G.R. No.

221815, November 29, 2017

GLYNNA FORONDA-CRYSTAL, Petitioner, v. ANIANA LAWAS SON, Respondent.

DECISION

REYES, JR., J.:

In law, nothing is as elementary as the concept of jurisdiction, for the same is the foundation
upon which the courts exercise their power of adjudication, and without which, no rights or
obligation could emanate from any decision or resolution.

The Case

Challenged before this Court via this Petition for Review on Certiorari under Rule 45 of the
Rules of Court is the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 02226
promulgated on March 12, 2015, which affirmed in toto the Decision2 dated November 24, 2006
of the Regional Trial Court (RTC), Branch 55 of Mandaue City. Likewise challenged is the
subsequent Resolution3 promulgated on October 19, 2015 which upheld the earlier decision.

The Antecedent Facts

Petitioner is the daughter of Eddie Foronda, the registered owner of a parcel of land located in
Barrio Magay, Municipality of Compostela, Province of Cebu. The latter derived his title over the
property from a successful grant of a Free Patent (Free Patent No. VII-519533), which is
covered by Original Certificate of Title (OCT) No. OP-37324, more particularly described as
follows:

A PARCEL OF LAND (lot 1280, Case 3, Pls .962) situated in the Barrio of Magay, Municipality
of Compostela, Province of Cebu, Island of Cebu. Bounded on the SE., along line 1-2 by Lot
707 (As 07-01-000033-amended); along line 2-3 by Lot 1275; on the SW., along line 3-4 by Lot
1281; on the NW., along line 4-5 by Lot 1315; along line 5-6 by Lot 1314; on the NE., along line
6-7 by Lot 1392, along line 7-1 by Lot 1279, all of Compostela, Cadastre x x x.4

On March 15, 1999, Aniana Lawas Son (respondent) instituted an action for reconveyance and
damages against Glynna Foronda-Crystal (petitioner) alleging that, for twelve and a half years,
she has been the lawful owner and possessor of the subject lot. She alleged that she purchased
the same from a certain Eleno T. Arias (Arias) on August 4, 1986 for a sum of P200,000.00.
According to her, since her acquisition, she has been religiously paying real property taxes
thereon as evidenced by Tax Declaration No. 16408A, which was issued under her name.5

According to the respondent, the issuance of the Free Patent in favor of the petitioner's father
was "due to gross error or any other cause."6 In support thereof, the respondent alleged that
"there is no tax declaration in the name of patentee Eddie Foronda" and that this "goes to show
that Eddie Foronda is not the owner of lot 1280 and neither has payment of real estate taxes
been made by him when he was still alive or by his heirs."7

On April 13, 1999, herein petitioner filed a motion to dismiss on the grounds of (1) lack of
jurisdiction, (2) venue is improperly laid, (3) action has prescribed, and, (4) lack of cause of
action. A week thereafter, the RTC issued an Order dated April 20, 1999,8 which dismissed the
case for lack of jurisdiction. The RTC asserted that the "market value of the subject property per
Tax Declaration No. 16408 (Annex B, Complaint) is P2,830.00" and thus, jurisdiction over the
case lies with the Municipal Circuit Trial Court of Liloan-Compostela, Cebu.

However, in yet another Order9 dated July 23, 1999, issued by the RTC following herein
respondent's motion for reconsideration, the RTC reconsidered and set aside its earlier ruling
based on the following ratiocination: (1) Paragraph III of the Complaint stated that the property
was worth P200,000.00; (2) the Court has "judicial knowledge that under the BIR zonal
valuation, the property located at Magay, Compostela, Cebu carries the value that may summed
(sic) up to more than P20,000.00 for the property with an area of 1,570 square meters";10 and
(3) the "tax declaration, sometimes being undervalued, is not controlling."11 Hence, trial
ensued.

On November 24, 2006, the RTC rendered its Decision in favor of the respondent. The Register
of Deeds of Cebu was ordered to cancel OCT No. OP-37324, and to issue, in lieu thereof, a
new one under the name of the respondent. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment in favor of the plaintiff and against the
defendants:

1) Declaring the issuance of Original Certificate of Title No. OP-37324 (Free Patent No. VII-
519533) in the name of Eddie Foronda a grave error since he is not the owner of Lot 1280, and
therefore null and void;

2) Ordering the Register of Deeds of Cebu to cancel Original Certificate of Title No. OP-37324
(Free Patent No. VII-519533) and to issue, in lieu thereof, a new one in the name of Aniana
Lawas Son of Compostela, Cebu. No pronouncement as to damages and costs of the suit.

SO ORDERED.12

Aggrieved, petitioner herein elevated the case to the CA. The material allegations that she
presented included the following: (1) the RTC rendered its decision with undue haste
considering that the same was promulgated even before the expiration of the period within
which the parties' respective memoranda were to be filed; (2) the respondent was not able to
prove that the lot she acquired from Arias was Lot No. 1280; (3) the respondent failed to prove
that she was in actual physical possession of the subject property whereas the petitioner was
able to do so since 1972; (4) the RTC erred in its order to cancel OCT No. OP-37324 and to
issue, in lieu thereof, a new title in herein respondent's name; and (5) the action filed by the
respondent was already barred by prescription and laches.

On March 12, 2015, the CA rendered the assailed Decision, which affirmed the RTC decision.
The fallo of CA decision reads:

WHEREFORE, premises considered, the instant appeal is DENIED. The Decision of the
Regional Trial Court, Branch 55, Mandaue City dated November 24, 2006 in Civil Case No.
MAN-3498, is hereby AFFIRMED.

SO ORDERED.13

On October 19, 2015, the Resolution14 issued by the CA denied the petitioner's motion for
reconsideration. Hence, this petition for review on certiorari under Rule 45 of the Rules of Court.
The Issues

The petitioner anchors her plea for the reversal of the assailed decision on the following
grounds:15

THE COURT OF APPEALS ERRED IN NOT DISMISSING THIS CASE ON THE GROUND OF
LACK OF JURISDICTION OF THE RTC OF MANDAUE CITY OVER THIS CASE AS THE
ASSESSED VALUE OF THE PROPERTY SUBJECT OF THIS CASE IS P1,030.00 AND THE
PROPERTY IS LOCATED IN COMPOSTELA, CEBU.

THE COURT OF APPEALS ERRED IN NOT DECLARING THE PROCEEDINGS AS WELL AS

THE JUDGMENT RENDERED BY THE RTC AS VOID

THE COURT OF APPEALS ERRED IN NOT APPLYING ARTICLE 434 OF THE CIVIL CODE
TO THE CASE AT BAR

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT LOT NO. 1280 WAS A PUBLIC
GRANT TO WHICH EDDIE FORONDA WAS ISSUED A FREE PATENT

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE ACTION IS BARRED BY
PRESCRIPTION VI. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
ACTION IS BARRED BY PRESCRIPTION (SIC) VII. THE COURT OF APPEALS ERRED IN
NOT HOLDING THAT THE VALIDITY AND INTEGRITY OF THE DECISION OF THE RTC IS
QUESTIONABLE BECAUSE IT WAS RENDERED WITH UNDUE HASTE.
The foregoing assignment of errors could be summarized in three main issues: (1) whether or
not the RTC validly acquired jurisdiction over the case, and whether or not the RTC decision
was void ab initio; (2) whether or not the Original Certificate of Title issued under the name of
petitioner's father should be canceled and set aside on the strength of the respondent's
allegations of ownership over the same; and (3) whether or not the action is already barred by
prescription.

The Court's Ruling

The petition is impressed with merit.

On the Issue of Jurisdiction

Jurisdiction is defined as the power and authority of a court to hear, try, and decide a case.16 In
order for the court or an adjudicative body to have authority to dispose of the case on the merits,
it must acquire, among others, jurisdiction over the subject matter.17 It is axiomatic that
jurisdiction over the subject matter is the power to hear and determine the general class to
which the proceedings in question belong; it is conferred by law and not by the consent or
acquiescence of any or all of the parties or by erroneous belief of the court that it exists.18

What is relevant in this case, therefore, is the delineation provided for by law which separates
the jurisdictions of the second level courts—the Regional Trial Courts—and the first level
courts—the Metropolitan Trial Courts (MeTC), Municipal Trial Courts (MTC), Municipal Circuit
Trial Courts (MCTC), and Municipal Trial Courts in the Cities (MTCC).
This can be easily ascertained through a reading of the Judiciary Reorganization Act of 1980, as
amended by Republic Act No. 7691.19

According to this law, in all civil actions which involve title to, or possession of, real property, or
any interest therein, the RTC shall exercise exclusive original jurisdiction where the assessed
value of the property exceeds P20,000.00 or, for civil actions in Metro Manila, where such value
exceeds P50,000.00.20 For those below the foregoing threshold amounts, exclusive jurisdiction
lies with the MeTC, MTC, MCTC, or MTCC.21

For a full discourse on the resolution of the present petition, emphasis must be given on the
assessed values22—not the fair market values—of the real properties concerned.

According to the case of Heirs of Concha, Sr. v. Spouses Lumocso,23 the law is emphatic that
in determining which court has jurisdiction, it is only the assessed value of the realty involved
that should be computed. Heirs of Concha, Sr. averred this definitive ruling by tracing the history
of the The Judiciary Reorganization Act of 1980, as amended. It said:

The original text of Section 19(2) of B.P. 129 as well as its forerunner, Section 44(b) of R.A.
296, as amended, gave the RTCs x x x exclusive original jurisdiction. x x x Thus, under the old
law, there was no substantial effect on jurisdiction whether a case is one, the subject matter of
which was incapable of pecuniary estimation, under Section 19(1) of B.P. 129 or one involving
title to property under Section 19(2).

The distinction between the two classes became crucial with the amendment introduced by R.A.
No. 7691 in 1994 which expanded the exclusive original jurisdiction of the first level courts. x x
x. Thus, under the present law, original jurisdiction over cases the subject matter of which
involves "title to, possession of, real property or any interest therein" under Section 19(2) of B.P.
129 is divided between the first and second level courts, with the assessed value of the real
property involved as the benchmark. This amendment was introduced to "unclog the overloaded
dockets of the RTCs which would result in the speedier administration of justice."24 (Emphasis,
underscoring and formatting supplied, citations omitted)

Time and again, this Court has continuously upheld Heirs of Concha, Sr.'s ruling on this
provision of law.25 In fact, in Malana, et al. v. Tappa, et al.26 the Court said that "the Judiciary
Reorganization Act of 1980, as amended, uses the word 'shall' and explicitly requires the MTC
to exercise exclusive original jurisdiction over all civil actions which involve title to or possession
of real property where the assessed value does not exceed P20,000.00."27

To determine the assessed value, which would in turn determine the court with appropriate
jurisdiction, an examination of the allegations in the complaint is necessary. It is a hornbook
doctrine that the court should only look into the facts alleged in the complaint to determine
whether a suit is within its jurisdiction.28 According to the case of Spouses Cruz v. Spouses
Cruz, et al.,29 only these facts can be the basis of the court's competence to take cognizance of
a case, and that one cannot advert to anything not set forth in the complaint, such as evidence
adduced at the trial, to determine the nature of the action thereby initiated.30

It is not a surprise, therefore, that a failure to allege the assessed value of a real property in the
complaint would result to a dismissal of the case. This is because absent any allegation in the
complaint of the assessed value of the property, it cannot be determined whether the RTC or
the MTC has original and exclusive jurisdiction over the petitioner's action. Indeed, the courts
cannot take judicial notice of the assessed or market value of the land.31 This is the same ratio
put forth by the Court in the case of Spouses Cruz v. Spouses Cruz, et al.,32 where the case
was dismissed partly on the basis of the following:

The complaint did not contain any such allegation on the assessed value of the property. There
is no showing on the face of the complaint that the RTC had jurisdiction over the action of
petitioners. Indeed, absent any allegation in the complaint of the assessed value of the property,
it cannot be determined whether it is the RTC or the MTC which has original and exclusive
jurisdiction over the petitioners' action.33 (Citations omitted)

In Quinagoran v. Court of Appeals,34 the Court had no qualms in dismissing the case for failing
to allege the assessed value of the subject property. Similar to Spouses Cruz,35Quinagoran36
held that: "Considering that the respondents failed to allege in their complaint the assessed
value of the subject property, the RTC seriously erred in denying the motion to dismiss.
Consequently, all proceedings in the RTC are null and void, and the CA erred in affirming the
RTC."

This is not to say, however, that there is no room for a liberal interpretation of this rule. In
Tumpag v. Tumpag,37 the Court, through Justice Brion, provided for an instance when an
exception to the strict application could be allowed. It said:

Generally, the court should only look into the facts alleged in the complaint to determine
whether a suit is within its jurisdiction. There may be instances, however, when a rigid
application of this rule may result in defeating substantial justice or in prejudice to a party's
substantial right.38

In that case, there was also no allegation of the assessed value of the property. However, the
Court pointed out that the facts contained in the Declaration of Real Property, which was
attached to the complaint, could have facially resolved the question on jurisdiction and would
have rendered the lengthy litigation on that very point unnecessary.39 In essence, the Court
said that the failure to allege the real property's assessed value in the complaint would not be
fatal if, in the documents annexed to the complaint, an allegation of the assessed value could be
found.

A reading of the quoted cases would reveal a pattern which would invariably guide both the
bench and the bar in similar situations. Based on the foregoing, the rule on determining the
assessed value of a real property, insofar as the identification of the jurisdiction of the first and
second level courts is concerned, would be two-tiered:

First, the general rule is that jurisdiction is determined by the assessed value of the real property
as alleged in the complaint; and

Second, the rule would be liberally applied if the assessed value of the property, while not
alleged in the complaint, could still be identified through a facial examination of the documents
already attached to the complaint.

Indeed, it is by adopting this two-tiered rule that the Court could dispense with a catena of cases
specifically dealing with issues concerning jurisdiction over real properties.

In upholding these afore-quoted rule, however, the Court is not unmindful of the cases of
Barangay Piapi v. Talip40 and Trayvilla v. Sejas41 where the market value of the property,
instead of the assessed value thereof, was used by the Court as basis for determining
jurisdiction.

In Barangay Piapi,42 the complaint did not allege the assessed value of the subject property.
What it alleged was the market value thereof. The Court held that, in the absence of an
allegation of assessed value in the complaint, the Court shall consider the alleged market value
to determine jurisdiction.

Notably, this case referred to Section 7(b), Rule 141 of the Rules of Court, which deals with
Legal Fees, to justify its reliance on the market value. It said:

The Rule requires that "the assessed value of the property, or if there is none, the estimated
value thereof, shall be alleged by the claimant." It bears reiterating that what determines
jurisdiction is the allegations in the complaint and the reliefs prayed for. Petitioners' complaint is
for reconveyance of a parcel of land. Considering that their action involves the title to or interest
in real property, they should have alleged therein its assessed value. However, they only
specified the market value or estimated value, which is P15,000.00. Pursuant to the provision of
Section 33 (3) quoted earlier, it is the Municipal Circuit Trial Court of Padada-Kiblawan, Davao
del Sur, not the RTC, which has jurisdiction over the case.43 (Italics in the original, and
emphasis supplied, citations omitted)

However, the rule alluded to above, while originally containing the sentence: "In a real action,
the assessed value of the property, or if there is none, the estimated value thereof shall be
alleged by the claimant and shall be the basis in computing the fees," has already been deleted
through an amendment by A.M. No. 04-2-04-SC. As it currently stands, Section 7 of Rule 141 of
the Rules of Court reads:

Section 7 Clerks of Regional Trial Courts.—

a) For filing an action or a permissive OR COMPULSORY counter-claim, CROSS-CLAIM, or

money claim against an estate not based on judgment, or for filing a third-party, fourth-party,
etc. complaint, or a complaint-in-intervention, if the total sum claimed, INCLUSIVE OF
INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF WHATEVER KIND, AND
ATTORNEY'S FEES, LITIGATION EXPENSES AND COSTS and/or in cases involving property,
the FAIR MARKET value of the REAL property in litigation STATED IN THE CURRENT TAX
DECLARATION OR CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL
REVENUE, WHICHEVER IS HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE
PROPERTY IN LITIGATION OR THE VALUE OF THE PERSONAL PROPERTY IN
LITIGATION AS ALLEGED BY THE CLAIMANT, is: x x x (Emphasis and underscoring supplied)

Two things must be said of this: first, Rule 141 of the Rules of Court concerns the amount of the
prescribed filing and docket fees, the payment of which bestows upon the courts the jurisdiction
to entertain the pleadings to be filed;44 and second, the latest iteration of the same provision
already deleted the phrase "estimated value thereof," such that the determination of the amount
of prescribed filing and docket fees are now based on the following: (a) the fair market value of
the real property in litigation stated in the current tax declaration or current zonal valuation of the
Bureau of Internal Revenue; or (b) the stated value of the real or personal property in litigation
as alleged by the claimant.

A reading of the discourse on this would indicate that the jurisdiction referred to above does not
deal with the delineation of the jurisdictions of the first and second level courts, but with the
acquisition of jurisdiction by the courts through the payment of the prescribed filing and docket
fees.

This is the same tenor of the Court's decision in Trayvilla. In that case, where no assessed
value was likewise alleged in the complaint, the Court determined jurisdiction by considering the
actual amount by which the property was purchased and as written in the Amended Complaint.
The Court stated that:

However, the CA failed to consider that in determining jurisdiction, it could rely on the
declaration made in the Amended Complaint that the property is valued at P6,000,00. The
handwritten document sued upon and the pleadings indicate that the property was purchased
by petitioners for the price of P6,000.00. For purposes of filing the civil case against
respondents, this amount should be the stated value of the property in the absence of a current
tax declaration or zonal valuation of the BIR.45 (Emphasis supplied)

But then again, like the discussion on Barangay Piapi above, Trayvilla was one which dealt with
the payment of the required filing and docket fees. The crux of the case was the acquisition of
jurisdiction by payment of docket fees, and not the delineation of the jurisdiction of the first and
second level courts. In fact, Trayvilla interchangeably used the terms "assessed value" and
"market value" in a manner that does not even recognize a difference.

Like Barangay Piapi, therefore, Spouses Trayvilla must not be read in the context of jurisdiction
of first and second level courts as contemplated in the Judiciary Reorganization Act of 1980, as
amended,46 where the assessed values of the properties are required. These cases must
perforce be read in the context of the determination of the actual amount of prescribed filing and
docket fees provided for in Rule 141 of the Rules of Court.

Having laid out the essential rules in determining the jurisdiction of the first and second level
courts for civil actions which involve title to, or possession of, real property, or any interest
therein, the Court now shifts focus to the specific circumstances that surround the current case.

In here, the respondent failed to allege in her complaint the assessed value of the subject
property. Rather, what she included therein was an allegation of its market value amounting to
P200,000.00.47 In the course of the trial, the petitioner asserted that the assessed value of the
property as stated in the tax declaration was merely P1,030.00, and therefore the RTC lacked
jurisdiction.

The question thus posed before this Court was whether or not the RTC should have dismissed
the case for lack of jurisdiction, and in the affirmative, whether or not the RTC decision should
be rendered void for being issued without jurisdiction.

As discussed above, settled is the requirement that the Judiciary Reorganization Act of 1980, as
amended, required the allegation of the real property's assessed value in the complaint. That
the complaint in the present case did not aver the assessed value of the property is a violation
of the law, and generally would be dismissed because the court which would exercise
jurisdiction over the case could not be identified.

However, a liberal interpretation of this law, as opined by the Court in Tumpag,48 would
necessitate an examination of the documents annexed to the complaint. In this instance, the
complaint referred to Tax Declaration No. 16408A, attached therein as Annex "B," which
naturally would contain the assessed value of the property. A perusal thereof would reveal that
the property was valued at P2,826.00.

On this basis, it is clear that it is the MTC, and not the RTC, that has jurisdiction over the case.
The RTC should have upheld its Order dated November 8, 2006 which dismissed the same.
Consequently, the decision that it rendered is null and void.

In the case of Maslag v. Monzon,49 the Court had occasion to rule that 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 the Judiciary Reorganization Act of 1980, as
amended, 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.

In yet another case, Diona v. Balangue,50 the Court ruled that void judgment for want of
jurisdiction is no judgment at all. It cannot be the source of any right nor the creator of any
obligation. No legal rights can emanate from a resolution that is null and void. As said by the
Court in Cañero v. University of the Philippines:51

A void judgment is not entitled to the respect accorded to a valid judgment, but may be entirely
disregarded or declared inoperative by any tribunal in which effect is sought to be given to it. It
has no legal or binding effect or efficacy for any purpose or at any place. It cannot affect, impair
or create rights. It is not entitled to enforcement and is, ordinarily, no protection to those who
seek to enforce. In other words, a void judgment is regarded as a nullity, and the situation is the
same as it would be if there was no judgment.52

Thus, considering the foregoing, it would be proper for the Court to immediately dismiss this
case without prejudice to the parties' filing of a new one before the MTC that has jurisdiction
over the subject property. Consequently, the other issues raised by the petitioner need not be
discussed further.

WHEREFORE, premises considered, the assailed Decision in CA-G.R. CV No. 02226 dated
March 12, 2015, and the Resolution dated October 19, 2015 of the Court of Appeals, as well as
the Decision dated November 24, 2006 of the Regional Trial Court, Branch 55 of Mandaue City,
are hereby ANNULLED and SET ASIDE for being issued without jurisdiction. This is without
prejudice to the filing of the parties of the proper action before the proper court.

SO ORDERED.
G.R. No. 176339 January 10, 2011

DO-ALL METALS INDUSTRIES, INC., SPS. DOMINGO LIM and LELY KUNG LIM, Petitioners,
vs.
SECURITY BANK CORP., TITOLAIDO E. PAYONGAYONG, EVYLENE C. SISON, PHIL.
INDUSTRIAL SECURITY AGENCY CORP. and GIL SILOS, Respondents.

DECISION

ABAD, J.:

This case is about the propriety of awarding damages based on claims embodied in the
plaintiff’s supplemental complaint filed without prior payment of the corresponding filing fees.

The Facts and the Case

From 1996 to 1997, Dragon Lady Industries, Inc., owned by petitioner spouses Domingo Lim
and Lely Kung Lim (the Lims) took out loans from respondent Security Bank Corporation (the
Bank) that totaled ₱92,454,776.45. Unable to pay the loans on time, the Lims assigned some of
their real properties to the Bank to secure the same, including a building and the lot on which it
stands (the property), located at M. de Leon St., Santolan, Pasig City.1

In 1998 the Bank offered to lease the property to the Lims through petitioner Do-All Metals
Industries, Inc. (DMI) primarily for business although the Lims were to use part of the property
as their residence. DMI and the Bank executed a two-year lease contract from October 1, 1998
to September 30, 2000 but the Bank retained the right to pre-terminate the lease. The contract
also provided that, should the Bank decide to sell the property, DMI shall have the right of first
refusal.

On December 3, 1999, before the lease was up, the Bank gave notice to DMI that it was pre-
terminating the lease on December 31, 1999. Wanting to exercise its right of first refusal, DMI
tried to negotiate with the Bank the terms of its purchase. DMI offered to pay the Bank ₱8
million for the property but the latter rejected the offer, suggesting ₱15 million instead. DMI
made a second offer of ₱10 million but the Bank declined the same.

While the negotiations were on going, the Lims claimed that they continued to use the property
in their business. But the Bank posted at the place private security guards from Philippine
Industrial Security Agency (PISA). The Lims also claimed that on several occasions in 2000, the
guards, on instructions of the Bank representatives Titolaido Payongayong and Evylene Sison,
padlocked the entrances to the place and barred the Lims as well as DMI’s employees from
entering the property. One of the guards even pointed his gun at one employee and shots were
fired. Because of this, DMI was unable to close several projects and contracts with prospective
clients. Further, the Lims alleged that they were unable to retrieve assorted furniture,
equipment, and personal items left at the property.

The Lims eventually filed a complaint with the Regional Trial Court (RTC) of Pasig City for
damages with prayer for the issuance of a temporary restraining order (TRO) or preliminary
injunction against the Bank and its co-defendants Payongayong, Sison, PISA, and Gil Silos.2
Answering the complaint, the Bank pointed out that the lease contract allowed it to sell the
property at any time provided only that it gave DMI the right of first refusal. DMI had seven days
from notice to exercise its option. On September 10, 1999 the Bank gave notice to DMI that it
intended to sell the property to a third party. DMI asked for an extension of its option to buy and
the Bank granted it. But the parties could not agree on a purchase price. The Bank required DMI
to vacate and turnover the property but it failed to do so. As a result, the Bank’s buyer backed-
out of the sale. Despite what happened, the Bank and DMI continued negotiations for the
purchase of the leased premises but they came to no agreement.

The Bank denied, on the other hand, that its guards harassed DMI and the Lims. To protect its
property, the Bank began posting guards at the building even before it leased the same to DMI.
Indeed, this arrangement benefited both parties. The Bank alleged that in October of 2000,
when the parties could not come to an agreement regarding the purchase of the property, DMI
vacated the same and peacefully turned over possession to the Bank.

The Bank offered no objection to the issuance of a TRO since it claimed that it never prevented
DMI or its employees from entering or leaving the building. For this reason, the RTC directed
the Bank to allow DMI and the Lims to enter the building and get the things they left there. The
latter claimed, however, that on entering the building, they were unable to find the movable
properties they left there. In a supplemental complaint, DMI and the Lims alleged that the Bank
surreptitiously took such properties, resulting in additional actual damages to them of over ₱27
million.

The RTC set the pre-trial in the case for December 4, 2001. On that date, however, counsel for
the Bank moved to reset the proceeding. The court denied the motion and allowed DMI and the
Lims to present their evidence ex parte. The court eventually reconsidered its order but only
after the plaintiffs had already presented their evidence and were about to rest their case. The
RTC declined to recall the plaintiffs’ witnesses for cross- examination but allowed the Bank to
present its evidence.3 This prompted the Bank to seek relief from the Court of Appeals (CA) and
eventually from this Court but to no avail.4

During its turn at the trial, the Bank got to present only defendant Payongayong, a bank officer.
For repeatedly canceling the hearings and incurring delays, the RTC declared the Bank to have
forfeited its right to present additional evidence and deemed the case submitted for decision.

On September 30, 2004 the RTC rendered a decision in favor of DMI and the Lims. It ordered
the Bank to pay the plaintiffs ₱27,974,564.00 as actual damages, ₱500,000.00 as moral
damages, ₱500,000 as exemplary damages, and ₱100,000.00 as attorney’s fees. But the court
absolved defendants Payongayong, Sison, Silos and PISA of any liability.

The Bank moved for reconsideration of the decision, questioning among other things the RTC’s
authority to grant damages considering plaintiffs’ failure to pay the filing fees on their
supplemental complaint. The RTC denied the motion. On appeal to the CA, the latter found for
the Bank, reversed the RTC decision, and dismissed the complaint as well as the
counterclaims.5 DMI and the Lims filed a motion for reconsideration but the CA denied the
same, hence this petition.

The Issues Presented

The issues presented in this case are:

1. Whether or not the RTC acquired jurisdiction to hear and adjudicate plaintiff’s supplemental
complaint against the Bank considering their failure to pay the filing fees on the amounts of
damages they claim in it;
2. Whether or not the Bank is liable for the intimidation and harassment committed against DMI
and its representatives; and

3. Whether or not the Bank is liable to DMI and the Lims for the machineries, equipment, and
other properties they allegedly lost after they were barred from the property.

The Court’s Rulings

One. On the issue of jurisdiction, respondent Bank argues that plaintiffs’ failure to pay the filing
fees on their supplemental complaint is fatal to their action.

But what the plaintiffs failed to pay was merely the filing fees for their Supplemental Complaint.
The RTC acquired jurisdiction over plaintiffs’ action from the moment they filed their original
complaint accompanied by the payment of the filing fees due on the same. The plaintiffs’ non-
payment of the additional filing fees due on their additional claims did not divest the RTC of the
jurisdiction it already had over the case.6

Two. As to the claim that Bank’s representatives and retained guards harassed and intimidated
DMI’s employees and the Lims, the RTC found ample proof of such wrongdoings and
accordingly awarded damages to the plaintiffs. But the CA disagreed, discounting the testimony
of the police officers regarding their investigations of the incidents since such officers were not
present when they happened. The CA may be correct in a way but the plaintiffs presented
eyewitnesses who testified out of personal knowledge. The police officers testified merely to
point out that there had been trouble at the place and their investigations yielded their findings.

The Bank belittles the testimonies of the petitioners’ witnesses for having been presented ex
parte before the clerk of court. But the ex parte hearing, having been properly authorized,
cannot be assailed as less credible. It was the Bank’s fault that it was unable to attend the
hearing. It cannot profit from its lack of diligence.

Domingo Lim and some employees of DMI testified regarding the Bank guards’ unmitigated use
of their superior strength and firepower. Their testimonies were never refuted. Police Inspector
Priscillo dela Paz testified that he responded to several complaints regarding shooting incidents
at the leased premises and on one occasion, he found Domingo Lim was locked in the building.
When he asked why Lim had been locked in, a Bank representative told him that they had
instructions to prevent anyone from taking any property out of the premises. It was only after
Dela Paz talked to the Bank representative that they let Lim out.7

Payongayong, the Bank’s sole witness, denied charges of harassment against the Bank’s
representatives and the guards. But his denial came merely from reports relayed to him. They
were not based on personal knowledge.1avvphil

While the lease may have already lapsed, the Bank had no business harassing and intimidating
the Lims and their employees. The RTC was therefore correct in adjudging moral damages,
exemplary damages, and attorney’s fees against the Bank for the acts of their representatives
and building guards.

Three. As to the damages that plaintiffs claim under their supplemental complaint, their stand is
that the RTC committed no error in admitting the complaint even if they had not paid the filing
fees due on it since such fees constituted a lien anyway on the judgment award. But this after-
judgment lien, which implies that payment depends on a successful execution of the judgment,
applies to cases where the filing fees were incorrectly assessed or paid or where the court has
discretion to fix the amount of the award.8 None of these circumstances obtain in this case.

Here, the supplemental complaint specified from the beginning the actual damages that the
plaintiffs sought against the Bank. Still plaintiffs paid no filing fees on the same. And, while
petitioners claim that they were willing to pay the additional fees, they gave no reason for their
omission nor offered to pay the same. They merely said that they did not yet pay the fees
because the RTC had not assessed them for it. But a supplemental complaint is like any
complaint and the rule is that the filing fees due on a complaint need to be paid upon its filing.9
The rules do not require the court to make special assessments in cases of supplemental
complaints.

To aggravate plaintiffs’ omission, although the Bank brought up the question of their failure to
pay additional filing fees in its motion for reconsideration, plaintiffs made no effort to make at
least a late payment before the case could be submitted for decision, assuming of course that
the prescription of their action had not then set it in. Clearly, plaintiffs have no excuse for their
continuous failure to pay the fees they owed the court. Consequently, the trial court should have
treated their Supplemental Complaint as not filed.

Plaintiffs of course point out that the Bank itself raised the issue of non-payment of additional
filing fees only after the RTC had rendered its decision in the case. The implication is that the
Bank should be deemed to have waived its objection to such omission. But it is not for a party to
the case or even for the trial court to waive the payment of the additional filing fees due on the
supplemental complaint. Only the Supreme Court can grant exemptions to the payment of the
fees due the courts and these exemptions are embodied in its rules.

Besides, as correctly pointed out by the CA, plaintiffs had the burden of proving that the
movable properties in question had remained in the premises and that the bank was responsible
for their loss. The only evidence offered to prove the loss was Domingo Lim’s testimony and
some undated and unsigned inventories. These were self-serving and uncorroborated.

WHEREFORE, the Court PARTIALLY GRANTS the petition and REINSTATES with
modification the decision of the Regional Trial Court of Pasig City in Civil Case 68184. The
Court DIRECTS respondent Security Bank Corporation to pay petitioners DMI and spouses
Domingo and Lely Kung Lim damages in the following amounts: ₱500,000.00 as moral
damages, ₱500,000.00 as exemplary damages, and ₱100,000.00 for attorney’s fees. The Court
DELETES the award of actual damages of ₱27,974,564.00.

SO ORDERED.
G.R. No. 224834, March 15, 2017

JONATHAN Y. DEE, Petitioner, v. HARVEST ALL INVESTMENT LIMITED, VICTORY FUND

LIMITED, BONDEAST PRIVATE LIMITED, AND ALBERT HONG HIN KAY, AS MINORITY
SHAREHOLDERS OF ALLIANCE SELECT FOODS INTERNATIONAL, INC., AND HEDY S.C.
YAP-CHUA, AS DIRECTOR AND SHAREHOLDER OF ALLIANCE SELECT FOODS
INTERNATIONAL, INC., Respondents.

G.R. NO. 224871

HARVEST ALL INVESTMENT LIMITED, VICTORY FUND LIMITED, BONDEAST PRIVATE

LIMITED, ALBERT HONG HIN KAY, AS MINORITY SHAREHOLDERS OF ALLIANCE SELECT
FOODS INTERNATIONAL, INC., AND HEDY S.C. YAP-CHUA, AS A DIRECTOR AND
SHAREHOLDER OF ALLIANCE SELECT FOODS INTERNATIONAL, INC., Petitioners, v.
ALLIANCE SELECT FOODS INTERNATIONAL, INC., 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, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in these consolidated petitions1 for review on certiorari are the Decision2 dated
February 15, 2016 and the Resolution3 dated May 25, 2016 of the Court of Appeals (CA) in
CA-G.R. SP No. 142213, which reversed the Resolution4 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.5 As per Alliance's by-laws, its Annual
Stockholders' Meeting (ASM) is held every June 15.6 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]."7 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)8 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.9 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 SR0.10 The Clerk of Court of the
RTC assessed Harvest All, et al. with filing fees amounting to P8,860.00 which they paid
accordingly.11 Later on, Harvest All, et al. filed an Amended Complaint:12 (a) deleting its
prayer to declare null and void the Board Resolution dated February 17, 2015 approving
the SRO; and (b) instead, prayed that the Alliance Board be enjoined from implementing and
carrying out the SRO prior to and as a condition for the holding of the 2015 ASM.13

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.14

The RTC Ruling

In a Resolution15 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.16 Citing Rule
141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC,17 and the Court's
pronouncement in Lu v. Lu Ym, Sr. (Lu),18 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.19

Aggrieved, Harvest All, et al. appealed20 to the CA.

The CA Ruling

In a Decision21 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.22 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 P8,860.00.23 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.24

The parties moved for reconsideration,25 which were, however, denied in a Resolution26 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)27 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."28

However, after a careful reading of Lu, it appears that Harvest All, et al. correctly pointed out29
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.30 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,"31viz.:

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. 32 (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, 33 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."34 (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,35 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). 36 (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 SR0.37 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-SC38 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

xxx

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;

xxx

NOW, THEREFORE, the Court resolves to ADOPT a new schedule of filing fees as follows:

xxx
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.

xxx

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,39 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." 40 (Emphases and
underscoring supplied)
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:chanRoblesvirtualLawlibrary
(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.

SO ORDERED.
G.R. No. 202664, November 20, 2015

MANUEL LUIS C. GONZALES AND FRANCIS MARTIN D. GONZALES, Petitioners, v. GJH

LAND, INC. (FORMERLY KNOWN AS S.J. LAND, INC.), CHANG HWAN JANG A.K.A. STEVE
JANG, SANG RAK KIM, MARIECHU N. YAP, AND ATTY. ROBERTO P. MALLARI II,
Respondent.

DECISION

PERLAS-BERNABE, J.:

This is a direct recourse to the Court, via a petition for review on certiorari,1 from the Orders
dated April 17, 20122 and July 9, 20123 of 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. Gonzales4 and Francis Martin D. Gonzales
(petitioners) filed a Complaint5 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 II6
(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.,7 but were nonetheless offered for sale on July 29, 2011 to the
corporation's stockholders,8 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,9 and later, in an Order10 dated August 24, 2011, granted the application for a writ of
preliminary injunction.

After filing their respective answers11 to the complaint, respondents filed a motion to dismiss12
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.13

The RTC Ruling

In an Order14 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.15 Accordingly, it dismissed the case.

Dissatisfied, petitioners filed a motion for reconsideration,16 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.17 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.18 They further
maintained that the RTC has jurisdiction over intra-corporate disputes under Republic Act No.
(RA) 8799,19 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.20

In an Order21 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. Panday22 (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,23 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,24 hence, intra-
corporate, which should be heard by the designated Special Commercial Court as provided
under A.M. No. 03-03-03-SC25 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.26 In Lozada v. Bracewell,27 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 528 of Presidential Decree No. 902-A29 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:chanRoblesvirtualLawlibrary
SEC. 5. Powers and Functionsof the Commission. - x x x

xxxx

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)cralawlawlibrary

The legal attribution of Regional Trial Courts as courts of general jurisdiction stems from Section
19 (6), Chapter II of Batas Pambansa Bilang (BP) 129,30 known as "The Judiciary
Reorganization Act of 1980":chanRoblesvirtualLawlibrary

Section 19. Jurisdiction in civil cases.- Regional Trial Courts shall exercise exclusive original
jurisdiction:chanRoblesvirtualLawlibrary

xxxx

(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
cralawlawlibrary

As enunciated in Durisol Philippines, Inc. v. CA:31chanroblesvirtuallawlibrary

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.32
cralawlawlibrary

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,33 wherein the Court
held that:chanRoblesvirtualLawlibrary

[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.34cralawlawlibrary

Further, as may be gleaned from the following excerpt of the Congressional

deliberations:chanRoblesvirtualLawlibrary

Senator [Raul S.] Roco: x x x.

xxxx

x x x. 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.35

x x x x (Emphasis supplied)cralawlawlibrary

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.36 It
was only on November 21, 2000 that the Court designated certain RTC branches to try and
decide said SEC cases37 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. 08-200138 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
courts39 in one RTC branch in a particular locality, i.e., the Special Commercial Court, to
streamline the court structure and to promote expediency.40 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:chanRoblesvirtualLawlibrary

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:chanRoblesvirtualLawlibrary

xxxx
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;41

x x x x (Underscoring supplied)cralawlawlibrary

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:chanRoblesvirtualLawlibrary

Section 6. The Supreme Court shall have administrative supervision over all courts and the
personnel thereof.cralawlawlibrary

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.42 Section 2, Article VIII of
the 1987 Constitution provides:chanRoblesvirtualLawlibrary

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.

xxxx
cralawlawlibrary

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.43 Unfortunately, the commercial case was wrongly raffled to a
regular branch, e.g., Branch 276, instead of being assigned44to 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,"45 which, however, contradicts and more importantly, cannot prevail
over its actual allegations that clearly make out an intra-corporate
dispute:chanRoblesvirtualLawlibrary

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.46cralawlawlibrary

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."47 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.48 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 dispute49 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:chanRoblesvirtualLawlibrary

SEC. 5. Powers and Functions of the Commission. - x x x

xxxx

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.cralawlawlibrary

In contrast, the appropriate jurisprudential reference to this case would be Tan v. Bausch &
Lomb, Inc.,50 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.51Similarly, 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) 129.52 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.53 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 ASSIGN said 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.cralawlawlibrary

SO ORDERED.
G.R. No. 202920 October 2, 2013

RICHARD CHUA, Petitioner,

vs.
THE EXECUTIVE JUDGE, METROPOLITAN TRIAL COURT, MANILA, Respondent.

DECISION

PEREZ, J.:

At bench is a Petition for Review on Certiorari,1 assailing the Orders2 dated 26 June 2012 and
26 July 2012 of the Executive Judge of the Metropolitan Trial Court (MeTC), Manila, in UDK
Nos. 12001457 to 96.

The facts:

On 13 January 2012, herein petitioner Richard Chua tiled before the Office of the City
Prosecutor (OCP) of Manila, a complaint charging one Letty Sy Gan of forty (40) counts of
violation of Batas Pambansa Bilang (BP Blg.) 22 or the Bouncing Checks Law.3 After
conducting preliminary investigation, the OCP found probable cause and, on 22 March 2012,
filed forty (40) counts of violation of BP Blg. 22 before the MeTC.4

Consequently, the MeTC informed petitioner that he has to pay a totalof ₱540,668.00 as filing
fees for all the forty (40) counts of violation of BP Blg. 22.5 Finding the said amount to be
beyond his means, petitioner consulted with the MeTC clerk of court to ask whether he could
pay filing fees on a per case basis instead of being required to pay the total filing fees for all the
BP Blg. 22 cases all at once.6 The MeTC clerk of court opined that petitioner could not.7
Petitioner was thus unable to pay any filing fees.

Due to non-payment of the required filing fees, the MeTC designated the forty (40) counts of
violation of BP Blg. 22 as undocketed cases under UDK Nos. 12001457 to 96. Subsequently,
the OCP moved for consolidation of the said cases.8

On 18 April 2012, petitioner filed before the Executive Judge of the MeTC a motion entitled "

Urgent Motion to Allow Private Complainant to Pay Filing Fee on a Per Case Basis" (Urgent
Motion).9 In it, petitioner reiterated his request that he be allowed to pay filing fees on a per
case basis instead of being required to pay the total amount of filing fees in its entirety.

On 26 June 2012, the Executive Judge issued an Order denying petitioner’s Urgent Motion. In
rebuffing petitioner’s Urgent Motion, the Executive Judge of the MeTC ratiocinated that granting
petitioner’s plea would constitute a deferment in the payment of filing fees that, in turn,
contravenes Section 1(b) of the Rule 111 of the Rules of Court.10

Petitioner moved for reconsideration, but to no avail.

Hence, this appeal.

OUR RULING
Prefatorily, it must be pointed out that petitioner availed of the wrong remedy in assailing the
Orders dated 26 June 2012 and 26 July 2012 of the Executive Judge of the MeTC via the
present petition for review on certiorari. The assailed orders are not, technically, final orders that
are appealable,11 let alone the proper subjects of an appeal by certiorari.12 The assailed
orders do not, at least for the moment, completely dispose of the B.P. 22 cases filed before the
MeTC.

The correct remedy for the petitioner, in view of the unavailability of an appeal or any other
remedy in the ordinary course of law, is a certiorari petition under Rule 65 of the Rules of
Court.13 But then again, the petitioner should have filed such a petition, not directly with this
Court, but before the appropriate Regional Trial Court pursuant to the principle of hierarchy of
courts.14

In the weightier interest of substantial justice, however, this Court forgives such procedural
lapses and treats the instant appeal as a certiorari petition filed properly before this Court. To
this Court, the grave abuse of discretion on the part of the Executive Judge was patent on the
undisputed facts of this case and is serious enough to warrant a momentary deviation from the
procedural norm.

Thus, We come to the focal issue of whether the Executive Judge of the MeTC committed grave
abuse of discretion, in light of the facts and circumstances herein obtaining, in refusing
petitioner’s request of paying filing fees on a per case basis.

We answer in the affirmative. We grant the petition.

In proposing to pay filing fees on a per case basis, petitioner was not trying to evade or deny his
obligation to pay for the filing fees for all forty (40) counts of violation of BP Blg. 22 filed before
the MeTC. He, in fact, acknowledges such obligation. He, in fact, admits that he is incapable of
fulfilling such obligation in its entirety.

Rather, what petitioner is asking is that he at least be allowed to pursue some of the cases, the
filing fees of which he is capable of financing. Petitioner manifests that, given his current
financial status, he simply cannot afford the filing fees for all the forty (40) BP Blg. 22 cases.

We see nothing wrong or illegal in granting petitioner’s request.

First. The Executive Judge erred when she treated the entire₱540,668.00 as one indivisible
obligation, when that figure was nothing but the sum of individual filing fees due for each count
of violation of BP Blg.22 filed before the MeTC. Granting petitioner’s request would not
constitute a deferment in the payment of filing fees, for the latter clearly intends to pay in full the
filing fees of some, albeit not all, of the cases filed.

Filing fees, when required, are assessed and become due for each initiatory pleading filed.15 In
criminal actions, these pleadings refer to the information filed in court.

In the instant case, there are a total of forty (40) counts of violation of BP Blg. 22 that was filed
before the MeTC.1âwphi1 And each of the forty (40) was, in fact, assessed its filing fees,
individually, based on the amount of check one covers.16 Under the rules of criminal procedure,
the filing of the forty(40) counts is equivalent to the filing of forty (40) different informations, as
each count represents an independent violation of BP Blg. 22.17 Filing fees are, therefore, due
for each count and may be paid for each count separately.
Second. In an effort to justify her refusal of petitioner’s request, the Executive Judge further
argues that since all forty (40) counts of violation of BP Blg. 22 were brought about by a single
complaint filed before the OCP and are now consolidated before the court, the payment of their
tiling fees should be made for all or none at all.18

That all forty (40) counts of violation of BP Blg. 22 all emanated from a single complaint filed in
the OCP is irrelevant. The fact remains that there are still forty (40) counts of violation of BP Blg.
22 that were filed before the MeTC and, as a consequence, forty (40) individual filing fees to be
paid.

Neither would the consolidation of all forty (40) counts make any difference. Consolidation
unifies criminal cases involving related offenses only for purposes of trial.19 Consolidation does
not transform the tiling fees due for each case consolidated into one indivisible fee.

Third. Allowing petitioner to pay for the tiling fees of some of the forty ( 40) counts of violation of
BP Big. 22 tiled before the MeTC, will concededly result into the absolute non-payment of the
filing fees of the rest. The fate of the cases which filing fees were not paid, however, is already
the concern of the MeTC.

WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed Orders
dated 26 June 2012 and 26 July 2012 of the Executive Judge of the Metropolitan Trial Court,
Manila, in UDK Nos.12001457 to 96 are ANNULED and SET ASIDE. The Metropolitan Trial
Court, Manila, is hereby directed to accept payments of tiling fees in UDK Nos. 12001457 to 96
on a per information basis.

No costs.

SO ORDERED.
[G.R. No. 165025 : August 31, 2011]

FEDMAN DEVELOPMENT CORPORATION, PETITIONER, VS. FEDERICO AGCAOILI,

RESPONDENT.

DECISION

BERSAMIN, J.:

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, [1] 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.[2]

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,[3] and formed
the Fedman Suite Condominium Corporation (FSCC) to manage FSB and hold title over its
common areas.[4]

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.[5] 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.[6]

In December 1983, the centralized air-conditioning unit of FSB's fourth floor broke down.[7] 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.[8] 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.[9]

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.[10] 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.[11]

On April 22, 1986, FDC again disconnected the electric supply of Unit 411.[12] Agcaoili thus
moved for the execution of the RTC decision dated August 26, 1985.[13] 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.[14]

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.[15]

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.[16]

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. [17]
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.[18]

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 P21,626.60 as actual damages;

b. P500,000.00 as moral damages;

c. P50,000.00 as exemplary damages; and

d. P50,000.00 as and for attorney's fees.

and to return to plaintiff the excess amount collected from him for real estate taxes.

SO ORDERED.[19]

FDC appealed, but the CA affirmed the RTC.[20] Hence, FDC comes to us on further
appeal.[21]

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.[22]

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.[23] 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.[24] 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.[25] 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.[26]

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.[27] 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.[28]

In Rivera v. Del Rosario,[29] 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,[30]
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,[31] Rule 141 (as revised by A.M.
No. 00-2-01-SC).[32] 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.[33] 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,[34] 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.[35]

The principle of estoppel, which is based on equity and public policy,[36] 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.[37]

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 of the total payments made. At this point, we, find no error on the part
of the lower court when it ruled that:

"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)[38]

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.[39]

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.[40]

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.[41] But FDC and FSCC failed to repair the centralized air-conditioning unit of the fourth
floor of FSB despite repeated demands from Agcaoili.[42] 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.[43] Also,
FDC and FSCC failed to provide water supply to the comfort room and to clean the
corridors.[44] The fire exit and elevator were also defective.[45] 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.[46]

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 docket fees from the respondent as fees
in lien in accordance with Section 2, Rule 141 of the Rules of Court.

SO ORDERED.
A.M. NO. 05-10-20-SC March 10, 2010

IN RE: EXEMPTION OF THE NATIONAL POWER CORPORATION FROM PAYMENT OF

FILING/ DOCKET FEES

RESOLUTION

MENDOZA, J.:

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,1 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.

xxx xxx xxx

[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:

xxx xxx xxx

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

xxx xxx xxx

(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.

xxx xxx xxx

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:
xxx xxx xxx

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

xxx xxx xxx

(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.1avvphi1

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.

SO ORDERED.
[G.R. NO. 151242 : June 15, 2005]

PROTON PILIPINAS CORPORATION, AUTOMOTIVE PHILIPPINES, ASEA ONE

CORPORATION and AUTOCORP, Petitioners, v. BANQUE NATIONALE DE PARIS,1
Respondent.

DECISION

CARPIO MORALES, J.:

It appears that sometime in 1995, petitioner Proton Pilipinas Corporation (Proton) availed of the
credit facilities of herein respondent, Banque Nationale de Paris (BNP). To guarantee the
payment of its obligation, its co-petitioners Automotive Corporation Philippines (Automotive),
Asea One Corporation (Asea) and Autocorp Group (Autocorp) executed a corporate guarantee2
to the extent of US$2,000,000.00. BNP and Proton subsequently entered into three trust receipt
agreements dated June 4, 1996,3 January 14, 1997,4 and April 24, 1997.5

Under the terms of the trust receipt agreements, Proton would receive imported passenger
motor vehicles and hold them in trust for BNP. Proton would be free to sell the vehicles subject
to the condition that it would deliver the proceeds of the sale to BNP, to be applied to its
obligations to it. In case the vehicles are not sold, Proton would return them to BNP, together
with all the accompanying documents of title.

Allegedly, Proton failed to deliver the proceeds of the sale and return the unsold motor vehicles.

Pursuant to the corporate guarantee, BNP demanded from Automotive, Asea and Autocorp the
payment of the amount of US$1,544,984.406 representing Proton's total outstanding
obligations. These guarantors refused to pay, however. Hence, BNP filed on September 7, 1998
before the Makati Regional Trial Court (RTC) a complaint against petitioners praying that they
be ordered to pay (1) US$1,544,984.40 plus accrued interest and other related charges thereon
subsequent to August 15, 1998 until fully paid and (2) an amount equivalent to 5% of all sums
due from petitioners as attorney's fees.

The Makati RTC Clerk of Court assessed the docket fees which BNP paid at P352,116.307
which was computed as follows:8

First Cause of Action î º $ 844,674.07

Second Cause of Action î º 171,120.53
Third Cause of Action î º 529,189.80

$1,544,984.40
5% as Attorney's Fees î º $ 77,249.22
TOTAL - '. . $1,622,233.62
Conversion rate to peso x 43_
TOTAL - '. . P69,756,000.00
(roundoff)
Computation based on Rule 141:

COURT JDF
P 69,756,000.00 P 69.606.000.00
- 150,000.00 x .003
69,606,000.00 208,818.00
x .002 + 450.00
139,212.00 P 209,268.00
+ 150.00
P 139,362.00
LEGAL : P139,362.00
+ 209,268.00
P348,630.00 x 1% = P3,486.30
P 139,362.00
+ 209,268.00
3,486.00
P 352,116.30 - Total fees paid by the plaintiff
To the complaint, the defendants-herein petitioners filed on October 12, 1998 a Motion to
Dismiss9 on the ground that BNP failed to pay the correct docket fees to thus prevent the trial
court from acquiring jurisdiction over the case.10 As additional ground, petitioners raised
prematurity of the complaint, BNP not having priorly sent any demand letter.11

By Order12 of August 3, 1999, Branch 148 of the Makati RTC denied petitioners' Motion to
Dismiss, viz:

Resolving the first ground relied upon by the defendant, this court believes and so hold that the
docket fees were properly paid. It is the Office of the Clerk of Court of this station that computes
the correct docket fees, and it is their duty to assess the docket fees correctly, which they
did.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Even granting arguendo that the docket fees were not properly paid, the court cannot just
dismiss the case. The Court has not yet ordered (and it will not in this case) to pay the correct
docket fees, thus the Motion to dismiss is premature, aside from being without any legal basis.

As held in the case of National Steel Corporation v. CA, G.R. No. 123215, February 2, 1999, the
Supreme Court said:

xxx

Although the payment of the proper docket fees is a jurisdictional requirement, the trial court
may allow the plaintiff in an action to pay the same within a reasonable time within the expiration
of applicable prescription or reglementary period. If the plaintiff fails to comply with this
requirement, the defendant should timely raise the issue of jurisdiction or else he would be
considered in estoppel. In the latter case, the balance between appropriate docket fees and the
amount actually paid by the plaintiff will be considered a lien or (sic) any award he may obtain in
his favor.

As to the second ground relied upon by the defendants, in that a review of all annexes to the
complaint of the plaintiff reveals that there is not a single formal demand letter for defendants to
fulfill the terms and conditions of the three (3) trust agreements.

In this regard, the court cannot sustain the submission of defendant. As correctly pointed out by
the plaintiff, failure to make a formal demand for the debtor to pay the plaintiff is not among the
legal grounds for the dismissal of the case. Anyway, in the appreciation of the court, this is
simply evidentiary.
xxx

WHEREFORE, for lack of merit, the Motion to Dismiss interposed by the defendants is hereby
DENIED.13 (Underscoring supplied)ςrαlαωlιbrαrÿ

Petitioners filed a motion for reconsideration14 of the denial of their Motion to Dismiss, but it
was denied by the trial court by Order15 of October 3, 2000.

Petitioners thereupon brought the case on certiorari and mandamus 16 to the Court of Appeals
which, by Decision17 of July 25, 2001, denied it in this wise:

'Section 7(a) of Rule 141 of the Rules of Court excludes interest accruing from the principal
amount being claimed in the pleading in the computation of the prescribed filing fees. The
complaint was submitted for the computation of the filing fee to the Office of the Clerk of Court
of the Regional Trial Court of Makati City which made an assessment that respondent paid
accordingly. What the Office of the Clerk of Court did and the ruling of the respondent Judge
find support in the decisions of the Supreme Court in Ng Soon v. Alday and Tacay v. RTC of
Tagum, Davao del Norte. In the latter case, the Supreme Court explicitly ruled that "where the
action is purely for recovery of money or damages, the docket fees are assessed on the basis of
the aggregate amount claimed, exclusive only of interests and costs."

Assuming arguendo that the correct filing fees was not made, the rule is that the court may
allow a reasonable time for the payment of the prescribed fees, or the balance thereof, and
upon such payment, the defect is cured and the court may properly take cognizance of the
action unless in the meantime prescription has set in and consequently barred the right of
action. Here respondent Judge did not make any finding, and rightly so, that the filing fee paid
by private respondent was insufficient.

On the issue of the correct dollar-peso rate of exchange, the Office of the Clerk of Court of the
RTC of Makati pegged it at P 43.21 to US$1. In the absence of any office guide of the rate of
exchange which said court functionary was duty bound to follow, the rate he applied is
presumptively correct.

Respondent Judge correctly ruled that the matter of demand letter is evidentiary and does not
form part of the required allegations in a complaint. Section 1, Rule 8 of the 1997 Rules of Civil
Procedure pertinently provides:

"Every pleading shall contain in a methodical and logical form, a plain, concise and direct
statement of the ultimate facts on which the party pleading relies for his claim or defense, as the
case may be, omitted the statement of mere evidentiary facts."

Judging from the allegations of the complaint particularly paragraphs 6, 12, 18, and 23 where
allegations of imputed demands were made upon the defendants to fulfill their respective
obligations, annexing the demand letters for the purpose of putting up a sufficient cause of
action is not required.

In fine, respondent Judge committed no grave abuse of discretion amounting to lack or excess
of jurisdiction to warrant certiorari and mandamus .18 (Underscoring
supplied)ςrαlαωlιbrαrÿ
Their Motion for Reconsideration19 having been denied by the Court of Appeals,20 petitioners
filed the present Petition for Review on Certiorari 21 and pray for the following reliefs:

WHEREFORE, in view of all the foregoing, it is most respectfully prayed of this Honorable Court
to grant the instant petition by REVERSING and SETTING ASIDE the questioned Decision of
July 25, 2001 and the Resolution of December 18, 2001 for being contrary to law, to
Administrative Circular No. 11-94 and Circular No. 7 and instead direct the court a quo to
require Private Respondent Banque to pay the correct docket fee pursuant to the correct
exchange rate of the dollar to the peso on September 7, 1998 and to quantify its claims for
interests on the principal obligations in the first, second and third causes of actions in its
Complaint in Civil Case No. 98-2180.22 (Underscoring supplied)ςrαlαωlιbrαrÿ

Citing Administrative Circular No. 11-94,23 petitioners argue that BNP failed to pay the correct
docket fees as the said circular provides that in the assessment thereof, interest claimed should
be included. There being an underpayment of the docket fees, petitioners conclude, the trial
court did not acquire jurisdiction over the case.

Additionally, petitioners point out that the clerk of court, in converting BNP's claims from US
dollars to Philippine pesos, applied the wrong exchange rate of US $1 = P43.00, the exchange
rate on September 7, 1998 when the complaint was filed having been pegged at US $1 =
P43.21. Thus, by petitioners' computation, BNP's claim as of August 15, 1998 was actually
P70,096,714.72,24 not P69,756,045.66.

Furthermore, petitioners submit that pursuant to Supreme Court Circular No. 7,25 the complaint
should have been dismissed for failure to specify the amount of interest in the prayer.

Circular No. 7 reads:

TO: JUDGES AND CLERKS OF COURT OF THE COURT OF TAX APPEALS, REGIONAL
TRIAL COURTS, METROPOLITAN TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS,
MUNICIPAL CIRCUIT TRIAL COURTS, SHARI'A DISTRICT COURTS;AND THE
INTEGRATED BAR OF THE PHILIPPINES

SUBJECT: ALL COMPLAINTS MUST SPECIFY AMOUNT OF DAMAGES SOUGHT NOT

ONLY IN THE BODY OF THE PLEADING, BUT ALSO IN THE PRAYER IN ORDER TO BE
ACCEPTED AND ADMITTED FOR FILING. THE AMOUNT OF DAMAGES SO SPECIFIED IN
THE COMPLAINT SHALL BE THE BASIS FOR ASSESSING THE AMOUNT OF THE FILING
FEES.

In Manchester Development Corporation v. Court of Appeals, No. L-75919, May 7, 1987, 149
SCRA 562, this Court condemned the practice of counsel who in filing the original complaint
omitted from the prayer any specification of the amount of damages although the amount of
over P78 million is alleged in the body of the complaint. This Court observed that "(T)his is
clearly intended for no other purpose than to evade the payment of the correct filing fees if not
to mislead the docket clerk, in the assessment of the filing fee. This fraudulent practice was
compounded when, even as this Court had taken cognizance of the anomaly and ordered an
investigation, petitioner through another counsel filed an amended complaint, deleting all
mention of the amount of damages being asked for in the body of the complaint. xxx"

For the guidance of all concerned, the WARNING given by the court in the afore-cited case is
reproduced hereunder:
"The Court serves warning that it will take drastic action upon a repetition of this unethical
practice.

To put a stop to this irregularity, henceforth all complaints, petitions, answers and other similar
pleadings should specify the amount of damages being prayed for not only in the body of the
pleading but also in the prayer, and said damages shall be considered in the assessment of the
filing fees in any case. Any pleading that fails to comply with this requirement shall not be
accepted nor admitted, or shall otherwise be expunged from the record.

The Court acquires jurisdiction over any case only upon the payment of the prescribed docket
fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the
Court, much less the payment of the docket fee based on the amount sought in the amended
pleading. The ruling in the Magaspi case (115 SCRA 193) in so far as it is inconsistent with this
pronouncement is overturned and reversed."

Strict compliance with this Circular is hereby enjoined.

Let this be circularized to all the courts hereinabove named and to the President and Board of
Governors of the Integrated Bar of the Philippines, which is hereby directed to disseminate this
Circular to all its members.

March 24, 1988.

(Sgd). CLAUDIO TEEHANKEE

Chief Justice

(Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ

On the other hand, respondent maintains that it had paid the filing fee which was assessed by
the clerk of court, and that there was no violation of Supreme Court Circular No. 7 because the
amount of damages was clearly specified in the prayer, to wit:

2. On the FIRST CAUSE OF ACTION -

(c) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS EIGHT HUNDRED
FORTY FOUR THOUSAND SIX HUNDRED SEVENTY FOUR AND SEVEN CENTS (US$
844,674.07), plus accrued interests and other related charges thereon subsequent to August
15, 1998, until fully paid; and (ii) an amount equivalent to 5% of all sums due from said
Defendant, as and for attorney's fees;

3. On the SECOND CAUSE OF ACTION -

(d) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS ONE HUNDRED
TWENTY AND FIFTY THREE CENTS (US$171,120.53), plus accrued interests and other
related charges thereon subsequent to August 15, 1998 until fully paid; and (ii) an amount
equivalent to 5% of all sums due from said Defendant, as and for attorney's fees;

4. On the THIRD CAUSE OF ACTION -

(e) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS FIVE HUNDRED
TWENTY NINE THOUSAND ONE HUNDRED EIGHTY NINE AND EIGHTY CENTS
(US$529,189.80), plus accrued interests and other related charges thereon subsequent to
August 15, 1998 until fully paid; and (ii) an amount equivalent to 5% or all sums due from said
Defendant, as and for attorney's fees;

5. On ALL THE CAUSES OF ACTION -

Defendants AUTOMOTIVE CORPORATION PHILIPPINES, ASEA ONE CORPORATION and

AUTOCORP GROUP to be ordered to pay Plaintiff BNP the aggregate sum of (i) US DOLLARS
ONE MILLION FIVE HUNDRED FORTY FOUR THOUSAND NINE HUNDRED EIGHTY FOUR
AND FORTY CENTS (US$1,544,984.40) (First through Third Causes of Action), plus accrued
interest and other related charges thereon subsequent to August 15, 1998 until fully paid; and
(ii) an amount equivalent to 5% of all sums due from said Defendants, as and for attorney's
fees.26

Moreover, respondent posits that the amount of US$1,544,984.40 represents not only the
principal but also interest and other related charges which had accrued as of August 15, 1998.
Respondent goes even further by suggesting that in light of Tacay v. Regional Trial Court of
Tagum, Davao del Norte27 where the Supreme Court held,

Where the action is purely for the recovery of money or damages, the docket fees are assessed
on the basis of the aggregate amount claimed, exclusive only of interests and costs.28
(Emphasis and underscoring supplied),

it made an overpayment.

When Tacay was decided in 1989, the pertinent rule applicable was Section 5 (a) of Rule 141
which provided for the following:

SEC. 5. Clerks of Regional Trial Courts. - (a) For filing an action or proceeding, or a permissive
counter-claim or cross-claim not arising out of the same transaction subject of the complaint, a
third-party complaint and a complaint in intervention and for all services in the same, if the sum
claimed, exclusive of interest, of the value of the property in litigation, or the value of the estate,
is:

1. Less than P 5,000.00 '. P 32.00

2. P 5,000.00 or more but less than P 10,000.00 48.00
3. P 10,000.00 or more but less than P 20,000.00 '' '. . 64.00
4. P 20,000.00 or more but less than P 40,000.00 '' '. . 80.00
5. P 40,000.00 or more but less than P 60,000.00 '' '. . 120.00
6. P 60,000.00 or more but less than P 80,000.00 '' '. 160.00
7. P 80,000.00 or more but less than P 150,000.00 - 200.00
8. And for each P 1,000.00 in excess of P 150,000.00 ..... 4.00
9. When the value of the case cannot be estimated - 400.00
10. When the case does not concern property
(naturalization, adoption, legal separation, etc.) .. ''. .. 64.00
11. In forcible entry and illegal detainer cases
appealed from inferior courts '. 40.00
If the case concerns real estate, the assessed value thereof shall be considered in computing
the fees.
In case the value of the property or estate or the sum claim is less or more in accordance with
the appraisal of the court, the difference of fees shall be refunded or paid as the case may be.

When the complaint in this case was filed in 1998, however, as correctly pointed out by
petitioners, Rule 141 had been amended by Administrative Circular No. 11-9429 which
provides:

BY RESOLUTION OF THE COURT, DATED JUNE 28, 1994, PURSUANT TO SECTION 5 (5)
OF ARTICLE VIII OF THE CONSTITUTION, RULE 141, SECTION 7 (a) AND (d), and
SECTION 8 (a) and (b) OF THE RULES OF COURT ARE HEREBY AMENDED TO READ AS
FOLLOWS:

RULE 141
LEGAL FEES

xxx

Sec. 7. Clerks of Regional Trial Courts

(a) For filing an action or a permissive counterclaim or money claim against an estate not based
on judgment, or for filing with leave of court a third-party, fourth-party, etc. complaint, or a
complaint in intervention, and for all clerical services in the same, if the total sum claimed,
inclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs,
or the stated value of the property in litigation, is:

1. Not more than P 100,000.00 P 400.00

2. P 100,000.00, or more but not more than P 150,000.00 - 600.00
3. For each P 1,000.00 in excess of P 150,000.00 - '. 5.00
xxx

Sec. 8. Clerks of Metropolitan and Municipal Trial Courts

(a) For each civil action or proceeding, where the value of the subject matter involved, or the
amount of the demand, inclusive of interest, damages or whatever kind, attorney's fees,
litigation expenses, and costs, is:

1. Not more than P 20,000.00 '. .. P 120.00

2. More than P 20,000.00 but not more than P 100,000.00 '. 400.00
3. More than P 100,000.00 but not more than P 200,000.00 - 850.00
(Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ

The clerk of court should thus have assessed the filing fee by taking into consideration "the total
sum claimed, inclusive of interest, damages of whatever kind, attorney's fees, litigation
expenses, and costs, or the stated value of the property in litigation." Respondent's and the
Court of Appeals' reliance then on Tacay was not in order.

Neither was, for the same reason, the Court of Appeals' reliance on the 1989 case of Ng Soon
v. Alday,30 where this Court held:
'The failure to state the rate of interest demanded was not fatal not only because it is the Courts
which ultimately fix the same, but also because Rule 141, Section 5(a) of the Rules of Court,
itemizing the filing fees, speaks of "the sum claimed, exclusive of interest." This clearly implies
that the specification of the interest rate is not that indispensable.

Factually, therefore, not everything was left to "guesswork" as respondent Judge has opined.
The sums claimed were ascertainable, sufficient enough to allow a computation pursuant to
Rule 141, section 5(a).

Furthermore, contrary to the position taken by respondent Judge, the amounts claimed need not
be initially stated with mathematical precision. The same Rule 141, section 5(a) (3rd paragraph),
allows an appraisal "more or less."31 Thus:

"In case the value of the property or estate or the sum claimed is less or more in accordance
with the appraisal of the court, the difference of fee shall be refunded or paid as the case may
be."

In other words, a final determination is still to be made by the Court, and the fees ultimately
found to be payable will either be additionally paid by the party concerned or refunded to him, as
the case may be. The above provision clearly allows an initial payment of the filing fees
corresponding to the estimated amount of the claim subject to adjustment as to what later may
be proved.

". . . there is merit in petitioner's claim that the third paragraph of Rule 141, Section 5(a) clearly
contemplates a situation where an amount is alleged or claimed in the complaint but is less or
more than what is later proved. If what is proved is less than what was claimed, then a refund
will be made; if more, additional fees will be exacted. Otherwise stated, what is subject to
adjustment is the difference in the fee and not the whole amount" (Pilipinas Shell Petroleum
Corp., et als., v. Court of Appeals, et als., G.R. No. 76119, April 10, 1989).32 (Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ

Respecting the Court of Appeals' conclusion that the clerk of court did not err when he applied
the exchange rate of US $1 = P43.00 "[i]n the absence of any office guide of the rate of
exchange which said court functionary was duty bound to follow,[hence,] the rate he applied is
presumptively correct," the same does not lie. The presumption of regularity of the clerk of
court's application of the exchange rate is not conclusive.33 It is disputable.34 As such, the
presumption may be overturned by the requisite rebutting evidence.35 In the case at bar,
petitioners have adequately proven with documentary evidence36 that the exchange rate when
the complaint was filed on September 7, 1998 was US $1 = P43.21.

In fine, the docket fees paid by respondent were insufficient.

With respect to petitioner's argument that the trial court did not acquire jurisdiction over the case
in light of the insufficient docket fees, the same does not lie.

True, in Manchester Development Corporation v. Court of Appeals,37 this Court held that the
court acquires jurisdiction over any case only upon the payment of the prescribed docket
fees,38 hence, it concluded that the trial court did not acquire jurisdiction over the case.

It bears emphasis, however, that the ruling in Manchester was clarified in Sun Insurance Office,
Ltd. (SIOL) v. Asuncion39 when this Court held that in the former there was clearly an effort to
defraud the government in avoiding to pay the correct docket fees, whereas in the latter the
plaintiff demonstrated his willingness to abide by paying the additional fees as required.

The principle in Manchester could very well be applied in the present case. The pattern and the
intent to defraud the government of the docket fee due it is obvious not only in the filing of the
original complaint but also in the filing of the second amended complaint.

However, in Manchester, petitioner did not pay any additional docket fee until the case was
decided by this Court on May 7, 1987. Thus, in Manchester, due to the fraud committed on the
government, this Court held that the court a quo did not acquire jurisdiction over the case and
that the amended complaint could not have been admitted inasmuch as the original complaint
was null and void.

In the present case, a more liberal interpretation of the rules is called for considering that, unlike
Manchester, private respondent demonstrated his willingness to abide by the rules by paying
the additional docket fees as required. The promulgation of the decision in Manchester must
have had that sobering influence on private respondent who thus paid the additional docket fee
as ordered by the respondent court. It triggered his change of stance by manifesting his
willingness to pay such additional docket fee as may be ordered.

Nevertheless, petitioners contend that the docket fee that was paid is still insufficient
considering the total amount of the claim. This is a matter which the clerk of court of the lower
court and/or his duly authorized docket clerk or clerk in charge should determine and, thereafter,
if any amount is found due, he must require the private respondent to pay the same.

Thus, the Court rules as follows:

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

2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings,
which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The
court may also allow payment of said fee within a reasonable time but also in no case beyond
its applicable prescriptive or reglementary period.

3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading
and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not
specified in the pleading, or if specified the same has been left for determination by the court,
the additional filing fee therefor shall constitute a lien on the judgment. It shall be the
responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess
and collect the additional fee.40 (Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ

The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of Bertuldo Hinog v.
Hon. Achilles Melicor:41

Plainly, while the payment of the prescribed docket fee is a jurisdictional requirement, even its
non-payment at the time of filing does not automatically cause the dismissal of the case, as long
as the fee is paid within the applicable prescriptive or reglementary period, more so when the
party involved demonstrates a willingness to abide by the rules prescribing such payment. Thus,
when insufficient filing fees were initially paid by the plaintiffs and there was no intention to
defraud the government, the Manchester rule does not apply. (Emphasis and underscoring
supplied; citations omitted)

In the case at bar, respondent merely relied on the assessment made by the clerk of court
which turned out to be incorrect. Under the circumstances, the clerk of court has the
responsibility of reassessing what respondent must pay within the prescriptive period, failing
which the complaint merits dismissal.

Parenthetically, in the complaint, respondent prayed for "accrued interest' subsequent to August
15, 1998 until fully paid." The complaint having been filed on September 7, 1998, respondent's
claim includes the interest from August 16, 1998 until such date of filing.

Respondent did not, however, pay the filing fee corresponding to its claim for interest from
August 16, 1998 until the filing of the complaint on September 7, 1998. As priorly discussed, this
is required under Rule 141, as amended by Administrative Circular No. 11-94, which was the
rule applicable at the time. Thus, as the complaint currently stands, respondent cannot claim the
interest from August 16, 1998 until September 7, 1998, unless respondent is allowed by motion
to amend its complaint within a reasonable time and specify the precise amount of interest
petitioners owe from August 16, 1998 to September 7, 199842 and pay the corresponding
docket fee therefor.

With respect to the interest accruing after the filing of the complaint, the same can only be
determined after a final judgment has been handed down. Respondent cannot thus be made to
pay the corresponding docket fee therefor. Pursuant, however, to Section 2, Rule 141, as
amended by Administrative Circular No. 11-94, respondent should be made to pay additional
fees which shall constitute a lien in the event the trial court adjudges that it is entitled to interest
accruing after the filing of the complaint.

Sec. 2. Fees as lien. - Where the court in its final judgment awards a claim not alleged, or a
relief different or more than that claimed in the pleading, the party concerned shall pay the
additional fees which shall constitute a lien on the judgment in satisfaction of said lien. The clerk
of court shall assess and collect the corresponding fees.

In Ayala Corporation v. Madayag,43 in interpreting the third rule laid down in Sun Insurance
regarding awards of claims not specified in the pleading, this Court held that the same refers
only to damages arising after the filing of the complaint or similar pleading as to which the
additional filing fee therefor shall constitute a lien on the judgment.

'The amount of any claim for damages, therefore, arising on or before the filing of the complaint
or any pleading should be specified. While it is true that the determination of certain damages
as exemplary or corrective damages is left to the sound discretion of the court, it is the duty of
the parties claiming such damages to specify the amount sought on the basis of which the court
may make a proper determination, and for the proper assessment of the appropriate docket
fees. The exception contemplated as to claims not specified or to claims although specified are
left for determination of the court is limited only to any damages that may arise after the filing of
the complaint or similar pleading for then it will not be possible for the claimant to specify nor
speculate as to the amount thereof.44 (Emphasis and underscoring supplied; citation
omitted)ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
WHEREFORE, the petition is GRANTED in part. The July 25, 2001 Decision and the December
18, 2001 Resolution of the Court Appeals are hereby MODIFIED. The Clerk of Court of the
Regional Trial Court of Makati City is ordered to reassess and determine the docket fees that
should be paid by respondent, BNP, in accordance with the Decision of this Court, and direct
respondent to pay the same within fifteen (15) days, provided the applicable prescriptive or
reglementary period has not yet expired. Thereafter, the trial court is ordered to proceed with
the case with utmost dispatch.

SO ORDERED.
A.M. No. 08-11-7-SC August 28, 2009

RE: REQUEST OF NATIONAL COMMITTEE ON LEGAL AID1 TO EXEMPT LEGAL AID

CLIENTS FROM PAYING FILING, DOCKET AND OTHER FEES.

RESOLUTION

CORONA, J.:

On September 23, 2008 the Misamis Oriental Chapter of the Integrated Bar of the Philippines
(IBP) promulgated Resolution No. 24, series of 2008.2 The resolution requested the IBP’s
National Committee on Legal Aid3 (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.

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 grant of a like exemption from the payment of filing, docket and other fees
to 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.4

The Court noted Resolution No. 24, series of 2008 and required the IBP, through the NCLA, to
comment thereon.5

In a comment dated December 18, 2008,6 the IBP, through the NCLA, made the following
comments:

(a) Under Section 16-D of RA7 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;8

(d) While each IBP local chapter is given a quarterly allocation (from the legal aid subsidy),9
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.10

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."11

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.12 (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.13 Among others, it has exercised its
power to "promulgate rules concerning the protection and enforcement of constitutional
rights"14 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 315 and Section 19, Rule 14116 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,"17 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.lawph!l

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:

Region18 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,19 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.1awphi1

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 service rendered
by a lawyer under this Rule either as a handling lawyer or as an 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.

The Office of the Court Administrator is hereby directed to promptly issue a circular to inform all
courts in the Philippines of the import of this resolution.

SO ORDERED.
G.R. No. 189950*

BERNADETTE S. BILAG, ERLINDA BILAGSANTILLAN, DIXON BILAG, REYNALDO B.

SUELLO, HEIRS OF LOURDES S. BILAG, HEIRS OF LETICIA BILAG-HANAOKA, and HEIRS
OF NELLIE BILAG, Petitioners,
vs.
ESTELA AY-AY, ANDRES ACOP, JR., FELICITAS AP-AP, SERGIO AP-AP, JOHN
NAPOLEON A. RAMIREZ, JR., and MA. TERESA A. RAMIREZ, Respondents

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated March 19, 2009 and
the Resolution3 dated September 3, 2009 of the Court of Appeals (CA) in CA-G.R. CV No.
86266, which set aside the Order4 dated October 10, 2005 of the Regional Trial Court of Baguio
City, Branch 61 (RTC Br. 61), and consequently, remanded the case to the latter court for trial.

The Facts

The instant case stemmed from a Complaint5 dated August 12, 2004 for Quieting of Title with
Prayer for Preliminary Injunction filed by respondents Estela Ay-Ay, Andres Acop, Jr., Felicitas
Ap-Ap, Sergio ApAp, John Napoleon A. Ramirez, Jr., and Ma. Teresa A. Ramirez (respondents)
against petitioners Bernadette S. Bilag, Erlinda BilagSantillan, Dixon Bilag, Reynaldo B. Suello,
Heirs of Lourdes S. Bilag, Heirs of Leticia Bilag-Hanaoka, and Heirs of Nellie Bilag before the
RTC Br. 61, docketed as Civil Case No. 5881-R. Essentially, respondents alleged that Iloc
Bilag, petitioners' predecessor-in-interest, sold to them separately various portions of a 159,496-
square meter parcel of land designated by the Bureau of Lands as Approved Plan No. 544367,
Psu 189147 situated at Sitio Benin, Baguio City (subject lands), and that they registered the
corresponding Deeds of Sale6 with the Register of Deeds of Baguio City. According to
respondents, Iloc Bilag not only acknowledged full payment and guaranteed that his heirs,
successors-in-interest, and executors are to be bound by such sales, but he also caused the
subject lands to be removed from the Ancestral Land Claims. Respondents further alleged that
they have been in continuous possession of the said lands since 1976 when they were
delivered to them and that they have already introduced various improvements thereon. Despite
the foregoing, petitioners refused to honor the foregoing sales by asserting their adverse rights
on the subject lands. Worse, they continued to harass respondents, and even threatened to
demolish their improvements and dispossess them thereof. Hence, they filed the instant
complaint to quiet their respective titles over the subject lands and remove the cloud cast upon
their ownership as a result of petitioners' refusal to recognize the sales.7

For their part, petitioners filed a Motion to Dismiss8 dated November 4, 2004 on the grounds of
lack of jurisdiction, prescription/laches/estoppel, and res judicata. Anent the first ground,
petitioners averred that the subject lands are untitled, unregistered, and form part of the Baguio
Townsite Reservation which were long classified as lands of the public domain. As such, the
RTC has no jurisdiction over the case as it is the Land Management Bureau (formerly the
Bureau of Lands) which is vested with the authority to determine issues of ownership over
unregistered public lands.9
As to the second ground, petitioners argued that it is only now, or more than 27 years from the
execution of the Deeds of Sale, that respondents seek to enforce said Deeds; thus, the present
action is already barred by prescription and/or laches. 10

Regarding the final ground, petitioners pointed out that on January 27, 1998, respondents had
already filed a complaint against them for injunction and damages, docketed as Civil Case No.
3934-R before the Regional Trial Court of Baguio City, Branch 5 (RTC Br. 5), wherein they
principally asserted their ownership over the subject lands. However, RTC Br. 5 dismissed Civil
Case No. 3934-R for lack of merit on the ground of respondents' failure to show convincing
proof of ownership over the same, 11 which Order of dismissal was then affirmed by the CA on
appeal. 12 Eventually, the Court issued a Resolution dated January 21, 200413 declaring the
case closed and terminated for failure to file the intended petition subject of the Motion for
Extension to file the same. In view of the foregoing, petitioners contended that due to the final
and executory ruling in Civil Case No. 3934-R, the filing of Civil Case No. 5881-R seeking to
establish the ownership thereof is already barred by res judicata. 14

The RTC Br. 61 Ruling

In an Order 15 dated October 10, 2005, the RTC Br. 61 ruled in petitioners' favor, and
consequently, ordered the dismissal of Civil Case No. 5881-R on the following grounds: (a) it
had no authority to do so; (b) the Deeds of Sale in respondents' favor could not as yet be
considered title to the subject lands, noting the failure of respondents to perfect their title or
assert ownership and possession thereof for the past 27 years; and (c) the filing of the instant
case is barred by res judicata considering the final and executory Decision dismissing the earlier
filed Civil Case No. 3934-R where respondents similarly sought to be declared the owners of the
subject lands.16

Aggrieved, respondents appealed to the CA. 17

The CA Ruling

In a Decision18 dated March 19, 2009, the CA set aside the dismissal of Civil Case No. 5881-R,
and accordingly, remanded the case to the court a quo for trial. 19 It held that Civil Case No.
3934-R was an action for injunction where respondents sought to enjoin petitioners' alleged
entry into the subject lands and their introduction of improvements thereat; whereas Civil Case
No. 5881-R is an action to quiet title where respondents specifically prayed, inter alia, for the
removal of the cloud upon their ownership and possession of the subject lands. In this light, the
CA concluded that while these cases may involve the same properties, the nature of the action
differs; hence, res judicata is not a bar to the present suit. On the issue of laches, prescription or
estoppel, the CA pointed out that in view of respondents' allegation that they have been in
possession of the subject lands since 1976, their action to quiet title is imprescriptible.20

Dissatisfied, petitioners moved for reconsideration 21 which was, however, denied in a

Resolution22 dated September 3, 2009; hence, this petition.

The Issue Before the Court

The petition is meritorious.

At the outset, it must be stressed that in setting aside the Order of dismissal of Civil Case No.
5881-R due to the inapplicability of the grounds of res judicata and prescription/laches, the CA
notably omitted from its discussion the first ground relied upon by petitioners, which is lack of
jurisdiction.

Jurisprudence has consistently held that "[j]urisdiction is defined as the power and authority of a
court to hear, try, and decide a case. In order for the court or an adjudicative body to have
authority to dispose of the case on the merits, it must acquire, among others, jurisdiction over
the subject matter. It is axiomatic that jurisdiction over the subject matter is the power to hear
and determine the general class to which the proceedings in question belong; it is conferred by
law and not by the consent or acquiescence of any or all of the parties or by erroneous belief of
the court that it exists. Thus, when a court has no jurisdiction over the subject matter, the only
power it has is to dismiss the action." 23 Perforce, it is important that a court or tribunal should
first determine whether or not it has jurisdiction over the subject matter presented before it,
considering that any act that it performs without jurisdiction shall be null and void, and without
any binding legal effects. The Court's pronouncement in Tan v. Cinco,24 is instructive on this
matter, to wit:

A judgment rendered by a court without jurisdiction is null and void and may be attacked
anytime. It creates no rights and produces no effect.1âwphi1 It remains a basic fact in law that
the choice of the proper forum is crucial, as the decision of a court or tribunal without jurisdiction
is a total nullity. A void judgment for want of jurisdiction is no judgment at all. All acts performed
pursuant to it and all claims emanating from it have no legal effect. 25

Now, on the issue of jurisdiction, a review of the records shows that the subject lands form part
of a 159,496-square meter parcel of land designated by the Bureau of Lands as Approved Plan
No. 544367, Psu 189147 situated at Sitio Benin, Baguio City. Notably, such parcel of land forms
part of the Baguio Townsite Reservation, a portion of which, or 146, 428 square meters, was
awarded to Iloc Bilag due to the reopening of Civil Reservation Case No. 1, GLRO Record No.
211, as evidenced by a Decision 26 dated April 22, 1968 promulgated by the then-Court of First
Instance of Baguio City.

In a catena of cases, 27 and more importantly, in Presidential Decree No. (PD) 1271,28 it was
expressly declared that all orders and decisions issued by the Court of First Instance of Baguio
and Benguet in connection with the proceedings for the reopening of Civil Reservation Case No.
1, GLRO Record 211, covering lands within the Baguio Town site Reservation are null and void
and without force and effect. While PD 1271 provides for a means to validate ownership over
lands forming part of the Baguio Town site Reservation, it requires, among others, that a
Certificate of Title be issued on such lands on or before July 31, 1973. 29 In this case, records
reveal that the subject lands are unregistered and untitled, as petitioners' assertion to that effect
was not seriously disputed by respondents. Clearly, the award of lots 2 and 3 of the 159,496-
square meter parcel of land designated by the Bureau of Lands as Approved Plan No. 544367,
Psu 189147 - which includes the subject lands - to Iloc Bilag by virtue of the reopening of Civil
Reservation Case No. 1, GLRO Record 211, is covered by the blanket nullification provided
under PD 1271, and consistently affirmed by the prevailing case law. In view of the foregoing, it
is only reasonable to conclude that the subject lands should be properly classified as lands of
the public domain as well.

Therefore, since the subject lands are untitled and unregistered public lands, then petitioners
correctly argued that it is the Director of Lands who has the authority to award their
ownership.30 Thus, the RTC Br. 61 correctly recognized its lack of power or authority to hear
and resolve respondents' action for quieting oftitle.31 In Heirs of Pocdo v. Avila,32 the Court
ruled that the trial court therein correctly dismissed an action to quiet title on the ground of lack
of jurisdiction for lack of authority to determine who among the parties have better right over the
disputed property, which is admittedly still part of public domain for being within the Baguio
Townsite Reservation, viz.:

The DENR Decision was affirmed by the Office of the President which held that lands within the
Baguio Townsite Reservation belong to the public domain and are no longer registrable under
the Land Registration Act. The Office of the President ordered the disposition of the disputed
property in accordance with the applicable rules of procedure for the disposition of alienable
public lands within the Baguio Townsite Reservation, particularly Chapter X of Commonwealth
Act No. 141 on Townsite Reservations and other applicable rules.

Having established that the disputed property is public land, the trial court was therefore correct
in dismissing the complaint to quiet title for lack of jurisdiction. The trial court had no jurisdiction
to determine who among the parties have better right over the disputed property which is
admittedly still part of the public domain. As held in Dajunos v. Tandayag:

x x x The Tarucs' action was for "quieting of title" and necessitated determination of the
respective rights of the litigants, both claimants to a free patent title, over a piece of property,
admittedly public land. The law, as relied upon by jurisprudence, lodges "the power of executive
control, administration, disposition and alienation of public lands with the Director of Lands
subject, of course, to the control of the Secretary of Agriculture and Natural Resources."

In sum, the decision rendered in civil case 1218 on October 28, 1968 is a patent nullity. The
court below did not have power to determine who (the Firmalos or the Tarucs) were entitled to
an award of free patent title over that piece of property that yet belonged to the public domain.
Neither did it have power to adjudge the Tarucs as entitled to the "true equitable ownership"
thereof, the latter's effect being the same: the exclusion of the Firmalos in favor of the Tarucs.

In an action for quieting of title, the complainant is seeking for "an adjudication that a claim of
title or interest in property adverse to the claimant is invalid, to free him from the danger of
hostile claim, and to remove a cloud upon or quiet title to land where stale or unenforceable
claims or demands exist." Under Articles 476 and 477 of the Civil Code, the two indispensable
requisites in an action to quiet title are: (1) that the plaintiff has a legal or equitable title to or
interest in the real property subject of the action; and (2) that there is a cloud on his title by
reason of any instrument, record, deed, claim, encumbrance or proceeding, which must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity.

In this case, petitioners, claiming to be owners of the disputed property, allege that respondents
are unlawfully claiming the disputed property by using void documents, namely the "Catulagan"
and the Deed of Waiver of Rights. However, the records reveal that petitioners do not have legal
or equitable title over the disputed property, which forms part of Lot 43, a public land within the
Baguio Townsite Reservation. It is clear from the facts of the case that petitioners'
predecessors-in-interest, the heirs of Pocdo Pool, were not even granted a Certificate of
Ancestral Land Claim over Lot 43, which remains public land. Thus, the trial court had no other
recourse but to dismiss the case. 33 (Emphases and underscoring supplied)

In conclusion, RTC Br. 61 has no jurisdiction over Civil Case No. 5881-R as the plaintiffs therein
(herein respondents) seek to quiet title over lands which belong to the public domain.
Necessarily, Civil Case No. 5881- R must be dismissed on this ground. It should be stressed
that the court a quo's lack of subject matter jurisdiction over the case renders it without authority
and necessarily obviates the resolution of the merits of the case. To reiterate, when a court has
no jurisdiction over the subject matter, the only power it has is to dismiss the action, as any act it
performs without jurisdiction is null and void, and without any binding legal effects. In this light,
the Court finds no further need to discuss the other grounds relied upon by petitioners in this
case.

WHEREFORE, the petition is GRANTED. The Decision dated March 19, 2009 and the
Resolution dated September 3, 2009 of the Court of Appeals in CA-G.R. CV No. 86266 are
hereby REVERSED and SET ASIDE. Accordingly, Civil Case No. 5881-R is DISMISSED on the
ground of lack of jurisdiction on the part of the Regional Trial Court of Baguio City, Branch 61.

SO ORDERED.
G.R. No. 184203, November 26, 2014

CITY OF LAPU-LAPU, Petitioner, v. PHILIPPINE ECONOMIC ZONE AUTHORITY,

Respondent.

G.R. NO. 187583

PROVINCE OF BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND

EMERLINDA S. TALENTO, IN HER CAPACITY AS PROVINCIAL TREASURER OF BATAAN,
Petitioners, v. PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.

DECISION

LEONEN, J.:

The Philippine Economic Zone Authority is exempt from payment of real property taxes.

These are consolidated1 petitions for review on certiorari the City of Lapu-Lapu and the
Province of Bataan separately filed against the Philippine Economic Zone Authority (PEZA).

In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals’ decision2
dated January 11, 2008 and resolution3 dated August 6, 2008, dismissing the City’s appeal for
being the wrong mode of appeal. The City appealed the Regional Trial Court, Branch 111,
Pasay City’s decision finding the PEZA exempt from payment of real property taxes.

In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of Appeals’
decision4 dated August 27, 2008 and resolution5 dated April 16, 2009, granting the PEZA’s
petition for certiorari. The Court of Appeals ruled that the Regional Trial Court, Branch 115,
Pasay City gravely abused its discretion in finding the PEZA liable for real property taxes to the
Province of Bataan.

Facts common to the consolidated petitions

In the exercise of his legislative powers,6 President Ferdinand E. Marcos issued Presidential
Decree No. 66 in 1972, declaring as government policy the establishment of export processing
zones in strategic locations in the Philippines. Presidential Decree No. 66 aimed “to encourage
and promote foreign commerce as a means of making the Philippines a center of international
trade, of strengthening our export trade and foreign exchange position, of hastening
industrialization, of reducing domestic unemployment, and of accelerating the development of
the country.”7chanRoblesvirtualLawlibrary

To carry out this policy, the Export Processing Zone Authority (EPZA) was created to operate,
administer, and manage the export processing zones established in the Port of Mariveles,
Bataan8 and such other export processing zones that may be created by virtue of the
decree.9chanRoblesvirtualLawlibrary

The decree declared the EPZA non-profit in character10 with all its revenues devoted to its
development, improvement, and maintenance.11 To maintain this non-profit character, the
EPZA was declared exempt from all taxes that may be due to the Republic of the Philippines, its
provinces, cities, municipalities, and other government agencies and instrumentalities.12
Specifically, Section 21 of Presidential Decree No. 66 declared the EPZA exempt from payment
of real property taxes:chanroblesvirtuallawlibrary

Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be
non-profit and shall devote and use all its returns from its capital investment, as well as excess
revenues from its operations, for the development, improvement and maintenance and other
related expenditures of the Authority to pay its indebtedness and obligations and in furtherance
and effective implementation of the policy enunciated in Section 1 of this Decree. In consonance
therewith, the Authority is hereby declared exempt:
....

(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses
to be paid to the National Government, its provinces, cities, municipalities and other government
agencies and instrumentalities[.]

In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan Export
Processing Zone. Certain parcels of land of the public domain located in the City of Lapu-Lapu
in Mactan, Cebu were reserved to serve as site of the Mactan Export Processing Zone.

In 1995, the PEZA was created by virtue of Republic Act No. 7916 or “the Special Economic
Zone Act of 1995”13 to operate, administer, manage, and develop economic zones in the
country.14 The PEZA was granted the power to register, regulate, and supervise the
enterprises located in the economic zones.15 By virtue of the law, the export processing zone
in Mariveles, Bataan became the Bataan Economic Zone16 and the Mactan Export Processing
Zone the Mactan Economic Zone.17chanRoblesvirtualLawlibrary

As for the EPZA, the law required it to “evolve into the PEZA in accordance with the guidelines
and regulations set forth in an executive order issued for [the]
purpose.”18chanRoblesvirtualLawlibrary

On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282, directing the
PEZA to assume and exercise all of the EPZA’s powers, functions, and responsibilities “as
provided in Presidential Decree No. 66, as amended, insofar as they are not inconsistent with
the powers, functions, and responsibilities of the PEZA, as mandated under [the Special
Economic Zone Act of 1995].”19 All of EPZA’s properties, equipment, and assets, among
others, were ordered transferred to the PEZA.20chanRoblesvirtualLawlibrary

Facts of G.R. No. 184203

In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through the Office of the Treasurer,
demanded from the PEZA ?32,912,350.08 in real property taxes for the period from 1992 to
1998 on the PEZA’s properties located in the Mactan Economic Zone.

The City reiterated its demand in the letter22 dated May 21, 1998. It cited Sections 193 and
234 of the Local Government Code of 1991 that withdrew the real property tax exemptions
previously granted to or presently enjoyed by all persons. The City pointed out that no provision
in the Special Economic Zone Act of 1995 specifically exempted the PEZA from payment of real
property taxes, unlike Section 21 of Presidential Decree No. 66 that explicitly provided for
EPZA’s exemption. Since no legal provision explicitly exempted the PEZA from payment of real
property taxes, the City argued that it can tax the PEZA.
The City made subsequent demands23 on the PEZA. In its last reminder24 dated May 13,
2002, the City assessed the PEZA ?86,843,503.48 as real property taxes for the period from
1992 to 2002.

On September 11, 2002, the PEZA filed a petition for declaratory relief25 with the Regional Trial
Court of Pasay City, praying that the trial court declare it exempt from payment of real property
taxes. The case was raffled to Branch 111.

The City answered26 the petition, maintaining that the PEZA is liable for real property taxes. To
support its argument, the City cited a legal opinion dated September 6, 1999 issued by the
Department of Justice,27 which stated that the PEZA is not exempt from payment of real
property taxes. The Department of Justice based its opinion on Sections 193 and 234 of the
Local Government Code that withdrew the tax exemptions, including real property tax
exemptions, previously granted to all persons.

A reply28 was filed by the PEZA to which the City filed a

rejoinder.29chanRoblesvirtualLawlibrary

Pursuant to Rule 63, Section 3 of Rules of Court,30 the Office of the Solicitor General filed a
comment31 on the PEZA’s petition for declaratory relief. It agreed that the PEZA is exempt
from payment of real property taxes, citing Sections 24 and 51 of the Special Economic Zone
Act of 1995.

The trial court agreed with the Solicitor General. Section 24 of the Special Economic Zone Act
of 1995 provides:chanroblesvirtuallawlibrary

SEC. 24. Exemption from National and Local Taxes. – Except for real property taxes on land
owned by developers, no taxes, local and national, shall be imposed on business
establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross
income earned by all business enterprises within the ECOZONE shall be paid and remitted as
follows:

a. Three percent (3%) to the National Government;

b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurer’s office of the municipality or city where the enterprise is located.

Section 51 of the law, on the other hand, provides:chanroblesvirtuallawlibrary

SEC. 51. Ipso-Facto Clause. – All privileges, benefits, advantages or exemptions granted to
special economic zones under Republic Act No. 7227, shall ipso-facto be accorded to special
economic zones already created or to be created under this Act. The free port status shall not
be vested upon new special economic zones.

Based on Section 51, the trial court held that all privileges, benefits, advantages, or exemptions
granted to special economic zones created under the Bases Conversion and Development Act
of 1992 apply to special economic zones created under the Special Economic Zone Act of 1995.
Since these benefits include exemption from payment of national or local taxes, these benefits
apply to special economic zones owned by the PEZA.
According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of the
Special Economic Zone Act of 1995. It ruled that Section 24, which taxes real property owned
by developers of economic zones, only applies to private developers of economic zones, not to
public developers like the PEZA. The PEZA, therefore, is not liable for real property taxes on
the land it owns.

Characterizing the PEZA as an agency of the National Government, the trial court ruled that the
City had no authority to tax the PEZA under Sections 133(o) and 234(a) of the Local
Government Code of 1991.

In the resolution32 dated June 14, 2006, the trial court granted the PEZA’s petition for
declaratory relief and declared it exempt from payment of real property taxes.

The City filed a motion for reconsideration,33 which the trial court denied in its resolution34
dated September 26, 2006.

The City then appealed35 to the Court of Appeals.

The Court of Appeals noted the following issues the City raised in its appellant’s brief: (1)
whether the trial court had jurisdiction over the PEZA’s petition for declaratory relief; (2) whether
the PEZA is a government agency performing governmental functions; and (3) whether the
PEZA is exempt from payment of real property taxes.

The issues presented by the City, according to the Court of Appeals, are pure questions of law
which should have been raised in a petition for review on certiorari directly filed before this
court. Since the City availed itself of the wrong mode of appeal, the Court of Appeals dismissed
the City’s appeal in the decision36 dated January 11, 2008.

The City filed a motion for extension of time to file a motion for reconsideration,37 which the
Court of Appeals denied in the resolution38 dated April 11, 2008.

Despite the denial of its motion for extension, the City filed a motion for reconsideration.39 In
the resolution40 dated August 6, 2008, the Court of Appeals denied that motion.

In its petition for review on certiorari with this court,41 the City argues that the Court of Appeals
“hid under the skirts of technical rules”42 in resolving its appeal. The City maintains that its
appeal involved mixed questions of fact and law. According to the City, whether the PEZA
performed governmental functions “cannot completely be addressed by law but [by] the factual
and actual activities [the PEZA is] carrying out.”43chanRoblesvirtualLawlibrary

Even assuming that the petition involves pure questions of law, the City contends that the
subject matter of the case “is of extreme importance with [far-reaching] consequence that [its
magnitude] would surely shape and determine the course of our nation’s future.”44 The Court
of Appeals, the City argues, should have resolved the case on the merits.

The City insists that the trial court had no jurisdiction to hear the PEZA’s petition for declaratory
relief. According to the City, the case involves real property located in the City of Lapu-Lapu.
The petition for declaratory relief should have been filed before the Regional Trial Court of the
City of Lapu-Lapu.45chanRoblesvirtualLawlibrary
Moreover, the Province of Bataan, the City of Baguio, and the Province of Cavite allegedly
demanded real property taxes from the PEZA. The City argues that the PEZA should have
likewise impleaded these local government units as respondents in its petition for declaratory
relief. For its failure to do so, the PEZA violated Rule 63, Section 2 of the Rules of Court, and
the trial court should have dismissed the petition.46chanRoblesvirtualLawlibrary

This court ordered the PEZA to comment on the City’s petition for review on
certiorari.47chanRoblesvirtualLawlibrary

At the outset of its comment, the PEZA argues that the Court of Appeals’ decision dated
January 11, 2008 had become final and executory. After the Court of Appeals had denied the
City’s appeal, the City filed a motion for extension of time to file a motion for reconsideration.
Arguing that the time to file a motion for reconsideration is not extendible, the PEZA filed its
motion for reconsideration out of time. The City has no more right to appeal to this
court.48chanRoblesvirtualLawlibrary

The PEZA maintains that the City availed itself of the wrong mode of appeal before the Court of
Appeals. Since the City raised pure questions of law in its appeal, the PEZA argues that the
proper remedy is a petition for review on certiorari with this court, not an ordinary appeal before
the appellate court. The Court of Appeals, therefore, correctly dismissed outright the City’s
appeal under Rule 50, Section 2 of the Rules of Court.49chanRoblesvirtualLawlibrary

On the merits, the PEZA argues that it is an agency and instrumentality of the National
Government. It is therefore exempt from payment of real property taxes under Sections 133(o)
and 234(a) of the Local Government Code.50 It adds that the tax privileges under Sections 24
and 51 of the Special Economic Zone Act of 1995 applied to it.51chanRoblesvirtualLawlibrary

Considering that the site of the Mactan Economic Zone is a reserved land under Proclamation
No. 1811, the PEZA claims that the properties sought to be taxed are lands of public dominion
exempt from real property taxes.52chanRoblesvirtualLawlibrary

As to the jurisdiction issue, the PEZA counters that the Regional Trial Court of Pasay had
jurisdiction to hear its petition for declaratory relief under Rule 63, Section 1 of the Rules of
Court.53 It also argued that it need not implead the Province of Bataan, the City of Baguio, and
the Province of Cavite as respondents considering that their demands came after the PEZA had
already filed the petition in court.54chanRoblesvirtualLawlibrary

Facts of G.R. No. 187583

After the City of Lapu-Lapu had demanded payment of real property taxes from the PEZA, the
Province of Bataan followed suit. In its letter55 dated May 29, 2003, the Province, through the
Office of the Provincial Treasurer, informed the PEZA that it would be sending a real property
tax billing to the PEZA. Arguing that the PEZA is a developer of economic zones, the Province
claimed that the PEZA is liable for real property taxes under Section 24 of the Special Economic
Zone Act of 1995.

In its reply letter56 dated June 18, 2003, the PEZA requested the Province to suspend the
service of the real property tax billing. It cited its petition for declaratory relief against the City of
Lapu-Lapu pending before the Regional Trial Court, Branch 111, Pasay City as basis.
The Province argued that serving a real property tax billing on the PEZA “would not in any way
affect [its] petition for declaratory relief before [the Regional Trial Court] of Pasay City.”57 Thus,
in its letter58 dated June 27, 2003, the Province notified the PEZA of its real property tax
liabilities for June 1, 1995 to December 31, 2002 totalling ?110,549,032.55.

After having been served a tax billing, the PEZA again requested the Province to suspend
collecting its alleged real property tax liabilities until the Regional Trial Court of Pasay City
resolves its petition for declaratory relief.59chanRoblesvirtualLawlibrary

The Province ignored the PEZA’s request. On January 20, 2004, the Province served on the
PEZA a statement of unpaid real property tax for the period from June 1995 to December
2004.60chanRoblesvirtualLawlibrary

The PEZA again requested the Province to suspend collecting its alleged real property taxes.61
The Province denied the request in its letter62 dated January 29, 2004, then served on the
PEZA a warrant of levy63 covering the PEZA’s real properties located in Mariveles, Bataan.

The PEZA’s subsequent requests64 for suspension of collection were all denied by the
Province.65 The Province then served on the PEZA a notice of delinquency in the payment of
real property taxes66 and a notice of sale of real property for unpaid real property tax.67 The
Province finally sent the PEZA a notice of public auction of the latter’s properties in Mariveles,
Bataan.68chanRoblesvirtualLawlibrary

On June 14, 2004, the PEZA filed a petition for injunction69 with prayer for issuance of a
temporary restraining order and/or writ of preliminary injunction before the Regional Trial Court
of Pasay City, arguing that it is exempt from payment of real property taxes. It added that the
notice of sale issued by the Province was void because it was not published in a newspaper of
general circulation as required by Section 260 of the Local Government
Code.70chanRoblesvirtualLawlibrary

The case was raffled to Branch 115.

In its order71 dated June 18, 2004, the trial court issued a temporary restraining order against
the Province. After the PEZA had filed a P100,000.00 bond,72 the trial court issued a writ of
preliminary injunction,73 enjoining the Province from selling the PEZA’s real properties at public
auction.

On March 3, 2006, the PEZA and Province both manifested that each would file a memorandum
after which the case would be deemed submitted for decision. The parties then filed their
respective memoranda.74chanRoblesvirtualLawlibrary

In the order75 dated January 31, 2007, the trial court denied the PEZA’s petition for injunction.
The trial court ruled that the PEZA is not exempt from payment of real property taxes.
According to the trial court, Sections 193 and 234 of the Local Government Code had withdrawn
the real property tax exemptions previously granted to all persons, whether natural or
juridical.76 As to the tax exemptions under Section 51 of the Special Economic Zone Act of
1995, the trial court ruled that the provision only applies to businesses operating within the
economic zones, not to the PEZA.77chanRoblesvirtualLawlibrary

The PEZA filed before the Court of Appeals a petition for certiorari78 with prayer for issuance of
a temporary restraining order.
The Court of Appeals issued a temporary restraining order, enjoining the Province and its
Provincial Treasurer from selling PEZA's properties at public auction scheduled on October 17,
2007.79 It also ordered the Province to comment on the PEZA’s petition.

In its comment,80 the Province alleged that it received a copy of the temporary restraining order
only on October 18, 2007 when it had already sold the PEZA’s properties at public auction.
Arguing that the act sought to be enjoined was already fait accompli, the Province prayed for the
dismissal of the petition for certiorari.

The PEZA then filed a supplemental petition for certiorari, prohibition, and mandamus81 against
the Province, arguing that the Provincial Treasurer of Bataan acted with grave abuse of
discretion in issuing the notice of delinquency and notice of sale. It maintained that it is exempt
from payment of real property taxes because it is a government instrumentality. It added that its
lands are property of public dominion which cannot be sold at public auction.

The PEZA also filed a motion82 for issuance of an order affirming the temporary restraining
order and a writ of preliminary injunction to enjoin the Province from consolidating title over the
PEZA’s properties.

In its resolution83 dated January 16, 2008, the Court of Appeals admitted the supplemental
petition for certiorari, prohibition, and mandamus. It required the Province to comment on the
supplemental petition and to file a memorandum on the PEZA’s prayer for issuance of
temporary restraining order.

The Province commented84 on the PEZA’s supplemental petition, to which the PEZA
replied.85chanRoblesvirtualLawlibrary

The Province then filed a motion86 for leave to admit attached rejoinder with motion to dismiss.
In the rejoinder with motion to dismiss,87 the Province argued for the first time that the Court of
Appeals had no jurisdiction over the subject matter of the action.

According to the Province, the PEZA erred in filing a petition for certiorari. Arguing that the
PEZA sought to reverse a Regional Trial Court decision in a local tax case, the Province
claimed that the court with appellate jurisdiction over the action is the Court of Tax Appeals.
The PEZA then prayed that the Court of Appeals dismiss the petition for certiorari for lack of
jurisdiction over the subject matter of the action.

The Court of Appeals held that the issue before it was whether the trial court judge gravely
abused his discretion in dismissing the PEZA’s petition for prohibition. This issue, according to
the Court of Appeals, is properly addressed in a petition for certiorari over which it has
jurisdiction to resolve. It, therefore, maintained jurisdiction to resolve the PEZA’s petition for
certiorari.88chanRoblesvirtualLawlibrary

Although it admitted that appeal, not certiorari, was the PEZA’s proper remedy to reverse the
trial court’s decision,89 the Court of Appeals proceeded to decide the petition for certiorari in
“the broader interest of justice.”90chanRoblesvirtualLawlibrary

The Court of Appeals ruled that the trial court judge gravely abused his discretion in dismissing
the PEZA’s petition for prohibition. It held that Section 21 of Presidential Decree No. 66 and
Section 51 of the Special Economic Zone Act of 1995 granted the PEZA exemption from
payment of real property taxes.91 Based on the criteria set in Manila International Airport
Authority v. Court of Appeals,92 the Court of Appeals found that the PEZA is an instrumentality
of the national government. No taxes, therefore, could be levied on it by local government
units.93chanRoblesvirtualLawlibrary

In the decision94 dated August 27, 2008, the Court of Appeals granted the PEZA’s petition for
certiorari. It set aside the trial court’s decision and nullified all the Province’s proceedings with
respect to the collection of real property taxes from the PEZA.

The Province filed a motion for reconsideration,95 which the Court of Appeals denied in the
resolution96 dated April 16, 2009 for lack of merit.

In its petition for review on certiorari with this court,97 the Province of Bataan insists that the
Court of Appeals had no jurisdiction to take cognizance of the PEZA’s petition for certiorari. The
Province maintains that the Court of Tax Appeals had jurisdiction to hear the PEZA’s petition
since it involved a local tax case decided by a Regional Trial
Court.98chanRoblesvirtualLawlibrary

The Province reiterates that the PEZA is not exempt from payment of real property taxes. The
Province points out that the EPZA, the PEZA’s predecessor, had to be categorically exempted
from payment of real property taxes. The EPZA, therefore, was not inherently exempt from
payment of real property taxes and so is the PEZA. Since Congress omitted from the Special
Economic Zone Act of 1995 a provision specifically exempting the PEZA from payment of real
property taxes, the Province argues that the PEZA is a taxable entity. It cited the rule in
statutory construction that provisions omitted in revised statutes are deemed
repealed.99chanRoblesvirtualLawlibrary

With respect to Sections 24 and 51 of the Special Economic Zone Act of 1995 granting tax
exemptions and benefits, the Province argues that these provisions only apply to business
establishments operating within special economic zones,100 not to the PEZA.

This court ordered the PEZA to comment on the Province’s petition for review on
certiorari.101chanRoblesvirtualLawlibrary

In its comment,102 the PEZA argues that the Court of Appeals had jurisdiction to hear its
petition for certiorari since the issue was whether the trial court committed grave abuse of
discretion in denying its petition for injunction. The PEZA maintains that it is exempt from
payment of real property taxes under Section 21 of Presidential Decree No. 66 and Section 51
of the Special Economic Zone Act of 1995.

The Province filed its reply,103 reiterating its arguments in its petition for review on certiorari.

On the PEZA’s motion,104 this court consolidated the petitions filed by the City of Lapu-Lapu
and the Province of Bataan.105chanRoblesvirtualLawlibrary

The issues for our resolution are the following:

I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapu’s appeal for raising
pure questions of law;
II. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction to hear, try, and
decide the City of Lapu-Lapu’s petition for declaratory relief;

III. Whether the petition for injunction filed before the Regional Trial Court, Branch 115, Pasay
City, is a local tax case appealable to the Court of Tax Appeals; and

IV. Whether the PEZA is exempt from payment of real property taxes.

We deny the consolidated petitions.

I.

The Court of Appeals did not err in

dismissing the City of Lapu-Lapu’s
appeal for raising pure questions of law

Under the Rules of Court, there are three modes of appeal from Regional Trial Court decisions.
The first mode is through an ordinary appeal before the Court of Appeals where the decision
assailed was rendered in the exercise of the Regional Trial Court’s original jurisdiction.
Ordinary appeals are governed by Rule 41, Sections 3 to 13 of the Rules of Court. In ordinary
appeals, questions of fact or mixed questions of fact and law may be
raised.106chanRoblesvirtualLawlibrary

The second mode is through a petition for review before the Court of Appeals where the
decision assailed was rendered by the Regional Trial Court in the exercise of its appellate
jurisdiction. Rule 42 of the Rules of Court governs petitions for review before the Court of
Appeals. In petitions for review under Rule 42, questions of fact, of law, or mixed questions of
fact and law may be raised.107chanRoblesvirtualLawlibrary

The third mode is through an appeal by certiorari before this court under Rule 45 where only
questions of law shall be raised.108chanRoblesvirtualLawlibrary

A question of fact exists when there is doubt as to the truth or falsity of the alleged facts.109 On
the other hand, there is a question of law if the appeal raises doubt as to the applicable law on a
certain set of facts.110chanRoblesvirtualLawlibrary

Under Rule 50, Section 2, an improper appeal before the Court of Appeals is dismissed outright
and shall not be referred to the proper court:chanroblesvirtuallawlibrary

SEC. 2. Dismissal of improper appeal to the Court of Appeals. – An appeal under Rule 41 taken
from the Regional Trial Court to the Court of Appeals raising only questions of law shall be
dismissed, issues purely of law not being reviewable by said court. Similarly, an appeal by
notice of appeal instead of by petition for review from the appellate judgment of a Regional Trial
Court shall be dismissed.

An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate
court but shall be dismissed outright.
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of Court, which provided that
improper appeals to the Court of Appeals shall not be dismissed but shall be certified to the
proper court for resolution:chanroblesvirtuallawlibrary

Sec. 3. Where appealed case erroneously, brought. — Where the appealed case has been
erroneously brought to the Court of Appeals, it shall not dismiss the appeal, but shall certify the
case to the proper court, with a specific and clear statement of the grounds therefor.

With respect to appeals by certiorari directly filed before this court but which raise questions of
fact, paragraph 4(b) of Circular No. 2-90 dated March 9, 1990 states that this court “retains the
option, in the exercise of its sound discretion and considering the attendant circumstances,
either itself to take cognizance of and decide such issues or to refer them to the Court of
Appeals for determination.”

In Indoyon, Jr. v. Court of Appeals,111 we said that this court “cannot tolerate ignorance of the
law on appeals.”112 It is not this court’s task to determine for litigants their proper remedies
under the Rules.113chanRoblesvirtualLawlibrary

We agree that the City availed itself of the wrong mode of appeal before the Court of Appeals.
The City raised pure questions of law in its appeal. The issue of whether the Regional Trial
Court of Pasay had jurisdiction over the PEZA’s petition for declaratory relief is a question of
law, jurisdiction being a matter of law.114 The issue of whether the PEZA is a government
instrumentality exempt from payment of real property taxes is likewise a question of law since
this question is resolved by examining the provisions of the PEZA’s charter as well as other
laws relating to the PEZA.115chanRoblesvirtualLawlibrary

The Court of Appeals, therefore, did not err in dismissing the City’s appeal pursuant to Rule 50,
Section 2 of the Rules of Court.

Nevertheless, considering the important questions involved in this case, we take cognizance of
the City’s petition for review on certiorari in the interest of justice.

In Municipality of Pateros v. The Honorable Court of Appeals,116 the Municipality of Pateros

filed an appeal under Rule 42 before the Court of Appeals, which the Court of Appeals denied
outright for raising pure questions of law. This court agreed that the Municipality of Pateros
“committed a procedural infraction”117 and should have directly filed a petition for review on
certiorari before this court. Nevertheless, “in the interest of justice and in order to write finis to
[the] controversy,”118 this court “opt[ed] to relax the rules”119 and proceeded to decide the
case. This court said:chanroblesvirtuallawlibrary

While it is true that rules of procedure are intended to promote rather than frustrate the ends of
justice, and while the swift unclogging of the dockets of the courts is a laudable objective, it
nevertheless must not be met at the expense of substantial justice.

The Court has allowed some meritorious cases to proceed despite inherent procedural defects
and lapses. This is in keeping with the principle that rules of procedure are mere tools designed
to facilitate the attainment of justice, and that strict and rigid application of rules which should
result in technicalities that tend to frustrate rather than promote substantial justice must always
be avoided. It is a far better and more prudent cause of action for the court to excuse a technical
lapse and afford the parties a review of the case to attain the ends of justice, rather than
dispose of the case on technicality and cause grave injustice to the parties, giving a false
impression of speedy disposal of cases while actually resulting in more delay, if not a
miscarriage of justice.120

Similar to Municipality of Pateros, we opt to relax the rules in this case. The PEZA operates or
otherwise administers special economic zones all over the country. Resolving the substantive
issue of whether the PEZA is taxable for real property taxes will clarify the taxing powers of all
local government units where special economic zones are operated. This case, therefore,
should be decided on the merits.

II.

The Regional Trial Court of Pasay had

no jurisdiction to hear, try, and decide
the PEZA’s petition for declaratory relief
against the City of Lapu-Lapu

Rule 63 of the Rules of Court governs actions for declaratory relief. Section 1 of Rule 63
provides:chanroblesvirtuallawlibrary

SECTION 1. Who may file petition. – Any person interested under a deed, will, contract or other
written instrument, or whose rights are affected by a statute, executive order or regulation,
ordinance, or any other governmental regulation may, before breach or violation, thereof, bring
an action in the appropriate Regional Trial Court to determine any question of construction or
validity arising, and for a declaration of his rights or duties, thereunder.

An action for reformation of an instrument, to quiet title to real property or remove clouds
therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be brought
under this Rule.

The court with jurisdiction over petitions for declaratory relief is the Regional Trial Court, the
subject matter of litigation in an action for declaratory relief being incapable of pecuniary
estimation.121 Section 19 of the Judiciary Reorganization Act of 1980
provides:chanroblesvirtuallawlibrary

SEC. 19. Jurisdiction in Civil Cases. – Regional Trial Courts shall exercise exclusive original
jurisdiction:

(1) In all civil actions in which the subject of litigation is incapable of pecuniary estimation[.]

Consistent with the law, the Rules state that a petition for declaratory relief is filed “in the
appropriate Regional Trial Court.”122

A special civil action for declaratory relief is filed for a judicial determination of any question of
construction or validity arising from, and for a declaration of rights and duties, under any of the
following subject matters: a deed, will, contract or other written instrument, statute, executive
order or regulation, ordinance, or any other governmental regulation.123 However, a
declaratory judgment may issue only if there has been “no breach of the documents in
question.”124 If the contract or statute subject matter of the action has already been breached,
the appropriate ordinary civil action must be filed.125 If adequate relief is available through
another form of action or proceeding, the other action must be preferred over an action for
declaratory relief.126chanRoblesvirtualLawlibrary
In Ollada v. Central Bank of the Philippines,127 the Central Bank issued CB-IED Form No. 5
requiring certified public accountants to submit an accreditation under oath before they were
allowed to certify financial statements submitted to the bank. Among those financial statements
the Central Bank disallowed were those certified by accountant Felipe B. Ollada.
128chanRoblesvirtualLawlibrary

Claiming that the requirement “restrained the legitimate pursuit of one’s trade,”129 Ollada filed a
petition for declaratory relief against the Central Bank.

This court ordered the dismissal of Ollada’s petition “without prejudice to [his] seeking relief in
another appropriate action.”130 According to this court, Ollada’s right had already been violated
when the Central Bank refused to accept the financial statements he prepared. Since there was
already a breach, a petition for declaratory relief was not proper. Ollada must pursue the
“appropriate ordinary civil action or proceeding.”131 This court
explained:chanroblesvirtuallawlibrary

Petitioner commenced this action as, and clearly intended it to be one for Declaratory Relief
under the provisions of Rule 66 of the Rules of Court. On the question of when a special civil
action of this nature would prosper, we have already held that the complaint for declaratory
relief will not prosper if filed after a contract, statute or right has been breached or violated. In
the present case such is precisely the situation arising from the facts alleged in the petition for
declaratory relief. As vigorously claimed by petitioner himself, respondent had already invaded
or violated his right and caused him injury — all these giving him a complete cause of action
enforceable in an appropriate ordinary civil action or proceeding. The dismissal of the action
was, therefore, proper in the light of our ruling in De Borja vs. Villadolid, 47 O.G. (5) p. 2315,
and Samson vs. Andal, G.R. No. L-3439, July 31, 1951, where we held that an action for
declaratory relief should be filed before there has been a breach of a contract, statutes or right,
and that it is sufficient to bar such action, that there had been a breach — which would
constitute actionable violation. The rule is that an action for Declaratory Relief is proper only if
adequate relief is not available through the means of other existing forms of action or
proceeding (1 C.J.S. 1027-1028). 132

It is also required that the parties to the action for declaratory relief be those whose rights or
interests are affected by the contract or statute in question.133 “There must be an actual
justiciable controversy or the ‘ripening seeds’ of one”134 between the parties. The issue
between the parties “must be ripe for judicial determination.”135 An action for declaratory relief
based on theoretical or hypothetical questions cannot be filed for our courts are not advisory
courts.136chanRoblesvirtualLawlibrary

In Republic v. Roque,137 this court dismissed respondents’ petition for declaratory relief for lack
of justiciable controversy. According to this court, “[the respondents’] fear of prospective
prosecution [under the Human Security Act] was solely based on remarks of certain government
officials which were addressed to the general public.”138chanRoblesvirtualLawlibrary

In Velarde v. Social Justice Society,139 this court refused to resolve the issue of “whether or not
[a religious leader’s endorsement] of a candidate for elective office or in urging or requiring the
members of his flock to vote for a specific candidate is violative [of the separation clause].”140
According to the court, there was no justiciable controversy and ordered the dismissal of the
Social Justice Society’s petition for declaratory relief. This court
explained:chanroblesvirtuallawlibrary
Indeed, SJS merely speculated or anticipated without factual moorings that, as religious
leaders, the petitioner and his co-respondents below had endorsed or threatened to endorse a
candidate or candidates for elective offices; and that such actual or threatened endorsement
"will enable [them] to elect men to public office who [would] in turn be forever beholden to their
leaders, enabling them to control the government"[;] and "pos[ing] a clear and present danger of
serious erosion of the people’s faith in the electoral process[;] and reinforc[ing] their belief that
religious leaders determine the ultimate result of elections," which would then be violative of the
separation clause.

Such premise is highly speculative and merely theoretical, to say the least. Clearly, it does not
suffice to constitute a justiciable controversy. The Petition does not even allege any indication or
manifest intent on the part of any of the respondents below to champion an electoral candidate,
or to urge their so-called flock to vote for, or not to vote for, a particular candidate. It is a time-
honored rule that sheer speculation does not give rise to an actionable right.

Obviously, there is no factual allegation that SJS’ rights are being subjected to any threatened,
imminent and inevitable violation that should be prevented by the declaratory relief sought. The
judicial power and duty of the courts to settle actual controversies involving rights that are
legally demandable and enforceable cannot be exercised when there is no actual or threatened
violation of a legal right.

All that the 5-page SJS Petition prayed for was "that the question raised in paragraph 9 hereof
be resolved." In other words, it merely sought an opinion of the trial court on whether the
speculated acts of religious leaders endorsing elective candidates for political offices violated
the constitutional principle on the separation of church and state. SJS did not ask for a
declaration of its rights and duties; neither did it pray for the stoppage of any threatened
violation of its declared rights. Courts, however, are proscribed from rendering an advisory
opinion.141

In sum, a petition for declaratory relief must satisfy six requisites:chanroblesvirtuallawlibrary

[F]irst, the subject matter of the controversy must be a deed, will, contract or other written
instrument, statute, executive order or regulation, or ordinance; second, the terms of said
documents and the validity thereof are doubtful and require judicial construction; third, there
must have been no breach of the documents in question; fourth, there must be an actual
justiciable controversy or the "ripening seeds" of one between persons whose interests are
adverse; fifth, the issue must be ripe for judicial determination; and sixth, adequate relief is not
available through other means or other forms of action or proceeding.142 (Emphases omitted)

We rule that the PEZA erred in availing itself of a petition for declaratory relief against the City.
The City had already issued demand letters and real property tax assessment against the
PEZA, in violation of the PEZA’s alleged tax-exempt status under its charter. The Special
Economic Zone Act of 1995, the subject matter of PEZA’s petition for declaratory relief, had
already been breached. The trial court, therefore, had no jurisdiction over the petition for
declaratory relief.

There are several aspects of jurisdiction.143 Jurisdiction over the subject matter is “the power
to hear and determine cases of the general class to which the proceedings in question
belong.”144 It is conferred by law, which may either be the Constitution or a statute.145
Jurisdiction over the subject matter means “the nature of the cause of action and the relief
sought.”146 Thus, the cause of action and character of the relief sought as alleged in the
complaint are examined to determine whether a court had jurisdiction over the subject
matter.147 Any decision rendered by a court without jurisdiction over the subject matter of the
action is void.148chanRoblesvirtualLawlibrary

Another aspect of jurisdiction is jurisdiction over the person. It is “the power of [a] court to
render a personal judgment or to subject the parties in a particular action to the judgment and
other rulings rendered in the action.”149 A court automatically acquires jurisdiction over the
person of the plaintiff upon the filing of the initiatory pleading.150 With respect to the defendant,
voluntary appearance in court or a valid service of summons vests the court with jurisdiction
over the defendant’s person.151 Jurisdiction over the person of the defendant is indispensable
in actions in personam or those actions based on a party’s personal liability.152 The
proceedings in an action in personam are void if the court had no jurisdiction over the person of
the defendant.153chanRoblesvirtualLawlibrary

Jurisdiction over the res or the thing under litigation is acquired either “by the seizure of the
property under legal process, whereby it is brought into actual custody of the law; or as a result
of the institution of legal proceedings, in which the power of the court is recognized and made
effective.”154 Jurisdiction over the res is necessary in actions in rem or those actions “directed
against the thing or property or status of a person and seek judgments with respect thereto as
against the whole world.”155 The proceedings in an action in rem are void if the court had no
jurisdiction over the thing under litigation.156chanRoblesvirtualLawlibrary

In the present case, the Regional Trial Court had no jurisdiction over the subject matter of the
action, specifically, over the remedy sought. As this court explained in Malana v.
Tappa:157chanRoblesvirtualLawlibrary

. . . an action for declaratory relief presupposes that there has been no actual breach of the
instruments involved or of rights arising thereunder. Since the purpose of an action for
declaratory relief is to secure an authoritative statement of the rights and obligations of the
parties under a statute, deed, or contract for their guidance in the enforcement thereof, or
compliance therewith, and not to settle issues arising from an alleged breach thereof, it may be
entertained only before the breach or violation of the statute, deed, or contract to which it refers.
A petition for declaratory relief gives a practical remedy for ending controversies that have not
reached the state where another relief is immediately available; and supplies the need for a
form of action that will set controversies at rest before they lead to a repudiation of obligations,
an invasion of rights, and a commission of wrongs.

Where the law or contract has already been contravened prior to the filing of an action for
declaratory relief, the courts can no longer assume jurisdiction over the action. In other words,
a court has no more jurisdiction over an action for declaratory relief if its subject has already
been infringed or transgressed before the institution of the action.158 (Emphasis supplied)

The trial court should have dismissed the PEZA’s petition for declaratory relief for lack of
jurisdiction.

Once an assessment has already been issued by the assessor, the proper remedy of a
taxpayer depends on whether the assessment was erroneous or illegal.

An erroneous assessment “presupposes that the taxpayer is subject to the tax but is disputing
the correctness of the amount assessed.”159 With an erroneous assessment, the taxpayer
claims that the local assessor erred in determining any of the items for computing the real
property tax, i.e., the value of the real property or the portion thereof subject to tax and the
proper assessment levels. In case of an erroneous assessment, the taxpayer must exhaust the
administrative remedies provided under the Local Government Code before resorting to judicial
action.

The taxpayer must first pay the real property tax under protest. Section 252 of the Local
Government Code provides:chanroblesvirtuallawlibrary

SECTION 252. Payment Under Protest. -(a) No protest shall be entertained unless the taxpayer
first pays the tax. There shall be annotated on the tax receipts the words "paid under protest".
The protest in writing must be filed within thirty (30) days from payment of the tax to the
provincial, city treasurer or municipal treasurer, in the case of a municipality within Metropolitan
Manila Area, who shall decide the protest within sixty (60) days from receipt.

(b) The tax or a portion thereof paid under protest, shall be held in trust by the treasurer
concerned.

(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion
of the tax protested shall be refunded to the protestant, or applied as tax credit against his
existing or future tax liability.

(d) In the event that the protest is denied or upon the lapse of the sixty day period prescribed in
subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title II,
Book II of this Code.

Should the taxpayer find the action on the protest unsatisfactory, the taxpayer may appeal with
the Local Board of Assessment Appeals within 60 days from receipt of the decision on the
protest:chanroblesvirtuallawlibrary

SECTION 226. Local Board of Assessment Appeals. - Any owner or person having legal
interest in the property who is not satisfied with the action of the provincial, city or municipal
assessor in the assessment of his property may, within sixty (60) days from the date of receipt
of the written notice of assessment, appeal to the Board of Assessment Appeals of the
provincial or city by filing a petition under oath in the form prescribed for the purpose, together
with copies of the tax declarations and such affidavits or documents submitted in support of the
appeal.

Payment under protest and appeal to the Local Board of Assessment Appeals are “successive
administrative remedies to a taxpayer who questions the correctness of an assessment.”160
The Local Board Assessment Appeals shall not entertain an appeal “without the action of the
local assessor”161 on the protest.

If the taxpayer is still unsatisfied after appealing with the Local Board of Assessment Appeals,
the taxpayer may appeal with the Central Board of Assessment Appeals within 30 days from
receipt of the Local Board’s decision:chanroblesvirtuallawlibrary

SECTION 229. Action by the Local Board of Assessment Appeals. - (a) The Board shall decide
the appeal within one hundred twenty (120) days from the date of receipt of such appeal. The
Board, after hearing, shall render its decision based on substantial evidence or such relevant
evidence on record as a reasonable mind might accept as adequate to support the conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have the power to summon
witnesses, administer oaths, conduct ocular inspection, take depositions, and issue subpoena
and subpoena duces tecum. The proceedings of the Board shall be conducted solely for the
purpose of ascertaining the facts without necessarily adhering to technical rules applicable in
judicial proceedings.

(c) The secretary of the Board shall furnish the owner of the property or the person having legal
interest therein and the provincial or city assessor with a copy of the decision of the Board. In
case the provincial or city assessor concurs in the revision or the assessment, it shall be his
duty to notify the owner of the property or the person having legal interest therein of such fact
using the form prescribed for the purpose. The owner of the property or the person having legal
interest therein or the assessor who is not satisfied with the decision of the Board, may, within
thirty (30) days after receipt of the decision of said Board, appeal to the Central Board of
Assessment Appeals, as herein provided. The decision of the Central Board shall be final and
executory. (Emphasis supplied)

On the other hand, an assessment is illegal if it was made without authority under the law.162
In case of an illegal assessment, the taxpayer may directly resort to judicial action without
paying under protest the assessed tax and filing an appeal with the Local and Central Board of
Assessment Appeals.

In Ty v. Trampe,163 the Municipal Assessor of Pasig sent Alejandro B. Ty a notice of

assessment with respect to Ty’s real properties in Pasig. Without resorting to the administrative
remedies under the Local Government Code, Ty filed before the Regional Trial Court a petition,
praying that the trial court nullify the notice of assessment. In assessing the real property taxes
due, the Municipal Assessor used a schedule of market values solely prepared by him. This, Ty
argued, was void for being contrary to the Local Government Code requiring that the schedule
of market values be jointly prepared by the provincial, city, and municipal assessors of the
municipalities within the Metropolitan Manila Area.

This court ruled that the assessment was illegal for having been issued without authority of the
Municipal Assessor. Reconciling provisions of the Real Property Tax Code and the Local
Government Code, this court held that the schedule of market values must be jointly prepared
by the provincial, city, and municipal assessors of the municipalities within the Metropolitan
Manila Area.

As to the issue of exhaustion of administrative remedies, this court held that Ty did not err in
directly resorting to judicial action. According to this court, payment under protest is required
only “where there is a question as to the reasonableness of the amount assessed.”164 As to
appeals before the Local and Central Board of Assessment Appeals, they are “fruitful only
where questions of fact are involved.”165chanRoblesvirtualLawlibrary

Ty raised the issue of the legality of the notice of assessment, an issue that did not go into the
reasonableness of the amount assessed. Neither did the issue involve a question of fact. Ty
raised a question of law and, therefore, need not resort to the administrative remedies provided
under the Local Government Code.

In the present case, the PEZA did not avail itself of any of the remedies against a notice of
assessment. A petition for declaratory relief is not the proper remedy once a notice of
assessment was already issued.
Instead of a petition for declaratory relief, the PEZA should have directly resorted to a judicial
action. The PEZA should have filed a complaint for injunction, the “appropriate ordinary civil
action”166 to enjoin the City from enforcing its demand and collecting the assessed taxes from
the PEZA. After all, a declaratory judgment as to the PEZA’s tax-exempt status is useless
unless the City is enjoined from enforcing its demand.

Injunction “is a judicial writ, process or proceeding whereby a party is ordered to do or refrain
from doing a certain act.”167 “It may be the main action or merely a provisional remedy for and
as incident in the main action.”168 The essential requisites of a writ of injunction are: “(1) there
must be a right in esse or the existence of a right to be protected; and (2) the act against which
the injunction is directed to constitute a violation of such right.”169chanRoblesvirtualLawlibrary

We note, however, that the City confused the concepts of jurisdiction and venue in contending
that the Regional Trial Court of Pasay had no jurisdiction because the real properties involved in
this case are located in the City of Lapu-Lapu.

On the one hand, jurisdiction is “the power to hear and determine cases of the general class to
which the proceedings in question belong.”170 Jurisdiction is a matter of substantive law.171
Thus, an action may be filed only with the court or tribunal where the Constitution or a statute
says it can be brought.172 Objections to jurisdiction cannot be waived and may be brought at
any stage of the proceedings, even on appeal.173 When a case is filed with a court which has
no jurisdiction over the action, the court shall motu proprio dismiss the
case.174chanRoblesvirtualLawlibrary

On the other hand, venue is “the place of trial or geographical location in which an action or
proceeding should be brought.”175 In civil cases, venue is a matter of procedural law.176 A
party’s objections to venue must be brought at the earliest opportunity either in a motion to
dismiss or in the answer; otherwise the objection shall be deemed waived.177 When the venue
of a civil action is improperly laid, the court cannot motu proprio dismiss the
case.178chanRoblesvirtualLawlibrary

The venue of an action depends on whether the action is a real or personal action. Should the
action affect title to or possession of real property, or interest therein, it is a real action. The
action should be filed in the proper court which has jurisdiction over the area wherein the real
property involved, or a portion thereof, is situated.179 If the action is a personal action, the
action shall be filed with the proper court where the plaintiff or any of the principal plaintiffs
resides, or where the defendant or any of the principal defendants resides, or in the case of a
non-resident defendant where he may be found, at the election of the
plaintiff.180chanRoblesvirtualLawlibrary

The City was objecting to the venue of the action, not to the jurisdiction of the Regional Trial
Court of Pasay. In essence, the City was contending that the PEZA’s petition is a real action as
it affects title to or possession of real property, and, therefore, the PEZA should have filed the
petition with the Regional Trial Court of Lapu-Lapu City where the real properties are located.

However, whatever objections the City has against the venue of the PEZA’s action for
declaratory relief are already deemed waived. Objections to venue must be raised at the
earliest possible opportunity.181 The City did not file a motion to dismiss the petition on the
ground that the venue was improperly laid. Neither did the City raise this objection in its
answer.
In any event, the law sought to be judicially interpreted in this case had already been breached.
The Regional Trial Court of Pasay, therefore, had no jurisdiction over the PEZA’s petition for
declaratory relief against the City.

III.

The Court of Appeals had no jurisdiction

over the PEZA’s petition for certiorari
against the Province of Bataan

Appeal is the remedy “to obtain a reversal or modification of a judgment on the merits.”182 A
judgment on the merits is one which “determines the rights and liabilities of the parties based on
the disclosed facts, irrespective of the formal, technical or dilatory objections.”183 It is not even
necessary that the case proceeded to trial.184 So long as the “judgment is general”185 and
“the parties had a full legal opportunity to be heard on their respective claims and contentions,”
186 the judgment is on the merits.

On the other hand, certiorari is a special civil action filed to annul or modify a proceeding of a
tribunal, board, or officer exercising judicial or quasi-judicial functions.187 Certiorari, which in
Latin means “to be more fully informed,”188 was originally a remedy in the common law. This
court discussed the history of the remedy of certiorari in Spouses Delos Santos v. Metropolitan
Bank and Trust Company:189chanRoblesvirtualLawlibrary

In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued
out of Chancery, or the King’s Bench, commanding agents or officers of the inferior courts to
return the record of a cause pending before them, so as to give the party more sure and speedy
justice, for the writ would enable the superior court to determine from an inspection of the record
whether the inferior court’s judgment was rendered without authority. The errors were of such a
nature that, if allowed to stand, they would result in a substantial injury to the petitioner to whom
no other remedy was available. If the inferior court acted without authority, the record was then
revised and corrected in matters of law. The writ of certiorari was limited to cases in which the
inferior court was said to be exceeding its jurisdiction or was not proceeding according to
essential requirements of law and would lie only to review judicial or quasi-judicial acts.190

In our jurisdiction, the term “certiorari” is used in two ways. An appeal before this court raising
pure questions of law is commenced by filing a petition for review on certiorari under Rule 45 of
the Rules of Court. An appeal by certiorari, which continues the proceedings commenced
before the lower courts,191 is filed to reverse or modify judgments or final orders.192 Under the
Rules, an appeal by certiorari must be filed within 15 days from notice of the judgment or final
order, or of the denial of the appellant’s motion for new trial or
reconsideration.193chanRoblesvirtualLawlibrary

A petition for certiorari under Rule 65, on the other hand, is an independent and original action
filed to set aside proceedings conducted without or in excess of jurisdiction or with grave abuse
of discretion amounting to lack or excess of jurisdiction.194 Under the Rules, a petition for
certiorari may only be filed if there is no appeal or any plain, speedy, or adequate remedy in the
ordinary course of law.195 The petition must be filed within 60 days from notice of the
judgment, order, or resolution.196chanRoblesvirtualLawlibrary
Because of the longer period to file a petition for certiorari, some litigants attempt to file petitions
for certiorari as substitutes for lost appeals by certiorari. However, Rule 65 is clear that a
petition for certiorari will not prosper if appeal is available. Appeal is the proper remedy even if
the error, or one of the errors, raised is grave abuse of discretion on the part of the court
rendering judgment.197 If appeal is available, a petition for certiorari cannot be filed.

In this case, the trial court’s decision dated January 31, 2007 is a judgment on the merits.
Based on the facts disclosed by the parties, the trial court declared the PEZA liable to the
Province of Bataan for real property taxes. The PEZA’s proper remedy against the trial court’s
decision, therefore, is appeal.

Since the PEZA filed a petition for certiorari against the trial court’s decision, it availed itself of
the wrong remedy. As the Province of Bataan contended, the trial court’s decision dated
January 31, 2007 “is only an error of judgment appealable to the higher level court and may not
be corrected by filing a petition for certiorari.”198 That the trial court judge allegedly committed
grave abuse of discretion does not make the petition for certiorari the correct remedy. The
PEZA should have raised this ground in an appeal filed within 15 days from notice of the
assailed resolution.

This court, “in the liberal spirit pervading the Rules of Court and in the interest of substantial
justice,”199 has treated petitions for certiorari as an appeal: “(1) if the petition for certiorari was
filed within the reglementary period within which to file a petition for review on certiorari; (2)
when errors of judgment are averred; and (3) when there is sufficient reason to justify the
relaxation of the rules.”200 Considering that “the nature of an action is determined by the
allegations of the complaint or the petition and the character of the relief sought,”201 a petition
which “actually avers errors of judgment rather than errors than that of jurisdiction”202 may be
considered a petition for review.

However, suspending the application of the Rules has its disadvantages. Relaxing procedural
rules may reduce the “effective enforcement of substantive rights,”203 leading to “arbitrariness,
caprice, despotism, or whimsicality in the settlement of disputes.”204 Therefore, for this court to
suspend the application of the Rules, the accomplishment of substantial justice must outweigh
the importance of predictability of court procedures.

The PEZA’s petition for certiorari may be treated as an appeal. First, the petition for certiorari
was filed within the 15-day reglementary period for filing an appeal. The PEZA filed its petition
for certiorari before the Court of Appeals on October 15, 2007,205 which was 12 days from
October 3, 2007206 when the PEZA had notice of the trial court’s order denying the motion for
reconsideration.

Second, the petition for certiorari raised errors of judgment. The PEZA argued that the trial
court erred in ruling that it is not exempt from payment of real property taxes given Section 21 of
Presidential Decree No. 66 and Sections 11 and 51 of the Special Economic Zone Act of
1995.207chanRoblesvirtualLawlibrary

Third, there is sufficient reason to relax the rules given the importance of the substantive issue
presented in this case.

However, the PEZA’s petition for certiorari was filed before the wrong court. The PEZA should
have filed its petition before the Court of Tax Appeals.
The Court of Tax Appeals has the exclusive appellate jurisdiction over local tax cases decided
by Regional Trial Courts. Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended by
Republic Act No. 9282, provides:chanroblesvirtuallawlibrary

Sec. 7. Jurisdiction. – The [Court of Tax Appeals] shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

....

3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally
decided or resolved by them in the exercise of their original or appellate jurisdiction[.]

The local tax cases referred to in Section 7, paragraph (a)(3) of Republic Act No. 1125, as
amended, include cases involving real property taxes. Real property taxation is governed by
Book II of the Local Government Code on “Local Taxation and Fiscal Matters.” Real property
taxes are collected by the Local Treasurer,208 not by the Bureau of Internal Revenue in charge
of collecting national internal revenue taxes, fees, and charges.209chanRoblesvirtualLawlibrary

Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by Republic Act No. 9282,
separately provides for the exclusive appellate jurisdiction of the Court of Tax Appeals over
decisions of the Central Board of Assessment Appeals involving the assessment or collection of
real property taxes:chanroblesvirtuallawlibrary

Sec. 7. Jurisdiction. – The [Court of Tax Appeals] shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

....

5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate
jurisdiction over cases involving the assessment and taxation of real property originally decided
by the provincial or city board of assessment appeals[.]

This separate provision, nevertheless, does not bar the Court of Tax Appeals from taking
cognizance of trial court decisions involving the collection of real property tax cases. Sections
256210 and 266211 of the Local Government Code expressly allow local government units to
file “in any court of competent jurisdiction” civil actions to collect basic real property taxes.
Should the trial court rule against them, local government units cannot be barred from appealing
before the Court of Tax Appeals – the “highly specialized body specifically created for the
purpose of reviewing tax cases.”212chanRoblesvirtualLawlibrary

We have also ruled that the Court of Tax Appeals, not the Court of Appeals, has the exclusive
original jurisdiction over petitions for certiorari assailing interlocutory orders issued by Regional
Trial Courts in a local tax case. We explained in The City of Manila v. Hon. Grecia-Cuerdo213
that while the Court of Tax Appeals has no express grant of power to issue writs of certiorari
under Republic Act No. 1125,214 as amended, the tax court’s judicial power as defined in the
Constitution215 includes the power to determine “whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the [Regional Trial Court] in
issuing an interlocutory order of jurisdiction in cases falling within the exclusive appellate
jurisdiction of the tax court.”216 We further elaborated:chanroblesvirtuallawlibrary
Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must
have the authority to issue, among others, a writ of certiorari. In transferring exclusive
jurisdiction over appealed tax cases to the CTA, it can reasonably be assumed that the law
intended to transfer also such power as is deemed necessary, if not indispensable, in aid of
such appellate jurisdiction. There is no perceivable reason why the transfer should only be
considered as partial, not total.

....

If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition
lies with the CA, this Court would be confirming the exercise by two judicial bodies, the CA and
the CTA, of jurisdiction over basically the same subject matter – precisely the split-jurisdiction
situation which is anathema to the orderly administration of justice. The Court cannot accept
that such was the legislative motive, especially considering that the law expressly confers on the
CTA, the tribunal with the specialized competence over tax and tariff matters, the role of judicial
review over local tax cases without mention of any other court that may exercise such power.
Thus, the Court agrees with the ruling of the CA that since appellate jurisdiction over private
respondents' complaint for tax refund is vested in the CTA, it follows that a petition for certiorari
seeking nullification of an interlocutory order issued in the said case should, likewise, be filed
with the same court. To rule otherwise would lead to an absurd situation where one court
decides an appeal in the main case while another court rules on an incident in the very same
case.

Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to
split jurisdiction to conclude that the intention of the law is to divide the authority over a local tax
case filed with the RTC by giving to the CA or this Court jurisdiction to issue a writ of certiorari
against interlocutory orders of the RTC but giving to the CTA the jurisdiction over the appeal
from the decision of the trial court in the same case. It is more in consonance with logic and
legal soundness to conclude that the grant of appellate jurisdiction to the CTA over tax cases
filed in and decided by the RTC carries with it the power to issue a writ of certiorari when
necessary in aid of such appellate jurisdiction. The supervisory power or jurisdiction of the CTA
to issue a writ of certiorari in aid of its appellate jurisdiction should co-exist with, and be a
complement to, its appellate jurisdiction to review, by appeal, the final orders and decisions of
the RTC, in order to have complete supervision over the acts of the latter.217 (Citations omitted)

In this case, the petition for injunction filed before the Regional Trial Court of Pasay was a local
tax case originally decided by the trial court in its original jurisdiction. Since the PEZA assailed
a judgment, not an interlocutory order, of the Regional Trial Court, the PEZA’s proper remedy
was an appeal to the Court of Tax Appeals.

Considering that the appellate jurisdiction of the Court of Tax Appeals is to the exclusion of all
other courts, the Court of Appeals had no jurisdiction to take cognizance of the PEZA’s petition.
The Court of Appeals acted without jurisdiction in rendering the decision in CA-G.R. SP No.
100984. Its decision in CA-G.R. SP No. 100984 is void.218chanRoblesvirtualLawlibrary

The filing of appeal in the wrong court does not toll the period to appeal. Consequently, the
decision of the Regional Trial Court, Branch 115, Pasay City, became final and executory after
the lapse of the 15th day from the PEZA’s receipt of the trial court’s decision.219 The denial of
the petition for injunction became final and executory.
IV.

The remedy of a taxpayer depends on the

stage in which the local government unit is
enforcing its authority to impose real
property taxes

The proper remedy of a taxpayer depends on the stage in which the local government unit is
enforcing its authority to collect real property taxes. For the guidance of the members of the
bench and the bar, we reiterate the taxpayer’s remedies against the erroneous or illegal
assessment of real property taxes.

Exhaustion of administrative remedies under the Local Government Code is necessary in cases
of erroneous assessments where the correctness of the amount assessed is assailed. The
taxpayer must first pay the tax then file a protest with the Local Treasurer within 30 days from
date of payment of tax.220 If protest is denied or upon the lapse of the 60-day period to decide
the protest, the taxpayer may appeal to the Local Board of Assessment Appeals within 60 days
from the denial of the protest or the lapse of the 60-day period to decide the protest.221 The
Local Board of Assessment Appeals has 120 days to decide the
appeal.222chanRoblesvirtualLawlibrary

If the taxpayer is unsatisfied with the Local Board’s decision, the taxpayer may appeal before
the Central Board of Assessment Appeals within 30 days from receipt of the Local Board’s
decision.223chanRoblesvirtualLawlibrary

The decision of the Central Board of Assessment Appeals is appealable before the Court of Tax
Appeals En Banc.224 The appeal before the Court of Tax Appeals shall be filed following the
procedure under Rule 43 of the Rules of Court.225chanRoblesvirtualLawlibrary

The Court of Tax Appeals’ decision may then be appealed before this court through a petition
for review on certiorari under Rule 45 of the Rules of Court raising pure questions of
law.226chanRoblesvirtualLawlibrary

In case of an illegal assessment where the assessment was issued without authority,
exhaustion of administrative remedies is not necessary and the taxpayer may directly resort to
judicial action.227 The taxpayer shall file a complaint for injunction before the Regional Trial
Court228 to enjoin the local government unit from collecting real property taxes.

The party unsatisfied with the decision of the Regional Trial Court shall file an appeal, not a
petition for certiorari, before the Court of Tax Appeals, the complaint being a local tax case
decided by the Regional Trial Court.229 The appeal shall be filed within fifteen (15) days from
notice of the trial court’s decision.

The Court of Tax Appeals’ decision may then be appealed before this court through a petition
for review on certiorari under Rule 45 of the Rules of Court raising pure questions of
law.230chanRoblesvirtualLawlibrary

In case the local government unit has issued a notice of delinquency, the taxpayer may file a
complaint for injunction to enjoin the impending sale of the real property at public auction. In
case the local government unit has already sold the property at public auction, the taxpayer
must first deposit with the court the amount for which the real property was sold, together with
interest of 2% per month from the date of sale to the time of the institution of action. The
taxpayer may then file a complaint to assail the validity of the public auction.231 The decisions
of the Regional Trial Court in these cases shall be appealable before the Court of Tax
Appeals,232 and the latter’s decisions appealable before this court through a petition for review
on certiorari under Rule 45 of the Rules of Court.233chanRoblesvirtualLawlibrary

V.

The PEZA is exempt from payment

of real property taxes

The jurisdictional errors in this case render these consolidated petitions moot. We do not review
void decisions rendered without jurisdiction.

However, the PEZA alleged that several local government units, including the City of Baguio
and the Province of Cavite, have issued their respective real property tax assessments against
the PEZA. Other local government units will likely follow suit, and either the PEZA or the local
government units taxing the PEZA may file their respective actions against each other.

In the interest of judicial economy234 and avoidance of conflicting decisions involving the same
issues,235 we resolve the substantive issue of whether the PEZA is exempt from payment of
real property taxes.

Real property taxes are annual taxes levied on real property such as lands, buildings,
machinery, and other improvements not otherwise specifically exempted under the Local
Government Code.236 Real property taxes are ad valorem, with the amount charged based on
a fixed proportion of the value of the property.237 Under the law, provinces, cities, and
municipalities within the Metropolitan Manila Area have the power to levy real property taxes
within their respective territories.238chanRoblesvirtualLawlibrary

The general rule is that real properties are subject to real property taxes. This is true especially
since the Local Government Code has withdrawn exemptions from real property taxes of all
persons, whether natural or juridical:chanroblesvirtuallawlibrary

SEC. 234. Exemptions from Real Property Tax. – The following are exempted from payment of
real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person;

(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,

nonprofit or religious cemeteries and all lands, buildings, and improvements actually, directly,
and exclusively used for religious, charitable or educational purposes;

(c) All machineries and equipment that are actually, directly and exclusively used by local water
districts and government-owned or –controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938;
and

(e) Machinery and equipment used for pollution control and environmental protection.

Except as provided herein, any exemption from payment of real property taxes previously
granted to, or presently enjoyed by, all persons, whether natural or juridical, including
government-owned or -controlled corporations are hereby withdrawn upon the effectivity of this
Code. (Emphasis supplied)

The person liable for real property taxes is the “taxable person who had actual or beneficial use
and possession [of the real property for the taxable period,] whether or not [the person owned
the property for the period he or she is being taxed].”239chanRoblesvirtualLawlibrary

The exceptions to the rule are provided in the Local Government Code. Under Section 133(o),
local government units have no power to levy taxes of any kind on the national government, its
agencies and instrumentalities and local government units:chanroblesvirtuallawlibrary

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless
otherwise provided herein, the exercise of taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:

....

(o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities and local government units.

Specifically on real property taxes, Section 234 enumerates the persons and real property
exempt from real property taxes:chanroblesvirtuallawlibrary

SEC. 234. Exemptions from Real Property Tax. – The following are exempted from payment of
real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person;

(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,

nonprofit or religious cemeteries and all lands, buildings, and improvements actually, directly,
and exclusively used for religious, charitable or educational purposes;

(c) All machineries and equipment that are actually, directly and exclusively used by local water
districts and government-owned or –controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power;

(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938;
and

(e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property tax previously granted
to, or presently enjoyed by, all persons, whether natural or juridical, including all government-
owned or -controlled corporations are hereby withdrawn upon the effectivity of this Code.
(Emphasis supplied)

For persons granted tax exemptions or incentives before the effectivity of the Local Government
Code, Section 193 withdrew these tax exemption privileges. These persons consist of both
natural and juridical persons, including government-owned or controlled
corporations:chanroblesvirtuallawlibrary

SEC. 193. Withdrawal of Tax Exemption Privileges. – Unless otherwise provided in this code,
tax exemptions or incentives granted to or presently enjoyed by all persons, whether natural or
juridical, including government-owned or controlled corporations, except local water districts,
cooperatives duly registered under R.A. 6938, non stock and non profit hospitals and
educational institutions, are hereby withdrawn upon effectivity of this Code.

As discussed, Section 234 withdrew all tax privileges with respect to real property taxes.

Nevertheless, local government units may grant tax exemptions under such terms and
conditions as they may deem necessary:chanroblesvirtuallawlibrary

SEC. 192. Authority to Grant Tax Exemption Privileges. – Local government units may, through
ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and
conditions as they may deem necessary.

In Mactan Cebu International Airport Authority v. Hon. Marcos,240 this court classified the
exemptions from real property taxes into ownership, character, and usage exemptions.

Ownership exemptions are exemptions based on the ownership of the real property. The
exemptions of real property owned by the Republic of the Philippines, provinces, cities,
municipalities, barangays, and registered cooperatives fall under this
classification.241chanRoblesvirtualLawlibrary

Character exemptions are exemptions based on the character of the real property. Thus, no
real property taxes may be levied on charitable institutions, houses and temples of prayer like
churches, parsonages, or convents appurtenant thereto, mosques, and non profit or religious
cemeteries.242chanRoblesvirtualLawlibrary

Usage exemptions are exemptions based on the use of the real property. Thus, no real
property taxes may be levied on real property such as: (1) lands and buildings actually, directly,
and exclusively used for religious, charitable or educational purpose; (2) machineries and
equipment actually, directly and exclusively used by local water districts or by government-
owned or controlled corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power; and (3) machinery and equipment used for
pollution control and environmental protection.243chanRoblesvirtualLawlibrary

Persons may likewise be exempt from payment of real properties if their charters, which were
enacted or reenacted after the effectivity of the Local Government Code, exempt them payment
of real property taxes.244chanRoblesvirtualLawlibrary

V. (A)
The PEZA is an instrumentality of the national government

An instrumentality is “any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some
if not all corporate powers, administering special funds, and enjoying operational autonomy,
usually through a charter.”245chanRoblesvirtualLawlibrary

Examples of instrumentalities of the national government are the Manila International Airport
Authority,246 the Philippine Fisheries Development Authority,247 the Government Service
Insurance System,248 and the Philippine Reclamation Authority.249 These entities are not
integrated within the department framework but are nevertheless vested with special functions
to carry out a declared policy of the national government.

Similarly, the PEZA is an instrumentality of the national government. It is not integrated within
the department framework but is an agency attached to the Department of Trade and
Industry.250 Book IV, Chapter 7, Section 38(3)(a) of the Administrative Code of 1987 defines
“attachment”:chanroblesvirtuallawlibrary

SEC. 38. Definition of Administrative Relationship. – Unless otherwise expressly stated in the
Code or in other laws defining the special relationships of particular agencies, administrative
relationships shall be categorized and defined as follows:

....

(3) Attachment.–(a) This refers to the lateral relationship between the department or its
equivalent and the attached agency or corporation for purposes of policy and program
coordination. The coordination may be accomplished by having the department represented in
the governing board of the attached agency or corporation, either as chairman or as a member,
with or without voting rights, if this is permitted by the charter; having the attached corporation or
agency comply with a system of periodic reporting which shall reflect the progress of the
programs and projects; and having the department or its equivalent provide general policies
through its representative in the board, which shall serve as the framework for the internal
policies of the attached corporation or agency[.]

Attachment, which enjoys “a larger measure of independence”251 compared with other

administrative relationships such as supervision and control, is further explained in Beja, Sr. v.
Court of Appeals:252chanRoblesvirtualLawlibrary

An attached agency has a larger measure of independence from the Department to which it is
attached than one which is under departmental supervision and control or administrative
supervision. This is borne out by the “lateral relationship” between the Department and the
attached agency. The attachment is merely for “policy and program coordination.” With respect
to administrative matters, the independence of an attached agency from Departmental control
and supervision is further reinforced by the fact that even an agency under a Department’s
administrative supervision is free from Departmental interference with respect to appointments
and other personnel actions “in accordance with the decentralization of personnel functions”
under the Administrative Code of 1987. Moreover, the Administrative Code explicitly provides
that Chapter 8 of Book IV on supervision and control shall not apply to chartered institutions
attached to a Department.253
With the PEZA as an attached agency to the Department of Trade and Industry, the 13-person
PEZA Board is chaired by the Department Secretary.254 Among the powers and functions of
the PEZA is its ability to coordinate with the Department of Trade and Industry for policy and
program formulation and implementation.255 In strategizing and prioritizing the development of
special economic zones, the PEZA coordinates with the Department of Trade and
Industry.256chanRoblesvirtualLawlibrary

The PEZA also administers its own funds and operates autonomously, with the PEZA Board
formulating and approving the PEZA’s annual budget.257 Appointments and other personnel
actions in the PEZA are also free from departmental interference, with the PEZA Board having
the exclusive and final authority to promote, transfer, assign and reassign officers of the
PEZA.258chanRoblesvirtualLawlibrary

As an instrumentality of the national government, the PEZA is vested with special functions or
jurisdiction by law. Congress created the PEZA to operate, administer, manage and develop
special economic zones in the Philippines.259 Special economic zones are areas with highly
developed or which have the potential to be developed into agro-industrial, industrial
tourist/recreational, commercial, banking, investment and financial centers.260 By operating,
administering, managing, and developing special economic zones which attract investments
and promote use of domestic labor, the PEZA carries out the following policy of the
Government:chanroblesvirtuallawlibrary

SECTION 2. Declaration of Policy. — It is the declared policy of the government to translate into
practical realities the following State policies and mandates in the 1987 Constitution, namely:

(a) “The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.” (Sec. 20, Art. II)

(b) “The State shall promote the preferential use of Filipino labor, domestic materials and locally
produced goods, and adopt measures that help make them competitive.” (Sec. 12, Art. XII)

In pursuance of these policies, the government shall actively encourage, promote, induce and
accelerate a sound and balanced industrial, economic and social development of the country in
order to provide jobs to the people especially those in the rural areas, increase their productivity
and their individual and family income, and thereby improve the level and quality of their living
condition through the establishment, among others, of special economic zones in suitable and
strategic locations in the country and through measures that shall effectively attract legitimate
and productive foreign investments.261

Being an instrumentality of the national government, the PEZA cannot be taxed by local
government units.

Although a body corporate vested with some corporate powers,262 the PEZA is not a
government-owned or controlled corporation taxable for real property taxes.

Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines the term
“government-owned or controlled corporation”:chanroblesvirtuallawlibrary

SEC. 2. General Terms Defined. – Unless the specific words of the text, or the context as a
whole, or a particular statute, shall require a different meaning:
....

(13) Government-owned or controlled corporation refers to any agency organized as a stock or

non-stock corporation, vested with functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of stock corporations, to the extent of at least
fifty-one (51) per cent of its capital stock: Provided, That government-owned or controlled
corporations may be further categorized by the Department of the Budget, the Civil Service
Commission, and the Commission on Audit for purposes of the exercise and discharge of their
respective powers, functions and responsibilities with respect to such corporations.

Government entities are created by law, specifically, by the Constitution or by statute. In the
case of government-owned or controlled corporations, they are incorporated by virtue of special
charters263 to participate in the market for special reasons which may be related to
dysfunctions or inefficiencies of the market structure. This is to adjust reality as against the
concept of full competition where all market players are price takers. Thus, under the
Constitution, government-owned or controlled corporations are created in the interest of the
common good and should satisfy the test of economic viability.264 Article XII, Section 16 of the
Constitution provides:chanroblesvirtuallawlibrary

Section 16. The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned or controlled
corporations may be created or established by special charters in the interest of the common
good and subject to the test of economic viability.

Economic viability is “the capacity to function efficiently in business.”265 To be economically

viable, the entity “should not go into activities which the private sector can do
better.”266chanRoblesvirtualLawlibrary

To be considered a government-owned or controlled corporation, the entity must have been

organized as a stock or non-stock corporation.267chanRoblesvirtualLawlibrary

Government instrumentalities, on the other hand, are also created by law but partake of
sovereign functions. When a government entity performs sovereign functions, it need not meet
the test of economic viability. In Manila International Airport Authority v. Court of Appeals,268
this court explained:chanroblesvirtuallawlibrary

In contrast, government instrumentalities vested with corporate powers and performing

governmental or public functions need not meet the test of economic viability. These
instrumentalities perform essential public services for the common good, services that every
modern State must provide its citizens. These instrumentalities need not be economically viable
since the government may even subsidize their entire operations. These instrumentalities are
not the "government-owned or controlled corporations" referred to in Section 16, Article XII of
the 1987 Constitution.

Thus, the Constitution imposes no limitation when the legislature creates government
instrumentalities vested with corporate powers but performing essential governmental or public
functions. Congress has plenary authority to create government instrumentalities vested with
corporate powers provided these instrumentalities perform essential government functions or
public services. However, when the legislature creates through special charters corporations
that perform economic or commercial activities, such entities — known as "government-owned
or controlled corporations" — must meet the test of economic viability because they compete in
the market place.

....

Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the
Constitutional Commission the purpose of this test, as follows:chanroblesvirtuallawlibrary

MR. OPLE: Madam President, the reason for this concern is really that when the government
creates a corporation, there is a sense in which this corporation becomes exempt from the test
of economic performance. We know what happened in the past. If a government corporation
loses, then it makes its claim upon the taxpayers' money through new equity infusions from the
government and what is always invoked is the common good. That is the reason why this year,
out of a budget of P115 billion for the entire government, about P28 billion of this will go into
equity infusions to support a few government financial institutions. And this is all taxpayers'
money which could have been relocated to agrarian reform, to social services like health and
education, to augment the salaries of grossly underpaid public employees. And yet this is all
going down the drain.

Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common
good," this becomes a restraint on future enthusiasts for state capitalism to excuse themselves
from the responsibility of meeting the market test so that they become viable. And so, Madam
President, I reiterate, for the committee's consideration and I am glad that I am joined in this
proposal by Commissioner Foz, the insertion of the standard of "ECONOMIC VIABILITY OR
THE ECONOMIC TEST," together with the common good.

....

Clearly, the test of economic viability does not apply to government entities vested with
corporate powers and performing essential public services. The State is obligated to render
essential public services regardless of the economic viability of providing such service. The non-
economic viability of rendering such essential public service does not excuse the State from
withholding such essential services from the public.269 (Emphases and citations omitted)

The law created the PEZA’s charter. Under the Special Economic Zone Act of 1995, the PEZA
was established primarily to perform the governmental function of operating, administering,
managing, and developing special economic zones to attract investments and provide
opportunities for preferential use of Filipino labor.

Under its charter, the PEZA was created a body corporate endowed with some corporate
powers. However, it was not organized as a stock270 or non-stock271 corporation. Nothing in
the PEZA’s charter provides that the PEZA’s capital is divided into shares.272 The PEZA also
has no members who shall share in the PEZA’s profits.

The PEZA does not compete with other economic zone authorities in the country. The
government may even subsidize the PEZA’s operations. Under Section 47 of the Special
Economic Zone Act of 1995, “any sum necessary to augment [the PEZA’s] capital outlay shall
be included in the General Appropriations Act to be treated as an equity of the national
government.”273chanRoblesvirtualLawlibrary
The PEZA, therefore, need not be economically viable. It is not a government-owned or
controlled corporation liable for real property taxes.

V. (B)

The PEZA assumed the non-profit character, including the tax exempt status, of the EPZA

The PEZA’s predecessor, the EPZA, was declared non-profit in character with all its revenues
devoted for its development, improvement, and maintenance. Consistent with this non-profit
character, the EPZA was explicitly declared exempt from real property taxes under its charter.
Section 21 of Presidential Decree No. 66 provides:chanroblesvirtuallawlibrary

Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be
non-profit and shall devote and use all its returns from its capital investment, as well as excess
revenues from its operations, for the development, improvement and maintenance and other
related expenditures of the Authority to pay its indebtedness and obligations and in furtherance
and effective implementation of the policy enunciated in Section 1 of this Decree. In consonance
therewith, the Authority is hereby declared exempt:
....

(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses
to be paid to the National Government, its provinces, cities, municipalities and other government
agencies and instrumentalities[.]

The Special Economic Zone Act of 1995, on the other hand, does not specifically exempt the
PEZA from payment of real property taxes.

Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its charter.
A provision in the Special Economic Zone Act of 1995 explicitly exempting the PEZA is
unnecessary. The PEZA assumed the real property exemption of the EPZA under Presidential
Decree No. 66.

Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA “to evolve into the
PEZA in accordance with the guidelines and regulations set forth in an executive order issued
for this purpose.” President Ramos then issued Executive Order No. 282 in 1995, ordering the
PEZA to assume the EPZA’s powers, functions, and responsibilities under Presidential Decree
No. 66 not inconsistent with the Special Economic Zone Act of 1995:chanroblesvirtuallawlibrary

SECTION 1. Assumption of EPZA’s Powers and Functions by PEZA. All the powers, functions
and responsibilities of EPZA as provided under its Charter, Presidential Decree No. 66, as
amended, insofar as they are not inconsistent with the powers, functions and responsibilities of
the PEZA, as mandated under Republic Act No. 7916, shall hereafter be assumed and
exercised by the PEZA. Henceforth, the EPZA shall be referred to as the PEZA.

The following sections of the Special Economic Zone Act of 1995 provide for the PEZA’s
powers, functions, and responsibilities:chanroblesvirtuallawlibrary

SEC. 5. Establishment of ECOZONES. – To ensure the viability and geographical dispersal of

ECOZONES through a system of prioritization, the following areas are initially identified as
ECOZONES, subject to the criteria specified in Section 6:
....

The metes and bounds of each ECOZONE are to be delineated and more particularly described
in a proclamation to be issued by the President of the Philippines, upon the recommendation of
the Philippine Economic Zone Authority (PEZA), which shall be established under this Act, in
coordination with the municipal and / or city council, National Land Use Coordinating Committee
and / or the Regional Land Use Committee.

SEC. 6. Criteria for the Establishment of Other ECOZONES. – In addition to the ECOZONES
identified in Section 5 of this Act, other areas may be established as ECOZONES in a
proclamation to be issued by the President of the Philippines subject to the evaluation and
recommendation of the PEZA, based on a detailed feasibility and engineering study which must
conform to the following criteria:

(a) The proposed area must be identified as a regional growth center in the Medium-Term
Philippine Development Plan or by the Regional Development Council;

(b) The existence of required infrastructure in the proposed ECOZONE, such as roads, railways,
telephones, ports, airports, etc., and the suitability and capacity of the proposed site to absorb
such improvements;

(c) The availability of water source and electric power supply for use of the ECOZONE;

(d) The extent of vacant lands available for industrial and commercial development and future
expansion of the ECOZONE as well as of lands adjacent to the ECOZONE available for
development of residential areas for the ECOZONE workers;

(e) The availability of skilled, semi-skilled and non-skilled trainable labor force in and around the
ECOZONE;

(f) The area must have a significant incremental advantage over the existing economic zones
and its potential profitability can be established;

(g) The area must be strategically located; and

(h) The area must be situated where controls can easily be established to curtail smuggling
activities.

Other areas which do not meet the foregoing criteria may be established as ECOZONES:
Provided, That the said area shall be developed only through local government and/or private
sector initiative under any of the schemes allowed in Republic Act No. 6957 (the build-operate-
transfer law), and without any financial exposure on the part of the national government:
Provided, further, That the area can be easily secured to curtail smuggling activities: Provided,
finally, That after five (5) years the area must have attained a substantial degree of
development, the indicators of which shall be formulated by the PEZA.

SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial / Trading,

Tourist, Investment and Financial Community. - Within the framework of the Constitution, the
interest of national sovereignty and territorial integrity of the Republic, ECOZONE shall be
developed, as much as possible, into a decentralized, self-reliant and self-sustaining industrial,
commercial/trading, agro-industrial, tourist, banking, financial and investment center with
minimum government intervention. Each ECOZONE shall be provided with transportation,
telecommunications, and other facilities needed to generate linkage with industries and
employment opportunities for its own inhabitants and those of nearby towns and cities.

The ECOZONE shall administer itself on economic, financial, industrial, tourism development
and such other matters within the exclusive competence of the national government.

The ECOZONE may establish mutually beneficial economic relations with other entities within
the country, or, subject to the administrative guidance of the Department of Foreign Affairs
and/or the Department of Trade and Industry, with foreign entities or enterprises.

Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up
enterprises in the ECOZONE, either by themselves or in joint venture with Filipinos in any sector
of industry, international trade and commerce within the ECOZONE. Their assets, profits and
other legitimate interests shall be protected: Provided, That the ECOZONE through the PEZA
may require a minimum investment for any ECOZONE enterprises in freely convertible
currencies: Provided, further, That the new investment shall fall under the priorities, thrusts and
limits provided for in the Act.

SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory. – The

ECOZONE shall be managed and operated by the PEZA as separate customs territory.

The PEZA is hereby vested with the authority to issue certificate of origin for products
manufactured or processed in each ECOZONE in accordance with the prevailing rules or origin,
and the pertinent regulations of the Department of Trade and Industry and/or the Department of
Finance.

SEC. 9. Defense and Security. – The defense of the ECOZONE and the security of its perimeter
fence shall be the responsibility of the national government in coordination with the PEZA.
Military forces sent by the national government for the purpose of defense shall not interfere in
the internal affairs of any of the ECOZONE and expenditure for these military forces shall be
borne by the national government. The PEZA may provide and establish the ECOZONES’
internal security and firefighting forces.

SEC. 10. Immigration. – Any investor within the ECOZONE whose initial investment shall not be
less than One Hundred Fifty Thousand Dollars ($150,000.00), his/her spouse and dependent
children under twenty-one (21) years of age shall be granted permanent resident status within
the ECOZONE. They shall have freedom of ingress and egress to and from the ECOZONE
without any need of special authorization from the Bureau of Immigration.

The PEZA shall issue working visas renewable every two (2) years to foreign executives and
other aliens, processing highly-technical skills which no Filipino within the ECOZONE
possesses, as certified by the Department of Labor and Employment. The names of aliens
granted permanent resident status and working visas by the PEZA shall be reported to the
Bureau of Immigration within thirty (30) days after issuance thereof.

SEC. 13. General Powers and Functions of the Authority. – The PEZA shall have the following
powers and functions:

(a) To operate, administer, manage and develop the ECOZONE according to the principles and
provisions set forth in this Act;
(b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and
decentralized manner;

(c) To coordinate with local government units and exercise general supervision over the
development, plans, activities and operations of the ECOZONES, industrial estates, export
processing zones, free trade zones, and the like;

(d) In coordination with local government units concerned and appropriate agencies, to
construct, acquire, own, lease, operate and maintain on its own or through contract, franchise,
license, bulk purchase from the private sector and build-operate-transfer scheme or joint
venture, adequate facilities and infrastructure, such as light and power systems, water supply
and distribution systems, telecommunication and transportation, buildings, structures,
warehouses, roads, bridges, ports and other facilities for the operation and development of the
ECOZONE;

(e) To create, operate and/or contract to operate such agencies and functional units or offices of
the authority as it may deem necessary;

(f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of
personal or real property; sue and be sued; and otherwise carry out its duties and functions as
provided for in this Act;

(g) To coordinate the formulation and preparation of the development plans of the different
entities mentioned above;

(h) To coordinate with the National Economic Development Authority (NEDA), the Department
of Trade and Industry (DTI), the Department of Science and Technology (DOST), and the local
government units and appropriate government agencies for policy and program formulation and
implementation; and

(i) To monitor and evaluate the development and requirements of entities in subsection (a) and
recommend to the local government units or other appropriate authorities the location,
incentives, basic services, utilities and infrastructure required or to be made available for said
entities.

SEC. 17. Investigation and Inquiries. – Upon a written formal complaint made under oath, which
on its face provides reasonable basis to believe that some anomaly or irregularity might have
been committed, the PEZA or the administrator of the ECOZONE concerned, shall have the
power to inquire into the conduct of firms or employees of the ECOZONE and to conduct
investigations, and for that purpose may subpoena witnesses, administer oaths, and compel the
production of books, papers, and other evidences: Provided, That to arrive at the truth, the
investigator(s) may grant immunity from prosecution to any person whose testimony or whose
possessions of documents or other evidence is necessary or convenient to determine the truth
in any investigation conducted by him or under the authority of the PEZA or the administrator of
the ECOZONE concerned.

SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of development of
each ECOZONE established pursuant to this Act shall be formulated by the PEZA, in
coordination with the Department of Trade and Industry and the National Economic and
Development Authority; Provided, That such development strategy is consistent with the
priorities of the national government as outlined in the medium-term Philippine development
plan. It shall be the policy of the government and the PEZA to encourage and provide Incentives
and facilitate private sector participation in the construction and operation of public utilities and
infrastructure in the ECOZONE, using any of the schemes allowed in Republic Act No. 6957
(the build-operate-transfer law).

SEC. 22. Survey of Resources. The PEZA shall, in coordination with appropriate authorities and
neighboring cities and

municipalities, immediately conduct a survey of the physical, natural assets and potentialities of
the ECOZONE areas under its

jurisdiction.

SEC. 26. Domestic Sales. – Goods manufactured by an ECOZONE enterprise shall be made
available for immediate retail sales in the domestic market, subject to payment of corresponding
taxes on the raw materials and other regulations that may be adopted by the Board of the
PEZA.

However, in order to protect the domestic industry, there shall be a negative list of Industries
that will be drawn up by the PEZA. Enterprises engaged in the industries included in the
negative list shall not be allowed to sell their products locally. Said negative list shall be
regularly updated by the PEZA.

The PEZA, in coordination with the Department of Trade and Industry and the Bureau of
Customs, shall jointly issue the necessary implementing rules and guidelines for the effective
Implementation of this section.

SEC. 29. Eminent Domain. – The areas comprising an ECOZONE may be expanded or
reduced when necessary. For this purpose, the government shall have the power to acquire,
either by purchase, negotiation or condemnation proceedings, any private lands within or
adjacent to the ECOZONE for:

a. Consolidation of lands for zone development purposes;

b. Acquisition of right of way to the ECOZONE; and

c. The protection of watershed areas and natural assets valuable to the prosperity of the
ECOZONE.

If in the establishment of a publicly-owned ECOZONE, any person or group of persons who has
been occupying a parcel of land within the Zone has to be evicted, the PEZA shall provide the
person or group of persons concerned with proper disturbance compensation: Provided,
however, That in the case of displaced agrarian reform beneficiaries, they shall be entitled to the
benefits under the Comprehensive Agrarian Reform Law, including but not limited to Section 36
of Republic Act No. 3844, in addition to a homelot in the relocation site and preferential
employment in the project being undertaken.

SEC. 32. Shipping and Shipping Register. – Private shipping and related business including
private container terminals may operate freely in the ECOZONE, subject only to such minimum
reasonable regulations of local application which the PEZA may prescribe.
The PEZA shall, in coordination with the Department of Transportation and Communications,
maintain a shipping register for each ECOZONE as a business register of convenience for
ocean-going vessels and issue related certification.

Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the
ECOZONE, subject only to such reasonable requirement as may be prescribed by the PEZA In
coordination with the appropriate agencies of the national government.

SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate agencies,
shall take concrete and appropriate steps and enact the proper measure for the protection of the
local environment.

SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to terminate
business or operations shall comply with such requirements and procedures which the PEZA
shall set, particularly those relating to the clearing of debts. The assets of the closed enterprise
can be transferred and the funds con be remitted out of the ECOZONE subject to the rules,
guidelines and procedures prescribed jointly by the Bangko Sentral ng Pilipinas, the Department
of Finance and the PEZA.

SEC. 35. Registration of Business Enterprises. - Business enterprises within a designated

ECOZONE shall register with the PEZA to avail of all incentives and benefits provided for in this
Act.

SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center for the
purpose of facilitating the registration of new enterprises in the ECOZONE. Thus, all appropriate
government agencies that are Involved In registering, licensing or issuing permits to investors
shall assign their representatives to the ECOZONE to attend to Investor’s requirements.

SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the Department of
Tabor and Employment, shall prescribe a master employment contract for all ECOZONE
enterprise staff members and workers, the terms of which provide salaries and benefits not less
than those provided under this Act, the Philippine Labor Code, as amended, and other relevant
issuances of the national government.

SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department of Labor and
Employment, shall promulgate appropriate measures and programs leading to the expansion of
the services of the ECOZONE to help the local governments of nearby areas meet the needs of
the migrant workers.

SEC. 42. Incentive Scheme. - An additional deduction equivalent to one- half (1/2) of the value
of training expenses incurred in developing skilled or unskilled labor or for managerial or other
management development programs incurred by enterprises in the ECOZONE can be deducted
from the national government's share of three percent (3%) as provided In Section 24.

The PEZA, the Department of Labor and Employment, and the Department of Finance shall
jointly make a review of the incentive scheme provided In this section every two (2) years or
when circumstances so warrant.

SEC. 43. Relationship with the Regional Development Council. - The PEZA shall determine the
development goals for the ECOZONE within the framework of national development plans,
policies and goals, and the administrator shall, upon approval by the PEZA Board, submit the
ECOZONE plans, programs and projects to the regional development council for inclusion in
and as inputs to the overall regional development plan.

SEC. 44. Relationship with the Local Government Units. - Except as herein provided, the local
government units comprising the ECOZONE shall retain their basic autonomy and identity. The
cities shall be governed by their respective charters and the municipalities shall operate and
function In accordance with Republic Act No. 7160, otherwise known as the Local Government

Code of 1991.

SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. – Privately-owned

industrial estates shall retain their autonomy and independence and shall be monitored by the
PEZA for the implementation of incentives.

SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments over
industrial estates and agri-export processing estates shall be transferred to the PEZA. The
resources of government-owned Industrial estates and similar bodies except the Bases
Conversion Development Authority and those areas identified under Republic Act No. 7227, are
hereby transferred to the PEZA as the holding agency. They are hereby detached from their
mother agencies and attached to the PEZA for policy, program and operational supervision.

The Boards of the affected government-owned industrial estates shall be phased out and only
the management level and an appropriate number of personnel shall be retained.

Government personnel whose services are not retained by the PEZA or any government office
within the ECOZONE shall be entitled to separation pay and such retirement and other benefits
they are entitled to under the laws then in force at the time of their separation: Provided, That in
no case shall the separation pay be less than one and one-fourth (1 1/4) month of every year of
service.

The non-profit character of the EPZA under Presidential Decree No. 66 is not inconsistent with
any of the powers, functions, and responsibilities of the PEZA. The EPZA’s non-profit
character, including the EPZA’s exemption from real property taxes, must be deemed assumed
by the PEZA.

In addition, the Local Government Code exempting instrumentalities of the national government
from real property taxes was already in force274 when the PEZA’s charter was enacted in 1995.
It would have been redundant to provide for the PEZA’s exemption in its charter considering that
the PEZA is already exempt by virtue of Section 133(o) of the Local Government Code.

As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was in force when the
EPZA’s charter was enacted. Unlike the Local Government Code, Commonwealth Act No. 470
does not contain a provision specifically exempting instrumentalities of the national government
from payment of real property taxes.275 It was necessary to put an exempting provision in the
EPZA’s charter.

Contrary to the PEZA’s claim, however, Section 24 of the Special Economic Zone Act of 1995 is
not a basis for the PEZA’s exemption. Section 24 of the Special Economic Zone Act of 1995
provides:chanroblesvirtuallawlibrary
Sec. 24. Exemption from National and Local Taxes. — Except for real property taxes on land
owned by developers, no taxes, local and national, shall be imposed on business
establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross
income earned by all business enterprises within the ECOZONE shall be paid and remitted as
follows:chanroblesvirtuallawlibrary

(a) Three percent (3%) to the National Government;

(b) Two percent (2%) which shall be directly remitted by the business establishments to the
treasurer's office of the municipality or city where the enterprise is located. (Emphasis supplied)

Tax exemptions provided under Section 24 apply only to business establishments operating
within economic zones. Considering that the PEZA is not a business establishment but an
instrumentality performing governmental functions, Section 24 is inapplicable to the PEZA.

Also, contrary to the PEZA’s claim, developers of economic zones, whether public or private
developers, are liable for real property taxes on lands they own. Section 24 does not distinguish
between a public and private developer. Thus, courts cannot distinguish.276 Unless the public
developer is exempt under the Local Government Code or under its charter enacted after the
Local Government Code’s effectivity, the public developer must pay real property taxes on their
land.

At any rate, the PEZA cannot be taxed for real property taxes even if it acts as a developer or
operator of special economic zones. The PEZA is an instrumentality of the national government
exempt from payment of real property taxes under Section 133(o) of the Local Government
Code. As this court said in Manila International Airport Authority, “there must be express
language in the law empowering local governments to tax national government
instrumentalities. Any doubt whether such power exists is resolved against local
governments.”277chanRoblesvirtualLawlibrary

V. (C)

Real properties under the PEZA’s title are owned by the Republic of the Philippines

Under Section 234(a) of the Local Government Code, real properties owned by the Republic of
the Philippines are exempt from real property taxes:chanroblesvirtuallawlibrary

SEC. 234. Exemptions from Real Property Tax. – The following are exempted from payment of
real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person[.]

Properties owned by the state are either property of public dominion or patrimonial property.
Article 420 of the Civil Code of the Philippines enumerates property of public
dominion:chanroblesvirtuallawlibrary

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without belonging for public use, and are intended for
some public service or for the development of the national wealth.

Properties of public dominion are outside the commerce of man. These properties are exempt
from “levy, encumbrance or disposition through public or private sale.”278 As this court
explained in Manila International Airport Authority:chanroblesvirtuallawlibrary

Properties of public dominion, being for public use, are not subject to levy, encumbrance or
disposition through public or private sale. Any encumbrance, levy on execution or auction sale
of any property of public dominion is void for being contrary to public policy. Essential public
services will stop if properties of public dominion are subject to encumbrances, foreclosures and
auction sale[.]279

On the other hand, all other properties of the state that are not intended for public use or are not
intended for some public service or for the development of the national wealth are patrimonial
properties. Article 421 of the Civil Code of the Philippines provides:chanroblesvirtuallawlibrary

Art. 421. All other property of the State, which is not of the character stated in the preceding
article, is patrimonial property.

Patrimonial properties are also properties of the state, but the state may dispose of its
patrimonial property similar to private persons disposing of their property. Patrimonial
properties are within the commerce of man and are susceptible to prescription, unless otherwise
provided.280chanRoblesvirtualLawlibrary

In this case, the properties sought to be taxed are located in publicly owned economic zones.
These economic zones are property of public dominion. The City seeks to tax properties
located within the Mactan Economic Zone,281 the site of which was reserved by President
Marcos under Proclamation No. 1811, Series of 1979. Reserved lands are lands of the public
domain set aside for settlement or public use, and for specific public purposes by virtue of a
presidential proclamation.282 Reserved lands are inalienable and outside the commerce of
man,283 and remain property of the Republic until withdrawn from public use either by law or
presidential proclamation.284 Since no law or presidential proclamation has been issued
withdrawing the site of the Mactan Economic Zone from public use, the property remains
reserved land.

As for the Bataan Economic Zone, the law consistently characterized the property as a port.
Under Republic Act No. 5490, Congress declared Mariveles, Bataan “a principal port of
entry”285 to serve as site of a foreign trade zone where foreign and domestic merchandise may
be brought in without being subject to customs and internal revenue laws and regulations of the
Philippines.286 Section 4 of Republic Act No. 5490 provided that the foreign trade zone in
Mariveles, Bataan “shall at all times remain to be owned by the
Government”:chanroblesvirtuallawlibrary

SEC. 4. Powers and Duties. – The Foreign Trade Zone Authority shall have the following
powers and duties:
To fix and delimit the site of the Zone which at all times remain to be owned by the Government,
and which shall have a contiguous and adequate area with well defined and policed boundaries,
with adequate enclosures to segregate the Zone from the customs territory for protection of
revenues, together with suitable provisions for ingress and egress of persons, conveyance,
vessels and merchandise sufficient for the purpose of this Act[.] (Emphasis supplied)

The port in Mariveles, Bataan then became the Bataan Economic Zone under the Special
Economic Zone Act of 1995.287 Republic Act No. 9728 then converted the Bataan Economic
Zone into the Freeport Area of Bataan.288chanRoblesvirtualLawlibrary

A port of entry, where imported goods are unloaded then introduced in the market for public
consumption, is considered property for public use. Thus, Article 420 of the Civil Code
classifies a port as property of public dominion. The Freeport Area of Bataan, where the
government allows tax and duty-free importation of goods,289 is considered property of public
dominion. The Freeport Area of Bataan is owned by the state and cannot be taxed under
Section 234(a) of the Local Government Code.

Properties of public dominion, even if titled in the name of an instrumentality as in this case,
remain owned by the Republic of the Philippines. If property registered in the name of an
instrumentality is conveyed to another person, the property is considered conveyed on behalf of
the Republic of the Philippines. Book I, Chapter 12, Section 48 of the Administrative Code of
1987 provides:chanroblesvirtuallawlibrary

SEC. 48. Official Authorized to Convey Real Property. – Whenever real property of the
government is authorized by law to be conveyed, the deed of conveyance shall be executed in
behalf of the government by the following:

....

(2) For property belonging to the Republic of the Philippines, but titled in the name of any
political subdivision or of any corporate agency or instrumentality, by the executive head of the
agency or instrumentality. (Emphasis supplied)

In Manila International Airport Authority, this court explained:chanroblesvirtuallawlibrary

[The exemption under Section 234(a) of the Local Government Code] should be read in relation
with Section 133(o) of the same Code, which prohibits local governments from imposing
“[t]axes, fess or charges of any kind on the National Government, its agencies and
instrumentalities x x x.” The real properties owned by the Republic are titled either in the name
of the Republic itself or in the name of agencies or instrumentalities of the National Government.
The Administrative Code allows real property owned by the Republic to be titled in the name of
agencies or instrumentalities of the national government. Such real properties remained owned
by the Republic of the Philippines and continue to be exempt from real estate tax.

The Republic may grant the beneficial use of its real property to an agency or instrumentality of
the national government. This happens when title of the real property is transferred to an
agency or instrumentality even as the Republic remains the owner of the real property. Such
arrangement does not result in the loss of the tax exemption/ Section 234(a) of the Local
Government Code states that real property owned by the Republic loses its tax exemption only
if the “beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person.” . . .290 (Emphasis in the original; italics supplied)
Even the PEZA’s lands and buildings whose beneficial use have been granted to other persons
may not be taxed with real property taxes. The PEZA may only lease its lands and buildings to
PEZA-registered economic zone enterprises and entities.291 These PEZA-registered
enterprises and entities, which operate within economic zones, are not subject to real property
taxes. Under Section 24 of the Special Economic Zone Act of 1995, no taxes, whether local or
national, shall be imposed on all business establishments operating within the economic
zones:chanroblesvirtuallawlibrary

SEC. 24. Exemption from National and Local Taxes. – Except for real property on land owned
by developers, no taxes, local and national, shall be imposed on business establishments
operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by
all business enterprises within the ECOZONE shall be paid and remitted as follows:

a. Three percent (3%) to the National Government;

b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurer’s office of the municipality or city where the enterprise is located.292 (Emphasis
supplied)

In lieu of revenues from real property taxes, the City of Lapu-Lapu collects two-fifths of 5% final
tax on gross income paid by all business establishments operating within the Mactan Economic
Zone:chanroblesvirtuallawlibrary

SEC. 24. Exemption from National and Local Taxes. – Except for real property on land owned
by developers, no taxes, local and national, shall be imposed on business establishments
operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by
all business enterprises within the ECOZONE shall be paid and remitted as follows:

a. Three percent (3%) to the National Government;

b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurer’s office of the municipality or city where the enterprise is located.293 (Emphasis
supplied)

For its part, the Province of Bataan collects a fifth of the 5% final tax on gross income paid by all
business establishments operating within the Freeport Area of
Bataan:chanroblesvirtuallawlibrary

Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. - No taxes,
local and national, shall be imposed on business establishments operating within the FAB. In
lieu thereof, said business establishments shall pay a five percent (5%) final tax on their gross
income earned in the following percentages:

(a) One per centum (1%) to the National Government;

(b) One per centum (1%) to the Province of Bataan;

(c) One per centum (1%) to the treasurer's office of the Municipality of Mariveles; and

(d) Two per centum (2%) to the Authority of the Freeport of Area of Bataan.294 (Emphasis
supplied)
Petitioners, therefore, are not deprived of revenues from the operations of economic zones
within their respective territorial jurisdictions. The national government ensured that local
government units comprising economic zones shall retain their basic autonomy and
identity.295chanRoblesvirtualLawlibrary

All told, the PEZA is an instrumentality of the national government. Furthermore, the lands
owned by the PEZA are real properties owned by the Republic of the Philippines. The City of
Lapu-Lapu and the Province of Bataan cannot collect real property taxes from the
PEZA.chanrobleslaw

WHEREFORE, the consolidated petitions are DENIED.

SO ORDERED.cralawlawlibrary
G.R. No. 125078 May 30, 2011

BERNABE L. NAVIDA, JOSE P. ABANGAN, JR., CEFERINO P. ABARQUEZ, ORLANDITO A.

ABISON, FELIPE ADAYA, ALBERTO R. AFRICA, BENJAMIN M. ALBAO, FELIPE
ALCANTARA, NUMERIANO S. ALCARIA, FERNANDO C. ALEJADO, LEOPOLDO N.
ALFONSO, FLORO I. ALMODIEL, ANTONIO B. ALVARADO, ELEANOR AMOLATA,
RODOLFO P. ANCORDA, TRIFINO F. ANDRADA, BERT B. ANOCHE, RAMON E.
ANTECRISTO, ISAGANI D. ANTINO, DOMINGO ANTOPINA, MANSUETO M. APARICIO,
HERMINIGILDO AQUINO, MARCELO S. AQUINO, JR., FELIPE P. ARANIA, ULYSES M.
ARAS, ARSENIO ARCE, RUPERTO G. ARINZOL, MIGUEL G. ARINZOL, EDGARADO P.
ARONG, RODRIGO D.R. ASTRALABIO, RONNIE BACAYO, SOFRONIO BALINGIT, NELSON
M. BALLENA, EMNIANO BALMONTE, MAXIMO M. BANGI, SALVADOR M. BANGI,
HERMOGENES T. BARBECHO, ARSENIO B. BARBERO, DIOSDADO BARREDO, VIRGILIO
BASAS, ALEJANDRO G. BATULAN, DOMINGO A. BAUTISTA, VICTOR BAYANI, BENIGNO
BESARES, RUFINO BETITO, GERARDO A. BONIAO, CARLO B. BUBUNGAN, FERNANDO
B. BUENAVISTA, ALEJANDRINO H. BUENO, TOMAS P. BUENO, LEONARDO M. BURDEOS,
VICENTE P. BURGOS, MARCELINO J. CABALUNA, DIOSDADO CABILING, EMETRIO C.
CACHUELA, BRAULIO B. CADIVIDA, JR., SAMSON C. CAEL, DANIEL B. CAJURAO, REY A.
CALISO, NORBERTO F. CALUMPAG, CELESTINO CALUMPAG, LORETO CAMACHO,
VICTORIANO CANETE, DOMINADOR P. CANTILLO, FRUCTUSO P. CARBAJOSA,
VICTORINO S. CARLOS, VICTOR CARLOS, GEORGE M. CASSION, JAIME S.
CASTAÑARES, FLAVIANO C. CASTAÑARES, ELPIDIO CATUBAY, NATHANIEL B.
CAUSANG, BEOFIL B. CAUSING, ADRIANO R. CEJAS, CIRILO G. CERERA, SR.,
CRISTITUTO M. CEREZO, DANTE V. CONCHA, ALBERT CORNELIO, CESAR CORTES,
NOEL Y. CORTEZ, SERNUE CREDO, CORNELIO A. CRESENCIO, ALEX CRUZ, ROGER
CRUZ, RANSAM CRUZ, CANUTO M. DADULA, ROMEO L. DALDE, ZACARIAS DAMBAAN,
ELISEO DAPROZA, VIRGILIO P. DAWAL, TESIFREDO I. DE TOMAS, GAMALLER P.
DEANG, CARMELINO P. DEANG, DIOSDADO P. DEANG, DOMINGO A. DEANG, FELIPE R.
DEANG, JR., JULIETO S. DELA CRUZ, ELIEZER R. DELA TORRE, JEFFREY R. DELA
TORRE, RAUL DEMONTEVERDE, FELIPE P. DENOLAN, RUBENCIO P. DENOY, RODRIGO
M. DERMIL, ROLANDO B. DIAZ, LORENZO DIEGO, JOVENCIO DIEGO, SATURNINO
DIEGO, GREGORIO DIONG, AMADO R. DIZON, FE DIZON, VIRGILO M. DOMANTAY, LEO
S. DONATO, DOMINADOR L. DOSADO, NESTOR DUMALAG, FREDDIE DURAN, SR.,
MARIO C. ECHIVERE, AQUILLO M. EMBRADORA, MIGUEL EMNACE, RIO T. EMPAS,
EFRAIM ENGLIS, ANICETO ENOPIA, DIOCENE ENTECOSA, RUBENTITO D. ENTECOSA,
AVELINO C. ENTERO, FORTUNATA ENTRADA, ROGELIO P. EROY, RODOLFO M.
ESCAMILLA, SERGIO C. ESCANTILLA, LAZARO A. ESPAÑOLA, EULOGIO M. ETURMA,
PRIMO P. FERNANDEZ, EDILBERTO D. FERNANDO, GREGORIO S. FERNANDO, VICENTE
P. FERRER, MARCELO T. FLOR, ANTONIO M. FLORES, REDENTOR T. FLOREZA,
NORBERTO J. FUENTES, RICARDO C. GABUTAN, PEDRO D.V. GALEOS, ARNULFO F.
GALEOS, EDGARDO V. GARCESA, BERNARDO P. GENTOBA, EDUARDO P. GENTOBA,
VICTORIO B. GIDO, ROLANDO V. GIMENA, EARLWIN L. GINGOYO, ERNESTO GOLEZ,
JUANITO G. GONZAGA, ONOFRE GONZALES, AMADO J. GUMERE, LEONARDO M.
GUSTO, ALEJANDRO G. HALILI, NOEL H. HERCEDA, EMILIO V. HERMONDO, CLAUDIO
HIPOLITO, TORIBIO S ILLUSORIO, TEODURO G. IMPANG, JR., GIL A. JALBUNA, HERMIE
L. JALICO, ARMANDO B. JAMERLAN, NARCISO JAPAY, LIBURO C. JAVINAS, ALEJANDO
S. JIMENEZ, FEDERICO T. JUCAR, NAPOLEON T. JUMALON, OSCAR JUNSAY,
ANASTACIO D. LABANA, CARLOS C. LABAY, AVELINO L. LAFORTEZA, LOE LAGUMBAY,
NORBETO D. LAMPERNIS, ROLANDO J. LAS PEÑAS, ISMAEL LASDOCE, RENOLO L.
LEBRILLA, CAMILO G. LEDRES, ANASTACIO LLANOS, ARMANDO A. LLIDO, CARLITO
LOPEZ, ARISTON LOS BAÑEZ, CONCISO L. LOVITOS, ARQUILLANO M. LOZADA,
RODOLFO C. LUMAKIN, PRIMITIVO LUNTAO, JR., EMILIO S. MABASA, JR., JUANITO A.
MACALISANG, TEOTIMO L. MADULIN, JOSEPH D. MAGALLON, PEDRO P. MAGLASANG,
MARIO G. MALAGAMBA, JAIME B. MAMARADLO, PANFILO A. MANADA, SR., RICARDO S.
MANDANI, CONCHITA MANDANI, ALBERTO T. MANGGA, ALEJANDRO A. MANSANES,
RUFINO T. MANSANES, EUTIQUIO P. MANSANES, ALCIO P. MARATAS, AGAPITO D.
MARQUEZ, RICARDO R. MASIGLAT, DENDERIA MATABANG, ARNELO N. MATILLANO,
HERNANI C. MEJORADA, ROSITA MENDOZA, GREGORIO R. MESA, RENATO N.
MILLADO, ANTONIO L. MOCORRO, ALBERTO M. MOLINA, JR., DOMINGO P. MONDIA,
JUANITO P. MONDIA, RICARDO MONTAÑO, RAUL T. MONTEJO, ROGELIO MUNAR,
RODOLFO E. MUÑEZ, CRESENCIO NARCISO, PANFILO C. NARCISO, BRICS P. NECOR,
MOISES P. NICOLAS, NEMESIO G. NICOLAS, ALFREDO NOFIEL, FELIX T. NOVENA,
MARCELO P. OBTIAL, SR., TEODORO B. OCRETO, BIBIANO C. ODI, ALFREDO M.
OPERIO, TEOTISTO B. OPON, IZRO M. ORACION, ALAN E. ORANAS, ELPEDIO T. OSIAS,
ERNESTO M. PABIONA, NARCISO J. PADILLA, NELSON G. PADIOS, SR., FRNACISCO G.
PAGUNTALAN, RENE B. PALENCIA, MICHAEL P. PALOMAR, VIRGILIO E. PANILAGAO,
NOLITO C. PANULIN, ROMEO PARAGUAS, NESTOR B. PASTERA, VICENTE Q. PEDAZO,
EDGAR M. PEÑARANDA, ILUMINIDO B. PERACULLO, ANTONIO C. PEREZ, DOMINGO
PEREZ, OSCAR C. PLEÑOS, ANTONIETO POLANCOS, SERAFIN G. PRIETO, ZENAIDA
PROVIDO, FERNANDO Y. PROVIDO, ERNESTO QUERO, ELEAZAR QUIJARDO, WILLIAM
U. QUINTOY, LAURO QUISTADIO, ROGELIO RABADON, MARCELINO M. RELIZAN, RAUL
A. REYES, OCTAVIO F. REYES, EDDIE M. RINCOR, EMMANUEL RIVAS, RODULFO RIVAS,
BIENVENIDO C. ROMANCA, JACINTO ROMOC, ROMEO S. ROMUALDO, ALBERTO
ROSARIO, ROMEO L. SABIDO, SIMON SAGNIP, TIMOTEO SALIG, ROMAN G. SALIGONAN,
VICTORINO SALOMON, GENEROSO J. SALONGKONG, RODOLFO E. SALVANI, JIMMY A.
SAMELIN, EDUARDO A. SAMELIN, ANDRES A. SAMELIN, GEORGE SAMELIN, ROMEO A.
SARAOSOS, RUDIGELIO S. SARMIENTO, CIRILO SAYAANG, JARLO SAYSON, LEONCIO
SERDONCILLO, RODOLFO C. SERRANO, NESTOR G. SEVILLA, SIMEON F. SIMBA,
CATALINO S. SIMTIM, SERAFIN T. SINSUANGCO, EDUARDO A. SOLA, VICTORINO M.
SOLOMON, JAIME B. SUFICIENCIA, LYNDON SUMAJIT, ALFREDO P. SUMAJIT, ALFREDO
L. SUMAJIT, PEDRO A. SUMARAGO, ERNESTO SUMILE, NESTOR S. SUMOG-OY,
MANUEL T. SUPAS, WILFREDO A. TABAQUE, CONSTANCIO L. TACULAD, EUFROCINO A.
TAGOTO, JR., SERAPIO TAHITIT, PANTALEON T. TAMASE, ERNESTO TARRE, MAGNO E.
TATOY, AVELINO TAYAPAD, SAMUEL S. TERRADO, APOLINARIO B. TICO, ORLANDO
TINACO, ALBERT G. TINAY, ANTONIO TOLEDO, ANTONIO M. TORREGOSA, ISABELO
TORRES, JIMMY C. TORRIBIO, EDUARDO Y. TUCLAOD, JACINTO UDAL, RICARDO M.
URBANO, ERNESTO G. VAFLOR, FILOMENO E. VALENZUELA, SALORIANO VELASCO,
RODOLFO VIDAL, WALTER VILLAFAÑE, DANTE VILLALVA, PERIGRINO P. VILLARAN,
JESUS L. VILLARBA, ELEAZAR D. VILLARBA, JENNY T. VILLAVA, HENRY C. VILLEGAS,
DELFIN C. WALOG, RODOLFO YAMBAO, EDGAR A. YARE, MANSUETO M. YBERA,
EDUARDO G. YUMANG, HENRY R. YUNGOT, ROMEO P. YUSON, ARSENIA ZABALA,
FELIX N. ZABALA and GRACIANO ZAMORA, Petitioners,
vs.
HON. TEODORO A. DIZON, JR., Presiding Judge, Regional Trial Court, Branch 37, General
Santos City, SHELL OIL CO., DOW CHEMICAL CO., OCCIDENTAL CHEMICAL CORP.,
STANDARD FRUIT CO., STANDARD FRUIT & STEAMSHIP CO., DOLE FOOD CO., INC.,
DOLE FRESH FRUIT CO., DEL MONTE FRESH PRODUCE N.A., DEL MONTE TROPICAL
FRUIT CO., CHIQUITA BRANDS INTERNATIONAL, INC. and CHIQUITA BRANDS, INC.,
Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 125598

THE DOW CHEMICAL COMPANY and OCCIDENTAL CHEMICAL CORPORATION,

Petitioners,
vs.
BERNABE L. NAVIDA, JOSE P. ABANGAN, JR., CEFERINO P. ABARQUEZ, ORLANDITO A.
ABISON, FELIPE ADAYA, ALBERTO R. AFRICA, BENJAMIN M. ALBAO, FELIPE
ALCANTARA, NUMERIANO S. ALCARIA, FERNANDO C. ALEJADO, LEOPOLDO N.
ALFONSO, FLORO I. ALMODIEL, ANTONIO B. ALVARADO, ELEANOR AMOLATA,
RODOLFO P. ANCORDA, TRIFINO F. ANDRADA, BERT B. ANOCHE, RAMON E.
ANTECRISTO, ISAGANI D. ANTINO, DOMINGO ANTOPINA, MANSUETO M. APARICIO,
HERMINIGILDO AQUINO, MARCELO S. AQUINO, JR., FELIPE P. ARANIA, ULYSES M.
ARAS, ARSENIO ARCE, RUPERTO G. ARINZOL, MIGUEL G. ARINZOL, EDGARADO P.
ARONG, RODRIGO D.R. ASTRALABIO, RONNIE BACAYO, SOFRONIO BALINGIT, NELSON
M. BALLENA, EMNIANO BALMONTE, MAXIMO M. BANGI, SALVADOR M. BANGI,
HERMOGENES T. BARBECHO, ARSENIO B. BARBERO, DIOSDADO BARREDO, VIRGILIO
BASAS, ALEJANDRO G. BATULAN, DOMINGO A. BAUTISTA, VICTOR BAYANI, BENIGNO
BESARES, RUFINO BETITO, GERARDO A. BONIAO, CARLO B. BUBUNGAN, FERNANDO
B. BUENAVISTA, ALEJANDRINO H. BUENO, TOMAS P. BUENO, LEONARDO M. BURDEOS,
VICENTE P. BURGOS, MARCELINO J. CABALUNA, DIOSDADO CABILING, EMETRIO C.
CACHUELA, BRAULIO B. CADIVIDA, JR., SAMSON C. CAEL, DANIEL B. CAJURAO, REY A.
CALISO, NORBERTO F. CALUMPAG, CELESTINO CALUMPAG, LORETO CAMACHO,
VICTORIANO CANETE, DOMINADOR P. CANTILLO, FRUCTUSO P. CARBAJOSA,
VICTORINO S. CARLOS, VICTOR CARLOS, GEORGE M. CASSION, JAIME S.
CASTAÑARES, FLAVIANO C. CASTAÑARES, ELPIDIO CATUBAY, NATHANIEL B.
CAUSANG, BEOFIL B. CAUSING, ADRIANO R. CEJAS, CIRILO G. CERERA, SR.,
CRISTITUTO M. CEREZO, DANTE V. CONCHA, ALBERT CORNELIO, CESAR CORTES,
NOEL Y. CORTEZ, SERNUE CREDO, CORNELIO A. CRESENCIO, ALEX CRUZ, ROGER
CRUZ, RANSAM CRUZ, CANUTO M. DADULA, ROMEO L. DALDE, ZACARIAS DAMBAAN,
ELISEO DAPROZA, VIRGILIO P. DAWAL, TESIFREDO I. DE TOMAS, GAMALLER P.
DEANG, CARMELINO P. DEANG, DIOSDADO P. DEANG, DOMINGO A. DEANG, FELIPE R.
DEANG, JR., JULIETO S. DELA CRUZ, ELIEZER R. DELA TORRE, JEFFREY R. DELA
TORRE, RAUL DEMONTEVERDE, FELIPE P. DENOLAN, RUBENCIO P. DENOY, RODRIGO
M. DERMIL, ROLANDO B. DIAZ, LORENZO DIEGO, JOVENCIO DIEGO, SATURNINO
DIEGO, GREGORIO DIONG, AMADO R. DIZON, FE DIZON, VIRGILO M. DOMANTAY, LEO
S. DONATO, DOMINADOR L. DOSADO, NESTOR DUMALAG, FREDDIE DURAN, SR.,
MARIO C. ECHIVERE, AQUILLO M. EMBRADORA, MIGUEL EMNACE, RIO T. EMPAS,
EFRAIM ENGLIS, ANICETO ENOPIA, DIOCENE ENTECOSA, RUBENTITO D. ENTECOSA,
AVELINO C. ENTERO, FORTUNATA ENTRADA, ROGELIO P. EROY, RODOLFO M.
ESCAMILLA, SERGIO C. ESCANTILLA, LAZARO A. ESPAÑOLA, EULOGIO M. ETURMA,
PRIMO P. FERNANDEZ, EDILBERTO D. FERNANDO, GREGORIO S. FERNANDO, VICENTE
P. FERRER, MARCELO T. FLOR, ANTONIO M. FLORES, REDENTOR T. FLOREZA,
NORBERTO J. FUENTES, RICARDO C. GABUTAN, PEDRO D.V. GALEOS, ARNULFO F.
GALEOS, EDGARDO V. GARCESA, BERNARDO P. GENTOBA, EDUARDO P. GENTOBA,
VICTORIO B. GIDO, ROLANDO V. GIMENA, EARLWIN L. GINGOYO, ERNESTO GOLEZ,
JUANITO G. GONZAGA, ONOFRE GONZALES, AMADO J. GUMERE, LEONARDO M.
GUSTO, ALEJANDRO G. HALILI, NOEL H. HERCEDA, EMILIO V. HERMONDO, CLAUDIO
HIPOLITO, TORIBIO S ILLUSORIO, TEODURO G. IMPANG, JR., GIL A. JALBUNA, HERMIE
L. JALICO, ARMANDO B. JAMERLAN, NARCISO JAPAY, LIBURO C. JAVINAS, ALEJANDO
S. JIMENEZ, FEDERICO T. JUCAR, NAPOLEON T. JUMALON, OSCAR JUNSAY,
ANASTACIO D. LABANA, CARLOS C. LABAY, AVELINO L. LAFORTEZA, LOE LAGUMBAY,
NORBETO D. LAMPERNIS, ROLANDO J. LAS PEÑAS, ISMAEL LASDOCE, RENOLO L.
LEBRILLA, CAMILO G. LEDRES, ANASTACIO LLANOS, ARMANDO A. LLIDO, CARLITO
LOPEZ, ARISTON LOS BAÑEZ, CONCISO L. LOVITOS, ARQUILLANO M. LOZADA,
RODOLFO C. LUMAKIN, PRIMITIVO LUNTAO, JR., EMILIO S. MABASA, JR., JUANITO A.
MACALISANG, TEOTIMO L. MADULIN, JOSEPH D. MAGALLON, PEDRO P. MAGLASANG,
MARIO G. MALAGAMBA, JAIME B. MAMARADLO, PANFILO A. MANADA, SR., RICARDO S.
MANDANI, CONCHITA MANDANI, ALBERTO T. MANGGA, ALEJANDRO A. MANSANES,
RUFINO T. MANSANES, EUTIQUIO P. MANSANES, ALCIO P. MARATAS, AGAPITO D.
MARQUEZ, RICARDO R. MASIGLAT, DENDERIA MATABANG, ARNELO N. MATILLANO,
HERNANI C. MEJORADA, ROSITA MENDOZA, GREGORIO R. MESA, RENATO N.
MILLADO, ANTONIO L. MOCORRO, ALBERTO M. MOLINA, JR., DOMINGO P. MONDIA,
JUANITO P. MONDIA, RICARDO MONTAÑO, RAUL T. MONTEJO, ROGELIO MUNAR,
RODOLFO E. MUÑEZ, CRESENCIO NARCISO, PANFILO C. NARCISO, BRICS P. NECOR,
MOISES P. NICOLAS, NEMESIO G. NICOLAS, ALFREDO NOFIEL, FELIX T. NOVENA,
MARCELO P. OBTIAL, SR., TEODORO B. OCRETO, BIBIANO C. ODI, ALFREDO M.
OPERIO, TEOTISTO B. OPON, IZRO M. ORACION, ALAN E. ORANAS, ELPEDIO T. OSIAS,
ERNESTO M. PABIONA, NARCISO J. PADILLA, NELSON G. PADIOS, SR., FRANCISCO G.
PAGUNTALAN, RENE B. PALENCIA, MICHAEL P. PALOMAR, VIRGILIO E. PANILAGAO,
NOLITO C. PANULIN, ROMEO PARAGUAS, NESTOR B. PASTERA, VICENTE Q. PEDAZO,
EDGAR M. PEÑARANDA, ILUMINIDO B. PERACULLO, ANTONIO C. PEREZ, DOMINGO
PEREZ, OSCAR C. PLEÑOS, ANTONIETO POLANCOS, SERAFIN G. PRIETO, ZENAIDA
PROVIDO, FERNANDO Y. PROVIDO, ERNESTO QUERO, ELEAZAR QUIJARDO, WILLIAM
U. QUINTOY, LAURO QUISTADIO, ROGELIO RABADON, MARCELINO M. RELIZAN, RAUL
A. REYES, OCTAVIO F. REYES, EDDIE M. RINCOR, EMMANUEL RIVAS, RODULFO RIVAS,
BIENVENIDO C. ROMANCA, JACINTO ROMOC, ROMEO S. ROMUALDO, ALBERTO
ROSARIO, ROMEO L. SABIDO, SIMON SAGNIP, TIMOTEO SALIG, ROMAN B. SALIGONAN,
VICTORINO SALOMON, GENEROSO M. SALONGKONG, RODOLFO E. SALVANI, JIMMY A.
SAMELIN, EDUARDO A. SAMELIN, ANDRES A. SAMELIN, GEORGE SAMELIN, ROMEO A.
SARAOSOS, RUDIGELIO S. SARMIENTO, CIRILO SAYAANG, JARLO SAYSON, LEONCIO
SERDONCILLO, RODOLFO C. SERRANO, NESTOR G. SEVILLA, SIMEON F. SIMBA,
CATALINO S. SIMTIM, SERAFIN T. SINSUANGCO, EDUARDO A. SOLA, VICTORINO M.
SOLOMON, JAIME B. SUFICIENCIA, LYNDON SUMAJIT, ALFREDO P. SUMAJIT, ALFREDO
L. SUMAJIT, PEDRO A. SUMARAGO, ERNESTO SUMILE, NESTOR S. SUMOG-OY,
MANUEL T. SUPAS, WILFREDO A. TABAQUE, CONSTANCIO L. TACULAD, EUFROCINO A.
TAGOTO, JR., SERAPIO TAHITIT, PANTALEON T. TAMASE, ERNESTO TARRE, MAGNO E.
TATOY, AVELINO TAYAPAD, SAMUEL S. TERRADO, APOLINARIO B. TICO, ORLANDO
TINACO, ALBERT G. TINAY, ANTONIO TOLEDO, ANTONIO M. TORREGOSA, ISABELO
TORRES, JIMMY C. TORRIBIO, EDUARDO Y. TUCLAOD, JACINTO UDAL, RICARDO M.
URBANO, ERNESTO G. VAFLOR, FILOMENO E. VALENZUELA, SALORIANO VELASCO,
RODOLFO VIDAL, WALTER VILLAFAÑE, DANTE VILLALVA, PERIGRINO P. VILLARAN,
JESUS L. VILLARBA, ELEAZAR D. VILLARBA, JENNY T. VILLAVA, HENRY C. VILLEGAS,
DELFIN C. WALOG, RODOLFO YAMBAO, EDGAR A. YARE, MANSUETO M. YBERA,
EDUARDO G. YUMANG, HENRY R. YUNGOT, ROMEO P. YUSON, ARSENIA ZABALA,
FELIX N. ZABALA, and GRACIANO ZAMORA, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 126654

CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO ALDEPOLIA, ARTEMIO

ALEMAN, FIDEL ALLERA, DOMINGO ALONZO, CORNELIO AMORA, FELIPE G. AMORA,
LEOPOLDO AMORADO, MARCELINO ANDIMAT, JORGE ANDOY, MARGARITO R.
ANGELIA, GREGOTIO APRIANO, ALFREDO A. ARARAO, BONIFACIO L. ARTIGAS, JERSON
ASUAL, SERAFIN AZUCENA, FELIX M. BADOY, JULIAN J. BAHALLA, REYNALDO BAHAYA,
ANTONIO L. BALDAGO, CESAR N. BALTAZAR, DOMINADO A. BARING, ANTIPAS A.
BATINGAL, MARCIANO NATINGAL, MARINO BIBANCO, LEANDRO BILIRAN, MARGARITO
BLANCO, CATALINO BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO BRINA,
LUIS BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA, RPDITO CABAGTE,
RICARADO C. CABALLES, CARLITO A. CAINDOC, CANDIDO CALO, JR., PEDRITO
CAMPAS, FERNANDO R. CAPAROSO, DANILO CARILLO, BONIFACIO M. CATCHA,
FRANKLIN CLARAS, JOSE F. COLLAMAT, BERNARDO M. COMPENDIO, CORNELIO
COSTILLAS, ENERIO R. DAGAME, FELIMON DEBUMA, JR., RICADO C. DEIPARIME,
GREGORIO S. DE LA PENA, JOSE G. DELUAO, JR., ELPEDIO A. DIAZ, QUINTINO
DISIPULO, JR., CESAR G. DONAYRE, JOSE DULABAY, JAIRO DUQUIZA, ANTONIO
ENGBINO, ALFREDO ESPINOSA, ALONZO FAILOG, JAIME FEROLINO, RODOLFO L.
GABITO, PEDRO G. GEMENTIZA, RICARDO A. GEROLAGA, RODULFO G. GEROY,
ROGELIO GONZAGA, ROLANDO GONZALES, MODESTO M. GODELOSAO, HECTOR
GUMBAN, CAMILO HINAG, LECERIO IGBALIC, SILVERIO E. IGCALINOS, ALFREDO INTOD,
OLEGARIO IYUMA, DOMINGO B. JAGMOC, JR., EDUARDO JARGUE, ROLANDO A.
LABASON, ROLANDO LACNO, VIRGILIO A. LADURA, CONSTANCIO M. LAGURA,
FRANCISCO LAMBAN, ENRIQUE LAQUERO, LUCIO B. LASACA, SISINO LAURDEN,
VIVENCIO LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO, MARDENIO LAYAO,
NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD, DIOSDADO MADATE, RAMON
MAGDOSA, NILO MAGLINTE, MARINO G. MALINAO, CARLITO MANACAP, AURELIO A.
MARO, CRISOSTOMO R. MIJARES, CESAR MONAPCO, SILVANO MONCANO, EMILIO
MONTAJES, CESAR B. MONTERO, CLEMENTE NAKANO, RODRIGO H. NALAS, EMELIANO
C. NAPITAN, JUANITO B. NARON, JR., LUCIO NASAKA, TEOFILO NUNEZ, JORGE M.
OLORVIDA, CANULO P. OLOY, DOROTEO S. OMBRETE, TEOFILIO OMOSURA, MIGUEL
ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA, ALFREDO P. PALASPAS,
CATALINO C. PANA, ERNESTO M. PASCUAL, BIENVENIDO PAYAG, RESURRECCION
PENOS, PEDRO PILAGO, ROMEO PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL,
JESUS D. QUIBOL, MAGNO QUIZON, DIONISIO RAMOS, MAMERTO RANISES, NESTOR B.
REBUYA, RODRIGO REQUILMEN, ISIDRO RETANAL, CARLITO ROBLE, GLICERIO V.
ROSETE, TINOY G. SABINO, MELCHOR SALIGUMBA, SILVERIO SILANGAN, ROBERTO
SIVA, PACITA SUYMAN, CANILO TAJON, AVELINO TATAPOD, ROMEO TAYCO, RENATO
TAYCO, CONRADO TECSON, AGAPITO TECSON, ROMAN. E. TEJERO, ALFREDO
TILANDOCA, CARLOS B. TIMA, HERMONEGES TIRADOR, JOSELITO TIRO, PASTOR T.
TUNGKO, LEANDRO B. TURCAL, VICENTE URQUIZA, VICENTE VILLA, ANTONIO P.
VILLARAIZ, LEOPOLDO VILLAVITO and SAMUEL M. VILLEGAS, Petitioners,
vs.
THE HON. ROMEO D. MARASIGAN, Presiding Judge of Regional Trial Court, Branch 16,
Davao City, SHELL OIL CO., DOW CHEMICAL CO., OCCIDENTAL CHEMICAL CORP.,
STANDARD FRUIT CO., STANDARD FRUIT & STEAMSHIP CO., DOLE FOOD CO., INC.,
DOLE FRESH FRUIT CO., DEL MONTE FRESH PRODUCE N.A., DEL MONTE TROPICAL
FRUIT CO., CHIQUITA BRANDS INTERNATIONAL, INC. and CHIQUITA BRANDS, INC.,
Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 127856

DEL MONTE FRESH PRODUCE N.A. and DEL MONTE TROPICAL FRUIT CO., Petitioners,
vs.
THE REGIONAL TRIAL COURT OF DAVAO CITY, BRANCHES 16 AND 13, CORNELIO
ABELLA, JR., IRENEO AGABATU, PRUDENCIO ALDEPOLIA, ARTEMIO ALEMAN, FIDEL
ALLERA, DOMINGO ALONZO, CORNELIO AMORA, FELIPE G. AMORA, LEOPOLDO
AMORADO, MARCELINO ANDIMAT, JORGE ANDOY, MARGARITO R. ANGELIA,
GREGOTIO APRIANO, ALFREDO A. ARARAO, BONIFACIO L. ARTIGAS, JERSON ASUAL,
SERAFIN AZUCENA, FELIX M. BADOY, JULIAN J. BAHALLA, REYNALDO BAHAYA,
ANTONIO L. BALDAGO, CESAR N. BALTAZAR, DOMINADO A. BARING, ANTIPAS A.
BATINGAL, MARCIANO NATINGAL, MARINO BIBANCO, LEANDRO BILIRAN, MARGARITO
BLANCO, CATALINO BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO BRINA,
LUIS BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA, RPDITO CABAGTE,
RICARADO C. CABALLES, CARLITO A. CAINDOC, CANDIDO CALO, JR., PEDRITO
CAMPAS, FERNANDO R. CAPAROSO, DANILO CARILLO, BONIFACIO M. CATCHA,
FRANKLIN CLARAS, JOSE F. COLLAMAT, BERNARDO M. COMPENDIO, CORNELIO
COSTILLAS, ENERIO R. DAGAME, FELIMON DEBUMA, JR., RICADO C. DEIPARIME,
GREGORIO S. DE LA PENA, JOSE G. DELUAO, JR., ELPEDIO A. DIAZ, QUINTINO
DISIPULO, JR., CESAR G. DONAYRE, JOSE DULABAY, JAIRO DUQUIZA, ANTONIO
ENGBINO, ALFREDO ESPINOSA, ALONZO FAILOG, JAIME FEROLINO, RODOLFO L.
GABITO, PEDRO G. GEMENTIZA, RICARDO A. GEROLAGA, RODULFO G. GEROY,
ROGELIO GONZAGA, ROLANDO GONZALES, MODESTO M. GODELOSAO, HECTOR
GUMBAN, CAMILO HINAG, LECERIO IGBALIC, SILVERIO E. IGCALINOS, ALFREDO INTOD,
OLEGARIO IYUMA, DOMINGO B. JAGMOC, JR., EDUARDO JARGUE, ROLANDO A.
LABASON, ROLANDO LACNO, VIRGILIO A. LADURA, CONSTANCIO M. LAGURA,
FRANCISCO LAMBAN, ENRIQUE LAQUERO, LUCIO B. LASACA, SISINO LAURDEN,
VIVENCIO LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO, MARDENIO LAYAO,
NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD, DIOSDADO MADATE, RAMON
MAGDOSA, NILO MAGLINTE, MARINO G. MALINAO, CARLITO MANACAP, AURELIO A.
MARO, CRISOSTOMO R. MIJARES, CESAR MONAPCO, SILVANO MONCANO, EMILIO
MONTAJES, CESAR B. MONTERO, CLEMENTE NAKANO, RODRIGO H. NALAS, EMELIANO
C. NAPITAN, JUANITO B. NARON, JR., LUCIO NASAKA, TEOFILO NUNEZ, JORGE M.
OLORVIDA, CANULO P. OLOY, DOROTEO S. OMBRETE, TEOFILIO OMOSURA, MIGUEL
ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA, ALFREDO P. PALASPAS,
CATALINO C. PANA, ERNESTO M. PASCUAL, BIENVENIDO PAYAG, RESURRECCION
PENOS, PEDRO PILAGO, ROMEO PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL,
JESUS D. QUIBOL, MAGNO QUIZON, DIONISIO RAMOS, MAMERTO RANISES, NESTOR B.
REBUYA, RODRIGO REQUILMEN, ISIDRO RETANAL, CARLITO ROBLE, GLICERIO V.
ROSETE, TINOY G. SABINO, MELCHOR SALIGUMBA, SILVERIO SILANGAN, ROBERTO
SIVA, PACITA SUYMAN, CANILO TAJON, AVELINO TATAPOD, ROMEO TAYCO, RENATO
TAYCO, CONRADO TECSON, AGAPITO TECSON, ROMAN. E. TEJERO, ALFREDO
TILANDOCA, CARLOS B. TIMA, HERMONEGES TIRADOR, JOSELITO TIRO, PASTOR T.
TUNGKO, LEANDRO B. TURCAL, VICENTE URQUIZA, VICENTE VILLA, ANTONIO P.
VILLARAIZ, LEOPOLDO VILLAVITO and SAMUEL M. VILLEGAS, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 128398

CHIQUITA BRANDS, INC., and CHIQUITA BRANDS INTERNATIONAL, INC., Petitioners,

vs.
HON. ANITA ALFELOR-ALAGABAN, in her capacity as Presiding Judge of the Regional Trial
Court, Davao City, Branch 13, CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO
ALDEPOLIA, ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO ALONZO, CORNELIO AMORA,
FELIPE G. AMORA, LEOPOLDO AMORADO, MARCELINO ANDIMAT, JORGE ANDOY,
MARGARITO R. ANGELIA, GREGOTIO APRIANO, ALFREDO A. ARARAO, BONIFACIO L.
ARTIGAS, JERSON ASUAL, SERAFIN AZUCENA, FELIX M. BADOY, JULIAN J. BAHALLA,
REYNALDO BAHAYA, ANTONIO L. BALDAGO, CESAR N. BALTAZAR, DOMINADO A.
BARING, ANTIPAS A. BATINGAL, MARCIANO NATINGAL, MARINO BIBANCO, LEANDRO
BILIRAN, MARGARITO BLANCO, CATALINO BONGO, MELCHOR BRIGOLE, ELISEO BRINA,
ROBERTO BRINA, LUIS BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA, RPDITO
CABAGTE, RICARADO C. CABALLES, CARLITO A. CAINDOC, CANDIDO CALO, JR.,
PEDRITO CAMPAS, FERNANDO R. CAPAROSO, DANILO CARILLO, BONIFACIO M.
CATCHA, FRANKLIN CLARAS, JOSE F. COLLAMAT, BERNARDO M. COMPENDIO,
CORNELIO COSTILLAS, ENERIO R. DAGAME, FELIMON DEBUMA, JR., RICADO C.
DEIPARIME, GREGORIO S. DE LA PENA, JOSE G. DELUAO, JR., ELPEDIO A. DIAZ,
QUINTINO DISIPULO, JR., CESAR G. DONAYRE, JOSE DULABAY, JAIRO DUQUIZA,
ANTONIO ENGBINO, ALFREDO ESPINOSA, ALONZO FAILOG, JAIME FEROLINO,
RODOLFO L. GABITO, PEDRO G. GEMENTIZA, RICARDO A. GEROLAGA, RODULFO G.
GEROY, ROGELIO GONZAGA, ROLANDO GONZALES, MODESTO M. GODELOSAO,
HECTOR GUMBAN, CAMILO HINAG, LECERIO IGBALIC, SILVERIO E. IGCALINOS,
ALFREDO INTOD, OLEGARIO IYUMA, DOMINGO B. JAGMOC, JR., EDUARDO JARGUE,
ROLANDO A. LABASON, ROLANDO LACNO, VIRGILIO A. LADURA, CONSTANCIO M.
LAGURA, FRANCISCO LAMBAN, ENRIQUE LAQUERO, LUCIO B. LASACA, SISINO
LAURDEN, VIVENCIO LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO, MARDENIO
LAYAO, NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD, DIOSDADO MADATE,
RAMON MAGDOSA, NILO MAGLINTE, MARINO G. MALINAO, CARLITO MANACAP,
AURELIO A. MARO, CRISOSTOMO R. MIJARES, CESAR MONAPCO, SILVANO MONCANO,
EMILIO MONTAJES, CESAR B. MONTERO, CLEMENTE NAKANO, RODRIGO H. NALAS,
EMELIANO C. NAPITAN, JUANITO B. NARON, JR., LUCIO NASAKA, TEOFILO NUNEZ,
JORGE M. OLORVIDA, CANULO P. OLOY, DOROTEO S. OMBRETE, TEOFILIO OMOSURA,
MIGUEL ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA, ALFREDO P. PALASPAS,
CATALINO C. PANA, ERNESTO M. PASCUAL, BIENVENIDO PAYAG, RESURRECCION
PENOS, PEDRO PILAGO, ROMEO PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL,
JESUS D. QUIBOL, MAGNO QUIZON, DIONISIO RAMOS, MAMERTO RANISES, NESTOR B.
REBUYA, RODRIGO REQUILMEN, ISIDRO RETANAL, CARLITO ROBLE, GLICERIO V.
ROSETE, TINOY G. SABINO, MELCHOR SALIGUMBA, SILVERIO SILANGAN, ROBERTO
SIVA, PACITA SUYMAN, CANILO TAJON, AVELINO TATAPOD, ROMEO TAYCO, RENATO
TAYCO, CONRADO TECSON, AGAPITO TECSON, ROMAN. E. TEJERO, ALFREDO
TILANDOCA, CARLOS B. TIMA, HERMONEGES TIRADOR, JOSELITO TIRO, PASTOR T.
TUNGKO, LEANDRO B. TURCAL, VICENTE URQUIZA, VICENTE VILLA, ANTONIO P.
VILLARAIZ, LEOPOLDO VILLAVITO and SAMUEL M. VILLEGAS, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court are consolidated Petitions for Review on Certiorari under Rule 45 of the Rules
of Court, which arose out of two civil cases that were filed in different courts but whose factual
background and issues are closely intertwined.

The petitions in G.R. Nos. 1250781 and 1255982 both assail the Order3 dated May 20, 1996 of
the Regional Trial Court (RTC) of General Santos City, Branch 37, in Civil Case No. 5617. The
said Order decreed the dismissal of the case in view of the perceived lack of jurisdiction of the
RTC over the subject matter of the complaint. The petition in G.R. No. 125598 also challenges
the Orders dated June 4, 19964 and July 9, 1996,5 which held that the RTC of General Santos
City no longer had jurisdiction to proceed with Civil Case No. 5617.

On the other hand, the petitions in G.R. Nos. 126654,6 127856,7 and 1283988 seek the
reversal of the Order9 dated October 1, 1996 of the RTC of Davao City, Branch 16, in Civil
Case No. 24,251-96, which also dismissed the case on the ground of lack of jurisdiction.

G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were consolidated in the Resolutions
dated February 10, 1997,10 April 28, 199711 and March 10, 1999.12

The factual antecedents of the petitions are as follows:

Proceedings before the Texas Courts

Beginning 1993, a number of personal injury suits were filed in different Texas state courts by
citizens of twelve foreign countries, including the Philippines. The thousands of plaintiffs sought
damages for injuries they allegedly sustained from their exposure to dibromochloropropane
(DBCP), a chemical used to kill nematodes (worms), while working on farms in 23 foreign
countries. The cases were eventually transferred to, and consolidated in, the Federal District
Court for the Southern District of Texas, Houston Division. The cases therein that involved
plaintiffs from the Philippines were "Jorge Colindres Carcamo, et al. v. Shell Oil Co., et al.,"
which was docketed as Civil Action No. H-94-1359, and "Juan Ramon Valdez, et al. v. Shell Oil
Co., et al.," which was docketed as Civil Action No. H-95-1356. The defendants in the
consolidated cases prayed for the dismissal of all the actions under the doctrine of forum non
conveniens.

In a Memorandum and Order dated July 11, 1995, the Federal District Court conditionally
granted the defendants’ motion to dismiss. Pertinently, the court ordered that:

Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90 days after the entry of
this Memorandum and Order provided that defendants and third- and fourth-party defendants
have:

(1) participated in expedited discovery in the United States xxx;

(2) either waived or accepted service of process and waived any other jurisdictional defense
within 40 days after the entry of this Memorandum and Order in any action commenced by a
plaintiff in these actions in his home country or the country in which his injury occurred. Any
plaintiff desiring to bring such an action will do so within 30 days after the entry of this
Memorandum and Order;

(3) waived within 40 days after the entry of this Memorandum and Order any limitations-based
defense that has matured since the commencement of these actions in the courts of Texas;

(4) stipulated within 40 days after the entry of this Memorandum and Order that any discovery
conducted during the pendency of these actions may be used in any foreign proceeding to the
same extent as if it had been conducted in proceedings initiated there; and

(5) submitted within 40 days after the entry of this Memorandum and Order an agreement
binding them to satisfy any final judgment rendered in favor of plaintiffs by a foreign court.
xxxx

Notwithstanding the dismissals that may result from this Memorandum and Order, in the event
that the highest court of any foreign country finally affirms the dismissal for lack of jurisdiction of
an action commenced by a plaintiff in these actions in his home country or the country in which
he was injured, that plaintiff may return to this court and, upon proper motion, the court will
resume jurisdiction over the action as if the case had never been dismissed for [forum non
conveniens].13

Civil Case No. 5617 before the RTC of General Santos City and G.R. Nos. 125078 and 125598

In accordance with the above Memorandum and Order, a total of 336 plaintiffs from General
Santos City (the petitioners in G.R. No. 125078, hereinafter referred to as NAVIDA, et al.) filed a
Joint Complaint14 in the RTC of General Santos City on August 10, 1995. The case was
docketed as Civil Case No. 5617. Named as defendants therein were: Shell Oil Co. (SHELL);
Dow Chemical Co. (DOW); Occidental Chemical Corp. (OCCIDENTAL); Dole Food Co., Inc.,
Dole Fresh Fruit Co., Standard Fruit Co., Standard Fruit and Steamship Co. (hereinafter
collectively referred to as DOLE); Chiquita Brands, Inc. and Chiquita Brands International, Inc.
(CHIQUITA); Del Monte Fresh Produce N.A. and Del Monte Tropical Fruit Co. (hereinafter
collectively referred to as DEL MONTE); Dead Sea Bromine Co., Ltd.; Ameribrom, Inc.; Bromine
Compounds, Ltd.; and Amvac Chemical Corp. (The aforementioned defendants are hereinafter
collectively referred to as defendant companies.)

Navida, et al., prayed for the payment of damages in view of the illnesses and injuries to the
reproductive systems which they allegedly suffered because of their exposure to DBCP. They
claimed, among others, that they were exposed to this chemical during the early 1970’s up to
the early 1980’s when they used the same in the banana plantations where they worked at;
and/or when they resided within the agricultural area where such chemical was used. Navida, et
al., claimed that their illnesses and injuries were due to the fault or negligence of each of the
defendant companies in that they produced, sold and/or otherwise put into the stream of
commerce DBCP-containing products. According to NAVIDA, et al., they were allowed to be
exposed to the said products, which the defendant companies knew, or ought to have known,
were highly injurious to the former’s health and well-being.

Instead of answering the complaint, most of the defendant companies respectively filed their
Motions for Bill of Particulars.15 During the pendency of the motions, on March 13, 1996,
NAVIDA, et al., filed an Amended Joint Complaint,16 excluding Dead Sea Bromine Co., Ltd.,
Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac Chemical Corp. as party defendants.

Again, the remaining defendant companies filed their various Motions for Bill of Particulars.17
On May 15, 1996, DOW filed an Answer with Counterclaim.18

On May 20, 1996, without resolving the motions filed by the parties, the RTC of General Santos
City issued an Order dismissing the complaint. First, the trial court determined that it did not
have jurisdiction to hear the case, to wit:

THE COMPLAINT FOR DAMAGES FILED WITH THE REGIONAL TRIAL COURT SHOULD BE
DISMISSED FOR LACK OF JURISDICTION

xxxx
The substance of the cause of action as stated in the complaint against the defendant foreign
companies cites activity on their part which took place abroad and had occurred outside and
beyond the territorial domain of the Philippines. These acts of defendants cited in the complaint
included the manufacture of pesticides, their packaging in containers, their distribution through
sale or other disposition, resulting in their becoming part of the stream of commerce.

Accordingly, the subject matter stated in the complaint and which is uniquely particular to the
present case, consisted of activity or course of conduct engaged in by foreign defendants
outside Philippine territory, hence, outside and beyond the jurisdiction of Philippine Courts,
including the present Regional Trial Court.19

Second, the RTC of General Santos City declared that the tort alleged by Navida, et al., in their
complaint is a tort category that is not recognized in Philippine laws. Said the trial court:

THE TORT ASSERTED IN THE PRESENT COMPLAINT AGAINST DEFENDANT FOREIGN

COMPANIES IS NOT WITHIN THE SUBJECT MATTER JURISDICTION OF THE REGIONAL
TRIAL COURT, BECAUSE IT IS NOT A TORT CATEGORY WITHIN THE PURVIEW OF THE
PHILIPPINE LAW

The specific tort asserted against defendant foreign companies in the present complaint is
product liability tort. When the averments in the present complaint are examined in terms of the
particular categories of tort recognized in the Philippine Civil Code, it becomes stark clear that
such averments describe and identify the category of specific tort known as product liability tort.
This is necessarily so, because it is the product manufactured by defendant foreign companies,
which is asserted to be the proximate cause of the damages sustained by the plaintiff workers,
and the liability of the defendant foreign companies, is premised on being the manufacturer of
the pesticides.

It is clear, therefore, that the Regional Trial Court has jurisdiction over the present case, if and
only if the Civil Code of the Philippines, or a suppletory special law prescribes a product liability
tort, inclusive of and comprehending the specific tort described in the complaint of the plaintiff
workers.20

Third, the RTC of General Santos City adjudged that Navida, et al., were coerced into
submitting their case to the Philippine courts, viz:

FILING OF CASES IN THE PHILIPPINES - COERCED AND ANOMALOUS

The Court views that the plaintiffs did not freely choose to file the instant action, but rather were
coerced to do so, merely to comply with the U.S. District Court’s Order dated July 11, 1995, and
in order to keep open to the plaintiffs the opportunity to return to the U.S. District Court.21

Fourth, the trial court ascribed little significance to the voluntary appearance of the defendant
companies therein, thus:

THE DEFENDANTS’ SUBMISSION TO JURISDICTION IS CONDITIONAL AS IT IS ILLUSORY

Defendants have appointed their agents authorized to accept service of summons/processes in

the Philippines pursuant to the agreement in the U.S. court that defendants will voluntarily
submit to the jurisdiction of this court. While it is true that this court acquires jurisdiction over
persons of the defendants through their voluntary appearance, it appears that such voluntary
appearance of the defendants in this case is conditional. Thus in the "Defendants’ Amended
Agreement Regarding Conditions of Dismissal for Forum Non Conveniens" (Annex to the
Complaint) filed with the U.S. District Court, defendants declared that "(t)he authority of each
designated representative to accept service of process will become effective upon final
dismissal of these actions by the Court". The decision of the U.S. District Court dismissing the
case is not yet final and executory since both the plaintiffs and defendants appealed therefrom
(par. 3(h), 3(i), Amended Complaint). Consequently, since the authority of the agent of the
defendants in the Philippines is conditioned on the final adjudication of the case pending with
the U.S. courts, the acquisition of jurisdiction by this court over the persons of the defendants is
also conditional. x x x.

The appointment of agents by the defendants, being subject to a suspensive condition, thus
produces no legal effect and is ineffective at the moment.22

Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of filing the case in
the Philippine courts violated the rules on forum shopping and litis pendencia. The trial court
expounded:

THE JURISDICTION FROWNS UPON AND PROHIBITS FORUM SHOPPING

This court frowns upon the fact that the parties herein are both vigorously pursuing their appeal
of the decision of the U.S. District court dismissing the case filed thereat. To allow the parties to
litigate in this court when they are actively pursuing the same cases in another forum, violates
the rule on ‘forum shopping’ so abhorred in this jurisdiction. x x x.

xxxx

THE FILING OF THE CASE IN U.S. DIVESTED THIS COURT OF ITS OWN JURISDICTION

Moreover, the filing of the case in the U.S. courts divested this court of its own jurisdiction. This
court takes note that the U.S. District Court did not decline jurisdiction over the cause of action.
The case was dismissed on the ground of forum non conveniens, which is really a matter of
venue. By taking cognizance of the case, the U.S. District Court has, in essence, concurrent
jurisdiction with this court over the subject matter of this case. It is settled that initial acquisition
of jurisdiction divests another of its own jurisdiction. x x x.

xxxx

THIS CASE IS BARRED BY THE RULE OF "LITIS PENDENCIA"

Furthermore, the case filed in the U.S. court involves the same parties, same rights and
interests, as in this case. There exists litis pendencia since there are two cases involving the
same parties and interests. The court would like to emphasize that in accordance with the rule
on litis pendencia x x x; the subsequent case must be dismissed. Applying the foregoing
[precept] to the case-at-bar, this court concludes that since the case between the parties in the
U.S. is still pending, then this case is barred by the rule on "litis pendencia."23

In fine, the trial court held that:

It behooves this Court, then to dismiss this case. For to continue with these proceedings, would
be violative of the constitutional provision on the Bill of Rights guaranteeing speedy disposition
of cases (Ref. Sec. 16, Article III, Constitution). The court has no other choice. To insist on
further proceedings with this case, as it is now presented, might accord this court a charming
appearance. But the same insistence would actually thwart the very ends of justice which it
seeks to achieve.

This evaluation and action is made not on account of but rather with due consideration to the
fact that the dismissal of this case does not necessarily deprive the parties – especially the
plaintiffs – of their possible remedies. The court is cognizant that the Federal Court may resume
proceedings of that earlier case between the herein parties involving the same acts or
omissions as in this case.

WHEREFORE, in view of the foregoing considerations, this case is now considered

DISMISSED.24

On June 4, 1996, the RTC of General Santos City likewise issued an Order,25 dismissing
DOW’s Answer with Counterclaim.

CHIQUITA, DEL MONTE and SHELL each filed a motion for reconsideration26 of the RTC
Order dated May 20, 1996, while DOW filed a motion for reconsideration27 of the RTC Order
dated June 4, 1996. Subsequently, DOW and OCCIDENTAL also filed a Joint Motion for
Reconsideration28 of the RTC Order dated May 20, 1996.

In an Order29 dated July 9, 1996, the RTC of General Santos City declared that it had already
lost its jurisdiction over the case as it took into consideration the Manifestation of the counsel of
NAVIDA, et al., which stated that the latter had already filed a petition for review on certiorari
before this Court.

CHIQUITA and SHELL filed their motions for reconsideration30 of the above order.

On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari in order to assail the
RTC Order dated May 20, 1996, which was docketed as G.R. No. 125078.

The RTC of General Santos City then issued an Order31 dated August 14, 1996, which merely
noted the incidents still pending in Civil Case No. 5617 and reiterated that it no longer had any
jurisdiction over the case.

On August 30, 1996, DOW and OCCIDENTAL filed their Petition for Review on Certiorari,32
challenging the orders of the RTC of General Santos City dated May 20, 1996, June 4, 1996
and July 9, 1996. Their petition was docketed as G.R. No. 125598.

In their petition, DOW and OCCIDENTAL aver that the RTC of General Santos City erred in
ruling that it has no jurisdiction over the subject matter of the case as well as the persons of the
defendant companies.

In a Resolution33 dated October 7, 1996, this Court resolved to consolidate G.R. No. 125598
with G.R. No. 125078.

CHIQUITA filed a Petition for Review on Certiorari,34 which sought the reversal of the RTC
Orders dated May 20, 1996, July 9, 1996 and August 14, 1996. The petition was docketed as
G.R. No. 126018. In a Resolution35 dated November 13, 1996, the Court dismissed the
aforesaid petition for failure of CHIQUITA to show that the RTC committed grave abuse of
discretion. CHIQUITA filed a Motion for Reconsideration,36 but the same was denied through a
Resolution37 dated January 27, 1997.

Civil Case No. 24,251-96 before the RTC of Davao City and G.R. Nos. 126654, 127856, and
128398

Another joint complaint for damages against SHELL, DOW, OCCIDENTAL, DOLE, DEL
MONTE, and CHIQUITA was filed before Branch 16 of the RTC of Davao City by 155 plaintiffs
from Davao City. This case was docketed as Civil Case No. 24,251-96. These plaintiffs (the
petitioners in G.R. No. 126654, hereinafter referred to as ABELLA, et al.) amended their Joint-
Complaint on May 21, 1996.38

Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as workers in the
banana plantation and/or as residents near the said plantation, they were made to use and/or
were exposed to nematocides, which contained the chemical DBCP. According to ABELLA, et
al., such exposure resulted in "serious and permanent injuries to their health, including, but not
limited to, sterility and severe injuries to their reproductive capacities."39 ABELLA, et al.,
claimed that the defendant companies manufactured, produced, sold, distributed, used, and/or
made available in commerce, DBCP without warning the users of its hazardous effects on
health, and without providing instructions on its proper use and application, which the defendant
companies knew or ought to have known, had they exercised ordinary care and prudence.

Except for DOW, the other defendant companies filed their respective motions for bill of
particulars to which ABELLA, et al., filed their opposition. DOW and DEL MONTE filed their
respective Answers dated May 17, 1996 and June 24, 1996.

The RTC of Davao City, however, junked Civil Case No. 24,251-96 in its Order dated October 1,
1996, which, in its entirety, reads:

Upon a thorough review of the Complaint and Amended Complaint For: Damages filed by the
plaintiffs against the defendants Shell Oil Company, DOW Chemicals Company, Occidental
Chemical Corporation, Standard Fruit Company, Standard Fruit and Steamship, DOLE Food
Company, DOLE Fresh Fruit Company, Chiquita Brands, Inc., Chiquita Brands International,
Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruits Co., all foreign corporations with
Philippine Representatives, the Court, as correctly pointed out by one of the defendants, is
convinced that plaintiffs "would have this Honorable Court dismiss the case to pave the way for
their getting an affirmance by the Supreme Court" (#10 of Defendants’ Del Monte Fresh
Produce, N.A. and Del Monte Tropical Fruit Co., Reply to Opposition dated July 22, 1996).
Consider these:

1) In the original Joint Complaint, plaintiffs state that: defendants have no properties in the
Philippines; they have no agents as well (par. 18); plaintiffs are suing the defendants for
tortuous acts committed by these foreign corporations on their respective countries, as plaintiffs,
after having elected to sue in the place of defendants’ residence, are now compelled by a
decision of a Texas District Court to file cases under torts in this jurisdiction for causes of
actions which occurred abroad (par. 19); a petition was filed by same plaintiffs against same
defendants in the Courts of Texas, USA, plaintiffs seeking for payment of damages based on
negligence, strict liability, conspiracy and international tort theories (par. 27); upon defendants’
Motion to Dismiss on Forum non [conveniens], said petition was provisionally dismissed on
condition that these cases be filed in the Philippines or before 11 August 1995 (Philippine date;
Should the Philippine Courts refuse or deny jurisdiction, the U. S. Courts will reassume
jurisdiction.)

11. In the Amended Joint Complaint, plaintiffs aver that: on 11 July 1995, the Federal District
Court issued a Memorandum and Order conditionally dismissing several of the consolidated
actions including those filed by the Filipino complainants. One of the conditions imposed was for
the plaintiffs to file actions in their home countries or the countries in which they were injured x x
x. Notwithstanding, the Memorandum and [O]rder further provided that should the highest court
of any foreign country affirm the dismissal for lack of jurisdictions over these actions filed by the
plaintiffs in their home countries [or] the countries where they were injured, the said plaintiffs
may return to that court and, upon proper motion, the Court will resume jurisdiction as if the
case had never been dismissed for forum non conveniens.

The Court however is constrained to dismiss the case at bar not solely on the basis of the above
but because it shares the opinion of legal experts given in the interview made by the Inquirer in
its Special report "Pesticide Cause Mass Sterility," to wit:

1. Former Justice Secretary Demetrio Demetria in a May 1995 opinion said: The Philippines
should be an inconvenient forum to file this kind of damage suit against foreign companies since
the causes of action alleged in the petition do not exist under Philippine laws. There has been
no decided case in Philippine Jurisprudence awarding to those adversely affected by DBCP.
This means there is no available evidence which will prove and disprove the relation between
sterility and DBCP.

2. Retired Supreme Court Justice Abraham Sarmiento opined that while a class suit is allowed
in the Philippines the device has been employed strictly. Mass sterility will not qualify as a class
suit injury within the contemplation of Philippine statute.

3. Retired High Court Justice Rodolfo Nocom stated that there is simply an absence of doctrine
here that permits these causes to be heard. No product liability ever filed or tried here.

Case ordered dismissed.40

Docketed as G.R. No. 126654, the petition for review, filed on November 12, 1996 by ABELLA,
et al., assails before this Court the above-quoted order of the RTC of Davao City.

ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil Case No. 24,251-96
on the ground of lack of jurisdiction.

According to ABELLA, et al., the RTC of Davao City has jurisdiction over the subject matter of
the case since Articles 2176 and 2187 of the Civil Code are broad enough to cover the acts
complained of and to support their claims for damages.

ABELLA, et al., further aver that the dismissal of the case, based on the opinions of legal
luminaries reported in a newspaper, by the RTC of Davao City is bereft of basis. According to
them, their cause of action is based on quasi-delict under Article 2176 of the Civil Code. They
also maintain that the absence of jurisprudence regarding the award of damages in favor of
those adversely affected by the DBCP does not preclude them from presenting evidence to
prove their allegations that their exposure to DBCP caused their sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for reconsideration of the
Order dated October 1, 1996 of the RTC of Davao City. DEL MONTE also filed its motion for
reconsideration, which contained an additional motion for the inhibition of the presiding judge.

The presiding judge of Branch 16 then issued an Order41 dated December 2, 1996, voluntarily
inhibiting himself from trying the case. Thus, the case was re-raffled to Branch 13 of the RTC of
Davao City.

In an Order42 dated December 16, 1996, the RTC of Davao City affirmed the Order dated
October 1, 1996, and denied the respective motions for reconsideration filed by defendant
companies.

Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997, questioning the Orders
dated October 1, 1996 and December 16, 1996 of the RTC of Davao City. This case was
docketed as G.R. No. 128398.

In its petition, CHIQUITA argues that the RTC of Davao City erred in dismissing the case motu
proprio as it acquired jurisdiction over the subject matter of the case as well as over the persons
of the defendant companies which voluntarily appeared before it. CHIQUITA also claims that the
RTC of Davao City cannot dismiss the case simply on the basis of opinions of alleged legal
experts appearing in a newspaper article.

Initially, this Court in its Resolution43 dated July 28, 1997, dismissed the petition filed by
CHIQUITA for submitting a defective certificate against forum shopping. CHIQUITA, however,
filed a motion for reconsideration, which was granted by this Court in the Resolution44 dated
October 8, 1997.

On March 7, 1997, DEL MONTE also filed its petition for review on certiorari before this Court
assailing the above-mentioned orders of the RTC of Davao City. Its petition was docketed as
G.R. No. 127856.

DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil Case No. 24,251-96,
as defined under the law and that the said court already obtained jurisdiction over its person by
its voluntary appearance and the filing of a motion for bill of particulars and, later, an answer to
the complaint. According to DEL MONTE, the RTC of Davao City, therefore, acted beyond its
authority when it dismissed the case motu proprio or without any motion to dismiss from any of
the parties to the case.

In the Resolutions dated February 10, 1997, April 28, 1997, and March 10, 1999, this Court
consolidated G.R. Nos. 125078, 125598, 126654, 127856, and 128398.

The Consolidated Motion to Drop DOW, OCCIDENTAL, and SHELL as Party-Respondents filed
by NAVIDA, et al. and ABELLA, et al.

On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before this Court a
Consolidated Motion (to Drop Party-Respondents).45 The plaintiff claimants alleged that they
had amicably settled their cases with DOW, OCCIDENTAL, and SHELL sometime in July 1997.
This settlement agreement was evidenced by facsimiles of the "Compromise Settlement,
Indemnity, and Hold Harmless Agreement," which were attached to the said motion. Pursuant to
said agreement, the plaintiff claimants sought to withdraw their petitions as against DOW,
OCCIDENTAL, and SHELL.
DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as well as the settlement
entered into between the plaintiff claimants and DOW, OCCIDENTAL, and SHELL.

The Memoranda of the Parties

Considering the allegations, issues, and arguments adduced by the parties, this Court, in a
Resolution dated June 22, 1998,46 required all the parties to submit their respective
memoranda.

CHIQUITA filed its Memorandum on August 28, 1998;47 SHELL asked to be excused from the
filing of a memorandum alleging that it had already executed a compromise agreement with the
plaintiff claimants.48 DOLE filed its Memorandum on October 12, 199849 while DEL MONTE
filed on October 13, 1998.50 NAVIDA, et al., and ABELLA, et al., filed their Consolidated
Memorandum on February 3, 1999;51 and DOW and OCCIDENTAL jointly filed a Memorandum
on December 23, 1999.52

The Motion to Withdraw Petition for Review in G.R. No. 125598

On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw Petition for Review in
G.R. No. 125598, 53 explaining that the said petition "is already moot and academic and no
longer presents a justiciable controversy" since they have already entered into an amicable
settlement with NAVIDA, et al. DOW and OCCIDENTAL added that they have fully complied
with their obligations set forth in the 1997 Compromise Agreements.

DOLE filed its Manifestation dated September 6, 2004,54 interposing no objection to the
withdrawal of the petition, and further stating that they maintain their position that DOW and
OCCIDENTAL, as well as other settling defendant companies, should be retained as
defendants for purposes of prosecuting the cross-claims of DOLE, in the event that the
complaint below is reinstated.

NAVIDA, et al., also filed their Comment dated September 14, 2004,55 stating that they agree
with the view of DOW and OCCIDENTAL that the petition in G.R. No. 125598 has become moot
and academic because Civil Case No. 5617 had already been amicably settled by the parties in
1997.

On September 27, 2004, DEL MONTE filed its Comment on Motion to Withdraw Petition for
Review Filed by Petitioners in G.R. No. 125598,56 stating that it has no objections to the
withdrawal of the petition filed by DOW and OCCIDENTAL in G.R. No. 125598.

In a Resolution57 dated October 11, 2004, this Court granted, among others, the motion to
withdraw petition for review filed by DOW and OCCIDENTAL.

THE ISSUES

In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et al., presented the following
issues for our consideration:

IN REFUTATION

I. THE COURT DISMISSED THE CASE DUE TO LACK OF JURISDICTION.

a) The court did not simply dismiss the case because it was filed in bad faith with petitioners
intending to have the same dismissed and returned to the Texas court.

b) The court dismissed the case because it was convinced that it did not have jurisdiction.

IN SUPPORT OF THE PETITION

II. THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.

a. The acts complained of occurred within Philippine territory.

b. Art. 2176 of the Civil Code of the Philippines is broad enough to cover the acts complained of.

c. Assumption of jurisdiction by the U.S. District Court over petitioner[s’] claims did not divest
Philippine [c]ourts of jurisdiction over the same.

d. The Compromise Agreement and the subsequent Consolidated Motion to Drop Party
Respondents Dow, Occidental and Shell does not unjustifiably prejudice remaining respondents
Dole, Del Monte and Chiquita.58

DISCUSSION

On the issue of jurisdiction

Essentially, the crux of the controversy in the petitions at bar is whether the RTC of General
Santos City and the RTC of Davao City erred in dismissing Civil Case Nos. 5617 and 24,251-
96, respectively, for lack of jurisdiction.

Remarkably, none of the parties to this case claims that the courts a quo are bereft of
jurisdiction to determine and resolve the above-stated cases. All parties contend that the RTC of
General Santos City and the RTC of Davao City have jurisdiction over the action for damages,
specifically for approximately ₱2.7 million for each of the plaintiff claimants.

NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious acts and/or omissions of
defendant companies occurred within Philippine territory. Specifically, the use of and exposure
to DBCP that was manufactured, distributed or otherwise put into the stream of commerce by
defendant companies happened in the Philippines. Said fact allegedly constitutes reasonable
basis for our courts to assume jurisdiction over the case. Furthermore, NAVIDA, et al., and
ABELLA, et al., assert that the provisions of Chapter 2 of the Preliminary Title of the Civil Code,
as well as Article 2176 thereof, are broad enough to cover their claim for damages. Thus,
NAVIDA, et al., and ABELLA, et al., pray that the respective rulings of the RTC of General
Santos City and the RTC of Davao City in Civil Case Nos. 5617 and 24,251-96 be reversed and
that the said cases be remanded to the courts a quo for further proceedings.

DOLE similarly maintains that the acts attributed to defendant companies constitute a quasi-
delict, which falls under Article 2176 of the Civil Code. In addition, DOLE states that if there
were no actionable wrongs committed under Philippine law, the courts a quo should have
dismissed the civil cases on the ground that the Amended Joint-Complaints of NAVIDA, et al.,
and ABELLA, et al., stated no cause of action against the defendant companies. DOLE also
argues that if indeed there is no positive law defining the alleged acts of defendant companies
as actionable wrong, Article 9 of the Civil Code dictates that a judge may not refuse to render a
decision on the ground of insufficiency of the law. The court may still resolve the case, applying
the customs of the place and, in the absence thereof, the general principles of law. DOLE posits
that the Philippines is the situs of the tortious acts allegedly committed by defendant companies
as NAVIDA, et al., and ABELLA, et al., point to their alleged exposure to DBCP which occurred
in the Philippines, as the cause of the sterility and other reproductive system problems that they
allegedly suffered. Finally, DOLE adds that the RTC of Davao City gravely erred in relying upon
newspaper reports in dismissing Civil Case No. 24,251-96 given that newspaper articles are
hearsay and without any evidentiary value. Likewise, the alleged legal opinions cited in the
newspaper reports were taken judicial notice of, without any notice to the parties. DOLE,
however, opines that the dismissal of Civil Case Nos. 5617 and 24,251-96 was proper, given
that plaintiff claimants merely prosecuted the cases with the sole intent of securing a dismissal
of the actions for the purpose of convincing the U.S. Federal District Court to re-assume
jurisdiction over the cases.

In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction over the subject matter
of the cases filed before them. The Amended Joint-Complaints sought approximately ₱2.7
million in damages for each plaintiff claimant, which amount falls within the jurisdiction of the
RTC. CHIQUITA avers that the pertinent matter is the place of the alleged exposure to DBCP,
not the place of manufacture, packaging, distribution, sale, etc., of the said chemical. This is in
consonance with the lex loci delicti commisi theory in determining the situs of a tort, which
states that the law of the place where the alleged wrong was committed will govern the action.
CHIQUITA and the other defendant companies also submitted themselves to the jurisdiction of
the RTC by making voluntary appearances and seeking for affirmative reliefs during the course
of the proceedings. None of the defendant companies ever objected to the exercise of
jurisdiction by the courts a quo over their persons. CHIQUITA, thus, prays for the remand of
Civil Case Nos. 5617 and 24,251-96 to the RTC of General Santos City and the RTC of Davao
City, respectively.

The RTC of General Santos City and the RTC of Davao City have jurisdiction over Civil Case
Nos. 5617 and 24,251-96, respectively

The rule is settled that jurisdiction over the subject matter of a case is conferred by law and is
determined by the allegations in the complaint and the character of the relief sought,
irrespective of whether the plaintiffs are entitled to all or some of the claims asserted therein.59
Once vested by law, on a particular court or body, the jurisdiction over the subject matter or
nature of the action cannot be dislodged by anybody other than by the legislature through the
enactment of a law.

At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases under Batas
Pambansa Blg. 129, as amended by Republic Act No. 7691, was:

SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original
jurisdiction:

xxxx

(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind,
attorney’s fees, litigation expenses, and costs or the value of the property in controversy
exceeds One hundred thousand pesos (₱100,000.00) or, in such other cases in Metro Manila,
where the demand, exclusive of the abovementioned items exceeds Two hundred thousand
pesos (₱200,000.00).60

Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:

2. The exclusion of the term "damages of whatever kind" in determining the jurisdictional
amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. No.
7691, applies to cases where the damages are merely incidental to or a consequence of the
main cause of action. However, in cases where the claim for damages is the main cause of
action, or one of the causes of action, the amount of such claim shall be considered in
determining the jurisdiction of the court.

Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded Amended Joint-
Complaints filed before the courts a quo, the following prayer:

PRAYER

WHEREFORE, premises considered, it is most respectfully prayed that after hearing, judgment
be rendered in favor of the plaintiffs ordering the defendants:

a) TO PAY EACH PLAINTIFF moral damages in the amount of One Million Five Hundred
Thousand Pesos (₱1,500,00.00);

b) TO PAY EACH PLAINTIFF nominal damages in the amount of Four Hundred Thousand
Pesos (₱400,000.00) each;

c) TO PAY EACH PLAINTIFF exemplary damages in the amount of Six Hundred Thousand
Pesos (₱600,000.00);

d) TO PAY EACH PLAINTIFF attorneys fees of Two Hundred Thousand Pesos (₱200,000.00);
and

e) TO PAY THE COSTS of the suit.61

From the foregoing, it is clear that the claim for damages is the main cause of action and that
the total amount sought in the complaints is approximately ₱2.7 million for each of the plaintiff
claimants. The RTCs unmistakably have jurisdiction over the cases filed in General Santos City
and Davao City, as both claims by NAVIDA, et al., and ABELLA, et al., fall within the purview of
the definition of the jurisdiction of the RTC under Batas Pambansa Blg. 129.

Moreover, the allegations in both Amended Joint-Complaints narrate that:

THE CAUSES OF ACTION

4. The Defendants manufactured, sold, distributed, used, AND/OR MADE AVAILABLE IN

COMMERCE nematocides containing the chemical dibromochloropropane, commonly known as
DBCP. THE CHEMICAL WAS USED AGAINST the parasite known as the nematode, which
plagued banana plantations, INCLUDING THOSE in the Philippines. AS IT TURNED OUT,
DBCP not only destroyed nematodes. IT ALSO CAUSED ILL-EFFECTS ON THE HEALTH OF
PERSONS EXPOSED TO IT AFFECTING the human reproductive system as well.
5. The plaintiffs were exposed to DBCP in the 1970s up to the early 1980s WHILE (a) they used
this product in the banana plantations WHERE they were employed, and/or (b) they resided
within the agricultural area WHERE IT WAS USED. As a result of such exposure, the plaintiffs
suffered serious and permanent injuries TO THEIR HEALTH, including, but not limited to,
STERILITY and severe injuries to their reproductive capacities.

6. THE DEFENDANTS WERE AT FAULT OR WERE NEGLIGENT IN THAT THEY

MANUFACTURED, produced, sold, and/or USED DBCP and/or otherwise, PUT THE SAME into
the stream of commerce, WITHOUT INFORMING THE USERS OF ITS HAZARDOUS
EFFECTS ON HEALTH AND/OR WITHOUT INSTRUCTIONS ON ITS PROPER USE AND
APPLICATION. THEY allowed Plaintiffs to be exposed to, DBCP-containing materials which
THEY knew, or in the exercise of ordinary care and prudence ought to have known, were highly
harmful and injurious to the Plaintiffs’ health and well-being.

7. The Defendants WHO MANUFACTURED, PRODUCED, SOLD, DISTRIBUTED, MADE

AVAILABLE OR PUT DBCP INTO THE STREAM OF COMMERCE were negligent OR AT
FAULT in that they, AMONG OTHERS:

a. Failed to adequately warn Plaintiffs of the dangerous characteristics of DBCP, or to cause

their subsidiaries or affiliates to so warn plaintiffs;

b. Failed to provide plaintiffs with information as to what should be reasonably safe and
sufficient clothing and proper protective equipment and appliances, if any, to protect plaintiffs
from the harmful effects of exposure to DBCP, or to cause their subsidiaries or affiliates to do
so;

c. Failed to place adequate warnings, in a language understandable to the worker, on

containers of DBCP-containing materials to warn of the dangers to health of coming into contact
with DBCP, or to cause their subsidiaries or affiliates to do so;

d. Failed to take reasonable precaution or to exercise reasonable care to publish, adopt and
enforce a safety plan and a safe method of handling and applying DBCP, or to cause their
subsidiaries or affiliates to do so;

e. Failed to test DBCP prior to releasing these products for sale, or to cause their subsidiaries or
affiliates to do so; and

f. Failed to reveal the results of tests conducted on DBCP to each plaintiff, governmental
agencies and the public, or to cause their subsidiaries or affiliate to do so.

8. The illnesses and injuries of each plaintiff are also due to the FAULT or negligence of
defendants Standard Fruit Company, Dole Fresh Fruit Company, Dole Food Company, Inc.,
Chiquita Brands, Inc. and Chiquita Brands International, Inc. in that they failed to exercise
reasonable care to prevent each plaintiff’s harmful exposure to DBCP-containing products which
defendants knew or should have known were hazardous to each plaintiff in that they, AMONG
OTHERS:

a. Failed to adequately supervise and instruct Plaintiffs in the safe and proper application of
DBCP-containing products;
b. Failed to implement proper methods and techniques of application of said products, or to
cause such to be implemented;

c. Failed to warn Plaintiffs of the hazards of exposure to said products or to cause them to be so
warned;

d. Failed to test said products for adverse health effects, or to cause said products to be tested;

e. Concealed from Plaintiffs information concerning the observed effects of said products on
Plaintiffs;

f. Failed to monitor the health of plaintiffs exposed to said products;

g. Failed to place adequate labels on containers of said products to warn them of the damages
of said products; and

h. Failed to use substitute nematocides for said products or to cause such substitutes to [be]
used.62 (Emphasis supplied and words in brackets ours.)

Quite evidently, the allegations in the Amended Joint-Complaints of NAVIDA, et al., and
ABELLA, et al., attribute to defendant companies certain acts and/or omissions which led to
their exposure to nematocides containing the chemical DBCP. According to NAVIDA, et al., and
ABELLA, et al., such exposure to the said chemical caused ill effects, injuries and illnesses,
specifically to their reproductive system.

Thus, these allegations in the complaints constitute the cause of action of plaintiff claimants – a
quasi-delict, which under the Civil Code is defined as an act, or omission which causes damage
to another, there being fault or negligence. To be precise, Article 2176 of the Civil Code
provides:

Article 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.

As specifically enumerated in the amended complaints, NAVIDA, et al., and ABELLA, et al.,
point to the acts and/or omissions of the defendant companies in manufacturing, producing,
selling, using, and/or otherwise putting into the stream of commerce, nematocides which contain
DBCP, "without informing the users of its hazardous effects on health and/or without instructions
on its proper use and application." 63

Verily, in Citibank, N.A. v. Court of Appeals,64 this Court has always reminded that jurisdiction
of the court over the subject matter of the action is determined by the allegations of the
complaint, irrespective of whether or not the plaintiffs are entitled to recover upon all or some of
the claims asserted therein. The jurisdiction of the court cannot be made to depend upon the
defenses set up in the answer or upon the motion to dismiss, for otherwise, the question of
jurisdiction would almost entirely depend upon the defendants. What determines the jurisdiction
of the court is the nature of the action pleaded as appearing from the allegations in the
complaint. The averments therein and the character of the relief sought are the ones to be
consulted.
Clearly then, the acts and/or omissions attributed to the defendant companies constitute a
quasi-delict which is the basis for the claim for damages filed by NAVIDA, et al., and ABELLA,
et al., with individual claims of approximately ₱2.7 million for each plaintiff claimant, which
obviously falls within the purview of the civil action jurisdiction of the RTCs.

Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et al., allegedly
suffered resulted from their exposure to DBCP while they were employed in the banana
plantations located in the Philippines or while they were residing within the agricultural areas
also located in the Philippines. The factual allegations in the Amended Joint-Complaints all point
to their cause of action, which undeniably occurred in the Philippines. The RTC of General
Santos City and the RTC of Davao City obviously have reasonable basis to assume jurisdiction
over the cases.

It is, therefore, error on the part of the courts a quo when they dismissed the cases on the
ground of lack of jurisdiction on the mistaken assumption that the cause of action narrated by
NAVIDA, et al., and ABELLA, et al., took place abroad and had occurred outside and beyond
the territorial boundaries of the Philippines, i.e., "the manufacture of the pesticides, their
packaging in containers, their distribution through sale or other disposition, resulting in their
becoming part of the stream of commerce,"65 and, hence, outside the jurisdiction of the RTCs.

Certainly, the cases below are not criminal cases where territoriality, or the situs of the act
complained of, would be determinative of jurisdiction and venue for trial of cases. In personal
civil actions, such as claims for payment of damages, the Rules of Court allow the action to be
commenced and tried in the appropriate court, where any of the plaintiffs or defendants resides,
or in the case of a non-resident defendant, where he may be found, at the election of the
plaintiff.66

In a very real sense, most of the evidence required to prove the claims of NAVIDA, et al., and
ABELLA, et al., are available only in the Philippines. First, plaintiff claimants are all residents of
the Philippines, either in General Santos City or in Davao City. Second, the specific areas where
they were allegedly exposed to the chemical DBCP are within the territorial jurisdiction of the
courts a quo wherein NAVIDA, et al., and ABELLA, et al., initially filed their claims for damages.
Third, the testimonial and documentary evidence from important witnesses, such as doctors, co-
workers, family members and other members of the community, would be easier to gather in the
Philippines. Considering the great number of plaintiff claimants involved in this case, it is not far-
fetched to assume that voluminous records are involved in the presentation of evidence to
support the claim of plaintiff claimants. Thus, these additional factors, coupled with the fact that
the alleged cause of action of NAVIDA, et al., and ABELLA, et al., against the defendant
companies for damages occurred in the Philippines, demonstrate that, apart from the RTC of
General Santos City and the RTC of Davao City having jurisdiction over the subject matter in
the instant civil cases, they are, indeed, the convenient fora for trying these cases.67

The RTC of General Santos City and the RTC of Davao City validly acquired jurisdiction over
the persons of all the defendant companies

It is well to stress again that none of the parties claims that the courts a quo lack jurisdiction
over the cases filed before them. All parties are one in asserting that the RTC of General Santos
City and the RTC of Davao City have validly acquired jurisdiction over the persons of the
defendant companies in the action below. All parties voluntarily, unconditionally and knowingly
appeared and submitted themselves to the jurisdiction of the courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that "[t]he defendant’s
voluntary appearance in the action shall be equivalent to service of summons." In this
connection, all the defendant companies designated and authorized representatives to receive
summons and to represent them in the proceedings before the courts a quo. All the defendant
companies submitted themselves to the jurisdiction of the courts a quo by making several
voluntary appearances, by praying for various affirmative reliefs, and by actively participating
during the course of the proceedings below.

In line herewith, this Court, in Meat Packing Corporation of the Philippines v. Sandiganbayan,68
held that jurisdiction over the person of the defendant in civil cases is acquired either by his
voluntary appearance in court and his submission to its authority or by service of summons.
Furthermore, the active participation of a party in the proceedings is tantamount to an invocation
of the court’s jurisdiction and a willingness to abide by the resolution of the case, and will bar
said party from later on impugning the court or body’s jurisdiction.69

Thus, the RTC of General Santos City and the RTC of Davao City have validly acquired
jurisdiction over the persons of the defendant companies, as well as over the subject matter of
the instant case. What is more, this jurisdiction, which has been acquired and has been vested
on the courts a quo, continues until the termination of the proceedings.

It may also be pertinently stressed that "jurisdiction" is different from the "exercise of
jurisdiction." Jurisdiction refers to the authority to decide a case, not the orders or the decision
rendered therein. Accordingly, where a court has jurisdiction over the persons of the defendants
and the subject matter, as in the case of the courts a quo, the decision on all questions arising
therefrom is but an exercise of such jurisdiction. Any error that the court may commit in the
exercise of its jurisdiction is merely an error of judgment, which does not affect its authority to
decide the case, much less divest the court of the jurisdiction over the case.70

Plaintiffs’ purported bad faith in filing the subject civil cases in Philippine courts

Anent the insinuation by DOLE that the plaintiff claimants filed their cases in bad faith merely to
procure a dismissal of the same and to allow them to return to the forum of their choice, this
Court finds such argument much too speculative to deserve any merit.

It must be remembered that this Court does not rule on allegations that are unsupported by
evidence on record. This Court does not rule on allegations which are manifestly conjectural, as
these may not exist at all. This Court deals with facts, not fancies; on realities, not appearances.
When this Court acts on appearances instead of realities, justice and law will be short-lived.71
This is especially true with respect to allegations of bad faith, in line with the basic rule that good
faith is always presumed and bad faith must be proved.72

In sum, considering the fact that the RTC of General Santos City and the RTC of Davao City
have jurisdiction over the subject matter of the amended complaints filed by NAVIDA, et al., and
ABELLA, et al., and that the courts a quo have also acquired jurisdiction over the persons of all
the defendant companies, it therefore, behooves this Court to order the remand of Civil Case
Nos. 5617 and 24,251-96 to the RTC of General Santos City and the RTC of Davao City,
respectively.

On the issue of the dropping of DOW, OCCIDENTAL and SHELL as respondents in view of
their amicable settlement with NAVIDA, et al., and ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying that DOW, OCCIDENTAL and SHELL
be dropped as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case Nos.
5617 and 24,251-96. The non-settling defendants allegedly manifested that they intended to file
their cross-claims against their co-defendants who entered into compromise agreements.
NAVIDA, et al., and ABELLA, et al., argue that the non-settling defendants did not aver any
cross-claim in their answers to the complaint and that they subsequently sought to amend their
answers to plead their cross-claims only after the settlement between the plaintiff claimants and
DOW, OCCIDENTAL, and SHELL were executed. NAVIDA, et al., and ABELLA, et al.,
therefore, assert that the cross-claims are already barred.

In their Memoranda, CHIQUITA and DOLE are opposing the above motion of NAVIDA, et al.,
and ABELLA, et al., since the latter’s Amended Complaints cited several instances of tortious
conduct that were allegedly committed jointly and severally by the defendant companies. This
solidary obligation on the part of all the defendants allegedly gives any co-defendant the
statutory right to proceed against the other co-defendants for the payment of their respective
shares. Should the subject motion of NAVIDA, et al., and ABELLA, et al., be granted, and the
Court subsequently orders the remand of the action to the trial court for continuance, CHIQUITA
and DOLE would allegedly be deprived of their right to prosecute their cross-claims against their
other co-defendants. Moreover, a third party complaint or a separate trial, according to
CHIQUITA, would only unduly delay and complicate the proceedings. CHIQUITA and DOLE
similarly insist that the motion of NAVIDA, et al., and ABELLA, et al., to drop DOW, SHELL and
OCCIDENTAL as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case Nos.
5617 and 24,251-96, be denied.

Incidentally, on April 2, 2007, after the parties have submitted their respective memoranda, DEL
MONTE filed a Manifestation and Motion73 before the Court, stating that similar settlement
agreements were allegedly executed by the plaintiff claimants with DEL MONTE and CHIQUITA
sometime in 1999. Purportedly included in the agreements were Civil Case Nos. 5617 and
24,251-96. Attached to the said manifestation were copies of the Compromise Settlement,
Indemnity, and Hold Harmless Agreement between DEL MONTE and the settling plaintiffs, as
well as the Release in Full executed by the latter.74 DEL MONTE specified therein that there
were "only four (4) plaintiffs in Civil Case No. 5617 who are claiming against the Del Monte
parties"75 and that the latter have executed amicable settlements which completely satisfied
any claims against DEL MONTE. In accordance with the alleged compromise agreements with
the four plaintiffs in Civil Case No. 5617, DEL MONTE sought the dismissal of the Amended
Joint-Complaint in the said civil case. Furthermore, in view of the above settlement agreements
with ABELLA, et al., in Civil Case No. 24,251-96, DEL MONTE stated that it no longer wished to
pursue its petition in G.R. No. 127856 and accordingly prayed that it be allowed to withdraw the
same.

Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be remanded to the RTC of
General Santos City and the RTC of Davao City, respectively, the Court deems that the
Consolidated Motions (to Drop Party-Respondents) filed by NAVIDA, et al., and ABELLA, et al.,
should likewise be referred to the said trial courts for appropriate disposition.

Under Article 2028 of the Civil Code, "[a] compromise is a contract whereby the parties, by
making reciprocal concessions, avoid a litigation or put an end to one already commenced."
Like any other contract, an extrajudicial compromise agreement is not excepted from rules and
principles of a contract. It is a consensual contract, perfected by mere consent, the latter being
manifested by the meeting of the offer and the acceptance upon the thing and the cause which
are to constitute the contract.76 Judicial approval is not required for its perfection.77 A
compromise has upon the parties the effect and authority of res judicata78 and this holds true
even if the agreement has not been judicially approved.79 In addition, as a binding contract, a
compromise agreement determines the rights and obligations of only the parties to it.80

In light of the foregoing legal precepts, the RTC of General Santos City and the RTC of Davao
City should first receive in evidence and examine all of the alleged compromise settlements
involved in the cases at bar to determine the propriety of dropping any party as a defendant
therefrom.

The Court notes that the Consolidated Motions (to Drop Party-Respondents) that was filed by
NAVIDA, et al., and ABELLA, et al., only pertained to DOW, OCCIDENTAL and SHELL in view
of the latter companies’ alleged compromise agreements with the plaintiff claimants. However,
in subsequent developments, DEL MONTE and CHIQUITA supposedly reached their own
amicable settlements with the plaintiff claimants, but DEL MONTE qualified that it entered into a
settlement agreement with only four of the plaintiff claimants in Civil Case No. 5617. These four
plaintiff claimants were allegedly the only ones who were asserting claims against DEL MONTE.
However, the said allegation of DEL MONTE was simply stipulated in their Compromise
Settlement, Indemnity, and Hold Harmless Agreement and its truth could not be verified with
certainty based on the records elevated to this Court. Significantly, the 336 plaintiff claimants in
Civil Case No. 5617 jointly filed a complaint without individually specifying their claims against
DEL MONTE or any of the other defendant companies. Furthermore, not one plaintiff claimant
filed a motion for the removal of either DEL MONTE or CHIQUITA as defendants in Civil Case
Nos. 5617 and 24,251-96.

There is, thus, a primary need to establish who the specific parties to the alleged compromise
agreements are, as well as their corresponding rights and obligations therein. For this purpose,
the courts a quo may require the presentation of additional evidence from the parties.
Thereafter, on the basis of the records of the cases at bar and the additional evidence submitted
by the parties, if any, the trial courts can then determine who among the defendants may be
dropped from the said cases.

It is true that, under Article 2194 of the Civil Code, the responsibility of two or more persons who
are liable for the same quasi-delict is solidary. A solidary obligation is one in which each of the
debtors is liable for the entire obligation, and each of the creditors is entitled to demand the
satisfaction of the whole obligation from any or all of the debtors.81

In solidary obligations, the paying debtor’s right of reimbursement is provided for under Article
1217 of the Civil Code, to wit:

Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or
more solidary debtors offer to pay, the creditor may choose which offer to accept.

He who made the payment may claim from his co-debtors only the share which corresponds to
each, with the interest for the payment already made. If the payment is made before the debt is
due, no interest for the intervening period may be demanded.

When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the
debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the
debt of each.1avvphil
The above right of reimbursement of a paying debtor, and the corresponding liability of the co-
debtors to reimburse, will only arise, however, if a solidary debtor who is made to answer for an
obligation actually delivers payment to the creditor. As succinctly held in Lapanday Agricultural
Development Corporation v. Court of Appeals,82 "[p]ayment, which means not only the delivery
of money but also the performance, in any other manner, of the obligation, is the operative fact
which will entitle either of the solidary debtors to seek reimbursement for the share which
corresponds to each of the [other] debtors."83

In the cases at bar, there is no right of reimbursement to speak of as yet. A trial on the merits
must necessarily be conducted first in order to establish whether or not defendant companies
are liable for the claims for damages filed by the plaintiff claimants, which would necessarily
give rise to an obligation to pay on the part of the defendants.

At the point in time where the proceedings below were prematurely halted, no cross-claims have
been interposed by any defendant against another defendant. If and when such a cross-claim is
made by a non-settling defendant against a settling defendant, it is within the discretion of the
trial court to determine the propriety of allowing such a cross-claim and if the settling defendant
must remain a party to the case purely in relation to the cross claim.

In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals,84 the
Court had the occasion to state that "where there are, along with the parties to the compromise,
other persons involved in the litigation who have not taken part in concluding the compromise
agreement but are adversely affected or feel prejudiced thereby, should not be precluded from
invoking in the same proceedings an adequate relief therefor."85

Relevantly, in Philippine International Surety Co., Inc. v. Gonzales,86 the Court upheld the
ruling of the trial court that, in a joint and solidary obligation, the paying debtor may file a third-
party complaint and/or a cross-claim to enforce his right to seek contribution from his co-
debtors.

Hence, the right of the remaining defendant(s) to seek reimbursement in the above situation, if
proper, is not affected by the compromise agreements allegedly entered into by NAVIDA, et al.,
and ABELLA, et al., with some of the defendant companies.

WHEREFORE, the Court hereby GRANTS the petitions for review on certiorari in G.R. Nos.
125078, 126654, and 128398. We REVERSE and SET ASIDE the Order dated May 20, 1996 of
the Regional Trial Court of General Santos City, Branch 37, in Civil Case No. 5617, and the
Order dated October 1, 1996 of the Regional Trial Court of Davao City, Branch 16, and its
subsequent Order dated December 16, 1996 denying reconsideration in Civil Case No. 24,251-
96, and REMAND the records of this case to the respective Regional Trial Courts of origin for
further and appropriate proceedings in line with the ruling herein that said courts have
jurisdiction over the subject matter of the amended complaints in Civil Case Nos. 5617 and
24,251-96.

The Court likewise GRANTS the motion filed by Del Monte to withdraw its petition in G.R. No.
127856. In view of the previous grant of the motion to withdraw the petition in G.R. No. 125598,
both G.R. Nos. 127856 and 125598 are considered CLOSED AND TERMINATED.

No pronouncement as to costs.

SO ORDERED.
DARMA MASLAG, Petitioner, v. AND ELIZABETH MONZON, WILLIAM GESTON, REGISTRY
OF DEEDS OF BENGUET, Respondents.

DECISION

DEL CASTILLO, J.:

"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."1

This is a Petition for Review on Certiorari2 of the May 31, 2006 Resolution3 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:cralavvonlinelawlibrary

WHEREFORE, the Motion to Dismiss is GRANTED, and the Appeal is hereby DISMISSED.

SO ORDERED.4nadcralavvonlinelawlibrary

The Petition also assails the CA’s September 22, 2006 Resolution5 denying petitioner’s Motion
for Reconsideration.6

Factual Antecedents

In 1998, petitioner filed a Complaint7 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.8 It ordered her to reconvey the said property to petitioner, and to pay
damages and costs of suit.9

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,10 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:cralavvonlinelawlibrary

SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction. – x x x

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,11 but neither presented
additional evidence before the new judge, Edgardo B. Diaz De Rivera, Jr. (Judge Diaz De
Rivera).12

On May 4, 2004, Judge Diaz De Rivera issued a Resolution13 reversing the MTC Decision.
The fallo reads as follows:cralavvonlinelawlibrary

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.14

Petitioner filed a Notice of Appeal15 from the RTC’s May 4, 2004 Resolution.

Petitioner assailed the RTC’s May 4, 2004 Resolution for reversing the MTC’s factual findings16
and prayed that the MTC Decision be adopted. Her prayer before the CA
reads:cralavvonlinelawlibrary

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.17

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.18

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.19

Petitioner sought reconsideration.20 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:21

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.22

Hence this Petition wherein petitioner prays that the CA be ordered to take cognizance of her
appeal.23

Issues

Petitioner set forth the following issues in her Petition:cralavvonlinelawlibrary

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 REVIEW UNDER RULE 42 OR AN ORDINARY
APPEAL UNDER RULE 41.24nadcralavvonlinelawlibrary

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.25

In her Complaint26 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:cralavvonlinelawlibrary

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."27
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.28 Pertinent provisions of Batas Pambansa Blg. (BP) 129,29 as amended by
Republic Act (RA) No. 7691,30 provides:cralavvonlinelawlibrary

Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original
jurisdiction:cralavvonlinelawlibrary

(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
(P20,000.00) 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;

xxxx

SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts in Civil Cases. — Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts shall exercise: x x x x

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real
property, or any interest therein where the assessed value of the property or interest therein
does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where
such assessed value does not exceed Fifty thousand pesos (P50,000.00) x x x.

In the case at bench, annexed to the Complaint is a Declaration of Real Property31 dated
November 12, 1991, which was later marked as petitioner’s Exhibit "A",32 showing that the
disputed property has an assessed value of P12,40033 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:cralavvonlinelawlibrary

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. (Emphasis supplied)

There are two modes of appealing an RTC decision or resolution on issues of fact and law.34
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"35 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.36 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 coveniently set aside."37
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.38 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."39 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.

SO ORDERED.
G.R. No. 168785 : February 05, 2010]

HERALD BLACK DACASIN, PETITIONER, VS. SHARON DEL MUNDO DACASIN,

RESPONDENT.

DECISION

CARPIO, J.:

The Case

For review [1] is a dismissal [2] of a suit to enforce a post-foreign divorce child custody
agreement for lack of jurisdiction.

The Facts

Petitioner Herald Dacasin (petitioner), American, and respondent Sharon Del Mundo Dacasin
(respondent), Filipino, were married in Manila in April 1994. They have one daughter,
Stephanie, born on 21 September 1995. In June 1999, respondent sought and obtained from
the Circuit Court, 19th Judicial Circuit, Lake County, Illinois (Illinois court) a divorce decree
against petitioner. [3] In its ruling, the Illinois court dissolved the marriage of petitioner and
respondent, awarded to respondent sole custody of Stephanie and retained jurisdiction over the
case for enforcement purposes.

On 28 January 2002, petitioner and respondent executed in Manila a contract (Agreement [4] )
for the joint custody of Stephanie. The parties chose Philippine courts as exclusive forum to
adjudicate disputes arising from the Agreement. Respondent undertook to obtain from the
Illinois court an order "relinquishing" jurisdiction to Philippine courts.

In 2004, petitioner sued respondent in the Regional Trial Court of Makati City, Branch 60 (trial
court) to enforce the Agreement. Petitioner alleged that in violation of the Agreement,
respondent exercised sole custody over Stephanie.

Respondent sought the dismissal of the complaint for, among others, lack of jurisdiction
because of the Illinois court's retention of jurisdiction to enforce the divorce decree.

The Ruling of the Trial Court

In its Order dated 1 March 2005, the trial court sustained respondent's motion and dismissed
the case for lack of jurisdiction. The trial court held that: (1) it is precluded from taking
cognizance over the suit considering the Illinois court's retention of jurisdiction to enforce its
divorce decree, including its order awarding sole custody of Stephanie to respondent; (2) the
divorce decree is binding on petitioner following the "nationality rule" prevailing in this
jurisdiction; [5] and (3) the Agreement is void for contravening Article 2035, paragraph 5 of the
Civil Code [6] prohibiting compromise agreements on jurisdiction. [7]

Petitioner sought reconsideration, raising the new argument that the divorce decree obtained by
respondent is void. Thus, the divorce decree is no bar to the trial court's exercise of jurisdiction
over the case.
In its Order dated 23 June 2005, the trial court denied reconsideration, holding that unlike in the
case of respondent, the divorce decree is binding on petitioner under the laws of his nationality.

Hence, this petition.

Petitioner submits the following alternative theories for the validity of the Agreement to justify its
enforcement by the trial court: (1) the Agreement novated the valid divorce decree, modifying
the terms of child custody from sole (maternal) to joint; [8] or (2) the Agreement is independent
of the divorce decree obtained by respondent.

The Issue

The question is whether the trial court has jurisdiction to take cognizance of petitioner's suit and
enforce the Agreement on the joint custody of the parties' child.

The Ruling of the Court

The trial court has jurisdiction to entertain petitioner's suit but not to enforce the Agreement
which is void. However, factual and equity considerations militate against the dismissal of
petitioner's suit and call for the remand of the case to settle the question of Stephanie's custody.

Regional Trial Courts Vested With Jurisdiction

to Enforce Contracts

Subject matter jurisdiction is conferred by law. At the time petitioner filed his suit in the trial
court, statutory law vests on Regional Trial Courts exclusive original jurisdiction over civil
actions incapable of pecuniary estimation. [9] An action for specific performance, such as
petitioner's suit to enforce the Agreement on joint child custody, belongs to this species of
actions. [10] Thus, jurisdiction-wise, petitioner went to the right court.

Indeed, the trial court's refusal to entertain petitioner's suit was grounded not on its lack of
power to do so but on its thinking that the Illinois court's divorce decree stripped it of jurisdiction.
This conclusion is unfounded. What the Illinois court retained was "jurisdiction x x x for the
purpose of enforcing all and sundry the various provisions of [its] Judgment for Dissolution." [11]
Petitioner's suit seeks the enforcement not of the "various provisions" of the divorce decree but
of the post-divorce Agreement on joint child custody. Thus, the action lies beyond the zone of
the Illinois court's so-called "retained jurisdiction."

Petitioner's Suit Lacks Cause of Action

The foregoing notwithstanding, the trial court cannot enforce the Agreement which is contrary to
law.

In this jurisdiction, parties to a contract are free to stipulate the terms of agreement subject to
the minimum ban on stipulations contrary to law, morals, good customs, public order, or public
policy. [12] Otherwise, the contract is denied legal existence, deemed "inexistent and void from
the beginning." [13] For lack of relevant stipulation in the Agreement, these and other ancillary
Philippine substantive law serve as default parameters to test the validity of the Agreement's
joint child custody stipulations. [14]
At the time the parties executed the Agreement on 28 January 2002, two facts are undisputed:
(1) Stephanie was under seven years old (having been born on 21 September 1995); and (2)
petitioner and respondent were no longer married under the laws of the United States because
of the divorce decree. The relevant Philippine law on child custody for spouses separated in fact
or in law [15] (under the second paragraph of Article 213 of the Family Code) is also undisputed:
"no child under seven years of age shall be separated from the mother x x x." [16] (This
statutory awarding of sole parental custody [17] to the mother is mandatory, [18] grounded on
sound policy consideration, [19] subject only to a narrow exception not alleged to obtain here.
[20] ) Clearly then, the Agreement's object to establish a post-divorce joint custody regime
between respondent and petitioner over their child under seven years old contravenes
Philippine law.

The Agreement is not only void ab initio for being contrary to law, it has also been repudiated by
the mother when she refused to allow joint custody by the father. The Agreement would be valid
if the spouses have not divorced or separated because the law provides for joint parental
authority when spouses live together. [21] However, upon separation of the spouses, the mother
takes sole custody under the law if the child is below seven years old and any agreement to the
contrary is void. Thus, the law suspends the joint custody regime for (1) children under seven of
(2) separated or divorced spouses. Simply put, for a child within this age bracket (and for
commonsensical reasons), the law decides for the separated or divorced parents how best to
take care of the child and that is to give custody to the separated mother. Indeed, the separated
parents cannot contract away the provision in the Family Code on the maternal custody of
children below seven years anymore than they can privately agree that a mother who is
unemployed, immoral, habitually drunk, drug addict, insane or afflicted with a communicable
disease will have sole custody of a child under seven as these are reasons deemed compelling
to preclude the application of the exclusive maternal custody regime under the second
paragraph of Article 213. [22]

It will not do to argue that the second paragraph of Article 213 of the Family Code applies only
to judicial custodial agreements based on its text that "No child under seven years of age shall
be separated from the mother, unless the court finds compelling reasons to order otherwise." To
limit this provision's enforceability to court sanctioned agreements while placing private
agreements beyond its reach is to sanction a double standard in custody regulation of children
under seven years old of separated parents. This effectively empowers separated parents, by
the simple expedient of avoiding the courts, to subvert a legislative policy vesting to the
separated mother sole custody of her children under seven years of age "to avoid a tragedy
where a mother has seen her baby torn away from her." [23] This ignores the legislative basis
that "[n]o man can sound the deep sorrows of a mother who is deprived of her child of tender
age." [24]

It could very well be that Article 213's bias favoring one separated parent (mother) over the
other (father) encourages paternal neglect, presumes incapacity for joint parental custody, robs
the parents of custodial options, or hijacks decision-making between the separated parents. [25]
However, these are objections which question the law's wisdom not its validity or uniform
enforceability. The forum to air and remedy these grievances is the legislature, not this Court. At
any rate, the rule's seeming harshness or undesirability is tempered by ancillary agreements the
separated parents may wish to enter such as granting the father visitation and other privileges.
These arrangements are not inconsistent with the regime of sole maternal custody under the
second paragraph of Article 213 which merely grants to the mother final authority on the care
and custody of the minor under seven years of age, in case of disagreements.
Further, the imposed custodial regime under the second paragraph of Article 213 is limited in
duration, lasting only until the child's seventh year. From the eighth year until the child's
emancipation, the law gives the separated parents freedom, subject to the usual contractual
limitations, to agree on custody regimes they see fit to adopt. Lastly, even supposing that
petitioner and respondent are not barred from entering into the Agreement for the joint custody
of Stephanie, respondent repudiated the Agreement by asserting sole custody over Stephanie.
Respondent's act effectively brought the parties back to ambit of the default custodial regime in
the second paragraph of Article 213 of the Family Code vesting on respondent sole custody of
Stephanie.

Nor can petitioner rely on the divorce decree's alleged invalidity - not because the Illinois court
lacked jurisdiction or that the divorce decree violated Illinois law, but because the divorce was
obtained by his Filipino spouse [26] - to support the Agreement's enforceability. The argument
that foreigners in this jurisdiction are not bound by foreign divorce decrees is hardly novel. Van
Dorn v. Romillo [27] settled the matter by holding that an alien spouse of a Filipino is bound by a
divorce decree obtained abroad. [28] There, we dismissed the alien divorcee's Philippine suit for
accounting of alleged post-divorce conjugal property and rejected his submission that the
foreign divorce (obtained by the Filipino spouse) is not valid in this jurisdiction in this wise:

There can be no question as to the validity of that Nevada divorce in any of the States of the
United States. The decree is binding on private respondent as an American citizen. For
instance, private respondent cannot sue petitioner, as her husband, in any State of the Union.
What he is contending in this case is that the divorce is not valid and binding in this jurisdiction,
the same being contrary to local law and public policy.

It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, only
Philippine nationals are covered by the policy against absolute divorces the same being
considered contrary to our concept of public policy and morality. However, aliens may obtain
divorces abroad, which may be recognized in the Philippines, provided they are valid according
to their national law. In this case, the divorce in Nevada released private respondent from the
marriage from the standards of American law, under which divorce dissolves the marriage.

xxxx

Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He
would have no standing to sue in the case below as petitioner's husband entitled to exercise
control over conjugal assets. As he is bound by the Decision of his own country's Court, which
validly exercised jurisdiction over him, and whose decision he does not repudiate, he is
estopped by his own representation before said Court from asserting his right over the alleged
conjugal property. (Emphasis supplied)

We reiterated Van Dorn in Pilapil v. Ibay-Somera [29] to dismiss criminal complaints for adultery
filed by the alien divorcee (who obtained the foreign divorce decree) against his former Filipino
spouse because he no longer qualified as "offended spouse" entitled to file the complaints
under Philippine procedural rules. Thus, it should be clear by now that a foreign divorce decree
carries as much validity against the alien divorcee in this jurisdiction as it does in the jurisdiction
of the alien's nationality, irrespective of who obtained the divorce.

The Facts of the Case and Nature of Proceeding

Justify Remand
Instead of ordering the dismissal of petitioner's suit, the logical end to its lack of cause of action,
we remand the case for the trial court to settle the question of Stephanie's custody. Stephanie is
now nearly 15 years old, thus removing the case outside of the ambit of the mandatory maternal
custody regime under Article 213 and bringing it within coverage of the default standard on child
custody proceedings - the best interest of the child. [30] As the question of custody is already
before the trial court and the child's parents, by executing the Agreement, initially showed
inclination to share custody, it is in the interest of swift and efficient rendition of justice to allow
the parties to take advantage of the court's jurisdiction, submit evidence on the custodial
arrangement best serving Stephanie's interest, and let the trial court render judgment. This
disposition is consistent with the settled doctrine that in child custody proceedings, equity may
be invoked to serve the child's best interest. [31]

WHEREFORE, we REVERSE the Orders dated 1 March 2005 and 23 June 2005 of the
Regional Trial Court of Makati City, Branch 60. The case is REMANDED for further proceedings
consistent with this ruling.

SO ORDERED.
G.R. No. 173616, June 25, 2014

AIR TRANSPORTATION OFFICE (ATO), Petitioner, v. HON. COURT OF APPEALS

(NINETEENTH DIVISION) AND BERNIE G. MIAQUE, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This petition for certiorari and prohibition of the Air Transportation Office (ATO) seeks the
nullification of the Court of Appeals’ Resolution1 dated March 29, 2006 and Resolution2 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 ATO 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
P1,296,103.10, 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.3cralawred

The MTCC subsequently rendered a Decision4 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 P460,060.70, plus differential
billings from January 1990 to July 1993 for P4,652.60 and interest charges from January 2000
to October 2000 for P2,678.38 or a total amount of P467,397.68 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 P719,708.43 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 P108,997.07. [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].5

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 Decision6 dated June 7, 2003, affirmed the MTCC
Decision in its entirety. Miaque’s motion for reconsideration was denied.7cralawred

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 Decision8 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, 2006.9cralawred

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 Resolution10 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.11cralawred

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 P100,000.00.12 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.13cralawred

In an Order14 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].15
Miaque sought reconsideration of the above Order but the RTC denied the motion in an
Order16 dated August 13, 2004. Thereafter, the RTC issued a Writ of Execution dated August
16, 2004.17cralawred

However, the Court of Appeals issued a Resolution18 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.19 Miaque again opposed the ATO’s urgent motion for
execution,20 while the ATO filed a supplemental urgent motion for execution stating that
Miaque’s appeal in the Court of Appeals had been dismissed.21cralawred

In an Order22 dated June 1, 2005, the RTC granted the ATO’s urgent motion for execution and
issued a Writ of Execution23 dated June 2, 2005. On the basis of the said writ, a notice to
vacate was given to Miaque.24 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.25 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.26 Thereafter, the Court of Appeals issued a Resolution27 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 service28 and issued reports of
partial delivery of possession.29 However, Miaque subsequently regained possession of the
said premises on the strength of the Court of Appeals’ Resolution dated June 14,
2005.30cralawred

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, 2005.31 This was opposed by Miaque.32 After the RTC heard the
parties, it issued an Order33 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.34cralawred

A new case in the Court of Appeals: CA-G.R. CEB-SP No. 01603

On March 28, 2006, Miaque filed a petition35 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 June 2, 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 or the 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 42 of 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 (P100,000.00) 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.36
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 P2 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.37 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.38cralawred

The ATO also argues that, by his admission that the issues in CA-G.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. CEB-SP 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.39
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.40cralawred

The ATO adds that Miaque’s petition for certiorari in CA-G.R. CEB-SP No. 01603 introduces a
new matter which is the alleged novation of the MTCC Decision when he deposited the amount
of P319,900.00 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.41cralawred

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.42cralawred

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 P319,000.00 to the ATO’s account
with the Land Bank of the Philippines in February 2006.43cralawred

This Court, in a Resolution44 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.

xxxx

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.45 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 dispossessor 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.46Teresa T. Gonzales La’O & Co., Inc. v. Sheriff Hatab47 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.48 (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.49 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.50 The rationale of immediate execution of judgment in an
ejectment case is to avoid injustice to a lawful possessor.51 Nevertheless, it should be stressed
that the appellate court may stay the writ of execution should circumstances so
require.52cralawred

The second characteristic -- the judgment of the RTC is not stayed by an appeal taken
therefrom -- reinforces the first. 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.53 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.54 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.55City of Naga v. Hon. Asuncion56 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.57cralawred

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 ancillary
writ must be struck down for having been rendered in grave abuse of discretion.58cralawred

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 CA-G.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.,59 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 therefrom. 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 14,60 Rule 39 of the Rules of Court in relation
to Section 661 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.62 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.63 and Nisce.64 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.
CEB-SP 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.

SO ORDERED
G.R. No. 163602 September 7, 2011

SPOUSES EULOGIA MANILA and RAMON MANILA, Petitioners,

vs.
SPOUSES EDERLINDA GALLARDO-MANZO and DANIEL MANZO, Respondents.

DECISION

VILLARAMA, JR., J.:

This resolves the petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision1 dated February 27, 2004 and Resolution2
dated May 14, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 49998 which granted the
petition for annulment of judgment filed by the respondents.

The controversy stemmed from an action for ejectment3 filed by the respondents, spouses
Ederlinda Gallardo-Manzo and Daniel Manzo, against the petitioners, spouses Ramon and
Eulogia Manila, before the Metropolitan Trial Court (MeTC) of Las Piñas City, Branch 79 (Civil
Case No. 3537). The facts as summarized by the said court are as follows:

On June 30, 1982, Ederlinda Gallardo leased two (2) parcels of land situated along Real St.,
Manuyo, Las Piñas, Metro Manila, to Eulogia Manila for a period of ten (10) years at a monthly
rental(s) of P2,000.00 for the first two years, and thereafter an increase of ten (10) percent
every after two years. They also agreed that the lessee shall have the option to buy the property
within two (2) years from the date of execution of the contract of lease at a fair market value of
One Hundred and Fifty Thousand Pesos (P150,000.00)

The contract of lease expired on July 1, 1992 but the lessee continued in possession of the
property despite a formal demand letter dated August 8, 1992, to vacate the same and pay the
rental arrearages. In a letter reply dated August 12, 1992, herein defendant claimed that no
rental fee is due because she allegedly became the owner of the property at the time she
communicated to the plaintiff her desire to exercise the option to buy the said property.

Their disagreement was later brought to the Barangay for conciliation but the parties failed to
reach a compromise, hence the present action.4

On July 14, 1993, the MeTC rendered its decision,5 the dispositive portion of which reads:

WHEREFORE, a judgment is rendered in favor of the plaintiffs ordering the defendants:

1) To vacate the subject parcels of land and surrender possession thereof upon the payment by
the plaintiff of one-half of the value of the building constructed by the lessee. Should the lessor
refuse to reimburse the aforesaid amount, the lessee shall have the option to exercise her right
under Article 1678 of the New Civil Code;

2) To pay rental arrearages up to July 1, 1992 in the amount of Two Hundred Twenty Eight
Thousand and Forty Four 80/100 Pesos (P228,044.80);

3) To pay, as reasonable compensation for their continued withholding of possession of the

subject lots, the sum of Three Thousand Two Hundred and Twenty One Pesos (P3,221.00)
every month, commencing July 2, 1992 up to such time that they finally yield possession thereof
to the plaintiffs, subject to an increase of ten percent (10%) after every two (2) years from said
date; and

4) To pay plaintiffs attorney’s fees in the sum of Five Thousand Pesos (P5,000.00)

No pronouncement as to costs.

SO ORDERED.6

Petitioners appealed to the Regional Trial Court (RTC) of Makati City, Branch 63 (Civil Case No.
93-3733) which reversed the MeTC. The RTC found that petitioners have in fact exercised their
option to buy the leased property but the respondents refused to honor the same. It noted that
respondents even informed the petitioners about foreclosure proceedings on their property,
whereupon the petitioners tried to intervene by tendering rental payments but the respondents
advised them to withhold such payments until the appeal of respondents in the case they filed
against the Rural Bank of Bombon (Camarines Sur), Inc. (Civil Case No. 6062) is resolved. It
further noted that respondents’ intention to sell the lot to petitioners is confirmed by the fact that
the former allowed the latter to construct a building of strong materials on the premises. The
RTC thus decreed:

IN THE LIGHT OF THE FOREGOING, judgment is hereby rendered reversing the decision of
the lower court dated July 14, 1993 and ordering as follows:

1) That plaintiffs execute a deed of absolute sale over that parcel of land subject of the Contract
of Lease dated June 30, 1982 after full payment of defendants of the purchase price of
P150,000.00;

2) That plaintiffs pay the costs of suit.

SO ORDERED.7

Respondents filed a motion for reconsideration on December 23, 1994. In its Order dated March
24, 1995, the RTC denied the motion for having been filed beyond the fifteen (15)-day period
considering that respondents received a copy of the decision on December 7, 1994.8
Consequently, the November 18, 1994 decision of the RTC became final and executory.9

On December 22, 1998, respondents filed a petition for annulment of the RTC decision in the
CA. Respondents assailed the RTC for ordering them to sell their property to petitioners arguing
that said court’s appellate jurisdiction in ejectment cases is limited to the determination of who is
entitled to the physical possession of real property and the only judgment it can render in favor
of the defendant is to recover his costs, which judgment is conclusive only on the issue of
possession and does not affect the ownership of the land. They contended that the sale of real
property by one party to another may be ordered by the RTC only in a case for specific
performance falling under its original exclusive jurisdiction, not in the exercise of its appellate
jurisdiction in an ejectment case. Respondents also alleged that the petition for annulment is the
only remedy available to them because the ordinary remedies of new trial, appeal, petition for
relief or other appropriate remedies are no longer available through no fault on their part.

By Decision dated February 27, 2004, the CA granted the petition, annulled the November 18,
1994 RTC decision and reinstated the July 14, 1993 MeTC decision. On the issue of lack of
jurisdiction raised by the respondents, the CA ruled as follows:
It must be stressed that the main action before the Metropolitan Trial Court is one for ejectment
grounded on the expiration of the parties’ contract of lease. And said court, finding that
petitioners have a valid right to ask for the ejectment of private respondents, ordered the latter
to vacate the premises and to pay their rentals in arrears. To Our mind, what the respondent
court should have done in the exercise of its appellate jurisdiction, was to confine itself to the
issue of whether or not petitioners have a valid cause of action for ejectment against the private
respondents.

Unfortunately, in the decision herein sought to be annulled, the respondent court went further
than what is required of it as an appellate court when it ordered the petitioners to sell their
properties to the private respondents. In a very real sense, the respondent court materially
changed the nature of petitioners’ cause of action by deciding the question of ownership even
as the appealed case involves only the issue of prior physical possession which, in every
ejectment suit, is the only question to be resolved. As it were, the respondent court converted
the issue to one for specific performance which falls under its original, not appellate jurisdiction.
Sad to say, this cannot be done by the respondent court in an appealed ejectment case
because the essential criterion of appellate jurisdiction is that it revises and corrects the
proceedings in a cause already instituted and does not create that cause (Marbury v. Madison,
1 Cranch (U.S.), 137, 172, 2 L. edition 60, cited in 15 Corpus Juris 727).

It follows that the respondent Regional Trial Court clearly acted without jurisdiction when it
ordered the petitioners to sell their properties to the private respondents. The order to sell can
be made only by the respondent court in an action for specific performance under its exclusive
original jurisdiction, and not in the exercise of its appellate jurisdiction in an appealed ejectment
suit, as in this case. Worse, the relief granted by the same court was not even prayed for by the
private respondents in their Answer and position paper before the MTC, whereat they only
asked for the dismissal of the complaint filed against them.10 (Emphasis supplied.)

With the denial of their motion for reconsideration, petitioners filed the present petition raising
the following issues:

WHETHER THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN ANNULLING THE

JUDGMENT BY THE REGIONAL TRIAL COURT OF MAKATI CITY NOTWITHSTANDING THE
FINDING THAT THE ORDINARY REMEDIES OF NEW TRIAL, APPEAL, PETITION FOR
RELIEF OR OTHER APPROPRIATE REMEDIES WERE LOST THROUGH THE FAULT OF
THE RESPONDENTS

WHETHER THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN ANNULLING THE

JUDGMENT BY THE REGIONAL TRIAL COURT OF MAKATI CITY ON THE GROUND OF
"LACK OF JURISDICTION" WHEN IT HAS NOT BEEN SHOWN THAT THE REGIONAL TRIAL
COURT OF MAKATI CITY HAD NO JURISDICTION OVER THE PERSON OF THE
RESPONDENTS OR THE SUBJECT MATTER OF THE CLAIM11

The petition is meritorious.

A petition for annulment of judgments or final orders of a Regional Trial Court in civil actions can
only be availed of where "the ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available through no fault of the petitioner."12 It is a remedy
granted only under exceptional circumstances and such action is never resorted to as a
substitute for a party’s own neglect in not promptly availing of the ordinary or other appropriate
remedies.13 The only grounds provided in Sec. 2, Rule 47 are extrinsic fraud and lack of
jurisdiction.

In this case, respondents alleged that the loss of remedies against the RTC decision was
attributable to their former counsel’s late filing of their motion for reconsideration and failure to
file any proper petition to set aside the said decision. They claimed that they had been
constantly following up the status of the case with their counsel, Atty. Jose Atienza, who
repeatedly assured them he was on top of the situation and would even get angry if repeatedly
asked about the case. Out of their long and close relationship with Atty. Atienza and due regard
for his poor health due to his numerous and chronic illnesses which required frequent prolonged
confinement at the hospital, respondents likewise desisted from hiring the services of another
lawyer to assist Atty. Atienza, until the latter’s death on September 10, 1998. Thus, it was only
on November 1998 that respondents engaged the services of their new counsel who filed the
petition for annulment of judgment in the CA.

We are not persuaded by respondents’ asseveration. They could have directly followed up the
status of their case with the RTC especially during the period of Atty. Atienza’s hospital
confinement. As party litigants, they should have constantly monitored the progress of their
case. Having completely entrusted their case to their former counsel and believing his word that
everything is alright, they have no one to blame but themselves when it turned out that their
opportunity to appeal and other remedies from the adverse ruling of the RTC could no longer be
availed of due to their counsel’s neglect. That respondents continued to rely on the services of
their counsel notwithstanding his chronic ailments that had him confined for long periods at the
hospital is unthinkable. Such negligence of counsel is binding on the client, especially when the
latter offered no plausible explanation for his own inaction. The Court has held that when a party
retains the services of a lawyer, he is bound by his counsel’s actions and decisions regarding
the conduct of the case. This is true especially where he does not complain against the manner
his counsel handles the suit.14 The oft-repeated principle is that an action for annulment of
judgment cannot and is not a substitute for the lost remedy of appeal.15

In any event, the petition for annulment was based not on fraudulent assurances or negligent
acts of their counsel, but on lack of jurisdiction.

Petitioners assail the CA in holding that the RTC decision is void because it granted a relief
inconsistent with the nature of an ejectment suit and not even prayed for by the respondents in
their answer. They contend that whatever maybe questionable in the decision is a ground for
assignment of errors on appeal – or in certain cases, as ground for a special civil action for
certiorari under Rule 65 – and not as ground for its annulment. On the other hand, respondents
assert that the CA, being a higher court, has the power to adopt, reverse or modify the findings
of the RTC in this case. They point out that the CA in the exercise of its sound discretion found
the RTC’s findings unsupported by the evidence on record which also indicated that the loss of
ordinary remedies of appeal, new trial and petition for review was not due to the fault of the
respondents.

We agree with the petitioners.

Lack of jurisdiction as a ground for annulment of judgment refers to either lack of jurisdiction
over the person of the defending party or over the subject matter of the claim.16 In a petition for
annulment of judgment based on lack of jurisdiction, petitioner must show not merely an abuse
of jurisdictional discretion but an absolute lack of jurisdiction. Lack of jurisdiction means
absence of or no jurisdiction, that is, the court should not have taken cognizance of the petition
because the law does not vest it with jurisdiction over the subject matter. Jurisdiction over the
nature of the action or subject matter is conferred by law.17

There is no dispute that the RTC is vested with appellate jurisdiction over ejectment cases
decided by the MeTC, MTC or MCTC. We note that petitioners’ attack on the validity of the RTC
decision pertains to a relief erroneously granted on appeal, and beyond the scope of judgment
provided in Section 6 (now Section 17) of Rule 70.18 While the court in an ejectment case may
delve on the issue of ownership or possession de jure solely for the purpose of resolving the
issue of possession de facto, it has no jurisdiction to settle with finality the issue of ownership19
and any pronouncement made by it on the question of ownership is provisional in nature.20 A
judgment in a forcible entry or detainer case disposes of no other issue than possession and
establishes only who has the right of possession, but by no means constitutes a bar to an action
for determination of who has the right or title of ownership.21 We have held that although it was
proper for the RTC, on appeal in the ejectment suit, to delve on the issue of ownership and
receive evidence on possession de jure, it cannot adjudicate with semblance of finality the
ownership of the property to either party by ordering the cancellation of the TCT.22

In this case, the RTC acted in excess of its jurisdiction in deciding the appeal of respondents
when, instead of simply dismissing the complaint and awarding any counterclaim for costs due
to the defendants (petitioners), it ordered the respondents-lessors to execute a deed of absolute
sale in favor of the petitioners-lessees, on the basis of its own interpretation of the Contract of
Lease which granted petitioners the option to buy the leased premises within a certain period
(two years from date of execution) and for a fixed price (₱150,000.00).23 This cannot be done
in an ejectment case where the only issue for resolution is who between the parties is entitled to
the physical possession of the property.

Such erroneous grant of relief to the defendants on appeal, however, is but an exercise of
jurisdiction by the RTC. Jurisdiction is not the same as the exercise of jurisdiction. As
distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide a cause, and
not the decision rendered therein.24 The ground for annulment of the decision is absence of, or
no, jurisdiction; that is, the court should not have taken cognizance of the petition because the
law does not vest it with jurisdiction over the subject matter.25

Thus, while respondents assailed the content of the RTC decision, they failed to show that the
RTC did not have the authority to decide the case on appeal. As we held in Ybañez v. Court of
Appeals:26

On the first issue, we feel that respondent court acted inadvertently when it set aside the RTC
ruling relative to the validity of the substituted service of summons over the persons of the
petitioners in the MTC level. We must not lose sight of the fact that what was filed before
respondent court is an action to annul the RTC judgment and not a petition for review.
Annulment of judgment may either be based on the ground that a judgment is void for want of
jurisdiction or that the judgment was obtained by extrinsic fraud. There is nothing in the records
that could cogently show that the RTC lacked jurisdiction. Chiefly, Section 22 of B.P. Blg. 129,
otherwise known as the Judiciary Reorganization Act of 1980, vests upon the RTC the exercise
of an "appellate jurisdiction over all cases decided by the Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts in their respective territorial jurisdictions." Clearly
then, when the RTC took cognizance of petitioners’ appeal from the adverse decision of the
MTC in the ejectment suit, it (RTC) was unquestionably exercising its appellate jurisdiction as
mandated by law. Perforce, its decision may not be annulled on the basis of lack of jurisdiction
as it has, beyond cavil, jurisdiction to decide the appeal.27 (Emphasis supplied.)

The CA therefore erred in annulling the November 18, 1994 RTC decision on the ground of lack
of jurisdiction as said court had jurisdiction to take cognizance of petitioners’ appeal.1avvphi1

On the timeliness of the petition for annulment of judgment filed with the CA, Section 3, Rule 47
of the Rules of Court provides that a petition for annulment of judgment based on extrinsic fraud
must be filed within four years from its discovery; and if based on lack of jurisdiction, before it is
barred by laches or estoppel. The principle of laches or "stale demands" ordains that the failure
or neglect, for an unreasonable and unexplained length of time, to do that which by exercising
due diligence could or should have been done earlier—negligence or omission to assert a right
within a reasonable time, warrants a presumption that the party entitled to assert it has
abandoned it or declined to assert it.28 There is no absolute rule as to what constitutes laches
or staleness of demand; each case is to be determined according to its particular
circumstances.29

Here, respondents’ failure to assail the RTC ruling in a petition for review or certiorari before the
CA, rendered the same final and executory. Having lost these remedies due to their lethargy for
three and a half years, they cannot now be permitted to assail anew the said ruling rendered by
the RTC in the exercise of its appellate jurisdiction. Their inaction and neglect to pursue
available remedies to set aside the RTC decision for such length of time, without any acceptable
explanation other than the word of a former counsel who already passed away, constitutes
unreasonable delay warranting the presumption that they have declined to assert their right over
the leased premises which continued to be in the possession of the petitioners. Clearly,
respondents’ petition to annul the final RTC decision is barred under the equitable doctrine of
laches.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated February
27, 2004 and Resolution dated May 14, 2004 of the Court of Appeals in CA-G.R. SP No. 49998
are SET ASIDE. The petition for annulment of judgment filed by herein respondents is
DISMISSED.

No costs.

SO ORDERED.
G.R. No. 171092 March 15, 2010

EDNA DIAGO LHUILLIER, Petitioner,

vs.
BRITISH AIRWAYS, Respondent.

DECISION

DEL CASTILLO, J.:

Jurisdictio est potestas de publico introducta cum necessitate juris dicendi. Jurisdiction is a
power introduced for the public good, on account of the necessity of dispensing justice.1

Factual Antecedents

On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint2 for damages against
respondent British Airways before the Regional Trial Court (RTC) of Makati City. She alleged
that on February 28, 2005, she took respondent’s flight 548 from London, United Kingdom to
Rome, Italy. Once on board, she allegedly requested Julian Halliday (Halliday), one of the
respondent’s flight attendants, to assist her in placing her hand-carried luggage in the overhead
bin. However, Halliday allegedly refused to help and assist her, and even sarcastically remarked
that "If I were to help all 300 passengers in this flight, I would have a broken back!"

Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight
attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in the
business class section to lecture on plane safety. Allegedly, Kerrigan made her appear to the
other passengers to be ignorant, uneducated, stupid, and in need of lecturing on the safety rules
and regulations of the plane. Affronted, petitioner assured Kerrigan that she knew the plane’s
safety regulations being a frequent traveler. Thereupon, Kerrigan allegedly thrust his face a
mere few centimeters away from that of the petitioner and menacingly told her that "We don’t
like your attitude."

Upon arrival in Rome, petitioner complained to respondent’s ground manager and demanded an
apology. However, the latter declared that the flight stewards were "only doing their job."

Thus, petitioner filed the complaint for damages, praying that respondent be ordered to pay ₱5
million as moral damages, ₱2 million as nominal damages, ₱1 million as exemplary damages,
₱300,000.00 as attorney’s fees, ₱200,000.00 as litigation expenses, and cost of the suit.

On May 16, 2005, summons, together with a copy of the complaint, was served on the
respondent through Violeta Echevarria, General Manager of Euro-Philippine Airline Services,
Inc.3

On May 30, 2005, respondent, by way of special appearance through counsel, filed a Motion to
Dismiss4 on grounds of lack of jurisdiction over the case and over the person of the respondent.
Respondent alleged that only the courts of London, United Kingdom or Rome, Italy, have
jurisdiction over the complaint for damages pursuant to the Warsaw Convention,5 Article 28(1)
of which provides:
An action for damages must be brought at the option of the plaintiff, either before the court of
domicile of the carrier or his principal place of business, or where he has a place of business
through which the contract has been made, or before the court of the place of destination.

Thus, since a) respondent is domiciled in London; b) respondent’s principal place of business is

in London; c) petitioner bought her ticket in Italy (through Jeepney Travel S.A.S, in Rome);6 and
d) Rome, Italy is petitioner’s place of destination, then it follows that the complaint should only
be filed in the proper courts of London, United Kingdom or Rome, Italy.

Likewise, it was alleged that the case must be dismissed for lack of jurisdiction over the person
of the respondent because the summons was erroneously served on Euro-Philippine Airline
Services, Inc. which is not its resident agent in the Philippines.

On June 3, 2005, the trial court issued an Order requiring herein petitioner to file her
Comment/Opposition on the Motion to Dismiss within 10 days from notice thereof, and for
respondent to file a Reply thereon.7 Instead of filing a Comment/Opposition, petitioner filed on
June 27, 2005, an Urgent Ex-Parte Motion to Admit Formal Amendment to the Complaint and
Issuance of Alias Summons.8 Petitioner alleged that upon verification with the Securities and
Exchange Commission, she found out that the resident agent of respondent in the Philippines is
Alonzo Q. Ancheta. Subsequently, on September 9, 2005, petitioner filed a Motion to Resolve
Pending Incident and Opposition to Motion to Dismiss.9

Ruling of the Regional Trial Court

On October 14, 2005, the RTC of Makati City, Branch 132, issued an Order10 granting
respondent’s Motion to Dismiss. It ruled that:

The Court sympathizes with the alleged ill-treatment suffered by the plaintiff. However, our
Courts have to apply the principles of international law, and are bound by treaty stipulations
entered into by the Philippines which form part of the law of the land. One of this is the Warsaw
Convention. Being a signatory thereto, the Philippines adheres to its stipulations and is bound
by its provisions including the place where actions involving damages to plaintiff is to be
instituted, as provided for under Article 28(1) thereof. The Court finds no justifiable reason to
deviate from the indicated limitations as it will only run counter to the provisions of the Warsaw
Convention. Said adherence is in consonance with the comity of nations and deviation from it
can only be effected through proper denunciation as enunciated in the Santos case (ibid). Since
the Philippines is not the place of domicile of the defendant nor is it the principal place of
business, our courts are thus divested of jurisdiction over cases for damages. Neither was
plaintiff’s ticket issued in this country nor was her destination Manila but Rome in Italy. It bears
stressing however, that referral to the court of proper jurisdiction does not constitute
constructive denial of plaintiff’s right to have access to our courts since the Warsaw Convention
itself provided for jurisdiction over cases arising from international transportation. Said treaty
stipulations must be complied with in good faith following the time honored principle of pacta
sunt servanda.

The resolution of the propriety of service of summons is rendered moot by the Court’s want of
jurisdiction over the instant case.

WHEREFORE, premises considered, the present Motion to Dismiss is hereby GRANTED and
this case is hereby ordered DISMISSED.
Petitioner filed a Motion for Reconsideration but the motion was denied in an Order11 dated
January 4, 2006.

Petitioner now comes directly before us on a Petition for Review on Certiorari on pure questions
of law, raising the following issues:

Issues

I. WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS

CONDUCT COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE
PERSONNEL OF A FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT
OF ANY FOREIGN COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW
CONVENTION.

II. WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION

TO DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE
CASE AND OVER ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN LAW
SUBMITTED ITSELF TO THE JURISDICTION OF THE LOWER COURT, ESPECIALLY SO,
WHEN THE VERY LAWYER ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT OF THE
CARRIER.

Petitioner’s Arguments

Petitioner argues that her cause of action arose not from the contract of carriage, but from the
tortious conduct committed by airline personnel of respondent in violation of the provisions of
the Civil Code on Human Relations. Since her cause of action was not predicated on the
contract of carriage, petitioner asserts that she has the option to pursue this case in this
jurisdiction pursuant to Philippine laws.

Respondent’s Arguments

In contrast, respondent maintains that petitioner’s claim for damages fell within the ambit of
Article 28(1) of the Warsaw Convention. As such, the same can only be filed before the courts
of London, United Kingdom or Rome, Italy.

Our Ruling

The petition is without merit.

The Warsaw Convention has the force and effect of law in this country.

It is settled that the Warsaw Convention has the force and effect of law in this country. In Santos
III v. Northwest Orient Airlines,12 we held that:

The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules
Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It
took effect on February 13, 1933. The Convention was concurred in by the Senate, through its
Resolution No. 19, on May 16, 1950. The Philippine instrument of accession was signed by
President Elpidio Quirino on October 13, 1950, and was deposited with the Polish government
on November 9, 1950. The Convention became applicable to the Philippines on February 9,
1951. On September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201,
declaring our formal adherence thereto, "to the end that the same and every article and clause
thereof may be observed and fulfilled in good faith by the Republic of the Philippines and the
citizens thereof."

The Convention is thus a treaty commitment voluntarily assumed by the Philippine government
and, as such, has the force and effect of law in this country.13

The Warsaw Convention applies because the air travel, where the alleged tortious conduct
occurred, was between the United Kingdom and Italy, which are both signatories to the Warsaw
Convention.

Article 1 of the Warsaw Convention provides:

1. This Convention applies to all international carriage of persons, luggage or goods performed
by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air
transport undertaking.

2. For the purposes of this Convention the expression "international carriage" means any
carriage in which, according to the contract made by the parties, the place of departure and the
place of destination, whether or not there be a break in the carriage or a transhipment, are
situated either within the territories of two High Contracting Parties, or within the territory of a
single High Contracting Party, if there is an agreed stopping place within a territory subject to
the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is
not a party to this Convention. A carriage without such an agreed stopping place between
territories subject to the sovereignty, suzerainty, mandate or authority of the same High
Contracting Party is not deemed to be international for the purposes of this Convention.
(Emphasis supplied)

Thus, when the place of departure and the place of destination in a contract of carriage are
situated within the territories of two High Contracting Parties, said carriage is deemed an
"international carriage". The High Contracting Parties referred to herein were the signatories to
the Warsaw Convention and those which subsequently adhered to it.14

In the case at bench, petitioner’s place of departure was London, United Kingdom while her
place of destination was Rome, Italy.15 Both the United Kingdom16 and Italy17 signed and
ratified the Warsaw Convention. As such, the transport of the petitioner is deemed to be an
"international carriage" within the contemplation of the Warsaw Convention.

Since the Warsaw Convention applies in the instant case, then the jurisdiction over the subject
matter of the action is governed by the provisions of the Warsaw Convention.

Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for damages
before –

1. the court where the carrier is domiciled;

2. the court where the carrier has its principal place of business;

3. the court where the carrier has an establishment by which the contract has been made; or

4. the court of the place of destination.

In this case, it is not disputed that respondent is a British corporation domiciled in London,
United Kingdom with London as its principal place of business. Hence, under the first and
second jurisdictional rules, the petitioner may bring her case before the courts of London in the
United Kingdom. In the passenger ticket and baggage check presented by both the petitioner
and respondent, it appears that the ticket was issued in Rome, Italy. Consequently, under the
third jurisdictional rule, the petitioner has the option to bring her case before the courts of Rome
in Italy. Finally, both the petitioner and respondent aver that the place of destination is Rome,
Italy, which is properly designated given the routing presented in the said passenger ticket and
baggage check. Accordingly, petitioner may bring her action before the courts of Rome, Italy.
We thus find that the RTC of Makati correctly ruled that it does not have jurisdiction over the
case filed by the petitioner.

Santos III v. Northwest Orient Airlines18 applies in this case.

Petitioner contends that Santos III v. Northwest Orient Airlines19 cited by the trial court is
inapplicable to the present controversy since the facts thereof are not similar with the instant
case.

We are not persuaded.

In Santos III v. Northwest Orient Airlines,20 Augusto Santos III, a resident of the Philippines,
purchased a ticket from Northwest Orient Airlines in San Francisco, for transport between San
Francisco and Manila via Tokyo and back to San Francisco. He was wait-listed in the Tokyo to
Manila segment of his ticket, despite his prior reservation. Contending that Northwest Orient
Airlines acted in bad faith and discriminated against him when it canceled his confirmed
reservation and gave his seat to someone who had no better right to it, Augusto Santos III sued
the carrier for damages before the RTC. Northwest Orient Airlines moved to dismiss the
complaint on ground of lack of jurisdiction citing Article 28(1) of the Warsaw Convention. The
trial court granted the motion which ruling was affirmed by the Court of Appeals. When the case
was brought before us, we denied the petition holding that under Article 28(1) of the Warsaw
Convention, Augusto Santos III must prosecute his claim in the United States, that place being
the (1) domicile of the Northwest Orient Airlines; (2) principal office of the carrier; (3) place
where contract had been made (San Francisco); and (4) place of destination (San Francisco).21

We further held that Article 28(1) of the Warsaw Convention is jurisdictional in character. Thus:

A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and
not a venue provision. First, the wording of Article 32, which indicates the places where the
action for damages "must" be brought, underscores the mandatory nature of Article 28(1).
Second, this characterization is consistent with one of the objectives of the Convention, which is
to "regulate in a uniform manner the conditions of international transportation by air." Third, the
Convention does not contain any provision prescribing rules of jurisdiction other than Article
28(1), which means that the phrase "rules as to jurisdiction" used in Article 32 must refer only to
Article 28(1). In fact, the last sentence of Article 32 specifically deals with the exclusive
enumeration in Article 28(1) as "jurisdictions," which, as such, cannot be left to the will of the
parties regardless of the time when the damage occurred.

xxxx
In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on a
dual concept. Jurisdiction in the international sense must be established in accordance with
Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular court
must be established pursuant to the applicable domestic law. Only after the question of which
court has jurisdiction is determined will the issue of venue be taken up. This second question
shall be governed by the law of the court to which the case is submitted.22

Contrary to the contention of petitioner, Santos III v. Northwest Orient Airlines23 is analogous to
the instant case because (1) the domicile of respondent is London, United Kingdom;24 (2) the
principal office of respondent airline is likewise in London, United Kingdom;25 (3) the ticket was
purchased in Rome, Italy;26 and (4) the place of destination is Rome, Italy.27 In addition,
petitioner based her complaint on Article 217628 of the Civil Code on quasi-delict and Articles
1929 and 2130 of the Civil Code on Human Relations. In Santos III v. Northwest Orient
Airlines,31 Augusto Santos III similarly posited that Article 28 (1) of the Warsaw Convention did
not apply if the action is based on tort. Hence, contrary to the contention of the petitioner, the
factual setting of Santos III v. Northwest Orient Airlines32 and the instant case are parallel on
the material points.

Tortious conduct as ground for the petitioner’s complaint is within the purview of the Warsaw
Convention.

Petitioner contends that in Santos III v. Northwest Orient Airlines,33 the cause of action was
based on a breach of contract while her cause of action arose from the tortious conduct of the
airline personnel and violation of the Civil Code provisions on Human Relations.34 In addition,
she claims that our pronouncement in Santos III v. Northwest Orient Airlines35 that "the
allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the
comprehension of the Warsaw Convention," is more of an obiter dictum rather than the ratio
decidendi.36 She maintains that the fact that said acts occurred aboard a plane is merely
incidental, if not irrelevant.37

We disagree with the position taken by the petitioner. Black defines obiter dictum as "an opinion
entirely unnecessary for the decision of the case" and thus "are not binding as precedent."38 In
Santos III v. Northwest Orient Airlines,39 Augusto Santos III categorically put in issue the
applicability of Article 28(1) of the Warsaw Convention if the action is based on tort.

In the said case, we held that the allegation of willful misconduct resulting in a tort is insufficient
to exclude the case from the realm of the Warsaw Convention. In fact, our ruling that a cause of
action based on tort did not bring the case outside the sphere of the Warsaw Convention was
our ratio decidendi in disposing of the specific issue presented by Augusto Santos III. Clearly,
the contention of the herein petitioner that the said ruling is an obiter dictum is without basis.

Relevant to this particular issue is the case of Carey v. United Airlines,40 where the passenger
filed an action against the airline arising from an incident involving the former and the airline’s
flight attendant during an international flight resulting to a heated exchange which included
insults and profanity. The United States Court of Appeals (9th Circuit) held that the "passenger's
action against the airline carrier arising from alleged confrontational incident between passenger
and flight attendant on international flight was governed exclusively by the Warsaw Convention,
even though the incident allegedly involved intentional misconduct by the flight attendant."41

In Bloom v. Alaska Airlines,42 the passenger brought nine causes of action against the airline in
the state court, arising from a confrontation with the flight attendant during an international flight
to Mexico. The United States Court of Appeals (9th Circuit) held that the "Warsaw Convention
governs actions arising from international air travel and provides the exclusive remedy for
conduct which falls within its provisions." It further held that the said Convention "created no
exception for an injury suffered as a result of intentional conduct" 43 which in that case involved
a claim for intentional infliction of emotional distress.

It is thus settled that allegations of tortious conduct committed against an airline passenger
during the course of the international carriage do not bring the case outside the ambit of the
Warsaw Convention.

Respondent, in seeking remedies from the trial court through special appearance of counsel, is
not deemed to have voluntarily submitted itself to the jurisdiction of the trial court.

Petitioner argues that respondent has effectively submitted itself to the jurisdiction of the trial
court when the latter stated in its Comment/Opposition to the Motion for Reconsideration that
"Defendant [is at a loss] x x x how the plaintiff arrived at her erroneous impression that it is/was
Euro-Philippines Airlines Services, Inc. that has been making a special appearance since x x x
British Airways x x x has been clearly specifying in all the pleadings that it has filed with this
Honorable Court that it is the one making a special appearance."44

In refuting the contention of petitioner, respondent cited La Naval Drug Corporation v. Court of
Appeals45 where we held that even if a party "challenges the jurisdiction of the court over his
person, as by reason of absence or defective service of summons, and he also invokes other
grounds for the dismissal of the action under Rule 16, he is not deemed to be in estoppel or to
have waived his objection to the jurisdiction over his person."46

This issue has been squarely passed upon in the recent case of Garcia v. Sandiganbayan,47
where we reiterated our ruling in La Naval Drug Corporation v. Court of Appeals48 and
elucidated thus:

Special Appearance to Question a Court’s Jurisdiction Is Not

Voluntary Appearance

The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly
provides:

Sec. 20. Voluntary appearance. – The defendant’s voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside
from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance.

Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his
person, together with other grounds raised therein, is not deemed to have appeared voluntarily
before the court. What the rule on voluntary appearance – the first sentence of the above-
quoted rule – means is that the voluntary appearance of the defendant in court is without
qualification, in which case he is deemed to have waived his defense of lack of jurisdiction over
his person due to improper service of summons.

The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she
voluntarily appeared without qualification. Petitioner filed the following pleadings in Forfeiture I:
(a) motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion
for reconsideration; (d) motion to consolidate forfeiture case with plunder case; and (e) motion
to dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to
quash Forfeiture II; and (b) motion for partial reconsideration.

The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for
special appearance with the purpose of challenging the jurisdiction of the SB over her person
and that of her three children. Petitioner asserts therein that SB did not acquire jurisdiction over
her person and of her three children for lack of valid service of summons through improvident
substituted service of summons in both Forfeiture I and Forfeiture II. This stance the petitioner
never abandoned when she filed her motions for reconsideration, even with a prayer to admit
their attached Answer Ex Abundante Ad Cautelam dated January 22, 2005 setting forth
affirmative defenses with a claim for damages. And the other subsequent pleadings, likewise,
did not abandon her stance and defense of lack of jurisdiction due to improper substituted
services of summons in the forfeiture cases. Evidently, from the foregoing Sec. 20, Rule 14 of
the 1997 Revised Rules on Civil Procedure, petitioner and her sons did not voluntarily appear
before the SB constitutive of or equivalent to service of summons.

Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant case. Said
case elucidates the current view in our jurisdiction that a special appearance before the court––
challenging its jurisdiction over the person through a motion to dismiss even if the movant
invokes other grounds––is not tantamount to estoppel or a waiver by the movant of his objection
to jurisdiction over his person; and such is not constitutive of a voluntary submission to the
jurisdiction of the court.1avvphi1

Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB
to cure the defective substituted services of summons. They are, therefore, not estopped from
questioning the jurisdiction of the SB over their persons nor are they deemed to have waived
such defense of lack of jurisdiction. Consequently, there being no valid substituted services of
summons made, the SB did not acquire jurisdiction over the persons of petitioner and her
children. And perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and
her three children are concerned, are null and void for lack of jurisdiction. (Emphasis supplied)

In this case, the special appearance of the counsel of respondent in filing the Motion to Dismiss
and other pleadings before the trial court cannot be deemed to be voluntary submission to the
jurisdiction of the said trial court. We hence disagree with the contention of the petitioner and
rule that there was no voluntary appearance before the trial court that could constitute estoppel
or a waiver of respondent’s objection to jurisdiction over its person.

WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the Regional Trial Court
of Makati City, Branch 132, dismissing the complaint for lack of jurisdiction, is AFFIRMED.

SO ORDERED.
G.R. No. 189570, July 31, 2013

HEIRS OF SANTIAGO NISPEROS, TEODORICO NISPEROS, RESTITUTA LARON,

CARMELITA H. NISPEROS, VIRGILIO H. NISPEROS, CONCHITA H. NISPEROS, PURITA H.
NISPEROS, PEPITO H. NISPEROS, REBECCA H. NISPEROS, ABRAHAM H. NISPEROS,
IGNACIO F. NISPEROS, RODOLFO F. NISPEROS, RAYMUNDO F. NISPEROS, RENATO F.
NISPEROS, FE N. MUNAR, BENITO F. NISPEROS, REYNALDO N. NISPEROS, MELBA N.
JOSE, ELY N. GADIANO, REPRESENTED BY TEODORICO NISPEROS, Petitioners, v.
MARISSA NISPEROS-DUCUSIN, Respondent.

DECISION

VILLARAMA, JR., J.:

Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the July 13, 2009 Decision1 and September 14, 2009
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 105898. The appellate court
affirmed the Decision3 of the Department of Agrarian Reform Adjudication Board (DARAB)
upholding the validity of the Deed of Voluntary Land Transfer and Original Certificate of Title
(OCT) No. CLOA-623 issued in favor of respondent Marissa Nisperos-Ducusin.

The instant case stemmed from a complaint4 filed by petitioners with the DARAB alleging the
following antecedents:cralawlibrary

The 15,837-square-meter parcel of land subject of the instant case is part of the 58,350-square-
meter agricultural land in Pao Sur, San Fernando City, La Union acquired by Santiago Nisperos,
the predecessor of petitioners, during his lifetime. He declared said property for taxation
purposes starting December 1947.5cralaw virtualaw library

When Santiago and his wife Estefania died, they were survived by their nine children:
Tranquilino, Felix, Olling, Maria, Lenardo, Millan, Fausto, Candido and Cipriana. The heirs of
Santiago, petitioners herein, claim that the subject property was occupied, controlled and tilled
by all nine children of Santiago. They paid taxes for it and even hired farm workers under Maria
and Cipriana’s supervision for the cultivation of the same. For taxation purposes, however, it
was initially declared only under the name of Maria.6 Starting 1988, it was declared under the
names of Maria and Cipriana.7cralaw virtualaw library

During the time when Maria and Cipriana were overseeing the property, Maria took respondent
Marissa Nisperos-Ducusin, a daughter of their cousin Purita, as her ward and raised her like her
own child.

On February 12, 1988, Maria and Cipriana, acting as representatives of their other siblings,
executed a Deed of Donation Mortis Causa8 in favor of petitioners over the 58,350-square-
meter property and another 46,000-square-meter property.

On April 28, 1992, a Deed of Voluntary Land Transfer9 (VLT) over the subject property was
executed between Maria and Cipriana as landowners, and respondent, who was then only 17
years old, as farmer-beneficiary. The instrument was signed by the three in the presence of
witnesses Anita, Lucia and Marcelina Gascon and Municipal Agrarian Reform Officer Susimo
Asuncion. The same was notarized by Notary Public Atty. Roberto E. Caoayan.

On June 24, 1992, Certificate of Land Ownership Award (CLOA) No. 000212245390210 was
issued to respondent by the Department of Agrarian Reform (DAR) over the subject property.
By virtue of said CLOA, OCT No. CLOA-62311 was issued to respondent a month later, or on
July 24, 1992.

Alleging fraud on the part of respondent which petitioners claim to have discovered only in
August 2001, petitioners filed a complaint on September 6, 2001 with the Municipal Agrarian
Reform Office (MARO) of San Fernando City, La Union. Unfortunately, no settlement between
petitioners and respondent was reached prompting the MARO to issue a Certificate to File
Action.12cralaw virtualaw library

On January 23, 2002, petitioners filed with the DARAB a complaint for annulment of documents
and damages against respondent. Petitioners contended that the transfer of ownership over the
subject land was made without the consent of the heirs of Santiago and that respondent took
advantage of Maria’s senility and made it appear that Maria and Cipriana sold said property by
virtue of the VLT. They further alleged that said document was falsified by respondent because
Maria could not anymore sign but could only affix her thumbmark as she did in a 1988 Deed of
Donation. To support their complaint, they attached a Joint Affidavit of Denial13 by Anita and
Lucia Gascon the supposed instrumental witnesses to the VLT. In said affidavit, Anita and Lucia
claimed that the signatures appearing therein are not theirs as they never affixed their
signatures on said document. They further stated that they were never aware of said document.

Petitioners likewise asseverated in their complaint that respondent committed fraud because
she was not a bona fide beneficiary as she was not engaged in farming since she was still a
minor at that time and that she could not validly enter into a contract with Maria and Cipriana.

On March 6, 2002, respondent filed a Motion to Dismiss14 petitioners’ complaint. She argued
that the action for annulment of the VLT and the OCT/CLOA and the claim for damages have
already prescribed.

In an Order15 dated April 17, 2002, the DARAB Regional Adjudicator denied respondent’s
Motion to Dismiss and ordered her to file her answer to the complaint.

In respondent’s Answer with Counterclaim16 dated July 7, 2002, respondent alleged that Maria
and Cipriana acquired the property from Santiago and possessed the same openly,
continuously, exclusively and publicly; thus, the consent of petitioners is not necessary to the
VLT. She denied the allegations of fraud and falsification, and insisted that she is a bona fide
beneficiary as she has been tilling the land with her parents even before 1992. She added that
her minority does not disqualify her from availing the benefits of agrarian reform.

On October 16, 2002, DARAB Regional Adjudicator Rodolfo A. Caddarao rendered a

Decision17 annulling the VLT and OCT/CLOA in respondent’s name. The fallo of the said
decision reads:cralawlibrary

WHEREFORE, premises considered, judgment is hereby rendered as follows:cralawlibrary

1. Declaring Deed of Voluntary [L]and Transfer dated April 28, 1992 executed by Maria
Nisperos in favor of Marissa Nisperos annulled or cancelled and [without] force and effect for
having been executed not in accordance with agrarian laws;chanr0blesvirtualawlibrary

2. Declaring OCT No. 00021224 in the name of Marissa D. Nisperos annulled or cancelled on
the ground of material misrepresentation of the alleged agrarian reform beneficiary.

3. Directing the Register of Deeds of La Union to cause the cancellation of the aforementioned
title;chanr0blesvirtualawlibrary

4. Directing the concerned Assessor’s Office to reinstate the tax declaration of said landholding
in the name of Maria and Cipriana Nisperos;chanr0blesvirtualawlibrary

5. Directing the parties to refer this problem with the court so that the issue of ownership of the
landholding could be finally resolved; and

6. Dismissing the other ancillary claims and counterclaims for lack of merit and evidence.

SO ORDERED.18

The Regional Adjudicator noted that the land supposedly owned by Maria and Cipriana (which
includes the 15,837-square-meter subject property) has a total area of 58,350 square meters.
Considering that there are two owners, he ruled that the individual share of each would be less
than five hectares each and well within the retention limit.

The Regional Adjudicator also held there was reason to believe that Maria and Cipriana’s
names were stated in the tax declaration for purposes of taxation only as no evidence was
presented that they lawfully acquired the property from their parents. It was also ruled that the
issuance of the title in respondent’s name was not in accordance with agrarian laws because
she cannot be considered as a tenant but more of an heir of the transferors.

Respondent contested the Regional Adjudicator’s decision before the DARAB alleging that the
Regional Adjudicator committed grave abuse of discretion. Respondent contended that the
complaint should not have been given due course since other parties-in-interest such as Maria,
the Register of Deeds of La Union and duly authorized representatives of the DAR were not
impleaded and prescription had already set in insofar as the contestability of the CLOA is
concerned. She likewise argued that being a farmer or a tenant is not a primordial requisite to
become an agrarian reform beneficiary. She added that the Regional Adjudicator went beyond
the scope of his authority by directing the parties to litigate the issue of ownership before the
court.

On September 16, 2008, the DARAB rendered a Decision19 reversing the decision of the
Regional Adjudicator and upholding the validity of the VLT and respondent’s title. The decretal
portion reads:cralawlibrary

WHEREFORE, premises considered, a new judgment is hereby rendered:cralawlibrary

1. DECLARING the VLT executed on April 28, 1992, between respondent-appellant Marissa
Nisperos-Ducusin and Maria and Cipriana Nisperos as valid and
regular;chanr0blesvirtualawlibrary
2. DECLARING the validity of the Original Certificate of Title (OCT) CLOA No. 623 issued in the
name of respondent-appellant Marissa Nisperos-Ducusin covering 15,837 square meter portion
of the disputed lot; and

3. MAINTAINING respondent-appellant Marissa Nisperos-Ducusin in peaceful possession and

cultivation of the subject lot.

No costs.

SO ORDERED.20

The DARAB dismissed petitioners’ claim of fraud since the VLT was executed in the presence
of DAR-MARO Susimo Asuncion, signed by three instrumental witnesses and notarized by Atty.
Roberto E. Caoayan of the DAR. It likewise held that the records are bereft of any indication that
fraud was employed in the transfer, and mere conjectures that fraud might have been exerted
just because Maria was already of advanced age while respondent was her care giver or ward
is not evidence. The DARAB also did not give credence to the Affidavit of Denial by the
instrumental witnesses since the statements there are mere hearsay because the affiants were
not cross-examined.

The DARAB likewise ruled that the fact that respondent was a minor at the time of the execution
of the VLT does not void the VLT as this is the reason why there is an active government
involvement in the VLT: so that even if the transferee is a minor, her rights shall be protected by
law. It also held that petitioners cannot assert their rights by virtue of the Deed of Donation
Mortis Causa allegedly executed by Maria and Cipriana in their favor since before the operative
condition (the death of the donors) was fulfilled, the donation was revoked by virtue of the VLT.
The DARAB further ruled that when OCT No. CLOA-623 was issued in respondent’s name, she
acquired absolute ownership of the landholding. Thus her right thereto has become fixed and
established and is no longer open to doubt or controversy.

Aggrieved, petitioners elevated the case to the CA via a petition for review21 where they raised
the following issues: (1) whether the subject property is covered by the Comprehensive Agrarian
Reform Program (CARP); (2) whether the VLT is valid having been issued through
misrepresentation and fraud; and (3) whether the action for annulment had already prescribed.

On July 13, 2009, the appellate court rendered the assailed decision dismissing the petition for
review and upholding the DARAB decision. It ruled that the Regional Adjudicator acted with
grave abuse of discretion when it held that the subject property was no longer covered by our
agrarian laws because of the retention rights of petitioners. The CA held that retention rights,
exclusion of a property from CARP coverage and the qualification and disqualification of
agrarian reform beneficiaries are issues not cognizable by the Regional Adjudicator and the
DARAB but by the DAR Secretary. The appellate court nevertheless held that petitioners failed
to discharge their burden of proving that fraud attended the execution of the VLT. It also agreed
with the DARAB that considering a certificate of title was already issued in favor of respondent,
the same became indefeasible and incontrovertible by the time petitioners instituted the case in
January 2002, and thus may no longer be judicially reviewed.

Hence this petition before this Court raising the issues of whether the appellate court erred
in:cralawlibrary

I
x x x DECLARING THAT THE PARAB HAS NO JURISDICTION TO RULE THAT THE
SUBJECT PIECE OF LAND WAS NO LONGER COVERED BY AGRARIAN LAWS.

II

x x x AFFIRMING THE DECISION OF THE DARAB DESPITE CLEAR AND CONVINCING

EVIDENCE REGARDING THE EXISTENCE OF FRAUD.

III
x x x RULING THAT THE CERTIFICATES OF TITLE ISSUED IN THE NAME OF THE
RESPONDENT IS INDEFEASIBLE.22

We set aside the assailed Decision and Resolution.

The complaint should have been lodged with the Office of the DAR Secretary and not with the
DARAB.

Section 1, Rule II of the 1994 DARAB Rules of Procedure, the rule in force at the time of the
filing of the complaint by petitioners in 2001, provides:cralawlibrary

SECTION 1. Primary and Exclusive Original and Appellate Jurisdiction. The Board shall have
primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all
agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program
(CARP) under Republic Act No. 6657, Executive Order Nos. 228, 229 and 129-A, Republic Act
No. 3844 as amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian
laws and their implementing rules and regulations. Specifically, such jurisdiction shall include
but not be limited to cases involving the following:cralawlibrary

xxxx

f) Those involving the issuance, correction and cancellation of Certificates of Land Ownership
Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land
Registration Authority;chanr0blesvirtualawlibrary

xxxx

However, it is not enough that the controversy involves the cancellation of a CLOA registered
with the Land Registration Authority for the DARAB to have jurisdiction. What is of primordial
consideration is the existence of an agrarian dispute between the parties.23cralaw virtualaw
library

Section 3(d) of R.A. No. 6657 defines an agrarian dispute as “any controversy relating to
tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands
devoted to agriculture, including disputes concerning farmworkers’ associations or
representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange
terms or conditions of such tenurial arrangements” and includes “any controversy relating to
compensation of lands acquired under this Act and other terms and conditions of transfer of
ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries,
whether the disputants stand in the proximate relation of farm operator and beneficiary,
landowner and tenant, or lessor and lessee.”
Thus, in Morta, Sr. v. Occidental,24 this Court held that there must be a tenancy relationship
between the parties for the DARAB to have jurisdiction over a case. It is essential to establish all
of the following indispensable elements, to wit: (1) that the parties are the landowner and the
tenant or agricultural lessee; (2) that the subject matter of the relationship is an agricultural land;
(3) that there is consent between the parties to the relationship; (4) that the purpose of the
relationship is to bring about agricultural production; (5) that there is personal cultivation on the
part of the tenant or agricultural lessee; and (6) that the harvest is shared between the
landowner and the tenant or agricultural lessee.25cralaw virtualaw library

In the instant case, petitioners, as supposed owners of the subject property, did not allege in
their complaint that a tenancy relationship exists between them and respondent. In fact, in their
complaint, they described respondent as a “ward” of one of the co-owners, Maria, who is “not a
bona fide beneficiary, she being not engaged in farming because she was still a minor” at the
time the VLT was executed.26cralaw virtualaw library

It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or government

agency, over the nature and subject matter of a petition or complaint is determined by the
material allegations therein and the character of the relief prayed for, irrespective of whether the
petitioner or complainant is entitled to any or all such reliefs. Jurisdiction over the nature and
subject matter of an action is conferred by the Constitution and the law, and not by the consent
or waiver of the parties where the court otherwise would have no jurisdiction over the nature or
subject matter of the action. Nor can it be acquired through, or waived by, any act or omission of
the parties. Moreover, estoppel does not apply to confer jurisdiction to a tribunal that has none
over the cause of action. The failure of the parties to challenge the jurisdiction of the DARAB
does not prevent the court from addressing the issue, especially where the DARAB’s lack of
jurisdiction is apparent on the face of the complaint or petition.27cralaw virtualaw library

Considering that the allegations in the complaint negate the existence of an agrarian dispute
among the parties, the DARAB is bereft of jurisdiction to take cognizance of the same as it is the
DAR Secretary who has authority to resolve the dispute raised by petitioners. As held in Heirs of
Julian dela Cruz v. Heirs of Alberto Cruz:cralawlibrary

The Court agrees with the petitioners’ contention that, under Section 2(f), Rule II of the DARAB
Rules of Procedure, the DARAB has jurisdiction over cases involving the issuance, correction
and cancellation of CLOAs which were registered with the LRA. However, for the DARAB to
have jurisdiction in such cases, they must relate to an agrarian dispute between landowner and
tenants to whom CLOAs have been issued by the DAR Secretary. The cases involving the
issuance, correction and cancellation of the CLOAs by the DAR in the administrative
implementation of agrarian reform laws, rules and regulations to parties who are not agricultural
tenants or lessees are within the jurisdiction of the DAR and not of the DARAB.28 (Emphasis
supplied.)

What the PARAD should have done is to refer the complaint to the proper office as mandated
by Section 4 of DAR Administrative Order No. 6, Series of 2000:cralawlibrary

SEC. 4. Referral of Cases. – If a case covered by Section 2 herein is filed before the DARAB,
the concerned DARAB official shall refer the case to the proper DAR office for appropriate
action within five (5) days after said case is determined to be within the jurisdiction of the
Secretary. Likewise, if a case covered by Section 3 herein is filed before any office other than
the DARAB, the concerned DAR official shall refer the case to the DARAB for resolution within
the same period provided herein.

While it is true that the PARAD and the DARAB (which was upheld by the CA) thoroughly
discussed in their respective decisions the issues pertaining to the validity of the VLT and the
OCT/CLOA issued to respondent, the fact that they are bereft of jurisdiction to resolve the same
prevents this Court from resolving the instant petition on its merits. The doctrine of primary
jurisdiction does not allow a court to arrogate unto itself authority to resolve a controversy, the
jurisdiction over which is initially lodged with an administrative body of special competence.29
To assume the power is to short-circuit the administrative process, which has yet to run its
regular course. The DAR must be given a chance to correct its administrative and procedural
lapses in the issuance of the CLOA.30 Moreover, it is in a better position to resolve the
particular issue at hand, being the agency possessing the required expertise on the matter and
authority to hear the same.

WHEREFORE, the July 13, 2009 Decision and September 14, 2009 Resolution of the Court of
Appeals in CA-G.R. SP No. 105898 are SET ASIDE. The complaint is REFERRED to the Office
of the Department of Agrarian Reform Secretary for appropriate action.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 176508, January 12, 2015

SAINT MARY CRUSADE TO ALLEVIATE POVERTY OF BRETHREN FOUNDATION, INC.,

Petitioner, v. HON. TEODORO T. RIEL, ACTING PRESIDING JUDGE, REGIONAL TRIAL
COURT, NATIONAL CAPITAL JUDICIAL REGION, BRANCH 85, QUEZON CITY, Respondent.
UNIVERSITY OF THE PHILIPPINES, Intervenor.

DECISION

BERSAMIN, J.:

A petition for the judicial reconstitution of a Torrens title must strictly comply with the
requirements prescribed in Republic Act No. 26;1 otherwise, the petition should be dismissed.

This case is a direct resort to the Court by petition for certiorari and mandamus. The petitioner
applied for the judicial reconstitution of Original Certificate of Title (OCT) No. 1609 of the
Register of Deeds of Quezon City, and for the issuance of a new OCT in place thereof,
docketed as L.R.C. Case No. Q-18987 (04), but respondent Acting Presiding Judge of Branch
85 of the Regional Trial Court (RTC) in Quezon City dismissed the petition for reconstitution
through the assailed order dated September 12, 2006. The petitioner alleges that the
respondent Judge thereby committed grave abuse of discretion and unlawful neglect of
performance of an act specifically enjoined upon him. Equally assailed is the ensuing denial of
its motion for reconsideration through the order dated February 5, 2007.

The antecedents follow.

On October 28, 2004, the petitioner claimed in its petition for reconstitution that the original copy
of OCT No. 1609 had been burnt and lost in the fire that gutted the Quezon City Register of
Deeds in the late 80’s. Initially, respondent Judge gave due course to the petition, but after the
preliminary hearing, he dismissed the petition for reconstitution through the first assailed order
of September 12, 2006,2 to wit:chanroblesvirtuallawlibrary

With the receipt of Report dated July 14, 2006 from Land Registration Authority (LRA)
recommending that the petition be dismissed, and considering the Opposition filed by the
Republic of the Philippines and University of the Philippines, the above-entitled petition is
hereby ordered DISMISSED.

On October 11, 2006, the petitioner moved for reconsideration of the dismissal,3 attaching the
following documents to support its petition for reconstitution, namely: (1) the copy of the original
application for registration dated January 27, 1955; (2) the notice of initial hearing dated June
23, 1955; (3) the letter of transmittal to the Court of First Instance in Quezon City; (4) the copy of
the Spanish Testimonial Title No. 3261054 dated March 25, 1977 in the name of Eladio
Tiburcio; (5) the copy of Tax Assessment No. 14238; and (6) the approved Plan SWD-37457.

On February 5, 2007, the RTC denied the motion for reconsideration for lack of any cogent or
justifiable ground to reconsider.4chanRoblesvirtualLawlibrary

Hence, on February 22, 2007, the petitioner came directly to the Court alleging that respondent
Judge had “unfairly abused his discretion and unlawfully neglected the performance of an act
which is specifically enjoined upon him as a duly [sic] under Rule 7, Section 8, of the Revised
Rules of Court;”5 that “in finally dismissing the herein subject Petition for Reconsideration,
respondent Honorable Acting Presiding Judge has acted without and in excess of his authority
and with grave abuse of discretion to the further damage and prejudice of the herein
petitioner;”6 and that it had no other remedy in the course of law except through the present
petition for certiorari and mandamus.cralawred

Issues

The Court directed respondent Judge and the Office of the Solicitor General (OSG) to comment
on the petition for certiorari and mandamus. Respondent Judge submitted his comment on May
23, 2007,7 and the OSG its comment on July 19, 2007.8 On November 13, 2007, the University
of the Philippines (UP) sought leave to intervene, attaching to its motion the intended
comment/opposition-in-intervention.9 The motion for the UP’s intervention was granted on
November 28, 2007.10 In turn, the petitioner presented its consolidated reply on February 8,
2008.11 The parties, except respondent Judge, then filed their memoranda in compliance with
the Court’s directive.

Respondent Judge justified the dismissal of the petition for reconstitution by citing the opposition
by the OSG and the UP, as well as the recommendation of the Land Registration Authority
(LRA). He pointed out that the petitioner did not present its purported Torrens title to be
reconstituted; that the petitioner’s claim was doubtful given the magnitude of 4,304,623 square
meters as the land area involved;12 and that the UP’s ownership of the portion of land covered
by petitioner’s claim had long been settled by the Court in a long line of
cases.13chanRoblesvirtualLawlibrary

The OSG and the UP argued that by directly coming to the Court by petition for certiorari and
mandamus, the petitioner had availed itself of the wrong remedies to substitute for its lost
appeal; that the correct recourse for the petitioner was an appeal considering that the two
assailed orders already finally disposed of the case; that the petitioner intended its petition for
certiorari and mandamus to reverse the final orders;14 that the petitioner further failed to
observe the doctrine of hierarchy of courts, despite the Court of Appeals (CA) having concurrent
jurisdiction with the Court over special civil actions under Rule 65;15 that the RTC would have
gravely erred had it proceeded on the petition for reconstitution despite the petitioner not having
notified the adjoining owners of the land or other parties with interest over the land;16 that the
petitioner had no factual and legal bases for reconstitution due to its failure to prove the
existence and validity of the certificate of title sought to be reconstituted, in addition to the
ownership of the land covered by the petition for reconstitution being already settled in a long
line of cases; that the petitioner’s claim over the land was derived from the Deed of Assignment
executed by one Marcelino Tiburcio – the same person whose claim had long been settled and
disposed of in Tiburcio v. People’s Homesite and Housing Corporation and University of the
Philippines (106 Phil. 477), which vested title in the UP, and in Cañero v. University of the
Philippines (437 SCRA 630); and that the Deed of Transfer and Conveyance dated November
26, 1925 executed by Tiburcio in favor of St. Mary Village Association, Inc. was not a basis for
the judicial reconstitution of title accepted under Section 2 of Republic Act No. 26.

In its memorandum, the petitioner indicates that the RTC gravely abused its discretion
amounting to lack or excess of its jurisdiction in dismissing its petition for reconstitution on the
basis of the recommendation of the LRA and the opposition of the Republic and the UP despite
having initially given due course to the petition for reconstitution. It urges that the dismissal
should be overturned because it was not given a chance to comment on the recommendation of
the LRA, or to controvert the oppositions filed.17 It contends that the LRA report did not
substantiate the allegation of dismissal of the application for registration of Marcelino Tiburcio
on October 17, 1955, in addition to the veracity of the report being questionable by virtue of its
not having been under oath.18chanRoblesvirtualLawlibrary

Ruling

The petition for certiorari and mandamus, being devoid of procedural and substantive merit, is
dismissed.

Firstly, certiorari, being an extraordinary remedy, is granted only under the conditions defined by
the Rules of Court. The conditions are that: (1) the respondent tribunal, board or officer
exercising judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (2)
there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of
law.19Without jurisdiction means that the court acted with absolute lack of authority; there is
excess of jurisdiction when the court transcends its power or acts without any statutory
authority; grave abuse of discretion implies such capricious and whimsical exercise of judgment
as to be equivalent to lack or excess of jurisdiction; in other words, power is exercised in an
arbitrary or despotic manner by reason of passion, prejudice, or personal hostility; and such
exercise is so patent or so gross as to amount to an evasion of a positive duty or to a virtual
refusal either to perform the duty enjoined or to act at all in contemplation of
law.20chanRoblesvirtualLawlibrary

The petition for certiorari and mandamus did not show how respondent Judge could have been
guilty of lacking or exceeding his jurisdiction, or could have gravely abused his discretion
amounting to lack or excess of jurisdiction. Under Section 1221 of Republic Act No. 26, the law
on the judicial reconstitution of a Torrens title, the Regional Trial Court (as the successor of the
Court of First Instance) had the original and exclusive jurisdiction to act on the petition for
judicial reconstitution of title. Hence, the RTC neither lacked nor exceeded its authority in acting
on and dismissing the petition. Nor did respondent Judge gravely abuse his discretion
amounting to lack or excess of jurisdiction considering that the petition for reconstitution
involved land already registered in the name of the UP, as confirmed by the LRA. Instead, it
would have been contrary to law had respondent Judge dealt with and granted the petition for
judicial reconstitution of title of the petitioner.

Secondly, the petitioner did not present the duplicate or certified copy of OCT No. 1609.
Thereby, it disobeyed Section 2 and Section 3 of Republic Act No. 26, the provisions that
expressly listed the acceptable bases for judicial reconstitution of an existing Torrens title, to
wit:chanroblesvirtuallawlibrary

Sec. 2. Original certificates of title shall be reconstituted from such of the sources hereunder
enumerated as may be available, in the following order:

(a) The owner's duplicate of the certificate of title;

(b) The co-owner's, mortgagee's, or lessee's duplicate of the certificate of title;

(c) A certified copy of the certificate of title, previously issued by the register of deeds or by a
legal custodian thereof;

(d) An authenticated copy of the decree of registration or patent, as the case may be, pursuant
to which the original certificate of title was issued;
(e) A document, on file in the registry of deeds, by which the property, the description of which
is given in said document, is mortgaged, leased or encumbered, or an authenticated copy of
said document showing that its original had been registered; and

(f) Any other document which, in the judgment of the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.

Sec. 3. Transfer certificates of title shall be reconstituted from such of the sources hereunder
enumerated as may be available, in the following order:

(a) The owner's duplicate of the certificate of title;

(b) The co-owner's, mortgagee's, or lessee's duplicate of the certificate of title;

(c) A certified copy of the certificate of title, previously issued by the register of deeds or by a
legal custodian thereof;

(d) The deed of transfer or other document, on file in the registry of deeds, containing the
description of the property, or an authenticated copy thereof, showing that its original had been
registered, and pursuant to which the lost or destroyed transfer certificate of title was issued;

(e) A document, on file in the registry of deeds, by which the property, the description of which is
given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said
document showing that its original had been registered; and

(f) Any other document which, in the judgment of the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.

Thirdly, with the questioned orders of the RTC having finally disposed of the application for
judicial reconstitution, nothing more was left for the RTC to do in the case. As of then, therefore,
the correct recourse for the petitioner was to appeal to the Court of Appeals by notice of appeal
within 15 days from notice of the denial of its motion for reconsideration. By allowing the period
of appeal to elapse without taking action, it squandered its right to appeal. Its present resort to
certiorari is impermissible, for an extraordinary remedy like certiorari cannot be a substitute for a
lost appeal. That the extraordinary remedy of certiorari is not an alternative to an available
remedy in the ordinary course of law is clear from Section 1 of Rule 65, which requires that
there must be no appeal, or any plain, speedy, and adequate remedy in the ordinary course of
law. Indeed, no error of judgment by a court will be corrected by certiorari, which corrects only
jurisdictional errors.22chanRoblesvirtualLawlibrary

Fourthly, the filing of the instant special civil action directly in this Court is in disregard of the
doctrine of hierarchy of courts. Although the Court has concurrent jurisdiction with the Court of
Appeals in issuing the writ of certiorari, direct resort is allowed only when there are special,
extra-ordinary or compelling reasons that justify the same. The Court enforces the observance
of the hierarchy of courts in order to free itself from unnecessary, frivolous and impertinent
cases and thus afford time for it to deal with the more fundamental and more essential tasks
that the Constitution has assigned to it.23 There being no special, important or compelling
reason, the petitioner thereby violated the observance of the hierarchy of courts, warranting the
dismissal of the petition for certiorari.
Finally, the land covered by the petition for judicial reconstitution related to the same area that
formed the UP campus. The UP’s registered ownership of the land comprising its campus has
long been settled under the law. Accordingly, the dismissal of the petition for judicial
reconstitution by respondent Judge only safeguarded the UP’s registered ownership. In so
doing, respondent Judge actually heeded the clear warnings to the lower courts and the Law
Profession in general against mounting or abetting any attack against such ownership. One
such warning was that in Cañero v. University of the Philippines,24 as
follows:chanroblesvirtuallawlibrary

We strongly admonish courts and unscrupulous lawyers to stop entertaining spurious cases
seeking further to assail respondent UP’s title. These cases open the dissolute avenues of graft
to unscrupulous land-grabbers who prey like vultures upon the campus of respondent UP. By
such actions, they wittingly or unwittingly aid the hucksters who want to earn a quick buck by
misleading the gullible to buy the Philippine counterpart of the proverbial London Bridge. It is
well past time for courts and lawyers to cease wasting their time and resources on these
worthless causes and take judicial notice of the fact that respondent UP’s title had already been
validated countless times by this Court. Any ruling deviating from such doctrine is to be viewed
as a deliberate intent to sabotage the rule of law and will no longer be countenanced.25

WHEREFORE, the Court DISMISSES the petition for certiorari and mandamus for lack of merit;
and ORDERS the petitioner to pay the costs of suit.

SO ORDERED.cralawlawlibrary
G.R. No. 215640, November 28, 2016

NESTOR CABRERA, Petitioner, v. ARNEL CLARIN AND WIFE; MILAGROS BARRIOS AND
HUSBAND; AURORA SERAFIN AND HUSBAND; AND BONIFACIO MORENO AND WIFE,
Respondents.

DECISION

PERALTA, J.:

For resolution of this Court is a petition for review on certiorari under Rule 45 of the Rules of
Court filed by petitioner Nestor Cabrera (Cabrera) assailing the Decision1 dated July 25, 2014
and Resolution2 dated November 21, 2014 of the Court of Appeals (CA) in CA-G.R. CV No.
100950, which reversed and set aside the Decision3 of the Regional Trial Court (RTC) of
Malolos, Bulacan, Branch 10, in Civil Case No. 752-M-2006.

The facts are as follows:cralawlawlibrary

The instant petition originated from a Complaint4 for accion publiciana with damages filed
before the RTC by Cabrera5 against respondents Arnel Clarin (Clarin) and wife, Milagros
Barrios (Barrios) and husband, Aurora Serafin (Serafin) and husband, and Bonifacio Moreno
(Moreno) and wife.6 Cabrera alleged that he is the lawful and registered owner of a parcel of
agricultural land located at Barangay Maysulao, Calumpit, Bulacan, with a total area of 60,000
square meters (sq. m.) covered by Transfer Certificate of Title (TCT) No. T-4439. He was in
actual and physical possession of the land until he discovered the encroachment of respondents
sometime in December 2005. By means of fraud, strategy and stealth, respondents usurped
and occupied portions of the said property, viz.: Clarin with 63 sq. m. thereof, Barrios with 41 sq.
m. thereof, Serafin with 30 sq. m. thereof, and Moreno with 11 sq. m. thereof. He made
numerous oral and written demands to vacate the premises but the respondents refused to
heed. They also tailed to settle amicably when the case was brought before the barangay for
conciliation.

In their Motion to Dismiss,7 respondents claimed that the complaint failed to state the assessed
value of the property which is needed in determining the correct amount of docket fees to be
paid. Also, Cabrera did not fulfill an essential condition prior to the filing of the complaint which
was submission of a government approved technical survey plan to prove the alleged
encroachment. Cabrera anchors his claim of ownership in the certificate of title registered in his
and his father Ciriaco Cabrera's name. Cabrera did not aver that it was his portion of property
that respondents have intruded as there was no proof of partition of the property since his father
who was an American citizen died in the United States of America.8

In an Order dated June 19, 2007, the RTC denied respondents' motion, and directed them to file
their Answer.9 The RTC cited the case of Aguilon v. Bohol10 in ruling that based on the
allegations in the complaint, the case is the plenary action of accion publiciana which clearly
falls within its jurisdiction. The trial court, in an Order11 dated October 19, 2007, declared
respondents in default upon tailing to file their Answer, and allowed Cabrera to present his
evidence ex parte. On February 5, 2009, respondents filed an Omnibus Motion12 to set aside
the order of default, to admit Answer, and to set the hearing for the presentation of their
evidence.
In a Decision dated May 30, 2012, the RTC ruled in favor of Cabrera. The dispositive portion
reads:chanRoblesvirtualLawlibrary

WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of the
[petitioner]:cralawlawlibrary

1. ORDERING the [respondents] and all other persons claiming rights under them to vacate the
subject portions of [the] land and surrender possession thereof to the plaintiff;

2. ORDERING the [respondents] to pay attorney's fees in the amount of Fifty Thousand Pesos
([P]50,000.00) and Ten Thousand Pesos ([P]10,000.00) litigation expenses.

SO ORDERED.13
Aggrieved, respondents elevated the case before the CA which then reversed and set aside the
decision of the RTC in a Decision dated July 25, 2014. The fallo of the decision
reads:chanRoblesvirtualLawlibrary
WHEREFORE, the appeal is hereby GRANTED. The Decision dated May 30, 2012 of the
Regional Trial Court, Branch 10, Malolos, Bulacan is REVERSED and SET ASIDE. In lieu
thereof, the complaint for accion publiciana with damages filed by [petitioner] Nestor Cabrera is
DISMISSED without prejudice for lack of jurisdiction.

SO ORDERED.14
Finding no cogent reason to deviate from its previous ruling, the CA denied the Motion for
Reconsideration filed by Cabrera.

Hence, the instant petition raising the following issues:chanRoblesvirtualLawlibrary

The Honorable Court of Appeals committed a reversible error when it held that "since [petitioner]
failed to allege the assessed value of the subject property, the court a quo has not acquired
jurisdiction over the action and all proceedings thereat are null and void," as such conclusion is
contradictory to the doctrine of estoppel.

The Honorable Court of Appeals committed a reversible error when it failed to take into
consideration the tax declaration annexed to the Appellee's Brief which provided the assessed
value of the property subject matter of the case.
The instant petition lacks merit.

In essence, the issue presented before this Court is whether or not estoppel bars respondents
from raising the issue of lack of jurisdiction.

Batas Pambansa Bilang 129, (the Judiciary Reorganization Act of 1980), as amended by
Republic Act (R.A.) No. 7691 provides:chanRoblesvirtualLawlibrary
xxxx

Section 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original
jurisdiction.

(2) In all civil actions which involve the title to, or possession of, real property, or any interest
therein, where the assessed value of the property involved exceeds Twenty thousand pesos
(P20,000,00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand
pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts;

xxxx

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:cralawlawlibrary

(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
docs not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where
such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses and costs: Provided, That in
cases of land not declared for taxation purposes, the value of such property shall be determined
by the assessed value of the adjacent lots.

x x x15
Before the amendments, the plenary action of accion publiciana was to be brought before the
RTC regardless of the value of the property. With the modifications introduced by R.A. No. 7691
in 1994, the jurisdiction of the first level courts has been expanded to include jurisdiction over
other real actions where the assessed value does not exceed P20,000.00, P50,000.00 where
the action is filed in Metro Manila. Accordingly, the jurisdictional element is the assessed value
of the property.16

A perusal of the complaint readily shows that Cabrera failed to state the assessed value of the
disputed land, thus:chanRoblesvirtualLawlibrary
xxxx

[T]he plaintiffs are the lawful and the registered owner of a parcel of agricultural land and more
particularly described under Transfer Certificate of Title No. T-4439, a copy of which is hereto
attached and marked as Annex "A" and made an integral part hereof;

[T]he defendants had illegally encroached the property of the plaintiff by means of fraud and
stealth and with force and intimidation. Defendant Arnel Clarin had encroached an approximate
area of SIXTY THREE (63) SQUARE METERS, while defendant Milagros Barrios had
encroached an approximate area of FORTY-ONE (41) SQUARE METERS, defendant Aurora
Serafin had encroached an approximate area of THIRTY (30) SQUARE METERS while
defendant Bonifacio Moreno had encroached an approximate area of ELEVEN (11) SQUARE
METERS, copy of the relocation plan is hereto attached and marked as Annex "B" and made an
integral part of this complaint;

The plaintiffs had already informed the defendants of the illegal encroachment but the
defendants refused to heed the call of the plaintiffs to vacate the land in question and threaten
plaintiff with bodily harm;

That prior to the discovery of the encroachment on or about December 2005, plaintiff was in
actual and physical possession of the premises.

That this matter was referred to the attention of the Office of the Barangay Chairman of
Barangay Maysulao, Calumpit, Bulacan and a Lupong Tagapamayapa was constituted but no
conciliation was reached and the Lupon issued a Certificate to File Action, copy of the
Certificate to File Action is hereto attached and marked as Annex "C" and made an integral part
hereof;

That notwithstanding numerous and persistent demands, both oral and written, extended upon
the defendants to vacate the subject parcel of land, they failed and refused and still fail and
refuse to vacate and surrender possession of the subject parcel of land to the lawful owner who
is plaintiff in this case. Copy of the last formal demand dated January 18, 2006 is hereto
attached and marked as Annex " " and the registry receipt as well as the registry return card as
"D" Annexes "D-1," and "D-2," respectively;

That because of this unjustifiable refusal of the defendants to vacate the premises in question
which they now unlawfully occupy, plaintiffs [were] constrained to engage the services of
counsel in an agreed amount of FIFTY THOUSAND PESOS ([P]50,000.00) Philippine Currency,
as acceptance fee and THREE THOUSAND PESOS ([P]3,000.00) Philippine Currency, per day
of Court appearance, which amount the defendants should jointly and solidarity pay the
plaintiffs, copy of the retaining contract is hereto attached and marked as Annex "E" and made
an integral part of this complaint;

That in order to protect the rights and interest of the plaintiffs, litigation expenses will be incurred
in an amount no less than TEN THOUSAND PESOS ([P]10,000.00), which amount the
defendants should jointly and solidarily pay the plaintiffs;

That the amount of THREE THOUSAND PESOS ([P]3,000.00) per month should be adjudicated
in favor of the plaintiff as against the defendants by way of beneficial use, to be counted from
the day the last formal demand until they fully vacate and surrender possession of the premises
in question to the plaintiffs. x x x.17
In dismissing the case, the CA noted such fact, to wit:chanRoblesvirtualLawlibrary
In the case at bench, the complaint for accion publiciana filed by [Cabrera] failed to allege the
assessed value of the real property subject of the complaint or the interest therein. Not even a
tax declaration was presented before the court a quo that would show the valuation of the
subject property. As such, there is no way to determine which court has jurisdiction over the
action or whether the court a quo has exclusive jurisdiction over the same. Verily, the court a
quo erred in denying the motion to dismiss filed by [respondents] and in taking cognizance of
the instant case.18
Indeed, nowhere in the complaint was the assessed value of the subject property ever
mentioned. On its face, there is no showing that the RTC has jurisdiction exclusive of the MTC.
Absent any allegation in the complaint of the assessed value of the property, it cannot readily be
determined which court had original and exclusive jurisdiction over the case at bar. The courts
cannot take judicial notice of the assessed or market value of the land.19

We note that Cabrera, in his Comment/Opposition to the Motion to Dismiss,20 maintained that
the accion publiciana is an action incapable of pecuniary interest under the exclusive jurisdiction
of the RTC.21 Thereafter, he admitted in his Brief before the CA that the assessed value of the
subject property now determines which court has jurisdiction over accion publiciana cases. In
asse1iing the trial court's jurisdiction, petitioner averred that his failure to allege the assessed
value of the property in his Complaint was merely innocuous and did not affect the jurisdiction of
the RTC to decide the case.

Cabrera alleges that the CA erred in concluding that the RTC has not acquired jurisdiction over
the action in the instant case being contrary to the doctrine of estoppel as elucidated in Honorio
Bernardo v. Heirs of Villegas.22 Estoppel sets in when respondents participated in all stages of
the case and voluntarily submitting to its jurisdiction seeking affirmative reliefs in addition to their
motion to dismiss due to lack of jurisdiction.

We are not persuaded. It is axiomatic that the nature of an action and the jurisdiction of a
tribunal are determined by the material allegations of the complaint and the law at the time the
action was commenced.23 A court's jurisdiction may be raised at any stage of the proceedings,
even on appeal for the same is conferred by law, and lack of it affects the very authority of the
court to take cognizance of and to render judgment on the action.24 It applies even if the issue
on jurisdiction was raised for the first time on appeal or even after final judgment.

The exception to the basic rule mentioned operates on the principle of estoppel by laches
whereby a party may be barred by laches from invoking the lack of jurisdiction at a late hour for
the purpose of annulling everything done in the case with the active participation of said party
invoking the plea. In the oft-cited case of Tijam v. Sibonghanoy,25 the party-surety invoked the
jurisdictions of both the trial and appellate courts in order to obtain affirmative relief, and even
submitted the case for final adjudication on the merits. It was only after the CA had rendered an
adverse decision that the party-surety raised the question of jurisdiction for the first time in a
motion to dismiss almost fifteen (15) years later. Hence, the Court adjudicated a party estopped
from assailing the court's jurisdiction, to wit:chanRoblesvirtualLawlibrary
xxxx

[a] party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent
and, after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction. .
. ., it was further said that the question whether the court had jurisdiction either of the subject
matter of the action or of the parties was not important in such cases because the party is
barred from such conduct not because the judgment or order of the court is valid and conclusive
as an adjudication, but for the reason that such practice cannot be tolerated - obviously for
reasons of public policy.

x x x26
However, it was explicated in Calimlim v. Ramirez27 that Tijam is an exceptional case because
of the presence of laches. Thus:chanRoblesvirtualLawlibrary
The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on
appeal. This doctrine has been qualified by recent pronouncements which stemmed principally
from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding
in said case had been applied to situations which were obviously not contemplated therein. The
exceptional circumstance involved in Sibonghanoy which justified the departure from the
accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a
blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy
not as the exception, but rather the general rule, virtually overthrowing altogether the time-
honored principle that the issue of jurisdiction is not lost by waiver or by estoppel.

In Sibonghanoy, the defense of lack of jurisdiction of the court that rendered the questioned
ruling was held to be barred by estoppel by laches. It was ruled that the lack of judsdictiou
having been raised for the first time in a motion to dismiss filed almost fifteen (15) years after
the questioned ruling had been rendered, such a plea may no longer be raised for being barred
by laches. As defined in said case, laches is failure or neglect, for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence, could or should have
been done earlier; it is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert has abandoned it or declined to assert
it.28
In the case of La Naval Drug Corporation v. Court of Appeals,29 We illustrated the rule as to
when jurisdiction by estoppel applies and when it does not, as
follows:chanRoblesvirtualLawlibrary
xxxx

Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears
that the court has no jurisdiction over the subject matter, the action shall be dismissed (Section
2, Rule 9, Rules of Court). This defense may be interposed at any time, during appeal (Roxas
vs. Rafferty, 37 Phil. 957) or even after final judgment (Cruzcosa vs. Judge Concepcion, et al.,
101 Phil. 146). Such is understandable, as this kind of jurisdiction is conferred by law and not
within the courts, let alone the parties, to themselves determine or conveniently set aside. In
People vs. Casiano (111 Phil. 73, 93-94), this Court, on the issue or estoppel,
held:chanRoblesvirtualLawlibrary
The operation of the principle of estoppel on the question of jurisdiction seemingly depends
upon whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the
case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on
appeal, from assailing such jurisdiction, for the same 'must exist as a matter of law, and may not
be conferred by consent of the parties or by estoppel' (5 C.J.S., 861-863).

However, if the lower court had jurisdiction, and the case was heard and decided upon a given
theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt
such theory will not be permitted, on appeal, to assume an inconsistent position - that the lower
court had jurisdiction. Here, the principle of estoppel applies. The rule that jurisdiction is
conferred by law, and does not depend upon the will of the parties, has no bearing thereon. x x
x.30
Guided by the abovementioned jurisprudence, this Court rules that respondents are not
estopped from assailing the jurisdiction of the RTC over the subject civil case. Records reveal
that even before filing their Answer, respondents assailed the jurisdiction of the RTC through a
motion to dismiss as there was no mention of the assessed value of the property in the
complaint. We note that the RTC anchored its denial of respondents' motion to dismiss on the
doctrine enunciated in a 1977 case - that all cases of recovery of possession or accion
publiciana lie with the RTC regardless of the value - which no longer holds true. Thereafter, the
respondents filed their Answer through an omnibus motion to set aside order of default and to
admit Answer.

The circumstances of the present case are different from the Heirs of Villegas31 case. First,
petitioner Bernardo in the Heirs of Villegas case actively participated during the trial by adducing
evidence and filing numerous pleadings, none of which mentioned any defect in the jurisdiction
of the RTC, while in this case, respondents already raised the issue of lack of jurisdiction in their
Motion to Dismiss filed before their Answer. Second, it was only on appeal before the CA, after
he obtained an adverse judgment in the trial court, that Bernardo, for the first time, came up with
the argument that the decision is void because there was no allegation in the complaint about
the value of the property; on the other hand, herein respondents raised the issue before there
was judgment on the merits in the trial court. Respondents never assumed inconsistent position
in their appeal before the CA.

Furthermore, the unfairness and inequity that the application of estoppel seeks to avoid
espoused in the Tijam case, which the Heirs of Villegas adheres to, are not present. The instant
case does not involve a situation where a party who, after obtaining affirmative relief from the
court, later on turned around to assail the jurisdiction of the same court that granted such relief
by reason of an unfavorable judgment. Respondents did not obtain affirmative relief from the
trial court whose jurisdiction they are assailing, as their motion to dismiss was denied and they
eventually lost their case in the proceedings below.

Anent the issue of the CA's failure to consider the tax declaration annexed in the Appellee's
Brief, Cabrera insists that its attachment in his Brief without objection from the other party
sealed the issue of the RTC's jurisdiction, and cured the defect of failure to allege the assessed
value of the property in the complaint as provided in Section 5,32 Rule 10 of the Rules of Court.

Such averments lack merit. The Rules of Court provides that the court shall consider no
evidence which has not been formally offered.33 A formal offer is necessary because judges
are mandated to rest their findings of facts and their judgment only and strictly upon the
evidence offered by the parties at the trial. Its function is to enable the trial judge to know the
purpose or purposes for which the proponent is presenting the evidence. Conversely, this allows
opposing parties to examine the evidence and object to its admissibility. Moreover, it facilitates
review as the appellate court will not be required to review documents not previously scrutinized
by the trial court.34 We relaxed the foregoing rule and allowed evidence not formally offered to
be admitted and considered by the trial court provided the following requirements are present,
viz.: first, the same must have been duly identified by testimony duly recorded and, second, the
same must have been incorporated in the records of the case.35

Based on the petitioner's admission, he presented the Tax Declaration 2006-07016-0039436

dated November 13, 2006 purporting to prove the assessed value of the property for the first
time on appeal before the CA in his Brief.37 There was no proof or allegation that he presented
the same during the trial or that the court examined such document.38 Since the tax declaration
was never duly identified by testimony during the trial albeit incorporated in the Appellee's Brief,
the CA will not be required to review such document that was not previously scrutinized by the
RTC. As the assessed value is a jurisdictional requirement, the belated presentation of
document proving such value before the appellate court will not cure the glaring defect in the
complaint. Thus, jurisdiction was not acquired.

We find Cabrera's application of Section 5, Rule 10 of the Rules of Court to support his claim
that failure of the respondents to object to his presentation of the tax declaration before the CA
constitutes an implied consent which then treated the issue of assessed value as if it had been
raised in the pleadings specious. Such rule contemplates an amendment to conform to or
authorize presentation of evidence before the trial court during the trial on the merits of the
case. As held in Bernardo, Sr. v. Court of Appeals,39 this Court
expounded:chanRoblesvirtualLawlibrary
It is settled that even if the complaint he defective, but the parties go to trial thereon, and the
plaintiff, without objection, introduces sufficient evidence to constitute the particular cause of
action which it intended to allege in the original complaint, and the defendant voluntarily
produces witnesses to meet the cause of action thus established, an issue is joined as fully and
as effectively as if it had been previously joined by the most perfect pleadings. Likewise, when
issues not raised by the pleadings are tried by express or implied consent of the parties, they
shall be treated in all respects as if they had been raised in the pleadings.40 (Emphases
supplied)
It bears emphasis that the ruling in Tijam establishes an exception which is to be applied only
under extraordinary circumstances or to those cases similar to its factual situation.41 The
general rule is that the lack of a court's jurisdiction is a non-waivable defense that a party can
raise at any stage of the proceedings in a case, even on appeal; the doctrine of estoppel, being
the exception to such non-waivable defense, must be applied with great care and the equity
must be strong in its favor.42

All told, We find no error on the part of the CA in dismissing the Complaint for lack of jurisdiction
and for not reviewing the document belatedly filed. Consequently, all proceedings in the RTC
are null and void. Indeed, a void judgment for want of jurisdiction is no judgment at all, and
cannot be the source of any right nor the creator of any obligation. All acts performed pursuant
to it and all claims emanating from it have no legal effect.43

WHEREFORE, petition for review on certiorari filed by petitioner Nestor Cabrera is hereby
DENIED. The assailed Decision dated July 25, 2014 and Resolution dated November 21, 2014
of the Court of Appeals in CA-G.R. CV No. 100950 are hereby AFFIRMED.

SO ORDERED.