket fees from the respondent as fees in lien in accordance with Section 2, Rule
of the total payments made. At this point, we, find no error on the part of the 141 of the Rules of Court.
lower court when it ruled that: SO ORDERED.

"There is nothing in the record to show that the aforementioned requisites for a
valid cancellation of a contract where complied with by defendant FDC. Hence,
the contract to sell which defendant FDC cancelled as per its letter dated August
17, 1987 remains valid and subsisting. Defendant FDC cannot by its own forfeit
the payments already made by the plaintiff which as of the same date amounts to
₱263,637.73."(RTC rollo, p. 81)

We sustain the aforequoted findings and ruling of the CA, which were supported
by the records and relevant laws, and were consistent with the findings and
ruling of the RTC. Factual findings and rulings of the CA are binding and
conclusive upon this Court if they are supported by the records and coincided
with those made by the trial court.

FDC’s claim that it was distinct in personality from FSCC is unworthy of

consideration due to its being a question of fact that cannot be reviewed under
Rule 45.

Among the obligations of FDC and FSCC to the unit owners or purchasers of FSB’s
units was the duty to provide a centralized air-conditioning unit, lighting,
electricity, and water; and to maintain adequate fire exit, elevators, and
cleanliness in each floor of the common areas of FSB. But FDC and FSCC failed to
repair the centralized air-conditioning unit of the fourth floor of FSB despite
repeated demands from Agcaoili. To alleviate the physical discomfort and
adverse effects on his work as a practicing attorney brought about by the
breakdown of the air-conditioning unit, he installed two window-type air-
conditioners at his own expense. Also, FDC and FSCC failed to provide water
supply to the comfort room and to clean the corridors. The fire exit and elevator
were also defective. These defects, among other circumstances, rightly compelled
Agcaoili to suspend the payment of his monthly amortizations and condominium
dues. Instead of addressing his valid complaints, FDC disconnected the electric
supply of his Unit 411 and unilaterally increased the interest rate without
justification.

Clearly, FDC was liable for damages. Article 1171 of the Civil Code provides that
those who in the performance of their obligations are guilty of fraud, negligence,
or delay, and those who in any manner contravene the tenor thereof are liable for
damages.

WHEREFORE, we DENY the petition for review; AFFIRM the decision of the Court
of Appeals; and DIRECT the Clerk of Court of the Regional Trial Court, Makati City,
Branch 150, or his duly authorized deputy to assess and collect the additional
IN RE: EXEMPTION OF THE NATIONAL POWER CORPORATION FROM
PAYMENT OF FILING/ DOCKET FEES
MENDOZA, J.: A.M. NO. 05-10-20-SC March 10, 2010
The National Power Corporation (NPC) seeks clarification from the Court on
whether or not it is exempt from the payment of filing fees, appeal bonds and
supersedeas bonds.
On December 6, 2005, the Court issued A.M. No. 05-10-20-SC, In re: Exemption of
the National Power Corporation from the Payment of Filing/Docket Fees, on the
basis of Section 13, Republic Act No. 6395 (An Act Revising the Charter of the
National Power Corporation). It reads:
The Court Resolved, upon the recommendation of the Office of the Court
Administrator, to DECLARE that the National Power Corporation (NPC) is still
exempt from the payment of filing fees, appeals bond, and supersedeas bonds.
On October 27, 2009, however, the Court issued A.M. No. 05-10-20-SC stating
that:
The Court Resolved, upon recommendation of the Committee on the Revision of
the Rules of Court, to DENY the request of the National Power Corporation (NPC)
for exemption from the payment of filing fees pursuant to Section 10 of Republic
Act No. 6395, as amended by Section 13 of Presidential Decree No. 938. The
request appears to run counter to Section 5(5), Article VIII of the Constitution, in
the rule-making power of the Supreme Court over the rules on pleading, practice
and procedure in all courts, which includes the sole power to fix the filing fees of
cases in courts.
Hence, the subject letter of NPC for clarification as to its exemption from the
payment of filing fees and court fees.
Section 22 of Rule 141 reads:
Sec. 22. Government exempt. – The Republic of the Philippines, its agencies and
instrumentalities are exempt from paying the legal fees provided in this rule.
Local government units and government-owned or controlled corporations with
or without independent charters are not exempt from paying such fees.
(emphasis supplied)
Section 70 of Republic Act No. 9136 (Electric Power Industry Reform Act of
2001), on privatization of NPC assets, expressly states that the NPC "shall remain
as a national government-owned and controlled corporation."
Thus, NPC is not exempt from payment of filing fees.
The non-exemption of NPC is further fortified by the promulgation on February
11, 2010 of A.M. No. 08-2-01-0, In re: Petition for Recognition of the Exemption
of the Government Service Insurance System (GSIS) from Payment of Legal Fees.
In said case, the Court, citing Echegaray v. Secretary of Justice, stressed that the
1987 Constitution took away the power of Congress to repeal, alter or
supplement rules concerning pleading, practice, and procedure; and that the
power to promulgate these rules is no longer shared by the Court with Congress
and the Executive, thus:
Since the payment of legal fees is a vital component of the rules promulgated by
this Court concerning pleading, practice and procedure, it cannot be validly
annulled, changed or modified by Congress. As one of the safeguards of this
Court’s institutional independence, the power to promulgate rules of pleading,
practice and procedure is now the Court’s exclusive domain. That power is no
longer shared by this Court with Congress, much less the Executive.
Speaking for the Court, then Associate Justice (now Chief Justice) Reynato S. Puno
traced the history of the rule-making power of this Court and highlighted its
evolution and development in Echegaray v. Secretary of Justice:
Under the 1935 Constitution, the power of this Court to promulgate rules
concerning pleading, practice and procedure was granted but it appeared to be
co-existent with legislative power for it was subject to the power of Congress to
repeal, alter or supplement. Thus, its Section 13, Article VIII provides:
Sec.13. The Supreme Court shall have the power to promulgate rules concerning
pleading, practice and procedure in all courts, and the admission to the practice
of law. Said rules shall be uniform for all courts of the same grade and shall not
diminish, increase, or modify substantive rights. The existing laws on pleading,
practice, and procedure are hereby repealed as statutes, and are declared Rules
of Court, subject to the power of the Supreme Court to alter and modify the same.
The Congress shall have the power to repeal, alter or supplement the rules
concerning pleading, practice and procedure, and the admission to the practice
of law in the Philippines.
[T]he 1973 Constitution reiterated the power of this Court "to promulgate rules
concerning pleading, practice, and procedure in all courts, x x x which, however,
may be repealed, altered or supplemented by the Batasang Pambansa x x x." More
completely, Section 5(2) [sic] 5 of its Article X provided:
Sec. 5. The Supreme Court shall have the following powers.
(5) Promulgate rules concerning pleading, practice, and procedure in all courts,
the admission to the practice of law, and the integration of the Bar, which,
however, may be repealed, altered, or supplemented by the Batasang Pambansa.
Such rules shall provide a simplified and inexpensive procedure for the speedy
disposition of case, shall be uniform for all courts of the same grade, and shall not
diminish, increase, or modify substantive rights.
The 1987 Constitution molded an even stronger and more independent judiciary.
Among others, it enhanced the rule making power of this Court. Its Section 5(5),
Article VIII provides:

Section 5. The Supreme Court shall have the following powers.

(5) Promulgate rules concerning the protection and enforcement of

constitutional rights, pleading, practice, and procedure in all courts, the
admission to the practice of law, the Integrated Bar, and legal assistance to the
underprivileged. Such rules shall provide a simplified and inexpensive procedure
for the speedy disposition of cases, shall be uniform for all courts of the same
grade, and shall not diminish, increase, or modify substantive rights. Rules of
procedure of special courts and quasi-judicial bodies shall remain effective unless
disapproved by the Supreme Court.

The rule making power of this Court was expanded. This Court for the first time
was given the power to promulgate rules concerning the protection and
enforcement of constitutional rights. The Court was also granted for the first time
the power to disapprove rules of procedure of special courts and quasi-judicial
bodies. But most importantly, the 1987 Constitution took away the power of
Congress to repeal, alter, or supplement rules concerning pleading, practice and
procedure. In fine, the power to promulgate rules of pleading, practice and
procedure is no longer shared by this Court with Congress, more so with the
Executive.

The separation of powers among the three co-equal branches of our government
has erected an impregnable wall that keeps the power to promulgate rules of
pleading, practice and procedure within the sole province of this Court. The other
branches trespass upon this prerogative if they enact laws or issue orders that
effectively repeal, alter or modify any of the procedural rules promulgated by this
Court. Viewed from this perspective, the claim of a legislative grant of exemption
from the payment of legal fees under Section 39 of RA 8291 necessarily fails.

With the foregoing categorical pronouncement of the Court, it is clear that NPC
can no longer invoke Republic Act No. 6395 (NPC Charter), as amended by
Presidential Decree No. 938, as its basis for exemption from the payment of legal
fees.

WHEREFORE, it is hereby CLARIFIED that the National Power Corporation is

not exempt from the payment of legal fees.
RE: REQUEST OF NATIONAL COMMITTEE ON LEGAL AID TO EXEMPT LEGAL
AID CLIENTS FROM PAYING FILING, DOCKET AND OTHER FEES.
CORONA, J.: A.M. No. 08-11-7-SC August 28, 2009
On September 23, 2008 the Misamis Oriental Chapter of the Integrated Bar of the
Philippines (IBP) promulgated Resolution No. 24, series of 2008. The resolution
requested the IBP’s National Committee on Legal Aid (NCLA) to ask for the
exemption from the payment of filing, docket and other fees of clients of the legal
aid offices in the various IBP chapters. Resolution No. 24, series of 2008 provided:
RESOLUTION NO. 24, SERIES OF 2008
RESOLUTION OF THE IBP–MISAMIS ORIENTAL CHAPTER FOR THE IBP
NATIONAL LEGAL AID OFFICE TO REQUEST THE COURTS AND OTHER
QUASI-JUDICIAL BODIES, THE PHILIPPINE MEDIATION CENTER AND
PROSECUTOR’S OFFICES TO EXEMPT LEGAL AID CLIENTS FROM PAYING
FILING, DOCKET AND OTHER FEES INCIDENTAL TO THE FILING AND
LITIGATION OF ACTIONS, AS ORIGINAL PROCEEDINGS OR ON APPEAL.
WHEREAS, Section 1, Article I of the Guidelines Governing the Establishment and
Operation of Legal Aid Offices in All Chapters of the Integrated Bar of the
Philippines (otherwise known as ["]Guideline[s] on Legal Aid["]) provides: Legal
aid is not a matter of charity. It is a means for the correction of social imbalances
that may often lead to injustice, for which reason, it is a public responsibility of the
Bar. The spirit of public service should therefore unde[r]ly all legal aid offices. The
same should be so administered as to give maximum possible assistance to indigent
and deserving members of the community in all cases, matters and situations in
which legal aid may be necessary to forestall injustice
. grant of a like exemption from the payment of filing, docket and other fees to the
WHEREAS, Section 2 of the same provides: In order to attain the objectives of legal
aid, legal aid office should be as close as possible to those who are in need thereof –
the masses. Hence, every chapter of the IBP must establish and operate an adequate
legal aid office.
WHEREAS, the Legal Aid Office of the IBP–Misamis Oriental Chapter has long
been operational, providing free legal services to numerous indigent clients,
through the chapter’s members who render volunteer services in the spirit of
public service;
WHEREAS, the courts, quasi-judicial bodies, the various mediation centers and
prosecutor’s offices are collecting fees, be they filing, docket, motion, mediation
or other fees in cases, be they original proceedings or on appeal;
WHEREAS, IBP Legal Aid clients are qualified under the same indigency and merit
tests used by the Public Attorney’s Office (PAO), and would have qualified for PAO
assistance, but for reasons other than indigency, are disqualified from availing of
the services of the PAO, like the existence of a conflict of interests or conflicting
defenses, and other similar causes;
WHEREAS, PAO clients are automatically exempt from the payment of docket and
other fees for cases, be they original proceedings or on appeal, by virtue of the
provisions of Section 16–D of R.A. 9406 (PAO Law), without the need for the filing
of any petition or motion to declare them as pauper litigants;
WHEREAS, there is no similar provision in any substantive law or procedural law
giving IBP Legal Aid clients the same benefits or privileges enjoyed by PAO clients
with respect to the payment of docket and other fees before the courts, quasi-
judicial bodies and prosecutor’s offices;
WHEREAS, the collection of docket and other fees from the IBP Legal Aid clients
poses an additional strain to their next to non-existent finances;
WHEREAS, the quarterly allowance given by the National Legal Aid Office to the
IBP Misamis Oriental Chapter is insufficient to even cover the incidental expenses
of volunteer legal aid lawyers, much less answer for the payment of docket and
other fees collected by the courts, quasi-judicial bodies and prosecutor’s offices
and mediation fees collected by the Philippine Mediation Center;
NOW THEREFORE, on motion of the Board of Officers of the IBP–Misamis
Oriental Chapter, be it resolved as it is hereby resolved, to move the IBP National
Legal Aid Office to make the necessary requests or representations with the
Supreme Court, the Philippine Mediation Center, the Department of Justice and
the National Prosecution Service and other quasi-judicial agencies to effect the
IBP Legal Aid clients as that enjoyed by PAO clients, towards the end that IBP
Legal Aid clients be automatically exempted from the filing of the
abovementioned fees;
RESOLVED FURTHER, that copies of this Resolution be furnished to Supreme
Court Chief Justice Honorable Reynato S. Puno, IBP National President Feliciano
M. Bautista, the IBP Board of Governors, Secretary of Justice Hon. Raul M.
Gonzalez, the National Supervisor of the Philippine Mediation Center, the
National Labor Relations Commission, the Civil Service Commission and other
quasi-judicial bodies and their local offices;
RESOLVED FINALLY to move the IBP Board of Governors and National Officers to
make the necessary representations with the National Legislature and its
members to effect the filing of a bill before the House of Representatives and the
Senate granting exemption to IBP Legal Aid clients from the payment of docket,
filing and or other fees in cases before the courts, quasi-judicial agencies and
prosecutor’s offices and the mediation centers.
Done this 23rd day of September 2008, Cagayan De Oro City.
Unanimously approved upon motion severally seconded.
The Court noted Resolution No. 24, series of 2008 and required the IBP, through
the NCLA, to comment thereon.
In a comment dated December 18, 2008, the IBP, through the NCLA, made the
following comments:
(a) Under Section 16-D of RA 9406, clients of the Public Attorneys’ Office (PAO)
are exempt from the payment of docket and other fees incidental to the
institution of action in court and other quasi-judicial bodies. On the other hand,
clients of legal aid offices in the various IBP chapters do not enjoy the same
exemption. IBP’s indigent clients are advised to litigate as pauper litigants under
Section 21, Rule 3 of the Rules of Court;
(b) They are further advised to submit documentary evidence to prove
compliance with the requirements under Section 21, Rule 3 of the Rules of
Court, i.e., certifications from the barangay and the Department of Social Welfare
and Development. However, not only does the process involve some expense
which indigent clients could ill-afford, clients also lack knowledge on how to go
about the tedious process of obtaining these documents;
(c) Although the IBP is given an annual legal aid subsidy, the amount it receives
from the government is barely enough to cover various operating expenses;
(d) While each IBP local chapter is given a quarterly allocation (from the legal aid
subsidy), said allocation covers neither the incidental expenses defrayed by legal
aid lawyers in handling legal aid cases nor the payment of docket and other fees
collected by the courts, quasi-judicial bodies and the prosecutor’s office, as well
as mediation fees and
(e) Considering the aforementioned factors, a directive may be issued by the
Supreme Court granting IBP’s indigent clients an exemption from the payment of
docket and other fees similar to that given to PAO clients under Section 16-D of
RA 9406. In this connection, the Supreme Court previously issued a circular
exempting IBP clients from the payment of transcript of stenographic notes.
At the outset, we laud the Misamis Oriental Chapter of the IBP for its effort to help
improve the administration of justice, particularly, the access to justice by the
poor. Its Resolution No. 24, series of 2008 in fact echoes one of the noteworthy
recommendations during the Forum on Increasing Access to Justice spearheaded
by the Court last year. In promulgating Resolution No. 24, the Misamis Oriental
Chapter of the IBP has effectively performed its duty to "participate in the
development of the legal system by initiating or supporting efforts in law reform
and in the administration of justice."
We now move on to determine the merits of the request.
Access to Justice: Making an Ideal a Reality
Access to justice by all, especially by the poor, is not simply an ideal in our society.
Its existence is essential in a democracy and in the rule of law. As such, it is
guaranteed by no less than the fundamental law:
Sec. 11. Free access to the courts and quasi-judicial bodies and adequate legal
assistance shall not be denied to any person by reason of poverty. (emphasis
supplied)
The Court recognizes the right of access to justice as the most important pillar of
legal empowerment of the marginalized sectors of our society. Among others, it
has exercised its power to "promulgate rules concerning the protection and
enforcement of constitutional rights" to open the doors of justice to the
underprivileged and to allow them to step inside the courts to be heard of their
plaints. In particular, indigent litigants are permitted under Section 21, Rule
3 and Section 19, Rule 141 of the Rules of Court to bring suits in forma pauperis.
The IBP, pursuant to its general objectives to "improve the administration of
justice and enable the Bar to discharge its public responsibility more
effectively," assists the Court in providing the poor access to justice. In particular,
it renders free legal aid under the supervision of the NCLA.
A New Rule, a New Tool for Access to Justice
Under the IBP’s Guidelines Governing the Establishment and Operation of Legal
Aid Offices in All Chapters of the IBP (Guidelines on Legal Aid), the combined
"means and merit tests" shall be used to determine the eligibility of an applicant
for legal aid:
ARTICLE VIII
TESTS
SEC. 19. Combined tests. – The Chapter Legal Aid Committee or the [NCLA], as the
case may be, shall pass upon the request for legal aid by the combined application
of the means test and merit test, and the consideration of other factors adverted
to in the following sections.
SEC. 20. Means test. – The means test aims at determining whether the applicant
has no visible means of support or his income is otherwise insufficient to provide
the financial resources necessary to engage competent private counsel owing to
the demands for subsistence of his family, considering the number of his
dependents and the conditions prevailing in the locality.
The means test shall not be applicable to applicants who fall under the
Developmental Legal Aid Program such as Overseas Filipino Workers, fishermen,
farmers, women and children and other disadvantaged groups.
SEC. 21. Merit test. – The merit test seeks to ascertain whether or not the
applicant’s cause of action or his defense is valid and chances of establishing the
same appear reasonable.
SEC. 22. Other factors. – The effect of the Legal Aid Service or of the failure to
render the same upon the Rule of Law, the proper administration of justice, the
public interest involved in given cases and the practice of law in the locality shall
likewise be considered.
SEC. 23. Private practice. – Care shall be taken that the Legal aid is not availed of
to the detriment of the private practice of law, or taken advantage of by anyone
for personal ends.
SEC. 24. Denial. – Legal aid may be denied to an applicant already receiving
adequate assistance from any source other than the Integrated Bar.
The "means and merit tests" appear to be reasonable determinants of eligibility
for coverage under the legal aid program of the IBP. Nonetheless, they may be
improved to ensure that any exemption from the payment of legal fees that may
be granted to clients of the NCLA and the legal aid offices of the various IBP
chapters will really further the right of access to justice by the poor. This will
guarantee that the exemption will neither be abused nor trivialized. Towards this
end, the following shall be observed by the NCLA and the legal aid offices in IBP
chapters nationwide in accepting clients and handling cases for the said clients:
A.M. No. 08-11-7-SC (IRR): Re: Rule on the Exemption From the Payment of
Legal Fees of the Clients of the National Committee on Legal Aid and of the
Legal Aid Offices in the Local Chapters of the Integrated Bar of the
Philippines
Rule on the Exemption From the Payment of Legal Fees of the Clients of the
National Committee on Legal Aid (NCLA) and of the Legal Aid Offices in the
Local Chapters of the Integrated Bar of the Philippines (IBP)
ARTICLE I
Purpose
Section 1. Purpose. – This Rule is issued for the purpose of enforcing the right of
free access to courts by the poor guaranteed under Section 11, Article III of the
Constitution. It is intended to increase the access to justice by the poor by
exempting from the payment of legal fees incidental to instituting an action in
court, as an original proceeding or on appeal, qualified indigent clients of the
NCLA and of the legal aid offices in local IBP chapters nationwide.
ARTICLE II
Definition of Terms
Section 1. Definition of important terms. – For purposes of this Rule and as used
herein, the following terms shall be understood to be how they are defined under
this Section:
(a) "Developmental legal aid" means the rendition of legal services in public
interest causes involving overseas workers, fisherfolk, farmers, laborers,
indigenous cultural communities, women, children and other disadvantaged
groups and marginalized sectors;
(b) "Disinterested person" refers to the punong barangay having jurisdiction
over the place where an applicant for legal aid or client of the NCLA or chapter
legal aid office resides;
(c) "Falsity" refers to any material misrepresentation of fact or any fraudulent,
deceitful, false, wrong or misleading statement in the application or affidavits
submitted to support it or the affidavit of a disinterested person required to be
submitted annually under this Rule which may substantially affect the
determination of the qualifications of the applicant or the client under the means
and merit tests;
(d) "Legal fees" refers to the legal fees imposed under Rule 141 of the Rules of
Court as a necessary incident of instituting an action in court either as an original
proceeding or on appeal. In particular, it includes filing or docket fees, appeal
fees, fees for issuance of provisional remedies, mediation fees, sheriff’s fees,
stenographer’s fees (that is fees for transcript of stenographic notes) and
commissioner’s fees;
(e) "Means test" refers to the set of criteria used to determine whether the
applicant is one who has no money or property sufficient and available for food,
shelter and basic necessities for himself and his family;
(f) "Merit test" refers to the ascertainment of whether the applicant’s cause of
action or his defense is valid and whether the chances of establishing the same
appear reasonable and
(g) "Representative" refers to the person authorized to file an application for legal
aid in behalf of the applicant when the said applicant is prevented by a compelling
reason from personally filing his application. As a rule, it refers to the immediate
family members of the applicant. However, it may include any of the applicant’s
relatives or any person or concerned citizen of sufficient discretion who has first-
hand knowledge of the personal circumstances of the applicant as well as of the
facts of the applicant’s case.
ARTICLE III
Coverage
Section 1. Persons qualified for exemption from payment of legal fees. – Persons
who shall enjoy the benefit of exemption from the payment of legal fees incidental
to instituting an action in court, as an original proceeding or on appeal, granted
under this Rule shall be limited only to clients of the NCLA and the chapter legal
aid offices.
The said clients shall refer to those indigents qualified to receive free legal aid
service from the NCLA and the chapter legal aid offices. Their qualifications shall
be determined based on the tests provided in this Rule.
Section 2. Persons not covered by the Rule. – The following shall be disqualified
from the coverage of this Rule. Nor may they be accepted as clients by the NCLA
and the chapter legal aid offices.
(a) Juridical persons; except in cases covered by developmental legal aid or public
interest causes involving juridical entities which are non-stock, non-profit
organizations, non-governmental organizations and people’s organizations
whose individual members will pass the means test provided in this Rule;
(b) Persons who do not pass the means and merit tests;
(c) Parties already represented by a counsel de parte;
(d) Owners or lessors of residential lands or buildings with respect to the filing
of collection or unlawful detainer suits against their tenants and
(e) Persons who have been clients of the NCLA or chapter legal aid office
previously in a case where the NCLA or chapter legal aid office withdrew its
representation because of a falsity in the application or in any of the affidavits
supporting the said application.
Section 3. Cases not covered by the Rule. – The NCLA and the chapter legal aid
offices shall not handle the following:
(a) Cases where conflicting interests will be represented by the NCLA and the
chapter legal aid offices and
(b) Prosecution of criminal cases in court.
ARTICLE IV
Tests of Indigency
Section 1. Tests for determining who may be clients of the NCLA and the legal aid
offices in local IBP chapters. – The NCLA or the chapter legal aid committee, as the
case may be, shall pass upon requests for legal aid by the combined application
of the means and merit tests and the consideration of other relevant factors
provided for in the following sections.
Section 2. Means test; exception. – (a) This test shall be based on the following
criteria: (i) the applicant and that of his immediate family must have a gross
monthly income that does not exceed an amount double the monthly minimum
wage of an employee in the place where the applicant resides and (ii) he does not
own real property with a fair market value as stated in the current tax declaration
of more than Three Hundred Thousand (₱300,000.00) Pesos.
In this connection, the applicant shall execute an affidavit of indigency (printed
at the back of the application form) stating that he and his immediate family do
not earn a gross income abovementioned, nor own any real property with the fair
value aforementioned, supported by an affidavit of a disinterested person
attesting to the truth of the applicant’s affidavit. The latest income tax return
and/or current tax declaration, if any, shall be attached to the applicant’s
affidavit.
(b) The means test shall not be applicable to applicants who fall under the
developmental legal aid program such as overseas workers, fisherfolk, farmers,
laborers, indigenous cultural communities, women, children and other
disadvantaged groups.
Section 3. Merit test. – A case shall be considered meritorious if an assessment of
the law and evidence at hand discloses that the legal service will be in aid of
justice or in the furtherance thereof, taking into consideration the interests of the
party and those of society. A case fails this test if, after consideration of the law
and evidence presented by the applicant, it appears that it is intended merely to
harass or injure the opposite party or to work oppression or wrong.
Section 4. Other relevant factors that may be considered. – The effect of legal aid
or of the failure to render the same upon the rule of law, the proper
administration of justice, the public interest involved in a given case and the
practice of law in the locality shall likewise be considered.
ARTICLE V
Acceptance and Handling of Cases
Section 1. Procedure in accepting cases. – The following procedure shall be
observed in the acceptance of cases for purposes of this Rule:
(a) Filing of application – An application shall be made personally by the
applicant, unless there is a compelling reason which prevents him from doing so,
in which case his representative may apply for him. It shall adhere substantially
to the form made for that purpose. It shall be prepared and signed by the
applicant or, in proper cases, his duly authorized representative in at least three
copies.
Applications for legal aid shall be filed with the NCLA or with the chapter legal
aid committee.
The NCLA shall, as much as possible, concentrate on cases of paramount
importance or national impact.
Requests received by the IBP National Office shall be referred by the NCLA to the
proper chapter legal aid committee of the locality where the cases have to be filed
or are pending. The chapter president and the chairman of the chapter’s legal aid
committee shall be advised of such referral.
(b) Interview – The applicant shall be interviewed by a member of the chapter
legal aid committee or any chapter member authorized by the chapter legal aid
committee to determine the applicant’s qualifications based on the means and
merit tests and other relevant factors. He shall also be required to submit copies
of his latest income tax returns and/or current tax declaration, if available, and
execute an affidavit of indigency printed at the back of the application form with
the supporting affidavit of a disinterested person attesting to the truth of the
applicant’s affidavit.
After the interview, the applicant shall be informed that he can follow up the
action on his application after five (5) working days.
(c) Action on the application – The chapter legal aid committee shall pass upon
every request for legal aid and submit its recommendation to the chapter board
of officers within three (3) working days after the interview of the applicant. The
basis of the recommendation shall be stated.
The chapter board of officers shall review and act on the recommendation of the
chapter legal aid committee within two (2) working days from receipt
thereof; Provided, however, that in urgent matters requiring prompt or
immediate action, the chapter’s executive director of legal aid or whoever
performs his functions may provisionally act on the application, subject to review
by the chapter legal aid committee and, thereafter, by the chapter board of
officers.
The action of the chapter board of officers on the application shall be final.
(d) Cases which may be provisionally accepted. – In the following cases, the NCLA
or the chapter legal aid office, through the chapter’s executive director of legal aid
or whoever performs his functions may accept cases provisionally pending
verification of the applicant’s indigency and an evaluation of the merit of his case.
(i) Where a warrant for the arrest of the applicant has been issued;
(ii) Where a pleading has to be filed immediately to avoid adverse effects to the
applicant;
(iii) Where an appeal has to be urgently perfected or a petition for certiorari,
prohibition or mandamus filed has to be filed immediately; and
(iv) Other similar urgent cases.
(e) Assignment of control number – Upon approval of the chapter board of
officers of a person’s application and the applicant is found to be qualified for
legal assistance, the case shall be assigned a control number. The numbering shall
be consecutive starting from January to December of every year. The control
number shall also indicate the region and the chapter handling the case.
Example:
Region Chapter Year Month Number
GM - Manila - 2009 - 03 - 099
(f) Issuance of a certification – After an application is approved and a control
number duly assigned, the chapter board of officers shall issue a certification that
the person (that is, the successful applicant) is a client of the NCLA or of the
chapter legal aid office. The certification shall bear the control number of the case
and shall state the name of the client and the nature of the judicial action subject
of the legal aid of the NCLA or the legal aid office of a local IBP chapter.
The certification shall be issued to the successful applicant free of charge.
Section 2. Assignment of cases. – After a case is given a control number, the
chapter board of officers shall refer it back to the chapter legal aid committee.
The chapter legal aid committee shall assign the case to any chapter member who
is willing to handle the case.
In case no chapter member has signified an intention to handle the case
voluntarily, the chapter legal aid committee shall refer the matter to the chapter
board of officers together with the names of at least three members who, in the
chapter legal aid committee’s discretion, may competently render legal aid on the
matter. The chapter board of officers shall appoint one chapter member from
among the list of names submitted by the chapter legal aid committee. The
chapter member chosen may not refuse the appointment except on the ground of
conflict of interest or other equally compelling grounds as provided in the Code
of Professional Responsibility, in which case the chapter board of officers shall
appoint his replacement from among the remaining names in the list previously
submitted by the chapter legal aid committee.
The chapter legal aid committee and the chapter board of officers shall take the
necessary measures to ensure that cases are well-distributed to chapter
members.
Section 3. Policies and guidelines in the acceptance and handling of cases. – The
following policies and guidelines shall be observed in the acceptance and
handling of cases:
(a) First come, first served – Where both the complainant/plaintiff/petitioner
and defendant/ respondent apply for legal aid and both are qualified, the first to
seek assistance shall be given preference.
(b) Avoidance of conflict of interest – Where acceptance of a case will give rise to
a conflict of interest on the part of the chapter legal aid office, the applicant shall
be duly informed and advised to seek the services of a private counsel or another
legal aid organization.
Where handling of the case will give rise to a conflict of interest on the part of the
chapter member assigned to the case, the client shall be duly informed and
advised about it. The handling lawyer shall also inform the chapter legal aid
committee so that another chapter member may be assigned to handle the case.
For purposes of choosing the substitute handling lawyer, the rule in the
immediately preceding section shall be observed.
(c) Legal aid is purely gratuitous and honorary – No member of the chapter or
member of the staff of the NCLA or chapter legal aid office shall directly or
indirectly demand or request from an applicant or client any compensation, gift
or present for legal aid services being applied for or rendered.
(d) Same standard of conduct and equal treatment – A chapter member who is
tasked to handle a case accepted by the NCLA or by the chapter legal aid office
shall observe the same standard of conduct governing his relations with paying
clients. He shall treat the client of the NCLA or of the chapter legal aid office and
the said client’s case in a manner that is equal and similar to his treatment of a
paying client and his case.
(e) Falsity in the application or in the affidavits – Any falsity in the application or
in the affidavit of indigency or in the affidavit of a disinterested person shall be
sufficient cause for the NCLA or chapter legal aid office to withdraw or terminate
the legal aid. For this purpose, the chapter board of officers shall authorize the
handling lawyer to file the proper manifestation of withdrawal of appearance of
the chapter legal aid office in the case with a motion for the dismissal of the
complaint or action of the erring client. The court, after hearing, shall approve the
withdrawal of appearance and grant the motion, without prejudice to whatever
criminal liability may have been incurred.
Violation of this policy shall disqualify the erring client from availing of the
benefits of this Rule in the future.
(f) Statement in the initiatory pleading – To avail of the benefits of the Rule, the
initiatory pleading shall state as an essential preliminary allegation that (i) the
party initiating the action is a client of the NCLA or of the chapter legal aid office
and therefore entitled to exemption from the payment of legal fees under this
Rule and (ii) a certified true copy of the certification issued pursuant to Section
1(e), of this Article is attached or annexed to the pleading.
Failure to make the statement shall be a ground for the dismissal of the action
without prejudice to its refiling.
The same rule shall apply in case the client, through the NCLA or chapter legal aid
office, files an appeal.
(g) Attachment of certification in initiatory pleading – A certified true copy of the
certification issued pursuant to Section 1(e), of this Article shall be attached as an
annex to the initiatory pleading.
Failure to attach a certified true copy of the said certification shall be a ground
for the dismissal of the action without prejudice to its refiling.
The same rule shall apply in case the client, through the NCLA or chapter legal aid
office, files an appeal.
(h) Signing of pleadings – All complaints, petitions, answers, replies, memoranda
and other important pleadings or motions to be filed in courts shall be signed by
the handling lawyer and co-signed by the chairperson or a member of the chapter
legal aid committee, or in urgent cases, by the executive director of legal aid or
whoever performs his functions.
Ordinary motions such as motions for extension of time to file a pleading or for
postponement of hearing and manifestations may be signed by the handling
lawyer alone.
(i) Motions for extension of time or for postponement – The filing of motions for
extension of time to file a pleading or for postponement of hearing shall be
avoided as much as possible as they cause delay to the case and prolong the
proceedings.
(j) Transfer of cases – Transfer of cases from one handling lawyer to another shall
be affected only upon approval of the chapter legal aid committee.
Section 4. Decision to appeal. – (a) All appeals must be made on the request of the
client himself. For this purpose, the client shall be made to fill up a request to
appeal.
(b) Only meritorious cases shall be appealed. If the handling lawyer, in
consultation with the chapter legal aid committee, finds that there is no merit to
the appeal, the client should be immediately informed thereof in writing and the
record of the case turned over to him, under proper receipt. If the client insists
on appealing the case, the lawyer handling the case should perfect the appeal
before turning over the records of the case to him.
Section 5. Protection of private practice. – Utmost care shall be taken to ensure
that legal aid is neither availed of to the detriment of the private practice of law
nor taken advantage of by anyone for purely personal ends.
ARTICLE VI
Withdrawal of Legal Aid and Termination of Exemption
Section 1. Withdrawal of legal aid. – The NCLA or the chapter legal aid committee
may, in justifiable instances as provided in the next Section, direct the handling
lawyer to withdraw representation of a client’s cause upon approval of the IBP
Board of Governors (in the case of the NCLA) or of the chapter board of officers
(in the case of the chapter legal aid committee) and through a proper motion filed
in Court.
Section 2. Grounds for withdrawal of legal aid. – Withdrawal may be warranted in
the following situations:
(a) In a case that has been provisionally accepted, where it is subsequently
ascertained that the client is not qualified for legal aid;
(b) Where the client’s income or resources improve and he no longer qualifies for
continued assistance based on the means test. For this purpose, on or before
January 15 every year, the client shall submit an affidavit of a disinterested
person stating that the client and his immediate family do not earn a gross income
mentioned in Section 2, Article V, nor own any real property with the fair market
value mentioned in the same Section;
(c) When it is shown or found that the client committed a falsity in the application
or in the affidavits submitted to support the application;
(d) When the client subsequently engages a de parte counsel or is provided with
a de oficio counsel;
(e) When, despite proper advice from the handling lawyer, the client cannot be
refrained from doing things which the lawyer himself ought not do under the
ethics of the legal profession, particularly with reference to their conduct towards
courts, judicial officers, witnesses and litigants, or the client insists on having
control of the trial, theory of the case, or strategy in procedure which would tend
to result in incalculable harm to the interests of the client;
(f) When, despite notice from the handling lawyer, the client does not cooperate
or coordinate with the handling lawyer to the prejudice of the proper and
effective rendition of legal aid such as when the client fails to provide documents
necessary to support his case or unreasonably fails to attend hearings when his
presence thereat is required; and
(g) When it becomes apparent that the representation of the client’s cause will
result in a representation of conflicting interests, as where the adverse party had
previously engaged the services of the NCLA or of the chapter legal aid office and
the subject matter of the litigation is directly related to the services previously
rendered to the adverse party.
Section 3. Effect of withdrawal. – The court, after hearing, shall allow the NCLA or
the chapter legal aid office to withdraw if it is satisfied that the ground for such
withdrawal exists.
Except when the withdrawal is based on paragraphs (b), (d) and (g) of the
immediately preceding Section, the court shall also order the dismissal of the
case. Such dismissal is without prejudice to whatever criminal liability may have
been incurred if the withdrawal is based on paragraph (c) of the immediately
preceding Section.
ARTICLE VII
Miscellaneous Provisions
Section 1. Lien on favorable judgment. – The amount of the docket and other
lawful fees which the client was exempted from paying shall be a lien on any
judgment rendered in the case favorable to the indigent, unless the court
otherwise provides.
In case, attorney’s fees have been awarded to the client, the same shall belong to
the NCLA or to the chapter legal aid office that rendered the legal aid, as the case
may be. It shall form part of a special fund which shall be exclusively used to
support the legal aid program of the NCLA or the chapter legal aid office. In this
connection, the chapter board of officers shall report the receipt of attorney’s fees
pursuant to this Section to the NCLA within ten (10) days from receipt thereof.
The NCLA shall, in turn, include the data on attorney’s fees received by IBP
chapters pursuant to this Section in its liquidation report for the annual subsidy
for legal aid.
Section 2. Duty of NCLA to prepare forms. – The NCLA shall prepare the standard
forms to be used in connection with this Rule. In particular, the NCLA shall
prepare the following standard forms: the application form, the affidavit of
indigency, the supporting affidavit of a disinterested person, the affidavit of a
disinterested person required to be submitted annually under Section 2(b),
Article VI, the certification issued by the NCLA or the chapter board of officers
under Section 1(f), Article V and the request to appeal.
The said forms, except the certification, shall be in Filipino. Within sixty (60) days
from receipt of the forms from the NCLA, the chapter legal aid offices shall make
translations of the said forms in the dominant dialect used in their respective
localities.
Section 3. Effect of Rule on right to bring suits in forma pauperis. – Nothing in this
Rule shall be considered to preclude those persons not covered either by this Rule
or by the exemption from the payment of legal fees granted to clients of the Public
Attorney’s Office under Section 16-D of RA 9406 to litigate in forma
pauperis under Section 21, Rule 3 and Section 19 Rule 141 of the Rules of Court.
Section 4. Compliance with Rule on Mandatory Legal Aid Service. – Legal aid The Office of the Court Administrator is hereby directed to promptly issue a
service rendered by a lawyer under this Rule either as a handling lawyer or as an circular to inform all courts in the Philippines of the import of this resolution.
interviewer of applicants under Section 1(b), Article IV hereof shall be credited
for purposes of compliance with the Rule on Mandatory Legal Aid Service.
The chairperson of the chapter legal aid office shall issue the certificate similar to
that issued by the Clerk of Court in Section 5(b) of the Rule on Mandatory Legal
Aid Service.

ARTICLE VIII
Effectivity
Section 1. Effectivity. – This Rule shall become effective after fifteen days
following its publication in a newspaper of general circulation.
The above rule, in conjunction with Section 21, Rule 3 and Section 19, Rule 141
of the Rules of Court, the Rule on Mandatory Legal Aid Service and the Rule of
Procedure for Small Claims Cases, shall form a solid base of rules upon which the
right of access to courts by the poor shall be implemented. With these rules, we
equip the poor with the tools to effectively, efficiently and easily enforce their
rights in the judicial system.

A Final Word
Equity will not suffer a wrong to be without a remedy. Ubi jus ibi remedium.
Where there is a right, there must be a remedy. The remedy must not only be
effective and efficient, but also readily accessible. For a remedy that is
inaccessible is no remedy at all.

The Constitution guarantees the rights of the poor to free access to the courts and
to adequate legal assistance. The legal aid service rendered by the NCLA and legal
aid offices of IBP chapters nationwide addresses only the right to adequate legal
assistance. Recipients of the service of the NCLA and legal aid offices of IBP
chapters may enjoy free access to courts by exempting them from the payment of
fees assessed in connection with the filing of a complaint or action in court. With
these twin initiatives, the guarantee of Section 11, Article III of Constitution is
advanced and access to justice is increased by bridging a significant gap and
removing a major roadblock.

WHEREFORE, the Misamis Oriental Chapter of the Integrated Bar of the

Philippines is hereby COMMENDED for helping increase the access to justice by
the poor. The request of the Misamis Oriental Chapter for the exemption from the
payment of filing, docket and other fees of the clients of the legal aid offices of the
various IBP chapters is GRANTED. The Rule on the Exemption From the Payment
of Legal Fees of the Clients of the National Committee on Legal Aid (NCLA) and of
the Legal Aid Offices in the Local Chapters of the Integrated Bar of the Philippines
(IBP) (which shall be assigned the docket number A.M. No. 08-11-7-SC [IRR]
provided in this resolution is hereby APPROVED. In this connection, the Clerk of
Court is DIRECTED to cause the publication of the said rule in a newspaper of
general circulation within five days from the promulgation of this resolution.
RE: Query of Mr. Roger C. Prioreschi Re Exemption from Legal and Filing
Fees of the Good Shepherd Foundation, Inc.
BERSAMIN, J.: A. M. No. 09-6-9-SC August 19, 2009
In his letter dated May 22, 2009 addressed to the Chief Justice, Mr. Roger C.
Prioreschi, administrator of the Good Shepherd Foundation, Inc., wrote:
The Good Shepherd Foundation, Inc. is very grateful for your 1rst. Indorsement
to pay a nominal fee of Php 5,000.00 and the balance upon the collection action
of 10 million pesos, thus giving us access to the Justice Systempreviously denied
by an up-front excessive court fee.
The Hon. Court Administrator Jose Perez pointed out to the need of complying
with OCA Circular No. 42-2005 and Rule 141 that reserves this "privilege" to
indigent persons. While judges are appointed to interpret the law, this type of law
seems to be extremely detailed with requirements that do not leave much room
for interpretations.
In addition, this law deals mainly with "individual indigent" and it does not
include Foundations or Associations that work with and for the most
Indigent persons. As seen in our Article of Incorporation, since 1985 the Good
Shepherd Foundation, Inc. reached-out to the poorest among the poor, to the
newly born and abandoned babies, to children who never saw the smile of their
mother, to old people who cannot afford a few pesos to pay for "common
prescriptions", to broken families who returned to a normal life. In other words,
we have been working hard for the very Filipino people, that the Government and
the society cannot reach to, or have rejected or abandoned them.
Can the Courts grant to our Foundation who works for indigent and
underprivileged people, the same option granted to indigent people?
The two Executive Judges, that we have approached, fear accusations of
favoritism or other kind of attack if they approve something which is not clearly
and specifically stated in the law or approved by your HONOR.
Can your Honor help us once more?
Grateful for your understanding, God bless you and your undertakings.
We shall be privileged if you find time to visit our orphanage – the Home of Love
– and the Spiritual Retreat Center in Antipolo City.
To answer the query of Mr. Prioreschi, the Courts cannot grant to foundations like
the Good Shepherd Foundation, Inc. the same exemption from payment of legal
fees granted to indigent litigants even if the foundations are working for indigent
and underprivileged people.
The basis for the exemption from legal and filing fees is the free access clause,
embodied in Sec. 11, Art. III of the 1987 Constitution, thus:
Sec. 11. Free access to the courts and quasi judicial bodies and adequate legal
assistance shall not be denied to any person by reason of poverty.
The importance of the right to free access to the courts and quasi judicial bodies
and to adequate legal assistance cannot be denied. A move to remove the
provision on free access from the Constitution on the ground that it was already
covered by the equal protection clause was defeated by the desire to give
constitutional stature to such specific protection of the poor.
In implementation of the right of free access under the Constitution, the Supreme
Court promulgated rules, specifically, Sec. 21, Rule 3, Rules of Court, and Sec. 19,
Rule 141, Rules of Court, which respectively state thus:
Sec. 21. Indigent party. — A party may be authorized to litigate his action, claim
or defense as an indigent if the court, upon an ex parte application and hearing,
is satisfied that the party is one who has no money or property sufficient and
available for food, shelter and basic necessities for himself and his family.
Such authority shall include an exemption from payment of docket and other
lawful fees, and of transcripts of stenographic notes which the court may order
to be furnished him. The amount of the docket and other lawful fees which the
indigent was exempted from paying shall be a lien on any judgment rendered in
the case favorable to the indigent, unless the court otherwise provides.
Any adverse party may contest the grant of such authority at any time before
judgment is rendered by the trial court. If the court should determine after
hearing that the party declared as an indigent is in fact a person with sufficient
income or property, the proper docket and other lawful fees shall be assessed and
collected by the clerk of court. If payment is not made within the time fixed by the
court, execution shall issue for the payment thereof, without prejudice to such
other sanctions as the court may impose. (22a)
Sec. 19. Indigent litigants exempt from payment of legal fees.– Indigent litigants
(a) whose gross income and that of their immediate family do not exceed an
amount double the monthly minimum wage of an employee and (b) who do not
own real property with a fair market value as stated in the current tax declaration
of more than three hundred thousand (P300,000.00) pesos shall be exempt from
payment of legal fees.
The legal fees shall be a lien on any judgment rendered in the case favorable to
the indigent litigant unless the court otherwise provides.
To be entitled to the exemption herein provided, the litigant shall execute an
affidavit that he and his immediate family do not earn a gross income
abovementioned, and they do not own any real property with the fair value
aforementioned, supported by an affidavit of a disinterested person attesting to
the truth of the litigant’s affidavit. The current tax declaration, if any, shall be
attached to the litigant’s affidavit.

Any falsity in the affidavit of litigant or disinterested person shall be sufficient

cause to dismiss the complaint or action or to strike out the pleading of that party,
without prejudice to whatever criminal liability may have been incurred.

The clear intent and precise language of the aforequoted provisions of the Rules
of Court indicate that only a natural party litigant may be regarded as an indigent
litigant. The Good Shepherd Foundation, Inc., being a corporation invested by the
State with a juridical personality separate and distinct from that of its
members, is a juridical person. Among others, it has the power to acquire and
possess property of all kinds as well as incur obligations and bring civil or
criminal actions, in conformity with the laws and regulations of their
organization. As a juridical person, therefore, it cannot be accorded the
exemption from legal and filing fees granted to indigent litigants.

That the Good Shepherd Foundation, Inc. is working for indigent and
underprivileged people is of no moment. Clearly, the Constitution has explicitly
premised the free access clause on a person’s poverty, a condition that only a
natural person can suffer.
There are other reasons that warrant the rejection of the request for exemption
in favor of a juridical person. For one, extending the exemption to a juridical
person on the ground that it works for indigent and underprivileged people may
be prone to abuse (even with the imposition of rigid documentation
requirements), particularly by corporations and entities bent on circumventing
the rule on payment of the fees. Also, the scrutiny of compliance with the
documentation requirements may prove too time-consuming and wasteful for
the courts.

In view of the foregoing, the Good Shepherd Foundation, Inc. cannot be extended
the exemption from legal and filing fees despite its working for indigent and
underprivileged people.
DARMA MASLAG, Petitioner, vs. ELIZABETH MONZON, WILLIAM GESTON,
and REGISTRY OF DEEDS OF BENGUET, Respondents.
DEL CASTILLO, J.: G.R. No. 174908 June 17, 2013
"It is incumbent upon x x x appellants to utilize the correct mode of appeal of the
decisions of trial courts to the appellate courts. In the mistaken choice of their
remedy, they can blame no one but themselves."
This is a Petition for Review on Certiorari of the May 31, 2006 Resolution of the
Court of Appeals (CA) in CA-G.R. CV No. 83365, which dismissed petitioner Darma
Maslag's (petitioner) ordinary appeal to it for being an improper remedy. The
Resolution disposed of the case as follows:
WHEREFORE, the Motion to Dismiss is GRANTED, and the Appeal is hereby
DISMISSED.
SO ORDERED.
The Petition also assails the CA’s September 22, 2006 Resolution denying
petitioner’s Motion for Reconsideration.
Factual Antecedents
In 1998, petitioner filed a Complaint for reconveyance of real property with
declaration of nullity of original certificate of title (OCT) against respondents
Elizabeth Monzon (Monzon), William Geston and the Registry of Deeds of La
Trinidad, Benguet. The Complaint was filed before the Municipal Trial Court
(MTC) of La Trinidad, Benguet.
After trial, the MTC found respondent Monzon guilty of fraud in obtaining an OCT
over petitioner’s property. It ordered her to reconvey the said property to
petitioner, and to pay damages and costs of suit.
Respondents appealed to the Regional Trial Court (RTC) of La Trinidad, Benguet.
After going over the MTC records and the parties’ respective memoranda, the RTC
of La Trinidad, Benguet, Branch 10, through Acting Presiding Judge Fernando P.
Cabato (Judge Cabato), issued its October 22, 2003 Order,declaring the MTC
without jurisdiction over petitioner’s cause of action. It further held that it will
take cognizance of the case pursuant to Section 8, Rule 40 of the Rules of Court,
which reads:
SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction.
–xxx
If the case was tried on the merits by the lower court without jurisdiction over
the subject matter, the Regional Trial Court on appeal shall not dismiss the case
if it has original jurisdiction thereof, but shall decide the case in accordance with
the preceding section, without prejudice to the admission of amended pleadings
and additional evidence in the interest of justice. Both parties acknowledged
receipt of the October 22, 2003 Order, but neither presented additional evidence
before the new judge, Edgardo B. Diaz De Rivera, Jr. (Judge Diaz De Rivera).
On May 4, 2004, Judge Diaz De Rivera issued a Resolution reversing the MTC
Decision. The fallo reads as follows:
WHEREFORE, the Judgment appealed from the Municipal Trial Court of La
Trinidad, Benguet is set aside. [Petitioner] is ordered to turn over the possession
of the 4,415 square meter land she presently occupies to [Monzon]. This case is
remanded to the court a quo for further proceedings to determine whether
[Maslag] is entitled to the remedies afforded by law to a builder in good faith for
the improvements she constructed thereon.
No pronouncement as to damages and costs.
SO ORDERED.
Petitioner filed a Notice of Appeal from the RTC’s May 4, 2004 Resolution.
Petitioner assailed the RTC’s May 4, 2004 Resolution for reversing the MTC’s
factual findings and prayed that the MTC Decision be adopted. Her prayer before
the CA reads:
WHEREFORE, premises considered, it is most respectfully prayed that the
decision of the Regional Trial Court, Branch 10 of La Trinidad, Benguet, appealed
from be reversed in toto and that the Honorable Court adopt the decision of the
Municipal Trial Court. Further reliefs just and equitable under the premises are
prayed for.
Respondents moved to dismiss petitioner’s ordinary appeal for being the
improper remedy. They asserted that the proper mode of appeal is a Petition for
Review under Rule 42 because the RTC rendered its May 4, 2004 Resolution in
its appellate jurisdiction.
Ruling of the Court of Appeals
The CA dismissed petitioner’s appeal. It observed that the RTC’s May 4, 2004
Resolution (the subject matter of the appeal before the CA) set aside an MTC
Judgment; hence, the proper remedy is a Petition for Review under Rule 42, and
not an ordinary appeal.
Petitioner sought reconsideration. She argued, for the first time, that the RTC
rendered its May 4, 2004 Resolution in its original jurisdiction. She cited the
earlier October 22, 2003 Order of the RTC declaring the MTC without jurisdiction
over the case.
The CA denied petitioner’s Motion for Reconsideration in its September 22, 2006
Resolution:
A perusal of the May 4, 2004 Resolution of the RTC, which is the subject matter
of the appeal, clearly reveals that it took cognizance of the MTC case in the
exercise of its appellate jurisdiction. Consequently, as We have previously
enunciated, the proper remedy, is a petition for review under Rule 42 and not an
ordinary appeal under Rule 41.

WHEREFORE, premises considered, the instant Motion for Reconsideration is
DENIED. The May 31, 2006 Resolution of this Court is hereby AFFIRMED in toto.
SO ORDERED.
Hence this Petition wherein petitioner prays that the CA be ordered to take
cognizance of her appeal.
Issues
Petitioner set forth the following issues in her Petition:
WHETHER X X X THE COURT OF APPEALS WAS CORRECT IN DISMISSING THE
APPEAL FILED BY THE PETITIONER, CONSIDERING THAT THE REGIONAL TRIAL
COURT, BRANCH 10 OF LA TRINIDAD, BENGUET HELD THAT THE ORIGINAL
COMPLAINT AS FILED BEFORE THE MUNICIPAL TRIAL COURT OF LA TRINIDAD,
BENGUET WAS DECIDED BY THE LATTER WITHOUT ANY JURISDICTION AND,
IN ORDERING THAT THE CASE SHALL BE DECIDED PURSUANT TO THE
PROVISION OF SECTION 8 OF RULE 40 OF THE RULES OF COURT, IT DECIDED
THE CASE NOT ON ITS APPELLATE JURISDICTION BUT ON ITS ORIGINAL
JURISDICTION WHAT WILL BE THE EFFECT OF THE DECISION OF THE
REGIONAL TRIAL COURT, BRANCH 10 OF LA TRINIDAD, BENGUET, WHEN IT
DECIDED A CASE APPEALED BEFORE IT UNDER THE PROVISION OF SECTION 8,
RULE 40 OF THE RULES OF COURT OF THE PHILIPPINES, AS TO THE COURSE OF
REMEDY THAT MAY BE AVAILED OF BY THE PETITIONER – A PETITION FOR
REVIEWUNDER RULE 42 OR AN ORDINARY APPEAL UNDER RULE 41.
Our Ruling
In its October 22, 2003 Order, the RTC declared that the MTC has no jurisdiction
over the subject matter of the case based on the supposition that the same is
incapable of pecuniary estimation. Thus, following Section 8, Rule 40 of the Rules
of Court, it took cognizance of the case and directed the parties to adduce further
evidence if they so desire. The parties bowed to this ruling of the RTC and,
eventually, submitted the case for its decision after they had submitted their
respective memoranda.
We cannot, however, gloss over this jurisdictional faux pas of the RTC. Since it
involves a question of jurisdiction, we may motu proprio review and pass upon
the same even at this late stage of the proceedings.
In her Complaint for reconveyance of real property with declaration of nullity of
OCT, petitioner claimed that she and her father had been in open, continuous,
notorious and exclusive possession of the disputed property since the 1940’s. She
averred:
7. Sometime in the year 1987, Elizabeth Monzon, the owner of the adjacent parcel
of land being occupied by plaintiff [Maslag], informed the plaintiff that the
respective parcels of land being claimed by them can now be titled. A suggestion
was, thereafter made, that those who were interested to have their lands titled,
will contribute to a common fund for the surveying and subsequent titling of the
land;
8. Since plaintiff had, for so long, yearned for a title to the land she occupies, she
contributed to the amount being requested by Elizabeth Monzon;
9. A subdivision survey was made and in the survey, the respective areas of the
plaintiff and the defendants were defined and delimited – all for purposes of
titling. x x x
10. But alas, despite the assurance of subdivided titles, when the title was finally
issued by the Registry of Deeds, the same was only in the name of Elizabeth
Monzon and WILLIAM GESTON. The name of Darma Maslag was fraudulently,
deliberately and in bad faith omitted. Thus, the title to the property, to the extent
of 18,295 square meters, was titled solely in the name of ELIZABETH MONZON.
As a relief, petitioner prayed that Monzon be ordered to reconvey the portion of
the property which she claimed was fraudulently included in Monzon’s title. Her
primary relief was to recover ownership of real property. Indubitably,
petitioner’s complaint involves title to real property. An action "involving title to
real property," on the other hand, was defined as an action where "the plaintiff’s
cause of action is based on a claim that she owns such property or that she has
the legal rights to have exclusive control, possession, enjoyment, or disposition
of the same."
Under the present state of the law, in cases involving title to real property,
original and exclusive jurisdiction belongs to either the RTC or the MTC,
depending on the assessed value of the subject property. Pertinent provisions of
Batas Pambansa Blg. (BP) 129, as amended by Republic Act (RA) No.
7691, provides:
Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive
original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of
pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of, real property, or
any interest therein, where the assessed value of the property involved exceeds
Twenty thousand pesos (₱20,000.00) or for civil actions in Metro Manila, where
x x x the assessed value of the property exceeds Fifty thousand pesos
([P]50,000.00) except actions for forcible entry into and unlawful detainer of
lands or buildings, original jurisdiction over which is conferred upon
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts;
SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in Civil Cases. — Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:
(3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value of
the property or interest therein does not exceed Twenty thousand pesos
(₱20,000.00) or, in civil actions in Metro Manila, where such assessed value does
not exceed Fifty thousand pesos (₱50,000.00) x x x.
In the case at bench, annexed to the Complaint is a Declaration of Real
Property dated November 12, 1991, which was later marked as petitioner’s
Exhibit "A", showing that the disputed property has an assessed value of
₱12,400 only. Such assessed value of the property is well within the jurisdiction
of the MTC. In fine, the RTC, thru Judge Cabato, erred in applying Section 19(1) of
BP 129 in determining which court has jurisdiction over the case and in
pronouncing that the MTC is divested of original and exclusive jurisdiction.
This brings to fore the next issue of whether the CA was correct in dismissing
petitioner’s appeal.
Section 2, Rule 50 of the Rules of Court provides for the dismissal of an improper
appeal:
SECTION 2. Dismissal of improper appeal to the Court of Appeals. – An appeal
under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising
only questions of law shall be dismissed, issues purely of law not being
reviewable by said court. Similarly, an appeal by notice of appeal instead of by
petition for review from the appellate judgment of a Regional Trial Court shall be
dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to
the appropriate court but shall be dismissed outright.1âwphi1 (Emphasis
supplied)
There are two modes of appealing an RTC decision or resolution on issues of fact
and law. The first mode is an ordinary appeal under Rule 41 in cases where the
RTC exercised its original jurisdiction. It is done by filing a Notice of Appeal with
the RTC. The second mode is a petition for review under Rule 42 in cases where
the RTC exercised its appellate jurisdiction over MTC decisions. It is done by filing
a Petition for Review with the CA. Simply put, the distinction between these two
modes of appeal lies in the type of jurisdiction exercised by the RTC in the Order
or Decision being appealed.
As discussed above, the MTC has original and exclusive jurisdiction over the
subject matter of the case; hence, there is no other way the RTC could have taken
cognizance of the case and review the court a quo’s Judgment except in the
exercise of its appellate jurisdiction. Besides, the new RTC Judge who penned the
May 4, 2004 Resolution, Judge Diaz de Rivera, actually treated the case as an
appeal despite the October 22, 2003 Order. He started his Resolution by stating,
"This is an appeal from the Judgment rendered by the Municipal Trial Court
(MTC) of La Trinidad Benguet" and then proceeded to discuss the merits of the
"appeal." In the dispositive portion of said Resolution, he reversed the MTC’s
findings and conclusions and remanded residual issues for trial with the MTC.
Thus, in fact and in law, the RTC Resolution was a continuation of the proceedings
that originated from the MTC. It was a judgment issued by the RTC in the exercise
of its appellate jurisdiction. With regard to the RTC’s earlier October 22, 2003
Order, the same should be disregarded for it produces no effect (other than to
confuse the parties whether the RTC was invested with original or appellate
jurisdiction). It cannot be overemphasized that jurisdiction over the subject
matter is conferred only by law and it is "not within the courts, let alone the
parties, to themselves determine or conveniently set aside." Neither would the
active participation of the parties nor estoppel operate to confer original and
exclusive jurisdiction where the court or tribunal only wields appellate
jurisdiction over the case. Thus, the CA is correct in holding that the proper mode
of appeal should have been a Petition for Review under Rule 42 of the Rules of
Court, and not an ordinary appeal under Rule 41.
Seeing the futility of arguing against what the RTC actually did, petitioner resorts
to arguing for what the RTC should have done. She maintains that the RTC should
have issued its May 4, 2004 Resolution in its original jurisdiction because it had
earlier ruled that the MTC had no jurisdiction over the cause of action.
Petitioner’s argument lacks merit. To reiterate, only statutes can confer
jurisdiction. Court issuances cannot seize or appropriate jurisdiction. It has been
repeatedly held that "any judgment, order or resolution issued without
jurisdiction is void and cannot be given any effect." By parity of reasoning, an
order issued by a court declaring that it has original and exclusive jurisdiction
over the subject matter of the case when under the law it has none cannot
likewise be given effect. It amounts to usurpation of jurisdiction which cannot be
countenanced. Since BP 129 already apportioned the jurisdiction of the MTC and
the RTC in cases involving title to property, neither the courts nor the petitioner
could alter or disregard the same. Besides, in determining the proper mode of
appeal from an RTC Decision or Resolution, the determinative factor is the type
of jurisdiction actually exercised by the RTC in rendering its Decision or
Resolution. Was it rendered by the RTC in the exercise of its original jurisdiction,
or in the exercise of its appellate jurisdiction? In short, we look at what type of
jurisdiction was actually exercised by the RTC. We do not look into what type of
jurisdiction the RTC should have exercised. This is but logical. Inquiring into what
the RTC should have done in disposing of the case is a question which already
involves the merits of the appeal, but we obviously cannot go into that where the
mode of appeal was improper to begin with.

WHEREFORE, premises considered, the Petition for Review is DENIED for lack of
merit. The assailed May 31, 2006 and September 22, 2006 Resolutions of the
Court of Appeals in CA-G.R. CV No. 83365 are AFFIRMED.
BANK OF THE PHILIPPINE ISLANDS, as successor-in-interest of Far East
Bank and Trust Company,Petitioner,
vs.
EDUARDO HONG, doing business under the name and style "SUPER LINE
PRINTING PRESS" and the COURT OF APPEALS, Respondents.
VILLARAMA, JR., J.: G.R. No. 161771 February 15, 2012
This petition for review on certiorari under Rule 45 assails the Decisiondated
September 27, 2002 and Resolutiondated January 12, 2004 of the Court of
Appeals (CA) in CA-G.R. SP No. 64166.
On September 16, 1997, the EYCO Group of Companies ("EYCO") filed a petition
for suspension of payments and rehabilitation before the Securities and Exchange
Commission (SEC), docketed as SEC Case No. 09-97-5764. A stay order was issued
on September 19, 1997 enjoining the disposition in any manner except in the
ordinary course of business and payment outside of legitimate business expenses
during the pendency of the proceedings, and suspending all actions, claims and
proceedings against EYCO until further orders from the SEC.On December 18,
1998, the hearing panel approved the proposed rehabilitation plan prepared by
EYCO despite the recommendation of the management committee for the
adoption of the rehabilitation plan prepared and submitted by the steering
committee of the Consortium of Creditor Banks which appealed the order to the
Commission.On September 14, 1999, the SEC rendered its decision disapproving
the petition for suspension of payments, terminating EYCO’s proposed
rehabilitation plan and ordering the dissolution and liquidation of the petitioning
corporation. The case was remanded to the hearing panel for liquidation
proceedings.On appeal by EYCO, (CA-G.R. SP No. 55208) the CA upheld the SEC
ruling. EYCO then filed a petition for certiorari before this Court, docketed as G.R.
No. 145977,which case was eventually dismissed under Resolution dated May 3,
2005 upon joint manifestation and motion to dismiss filed by the parties.Said
resolution had become final and executory on June 16, 2005.
Sometime in November 2000 while the case was still pending with the CA,
petitioner Bank of the Philippine Islands (BPI), filed with the Office of the Clerk
of Court, Regional Trial Court of Valenzuela City, a petition for extra-judicial
foreclosure of real properties mortgaged to it by Eyco Properties, Inc. and Blue
Star Mahogany, Inc. Public auction of the mortgaged properties was scheduled on
December 19, 2000.
Claiming that the foreclosure proceedings initiated by petitioner was illegal,
respondent Eduardo Hong, an unsecured creditor of Nikon Industrial
Corporation, one of the companies of EYCO, filed an action for injunction and
damages against the petitioner in the same court (RTC of Valenzuela City). On its
principal cause of action, the complaint alleged that:
18. The ex-officio sheriff has no authority to sell the mortgaged properties. Upon
his appointment as liquidator, Edgardo Tarriela was empowered by the SEC to
receive and preserve all assets, and cause their valuation (SEC Rules on Corporate
Recovery, Rule VI, Section 6-4). Therefore, the SEC retains jurisdiction over the
mortgaged properties of EYCO Properties, Inc. To allow the ex-officio sheriff to
take possession of the mortgaged properties and sell the same in a foreclosure
sale would be in derogation of said jurisdiction.
19. All the assets of the EYCO Group should thus be surrendered for collation to
the liquidator and all claims against the EYCO Group should be filed with the
liquidator in the liquidation proceedings with the SEC. The SEC, at which the
liquidation is pending, has jurisdiction over the mortgaged properties to the
exclusion of any other court. Consequently, the ex-officio sheriff has absolutely
no jurisdiction to issue the notice of sheriff’s sale and to sell the mortgaged
properties on 19 December 2000.
20. Moreover, the sale of the mortgaged properties on 19 December 2000 would
give undue preference to defendant FEBTC to the detriment of other creditors,
particularly plaintiff. This was specifically proscribed by the Supreme Court
stating in the case of Bank of the Philippine Islands v. Court of Appeals that
whenever a distressed corporation asks SEC for rehabilitation and suspension of
payments, preferred creditors may no longer assert such preference, but shall
stand on equal footing with other creditors. Consequently, foreclosure should be
disallowed so as not to prejudice other creditors or cause discrimination among
them.(Emphasis supplied.)
After hearing, the trial court issued a temporary restraining order (TRO).
Petitioner filed a motion to dismissarguing that by plaintiff’s own allegations in
the complaint, jurisdiction over the reliefs prayed for belongs to the SEC, and that
plaintiff is actually resorting to forum shopping since he has filed a claim with the
SEC and the designated Liquidator in the ongoing liquidation of the EYCO Group
of Companies. In his Opposition,plaintiff (respondent) asserted that the RTC has
jurisdiction on the issue of propriety and validity of the foreclosure by petitioner,
in accordance with Section 1, Rule 4 of the 1997 Rules of Civil Procedure, as
amended, the suit being in the nature of a real action.
On January 17, 2001, the trial court denied the motion to dismiss.Petitioner’s
motion for reconsideration was likewise denied.Petitioner challenged the
validity of the trial court’s ruling before the CA via a petition for certiorari
under Rule 65.
The CA affirmed the trial court’s denial of petitioner’s motion to dismiss. It held
that questions relating to the validity or legality of the foreclosure proceedings,
including an action to enjoin the same, must necessarily be cognizable by the RTC,
notwithstanding that the SEC likewise possesses the power to issue injunction in
all cases in which it has jurisdiction as provided in Sec. 6 (a) of Presidential
Decree (P.D.) No. 902-A. Further, the CA stated that an action for foreclosure of
mortgage and all incidents relative thereto including its validity or invalidity is
within the jurisdiction of the RTC and is not among those cases over which the
SEC exercises exclusive and original jurisdiction under Sec. 5 of P.D. No. 902-A.
Consequently, no grave abuse of discretion was committed by the trial court in
issuing the assailed orders.
With the CA’s denial of its motion for reconsideration, petitioner is now before
this Court raising the sole issue of whether the RTC can take cognizance of the
injunction suit despite the pendency of SEC Case No. 09-97-5764.
The petition has no merit.
Jurisdiction is defined as the power and authority of a court to hear and decide a
case.A court’s jurisdiction over the subject matter of the action is conferred only
by the Constitution or by statute.The nature of an action and the subject matter
thereof, as well as which court or agency of the government has jurisdiction over
the same, are determined by the material allegations of the complaint in relation
to the law involved and the character of the reliefs prayed for, whether or not the
complainant/plaintiff is entitled to any or all of such reliefs.And jurisdiction being
a matter of substantive law, the established rule is that the statute in force at the
time of the commencement of the action determines the jurisdiction of the court.
Perusal of the complaint reveals that respondent does not ask the trial court to
rule on its interest or claim -- as an unsecured creditor of two companies under
EYCO -- against the latter’s properties mortgaged to petitioner. The complaint
principally seeks to enjoin the foreclosure proceedings initiated by petitioner
over those properties on the ground that such properties are held in trust and
placed under the jurisdiction of the appointed Liquidator in SEC Case No. 09-97-
5764. Thus, Civil Case No. 349-V-00 is one for injunction with prayer for damages.
An action for injunction is a suit which has for its purpose the enjoinment of the
defendant, perpetually or for a particular time, from the commission or
continuance of a specific act, or his compulsion to continue performance of a
particular act. It has an independent existence, and is distinct from the ancillary
remedy of preliminary injunction which cannot exist except only as a part or an
incident of an independent action or proceeding. In an action for injunction, the
auxiliary remedy of preliminary injunction, prohibitory or mandatory, may issue.
As a rule, actions for injunction and damages lie within the jurisdiction of the RTC
pursuant to Section 19 of Batas Pambansa Blg. 129, otherwise known as the
"Judiciary Reorganization Act of 1980," as amended by Republic Act (R.A.) No.
7691.
Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive
original jurisdiction:
(1) In all civil actions in which the subject of the litigations is incapable of
pecuniary estimation;
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person
or body exercising x x x judicial or quasi-judicial functions;
(8) In all other cases in which the demand, exclusive of interest, damages of
whatever kind, attorney’s fees, litigation expenses, and costs or the value of the
property in controversy exceeds Three hundred thousand pesos (₱300,000.00)
or, in such other cases in Metro Manila, where the demand exclusive of the above-
mentioned items exceeds Four hundred thousand pesos (₱400,000.00). (Italics
supplied.)
On the other hand, Sec. 6 (a) of P.D. No. 902-A empowered the SEC to "issue
preliminary or permanent injunctions, whether prohibitory or mandatory, in all
cases in which it has jurisdiction." Such cases in which the SEC exercises original
and exclusive jurisdiction are the following:
(a) Devices or schemes employed by or any acts, of the board of directors,
business associates, its officers or partnership, amounting to fraud and
misrepresentation which may be detrimental to the interest of the public and/or
of the stockholder, partners, members of associations or organizations registered
with the Commission;
(b) Controversies arising out of intra-corporate or partnership relations,
between and among stockholders, members or associates; between any or all of
them and the corporation, partnership or association of which they are
stockholders, members or associates, respectively; and between such
corporation, partnership or association and the state insofar as it concerns their
individual franchise or right to exist as such entity; and
(c) Controversies in the election or appointments of directors, trustees, officers
or managers of such corporations, partnerships or associations.
Previously, under the Rules of Procedure on Corporate Recovery, the SEC upon
termination of cases involving petitions for suspension of payments or
rehabilitation may, motu proprio, or on motion by any interested party, or on the
basis of the findings and recommendation of the Management Committee that the
continuance in business of the debtor is no longer feasible or profitable, or no
longer works to the best interest of the stockholders, parties-litigants, creditors,
or the general public, order the dissolution of the debtor and the liquidation of its
remaining assets appointing a Liquidator for the purpose.The debtor’s properties
are then deemed to have been conveyed to the Liquidator in trust for the benefit
of creditors, stockholders and other persons in interest. This notwithstanding,
any lien or preference to any property shall be recognized by the Liquidator in
favor of the security or lienholder, to the extent allowed by law, in the
implementation of the liquidation plan.
However, R.A. No. 8799, which took effect on August 8, 2000, transferred to the
appropriate regional trial courts the SEC’s jurisdiction over those cases
enumerated in Sec. 5 of P.D. No. 902-A. Section 5.2 of R.A. No. 8799 provides:
SEC. 5.2 The Commission’s jurisdiction over all cases enumerated under Section
5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general
jurisdiction or the appropriate Regional Trial Court: Provided, that the Supreme
Court in the exercise of its authority may designate the Regional Trial Court
branches that shall exercise jurisdiction over these cases. The Commission shall
retain jurisdiction over pending cases involving intra-corporate disputes
submitted for final resolution which should be resolved within one (1) year from
the enactment of this Code. The Commission shall retain jurisdiction over
pending suspension of payments/rehabilitation cases filed as of 30 June
2000 until finally disposed. (Emphasis supplied.)
Upon the effectivity of R.A. No. 8799, SEC Case No. 09-97-5764 was no longer
pending.1âwphi1 The SEC finally disposed of said case when it rendered on
September 14, 1999 the decision disapproving the petition for suspension of
payments, terminating the proposed rehabilitation plan, and ordering the
dissolution and liquidation of the petitioning corporation. With the enactment of
the new law, jurisdiction over the liquidation proceedings ordered in SEC Case
No. 09-97-5764 was transferred to the RTC branch designated by the Supreme
Court to exercise jurisdiction over cases formerly cognizable by the SEC. As this
Court held in Consuelo Metal Corporation v. Planters Development Bank:
The SEC assumed jurisdiction over CMC’s petition for suspension of payment and
issued a suspension order on 2 April 1996 after it found CMC’s petition to be
sufficient in form and substance. While CMC’s petition was still pending with the
SEC as of 30 June 2000, it was finally disposed of on 29 November 2000 when the
SEC issued its Omnibus Order directing the dissolution of CMC and the transfer
of the liquidation proceedings before the appropriate trial court. The SEC finally
disposed of CMC’s petition for suspension of payment when it determined that
CMC could no longer be successfully rehabilitated.
However, the SEC’s jurisdiction does not extend to the liquidation of a
corporation. While the SEC has jurisdiction to order the dissolution of a
corporation, jurisdiction over the liquidation of the corporation now pertains to
the appropriate regional trial courts. This is the reason why the SEC, in its 29
November 2000 Omnibus Order, directed that "the proceedings on and
implementation of the order of liquidation be commenced at the Regional Trial
Court to which this case shall be transferred." This is the correct procedure
because the liquidation of a corporation requires the settlement of claims for and
against the corporation, which clearly falls under the jurisdiction of the regular
courts. The trial court is in the best position to convene all the creditors of the
corporation, ascertain their claims, and determine their preferences.(Emphasis
supplied.)
There is no showing in the records that SEC Case No. 09-97-5764 had been
transferred to the appropriate RTC designated as Special Commercial Court at the
time of the commencement of the injunction suit on December 18, 2000. Given
the urgency of the situation and the proximity of the scheduled public auction of
the mortgaged properties as per the Notice of Sheriff’s Sale, respondent was
constrained to seek relief from the same court having jurisdiction over the
foreclosure proceedings – RTC of Valenzuela City. Respondent thus filed Civil
Case No. 349-V-00 in the RTC of Valenzuela City on December 18, 2000
questioning the validity of and enjoining the extrajudicial foreclosure initiated by
petitioner. Pursuant to its original jurisdiction over suits for injunction and
damages, the RTC of Valenzuela City, Branch 75 properly took cognizance of the
injunction case filed by the respondent. No reversible error was therefore
committed by the CA when it ruled that the RTC of Valenzuela City, Branch 75 had
jurisdiction to hear and decide respondent’s complaint for injunction and
damages.
Lastly, it may be mentioned that while the Consortium of Creditor Banks had
agreed to end their opposition to the liquidation proceedings upon the execution
of the Agreementdated February 10, 2003, on the basis of which the parties
moved for the dismissal of G.R. No. 145977, it is to be noted that petitioner is not
a party to the said agreement. Thus, even assuming that the SEC retained
jurisdiction over SEC Case No. 09-97-5764, petitioner was not bound by the terms
and conditions of the Agreement relative to the foreclosure of those mortgaged
properties belonging to EYCO and/or other accommodation mortgagors.
WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated
September 27, 2002 and Resolution dated January 12, 2004 of the Court of
Appeals in CA-G.R. SP No. 64166 are AFFIRMED.
AIR TRANSPORTATION OFFICE (ATO), Petitioner, vs. HON. COURT OF
APPEALS (NINETEENTH DIVISION) and BERNIE G. MIAQUE, Respondents.
LEONARDO-DE CASTRO, J.: G.R. No. 173616 June 25, 2014
This petition for certiorari and prohibition of the Air Transportation Office (ATO)
seeks the nullification of the Court of Appeals' Resolution dated March 29, 2006
and Resolution dated May 30, 2006 in CA-G.R. CEB-SP No. 01603. The Resolution
dated March 29, 2006 granted the application for temporary restraining order
(TRO) of Bernie G. Miaque, while the Resolution dated May 30, 2006 issued a writ
of preliminary injunction enjoining the implementation of the writ of execution
issued by the Regional Trial Court (RTC) of Iloilo despite Miaque's alleged
continued failure and refusal to make current the supersedeas bond and to pay
to the A TO the rental and concession privilege fees.
The proceedings on the main case of ejectment
MTCC of Iloilo City: Civil Case No. 01 (38)
In May 2001, the ATO filed a complaint for unlawful detainer against Miaque in
the Municipal Trial Court in Cities (MTCC) of Iloilo City, Branch 3. It was docketed
as Civil Case No. 01 (38). The ATO sought the following, among others:
(1) That Miaque be ordered to permanently vacate and peacefully return to the
ATO possession of:
(a) the 800-square meter Refreshment Parlor fronting the New Terminal
Building-Iloilo Airport;
(b) the 310-square meter Restaurant/Gift Shop inside the Iloilo Airport Terminal;
and
(c) all areas occupied or otherwise utilized by Miaque incident to his operation of
the Porterage Service within the Iloilo Airport; and
(2) That Miaque be ordered to immediately pay the ATO the amount of not less
than ₱1,296,103.10, representing unpaid space rental and concessionaire
privilege fees as of October 15, 2000 plus interest and additional rental and fees
which may be proven during the trial.
The MTCC subsequently rendered a Decision dated May 27, 2002 the dispositive
part of which reads:
WHEREFORE, judgment is rendered finding [Miaque] to be unlawfully detaining
the following premises and orders [him], his men and privies to:
a. vacate the 800[-]square meter Refreshment Parlor fronting the New Terminal
Building-Iloilo Airport. [Miaque] is further ordered to pay [the ATO] the rental
and concessionaire privilege fee[s] accruing from November 1986 to October
2000, totaling ₱460,060.70, plus differential billings from January 1990 to July
1993 for ₱4,652.60 and interest charges from January 2000 to October 2000 for
₱2,678.38 or a total amount of ₱467,397.68 as of October 2000, less the payments
made by [Miaque] under Official Receipt No. 4317842 dated December 1998, and
the monthly current lease/concession privilege fee from November 2000 until
[Miaque] shall have vacated the premises;
(b) vacate the 310[-]square meter Restaurant/Gift Shop inside the Iloilo Terminal
Building which was reduced to a total of 183 square meters in 1998 (51.56 square
meters inside the pre-departure area and 126.72 square meters outside the pre-
departure area). [Miaque] is also ordered to pay [the ATO]
rentals/concessionaire’s privilege fee[s] from January 16, 1992 to October 15,
2000 in the total amount of ₱719,708.43 and from October 16, 2000, to pay the
current monthly lease/concessionaire privilege fees until [Miaque] shall have
vacated the premises; and
(c) vacate the area occupied or used by [Miaque] incident to his operation of the
Porterage Service within the Iloilo Airport. [Miaque] is further ordered to pay
Tender Offer Fee due from March 1992 to October 2000 in the total amount of
₱108,997.07. [Miaque] is further ordered to pay the current monthly concession
privilege fee from October 2000 until such time that [Miaque] shall have vacated
the premises.
Costs against [Miaque].
RTC of Iloilo City: Civil Case No. 02-27292
Miaque appealed the MTCC Decision to the RTC of Iloilo City, Branch 24. It was
docketed as Civil Case No. 02-27292. The RTC, in its Decision dated June 7, 2003,
affirmed the MTCC Decision in its entirety. Miaque’s motion for reconsideration
was denied. Court of Appeals: CA-G.R. SP No. 79439 Miaque questioned the RTC
Decision in the Court of Appeals by filing a petition for review, docketed as CA-
G.R. SP No. 79439, on September 25, 2003. In a Decision dated April 29, 2005, the
Court of Appeals dismissed the petition and affirmed the RTC Decision. Miaque
moved for reconsideration but it was denied in a Resolution dated January 5,
2006.
Supreme Court: G.R. No. 171099
Miaque brought the case to this Court in a petition for review, docketed as G.R.
No. 171099. In a Resolution dated February 22, 2006, the petition was denied as
no reversible error in the Court of Appeals Decision was sufficiently shown. The
motion for reconsideration of Miaque was denied with finality.
The proceedings on execution
As an incident of CA-G.R. SP No. 79439, the Court of Appeals issued on February
27, 2004 a temporary restraining order (TRO) effective for a period of 60 days
and required Miaque to post a bond in the amount of ₱100,000.00.After the lapse
of the TRO, the ATO filed an urgent motion for the execution of the RTC Decision
pursuant to Section 21, Rule 70 of the Rules of Court. This was opposed by
Miaque.
In an Order dated August 2, 2004, the RTC granted the ATO’s motion:
Wherefore, in view of the above consideration, the court finds merit [i]n the
reasons given in the motion of [the ATO] and hereby Grants the issuance of a Writ
of Execution.
Pursuant to Section 21, Rule 70 of the 1997 Rules of Civil Procedure, which
mandates that the judgment of this Court being immediately executory in cases
of this nature, let a writ of execution shall issue, ordering the sheriff of this Court
to effect its Decision dated June 7, 2003, affirming the Decision of the MTCC,
Branch 3, Iloilo City.
Furnish copies of this order to the Asst. Solicitor Almira Tomampos of the Office
of the Solicitor General and Atty. Rex Rico, counsel for [Miaque].
Miaque sought reconsideration of the above Order but the RTC denied the motion
in an Order dated August 13, 2004. Thereafter, the RTC issued a Writ of Execution
dated August 16, 2004.
However, the Court of Appeals issued a Resolution dated August 18, 2004
ordering the issuance of a writ of preliminary injunction and enjoining the ATO
and all persons acting in its behalf from enforcing the respective Decisions of the
MTCC and the RTC while CA-G.R. SP No. 79439 is pending. Thus, after the
dismissal of Miaque’s petition for review in CA-G.R. SP No. 79439, the ATO filed
another urgent motion for execution of the RTC Decision. In its motion, the ATO
pointed out that the supersedeas bond filed by Miaque had lapsed and was not
renewed and that the rental and concessionaire privilege fees have not been paid
at all in violation of Section 8, Rule 70 of the Rules of Court. Miaque again opposed
the ATO’s urgent motion for execution, while the ATO filed a supplemental urgent
motion for execution stating that Miaque’s appeal in the Court of Appeals had
been dismissed.
In an Order dated June 1, 2005, the RTC granted the ATO’s urgent motion for
execution and issued a Writ of Execution dated June 2, 2005. On the basis of the
said writ, a notice to vacate was given to Miaque. On June 3, 2005, Miaque filed a
motion for reconsideration of the Order dated June 1, 2005, with prayer to set
aside the writ of execution and notice to vacate. At the same time, he filed a
motion in CA-G.R. SP No. 79439 praying that the Court of Appeals order the RTC
judge and the concerned sheriffs to desist from implementing the writ of
execution. Thereafter, the Court of Appeals issued a Resolution dated June 14,
2005 ordering the sheriffs to desist from executing the Decisions of the MTCC and
the RTC while CA-G.R. SP No. 79439 is still pending. However, on June 15, 2005,
before the concerned sheriffs received a copy of the Resolution dated June 14,
2005, the said sheriffs implemented the writ of execution and delivered the
possession of the following premises to the ATO:
(a) the Restaurant/Gift Shop inside the Iloilo Terminal Building in the reduced
area of 183 square meters; and
(b) the area which Miaque occupied or used incident to his operation of the
Porterage Service within the Iloilo Airport.
The sheriffs who implemented the writ then filed a return of service and issued
reports of partial delivery of possession. However, Miaque subsequently
regained possession of the said premises on the strength of the Court of Appeals’
Resolution dated June 14, 2005.
On February 9, 2006, after the Court of Appeals issued its Resolution dated
January 5, 2006 denying Miaque’s motion for reconsideration of the Decision
dated April 29, 2005 in CA-G.R. SP No. 79439, the ATO filed with the RTC a motion
for the revival of the writs of execution dated August 16, 2004 and June 2,
2005. This was opposed by Miaque. After the RTC heard the parties, it issued an
Order dated March 20, 2006 granting the ATO’s motion and revived the writs of
execution dated August 16, 2004 and June 2, 2005. Miaque filed a motion for
reconsideration but the RTC denied it.
A new case in the Court of Appeals: CA-G.R. CEB-SP No. 01603
On March 28, 2006, Miaque filed a petition for certiorari (with prayer for issuance
of TRO and/or writ of preliminary injunction) in the Court of Appeals, docketed
as CA-G.R. CEB-SP No. 01603, where he assailed the RTC’s Order dated March 20,
2006. He prayed, among others, that the implementation of the writs of execution
be enjoined. It is here where the Court of Appeals issued the Resolutions being
challenged in this case, namely, the Resolution dated March 29, 2006 issuing a
TRO effective for 60 days, and Resolution dated May 30, 2006 issuing a writ of
preliminary injunction enjoining the implementation of the writs of execution
dated August 16, 2004 and June2, 2005. In particular, the Resolution dated May
30, 2006 reads: Before us for resolution is [Miaque]’s application for the issuance
of a writ of preliminary injunction that would restrain the respondent judge,
Sheriffs Marcial B. Lambuso, Winston T. Eguia, Camilo I. Divinagracia, Jr. and Eric
George S. Luntao and all other persons acting for and in their behalves, from
enforcing the orders issued by the respondent judge on March 20, 2006 and
March 24, 2006, including the writ[s] of execution issued pursuant thereto, while
the petition in the case at bench is still pending with us.
After examining judiciously the record in this case, together with the submissions
and contentions of the parties, we have come up with a finding and so hold that
there is a sufficient showing by [Miaque] that the grounds for the issuance of a
writ of preliminary injunction enumerated in Section 3 of Rule 58 of the 1997
Revised Rules of Court exist. We find that [Miaque] has a right in esse to be
protected and the acts against which the injunction is sought to be directed are
violative of said right. To our mind, [Miaque] appears to have a clear legal right
to hold on to the premises leased by him from ATO at least until such time when
he shall have been duly ejected therefrom by a writ of execution of judgment
caused to be issued by the MTCC in Iloilo City, which is the court of origin of the
decision promulgated by this Court in CA-G.R. SP No. 79439 on April 29, 2005.
Under the attendant circumstances, it appears that the respondent judge orthe
RTC in Iloilo City has no jurisdiction to order the issuance of such writ of
execution because we gave due course to the petition for review filed with us in
CA-G.R. SP No. 79439 and, in fact, rendered a decision on the merit in said case,
thereby divesting the RTC in Iloilo City of jurisdiction over the case as provided
for in the third paragraph of Section 8(a) of Rule 42of the 1997 Revised Rules of
Court. In City of Manila vs. Court of Appeals, 204 SCRA 362, as cited in Mocles vs.
Maravilla, 239 SCRA 188, the Supreme Court held as follows:
"The rule is that, if the judgment of the metropolitan trial court is appealed to the
RTC and the decision of the latter itself is elevated to the CA whose decision
thereafter became final, the case should be remanded through the RTC to the
metropolitan trial court for execution."
WHEREFORE, in view of the foregoing premises, a WRIT OF PRELIMINARY
INJUNCTION is hereby ordered or caused to be issued by us enjoining the
respondent judge, Sheriffs Marcial B. Lambuso, Winston T. Eguia, Camilo I.
Divinagracia, Jr. and Eric George S. Luntao and all other persons acting for and in
their behalves, from enforcing the orders issued by the respondent judge on
March 20, 2006 and March 24, 2006, including the writ[s] of execution issued
pursuant thereto, while the petition in the case at bench is still pending with us.
This is subject to the petitioner’s putting up of a bond in the sum of ONE
HUNDRED THOUSAND PESOS(₱100,000.00) to the effect that he will pay to the
respondent ATO all damages which said office may sustain by reason of the
injunctive writ if we should finally decide that [Miaque] is not entitled thereto.
The present petition
The ATO claims that the Court of Appeals acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing the TRO and the subsequent
writ of preliminary injunction through the Order dated March 29, 2006 and the
Resolution dated May 30,2006, respectively. According to the ATO, the Court of
Appeals ignored the government’s right under the law, Rules of Court,
jurisprudence and equity to the possession as well as to the payment of rental
and concession privilege fees which, at the time of the filing of this petition,
already amounted to ₱2 Million. Such right had already been decided with finality
by this Court, which affirmed the Decision dated April 29, 2005 of the Court of
Appeals in CA-G.R. SP No. 79439, but the Court of Appeals has repeatedly
thwarted it. The RTC acted properly and pursuant to Section 21, Rule 70 of the
Rules of Court when it issued the writs of execution. Moreover, the ATO asserts
that a TRO cannot restrain an accomplished fact, as the RTC’s writ of execution
dated June 1, 2005 had already been partially implemented.
The ATO also argues that, by his admission that the issues in CAG.R. SP No. 79439
and CA-G.R. CEB-SP No. 01603 are exactly the same, Miaque has committed forum
shopping. In this connection, the ATO points out that, in his opposition to the
ATO’s motion for additional period of time to file its comment on Miaque’s
petition in CA-G.R. CEB-SP No. 01603, Miaque pointed out the similarity of the
core issues in CA-G.R. SP No. 79439 and CA-G.R. CEB-SP No. 01603, to wit:
b) The legal issues raised by the petition [in CA-G.R. CEBSP No. 01603] are very
simple and not complicated. In fact, the threshold issue, i.e., whether or not
respondent court (RTC) has jurisdiction to issue the writ of execution after the
appeal over its decision had been perfected and the petition for review [in CA-
G.R. SP No. 79439] given due course, is exactly the same one earlier raised by [the
ATO itself in its] "Motion for Reconsideration" of the Resolution dated June 14,
2005, in CA G.R. No. 79439, entitled "Bernie G. Miaque vs. Hon. Danilo P. Galvez
and Air Transportation Office (ATO)", (same parties in this proceeding), then
pending before the 20th Division, Court of Appeals, Cebu City.
Hence, all that [the ATO has] to do is simply to reiterate [its] said arguments, the
law and jurisprudence [it has] earlier invoked and, if [it wishes], add some more
arguments, laws or jurisprudence thereto. Such an exercise would definitely not
require a sixty (60) day period. A ten (10) day period is more than sufficient.
The ATO further contends that the subject premises form part of a public utility
infrastructure and, pursuant to Presidential Decree No. 1818, the issuance of a
TRO against a public utility infrastructure is prohibited.
The ATO adds that Miaque’s petition for certiorari in CA-G.R. CEBSP No. 01603
introduces a new matter which is the alleged novation of the MTCC Decision
when he deposited the amount of ₱319,900.00 to the Land Bank of the
Philippines account of the ATO in February 2006. At any rate, the ATO asserts
that its tenacity in pursuing the execution of the judgment against Miaque belies
its consent to the alleged novation.
For his part, Miaque argues that this Court has no jurisdiction to dismiss a
petition still pending with the Court of Appeals. Thus, the ATO cannot properly
pray that this Court dismiss CA-G.R. CEB-SP No. 01603. According to Miaque, the
jurisdiction of this Court is limited only to the determination of whether or not
the Court of Appeals gravely abused its discretion in issuing a TRO and,
subsequently, a preliminary injunction in CA-G.R. CEB-SP No. 01603. In this
connection, Miaque insists that the Court of Appeals acted well within its
jurisdiction in the issuance of both the Order dated March 29, 2006 granting a
TRO and the Resolution dated May 30, 2006 issuing a writ of preliminary
injunction in CA-G.R. CEB-SP No. 01603. As this Court has effectively affirmed the
MTCC Decision, then it is the MTCC and not the RTC which should have directed
the execution of the MTCC Decision. Moreover, the RTC had no jurisdiction to
issue the writs of execution dated August 16, 2004 and June 1, 2005 because the
said court already lost its jurisdiction when Miaque filed an appeal to the Court
of Appeals on September 25, 2003, which appeal was given due course.
Miaque also asserts that the ATO’s claim that the RTC’s writ of execution had been
partially implemented is not true and that he is in possession of the entire subject
premises when the Court of Appeals issued the TRO and writ of preliminary
injunction being challenged in this case.
Finally, Miaque alleges that no writ may be issued to enforce the MTCC Decision
as the said decision had already been novated by his deposit of ₱319,000.00 to
the ATO’s account with the Land Bank of the Philippines in February 2006.
This Court, in a Resolution dated August 14, 2006, issued a TRO enjoining the
Court of Appeals, Miaque, and his agents and representatives from implementing
the Resolution dated March 29, 2006 and the Resolution dated May 30, 2006 in
CA-G.R. CEB-SP No. 01603.
The Court’s ruling
The petition is meritorious.
Preliminarily, the Court notes that the challenge to the Order dated March 29,
2006 granting a TRO, effective for 60 days, is moot as its effectivity had already
lapsed.
Cutting through the tangled web of issues presented by the contending parties,
the basic question in this petition is whether or not the Court of Appeals
committed grave abuse of discretion amounting to lack or excess of jurisdiction
in issuing the Resolution dated May 30, 2006 which granted petitioner’s
application for the issuance of a writ of preliminary injunction in CA-G.R. CEB-SP
No. 01603.
Section 21, Rule 70 of the Rules of Court provides the key to that question: Sec.
21. Immediate execution on appeal to Court of Appeals or Supreme Court. – The
judgment of the Regional Trial Court against the defendant shall be immediately
executory, without prejudice to a further appeal that may be taken therefrom.
(Emphasis supplied.)
This reflects Section 21 of the Revised Rule on Summary Procedure:
Sec. 21. Appeal. - The judgment or final order shall be appealable to the
appropriate Regional Trial Court which shall decide the same in accordance with
Section 22 of Batas Pambansa Blg. 129. The decision of the Regional Trial Court
in civil cases governed by this Rule, including forcible entry and unlawful
detainer, shall be immediately executory, without prejudice to a further appeal
that may be taken therefrom. Section 10 of Rule 70 shall be deemed repealed.
(Emphasis and underscoring supplied.)
The above provisions are supplemented and reinforced by Section 4, Rule 39 and
Section 8(b), Rule 42 of the Rules of Court which respectively provide:
Sec. 4. Judgments not stayed by appeal. – Judgments in actions for injunction,
receivership, accounting and support, and such other judgments as are now or
may hereafter be declared to be immediately executory, shall be enforceable after
their rendition and shall not be stayed by an appeal taken therefrom, unless
otherwise ordered by the trial court. On appeal therefrom, the appellate court in
its discretion may make an order suspending, modifying, restoring or granting
the injunction, receivership, accounting, or award of support.
The stay of execution shall be upon such terms as to bond or otherwise as may be
considered proper for the security or protection of the rights of the adverse party.
Sec. 8. Perfection of appeal; effect thereof.–
(a) Upon the timely filing of a petition for review and the payment of the
corresponding docket and other lawful fees, the appeal is deemed perfected as to
the petitioner.
The Regional Trial Court loses jurisdiction over the case upon the perfection of
the appeals filed in due time and the expiration of the time to appeal of the other
parties.
However, before the Court of Appeals gives due course to the petition, the
Regional Trial Court may issue orders for the protection and preservation of the
rights of the parties which do not involve any matter litigated by the appeal,
approve compromises, permit appeals of indigent litigants, order execution
pending appeal in accordance with Section 2 of Rule 39, and allow withdrawal of
the appeal.
(b) Except in civil cases decided under the Rules on Summary Procedure, the
appeal shall stay the judgment or final order unless the Court of Appeals, the law,
or these Rules shall provide otherwise. (Emphases supplied.)
The totality of all the provisions above shows the following significant
characteristics of the RTC judgment in an ejectment case appealed to it:
(1) The judgment of the RTC against the defendant-appellant is immediately
executory, without prejudice to a further appeal that may be taken therefrom;
and
(2) Such judgment of the RTC is not stayed by an appeal taken therefrom, unless
otherwise ordered by the RTC or, in the appellate court’s discretion, suspended
or modified.
The first characteristic -- the judgment of the RTC is immediately executory -- is
emphasized by the fact that no resolutory condition has been imposed that will
prevent or stay the execution of the RTC’s judgment. The significance of this may
be better appreciated by comparing Section 21 of Rule 70 with its precursor,
Section 10, Rule 70 of the 1964 Rules of Court which provided:
Sec. 10. Stay of execution on appeal to Court of Appeals or Supreme Court. –
Where defendant appeals from a judgment of the Court of First Instance,
execution of said judgment, with respect to the restoration of possession, shall
not be stayed unless the appellant deposits the same amounts and within the
periods referred to in section 8 of this rule to be disposed of in the same manner
as therein provided.
Under the old provision, the procedure on appeal from the RTC’s judgment to the
Court of Appeals was, with the exception of the need for a supersedeas bond
which was not applicable, virtually the same as the procedure on appeal of the
MTC’s judgment to the RTC. Thus, in the contemplated recourse to the Court of
Appeals, the defendant, after perfecting his appeal, could also prevent the
immediate execution of the judgment by making the periodic deposit of rentals
during the pendency of the appeal and thereby correspondingly prevent
restitution of the premises to the plaintiff who had already twice vindicated his
claim to the property in the two lower courts. On the other hand, under the
amendatory procedure introduced by the present Section 21 of Rule 70, the
judgment of the RTC shall be immediately executory and can accordingly be
enforced forthwith. It shall not be stayed by the mere continuing deposit of
monthly rentals by the dispossess or during the pendency of the case in the Court
of Appeals or this Court, although such execution of the judgment shall be without
prejudice to that appeal taking its due course. This reiterates Section 21 of the
Revised Rule on Summary Procedure which replaced the appellate procedure in,
and repealed, the former Section 10, Rule 70 of the 1964 Rules of Court. Teresa
T. Gonzales La’O & Co., Inc. v. Sheriff Hatab states:
Unlike Rule 70 of the 1964 Revised Rules of Court where the defendant, after
perfecting his appeal, could prevent the immediate execution of the judgment by
taking an appeal and making a periodic deposit of monthly rentals during the
pendency of the appeal thereby preventing the plaintiff from taking possession
of the premises in the meantime, the present wording of Section 21, Rule 70
explicitly provides that the judgment of the regional trial court in ejectment cases
appealed to it shall be immediately executory and can be enforced despite the
perfection of an appeal to a higher court. (Emphasis supplied.)
The RTC’s duty to issue a writ of execution under Section 21 of Rule 70 is
ministerial and may be compelled by mandamus. Section 21 of Rule 70
presupposes that the defendant in a forcible entry or unlawful detainer case is
unsatisfied with the RTC’s judgment and appeals to a higher court. It authorizes
the RTC to immediately issue a writ of execution without prejudice to the appeal
taking its due course. The rationale of immediate execution of judgment in an
ejectment case is to avoid injustice to a lawful possessor. Nevertheless, it should
be stressed that the appellate court may stay the writ of execution should
circumstances so require.
The second characteristic -- the judgment of the RTC is not stayed by an appeal
taken therefrom – reinforces the first.1âwphi1 The judgment of the RTC in an
ejectment case is enforceable upon its rendition and, upon motion, immediately
executory notwithstanding an appeal taken therefrom. The execution of the
RTC’s judgment is not discretionary execution under Section 2, Rule 39 of the
Rules of Court which provides:
Section 2. Discretionary execution. –
(a) Execution of a judgment or a final order pending appeal. – On motion of the
prevailing party with notice to the adverse party filed in the trial court while it
has jurisdiction over the case and is in possession of either the original record or
the record on appeal, as the case may be, at the time of the filing of such motion,
said court may, in its discretion, order execution of a judgment or final order even
before the expiration of the period to appeal.
After the trial court has lost jurisdiction, the motion for execution pending appeal
may be filed in the appellate court.
Discretionary execution may only issue upon good reasons to be stated in a
special order after due hearing.
(b) Execution of several, separate or partial judgments. – A several, separate or
partial judgment may be executed under the same terms and conditions as
execution of a judgment or final order pending appeal.
Discretionary execution is authorized while the trial court, which rendered the
judgment sought to be executed, still has jurisdiction over the case as the period
to appeal has not yet lapsed and is in possession of either the original record or
the record on appeal, as the case may be, at the time of the filing of the motion for
execution. It is part of the trial court’s residual powers, or those powers which it
retains after losing jurisdiction over the case as a result of the perfection of the
appeal. As a rule, the judgment of the RTC, rendered in the exercise of its appellate
jurisdiction, being sought to be executed in a discretionary execution is stayed by
the appeal to the Court of Appeals pursuant to Section 8(b), Rule 42 of the Rules
of Court. On the other hand, execution of the RTC’s judgment under Section 21,
Rule 70 is not discretionary execution but a ministerial duty of the RTC. It is not
governed by Section 2, Rule 39 of the Rules of Court but by Section 4, Rule 39 of
the Rules of Court on judgments not stayed by appeal. In this connection, it is not
covered by the general rule, that the judgment of the RTC is stayed by appeal to
the Court of Appeals under Section 8(b), Rule 42 of the Rules of Court, but
constitutes an exception to the said rule. In connection with the second
characteristic of the RTC judgment in an ejectment case appealed to it, the
consequence of the above distinctions between discretionary execution and the
execution of the RTC’s judgment in an ejectment case on appeal to the Court of
Appeals is that the former may be availed of in the RTC only before the Court of
Appeals gives due course to the appeal while the latter may be availed of in the
RTC at any stage of the appeal to the Court of Appeals. But then again, in the latter
case, the Court of Appeals may stay the writ of execution issued by the RTC should
circumstances so require. City of Naga v. Hon. Asuncion explains:
This is not to say that the losing defendant in an ejectment case is without
recourse to avoid immediate execution of the RTC decision. The defendant may x
x x appeal said judgment to the Court of Appeals and therein apply for a writ of
preliminary injunction. Thus, as held in Benedicto v. Court of Appeals, even if RTC
judgments in unlawful detainer cases are immediately executory, preliminary
injunction may still be granted. (Citation omitted.)
To reiterate, despite the immediately executory nature of the judgment of the
RTC in ejectment cases, which judgment is not stayed by an appeal taken
therefrom, the Court of Appeals may issue a writ of preliminary injunction that
will restrain or enjoin the execution of the RTC’s judgment. In the exercise of such
authority, the Court of Appeals should constantly be aware that the grant of a
preliminary injunction in a case rests on the sound discretion of the court with
the caveat that it should be made with great caution.
A writ of preliminary injunction is an extraordinary event which must be granted
only in the face of actual and existing substantial rights. The duty of the court
taking cognizance of a prayer for a writ of preliminary injunction is to determine
whether the requisites necessary for the grant of an injunction are present in the
case before it. In the absence of the same, and where facts are shown to be
wanting in bringing the matter within the conditions for its issuance, the
ancillarywrit must be struck down for having been rendered in grave abuse of
discretion.
In this case, the decisions of the MTCC in Civil Case No. 01 (38), of the RTC in Civil
Case No. 02-27292, and of the Court of Appeals in CAG.R. SP No. 79439
unanimously recognized the right of the ATO to possession of the property and
the corresponding obligation of Miaque to immediately vacate the subject
premises. This means that the MTCC, the RTC, and the Court of Appeals all ruled
that Miaque does not have any right to continue in possession of the said
premises. It is therefore puzzling how the Court of Appeals justified its issuance
of the writ of preliminary injunction with the sweeping statement that Miaque
"appears to have a clear legal right to hold on to the premises leased by him from
ATO at least until such time when he shall have been duly ejected therefrom by a
writ of execution of judgment caused to be issued by the MTCC in Iloilo City,
which is the court of origin of the decision promulgated by this Court in CA-G.R.
SP No. 79439." Unfortunately, in its Resolution dated May 30, 2006 granting a
writ of preliminary injunction in Miaque’s favor, the Court of Appeals did not
state the source or basis of Miaque’s "clear legal right to hold on to the [said]
premises." This is fatal.
In Nisce v. Equitable PCI Bank, Inc., this Court stated that, in granting or
dismissing an application for a writ of preliminary injunction, the court must
state in its order the findings and conclusions based on the evidence and the law.
This is to enable the appellate court to determine whether the trial court
committed grave abuse of its discretion amounting to excess or lack of
jurisdiction in resolving, one way or the other, the plea for injunctive relief. In the
absence of proof of a legal right and the injury sustained by one who seeks an
injunctive writ, an order for the issuance of a writ of preliminary injunction will
be nullified. Thus, where the right of one who seeks an in junctive writ is doubtful
or disputed, a preliminary injunction is not proper. The possibility of irreparable
damage without proof of an actual existing right is not a ground for a preliminary
injunction.
The sole basis of the Court of Appeals in issuing its Resolution dated May 30, 2006
is its view that the RTC "has no jurisdiction to order the issuance of [the] writ of
execution" because, when it gave due course to the petition for review in CA-G.R.
SP No. 79439, the RTC was already divested of jurisdiction over the case pursuant
to the third paragraph of Section 8(a), Rule 42 of the Rules of Court. The Court of
Appeals is mistaken. It disregards both (1) the immediately executory nature of
the judgment of the RTC in ejectment cases, and (2) the rule that such judgment
of the RTC is not stayed by an appeal taken there from. It ignores the nature of
the RTC’s function to issue a writ of execution of its judgment in an ejectment case
as ministerial and not discretionary.
The RTC was validly exercising its jurisdiction pursuant to Section 21, Rule 70 of
the Rules of Court when it issued the writs of execution dated August 16, 2004
and June 2,2005. While the Court of Appeals in CA-G.R. SP No. 79439 enjoined the
execution of the RTC’s judgment during the pendency of CA-G.R. SP No. 79439,
the RTC revived the writs of execution dated August 16, 2004 and June 1, 2005 in
its Order dated March 20, 2006, after the Court of Appeals denied Miaque’s
motion for reconsideration of the dismissal of the petition in CA-G.R. SP No.
79439. Indeed, the said writs of execution need not even be revived because they
continue in effect during the period within which the judgment may be enforced
by motion, that is within five years from entry of judgment, pursuant to Section
14, Rule 39 of the Rules of Court in relation to Section 6 of the same Rule.
There is grave abuse of discretion when an act is (1) done contrary to the
Constitution, the law or jurisprudence, or (2) executed whimsically, capriciously
or arbitrarily out of malice, ill will or personal bias. In this case, the Court of
Appeals issued the Resolution dated May 30, 2006 granting Miaque’s prayer for
a writ of preliminary injunction contrary to Section 21, Rule 70 and other relevant
provisions of the Rules of Court, as well as this Court’s pronouncements in Teresa
T. Gonzales La’O & Co., Inc. and Nisce. Thus, the Court of Appeals committed grave
abuse of discretion when it issued the Resolution dated May 30, 2006 in CA-G.R.
CEB-SP No. 01603.
This Court notes that the controversy between the parties in this case has been
unduly protracted, considering that the decisions of the MTCC, the RTC, the Court
of Appeals, and this Court in favor of the ATO and against Miaque on the ejectment
case are already final and executory. The Court of Appeals should therefore
proceed expeditiously in resolving CA-G.R. CEBSP No. 01603.

WHEREFORE, the petition is hereby GRANTED. The Resolution dated May 30,
2006 of the Court of Appeals in CA-G.R. CEB-SP No. 01603 is ANNULLED for
having been rendered with grave abuse of discretion. The Court of Appeals is
directed to conduct its proceedings in CA-G.R. CEB-SP No. 01603 expeditiously
and without delay.