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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-26816 February 28, 1967

PABLO DE JESUS, ENGRACIA DE JESUS and MANUELA DE JESUS, petitioners, vs. HON. GREGORIO N. GARCIA, Judge of the City Court of Manila, Branch I THE SHELL COMPANY OF THE PHILIPPINES, LTD., MAXIMA DE Jesus and SALVADOR BARRIOS,respondents. Feria, Feria, Lugto & La'O for petitioners. Salvador Barrios for respondents. SANCHEZ, J.: Before us upon an original action of certiorari and prohibition, are two jurisdictional issues: first, jurisdiction over the subject matter; and second, the power of the City Court of Manila to issue a writ of preliminary or final injunction upon the factual averments hereinafter to be recited. The problem cropped up because petitioners' motion to dismiss the complaint and to dissolve the writ of preliminary injunction upon the above grounds, in that case filed by principal individual respondents against them in the city court,1 was denied, and their motion to reconsider rejected. The pivotal disputed allegations of the verified complaint below are these: Ten persons,2among whom are petitioners and respondent, Maxima de Jesus, are co-owners of six (6) parcels of land running along Espaa P. Campa and Adelina Streets in Sampaloc, Manila. Administratrix thereof and co-owners attorney-in-fact is Maxima de Jesus. Her stipulated compensation is 10% of the rentals. The monthly receipts signed by each co-owner, for his/her rental share, is in a form reproduced in the complaint as follows: RECEIVED from Mrs. Maxima de Jesus Barrios the sum of .................. as my share, in the rental collected for this month, on the properties of which I am a co-owner. Ten per cent (10%) of said rentals had been previously deducted as agreed upon by me, for her administration fee together with her expenses concerning a collector and an Attorney that she may employ to INCREASE rate, prevent arrears, and eject stubborn tenant.
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Lessee of the property is Shell Company of the Philippines, Ltd. The original lease contract was dated August 23 and 29, 1953. This lease was renewed by instrument executed on January 10, 1966, where under, through the efforts of Maxima de Jesus, the monthly rentals were increased from P850.00 to P3,500.00 during the first ten (10) years and to P4,000.00 for the subsequent five (5) years. Shell pays the rentals by issuing a check for P3,500.00 in the name of Maxima de Jesus who, in turn, distributes the shares of her co-owners. Petitioners' monthly shares on the basis of P3,500.00 monthly rentals are: Manuela de Jesus Pablo de Jesus 9/54 of P3,500.00 9/54 of P3,500.00 P 583.33 P 583.33 P 684.14 P1,850.80 Petitioners (defendants below), in October, 1966 so the complaint further avers sought to unjustly deprive Maxima de Jesus of her 10% compensation. And, to fraudulently escape such obligation, they surreptitiously instructed Shell not to pay their share in the rentals through said Maxima de Jesus but directly to them. As against Shell, the complaint states: ... Pero ahora la compania demandada esta vacilando si va a cambiar esa FORMA DE PAGO, para seguir dicho aviso de los 3 demandados individuales, de que ella pague directamente a ellos sus "shares" de P1,850.80 mensuales dejando a la demandante fraudulentamente privada y despojada de su 10% de compensacion que asciende a P185.08 mensuales. The complaint winds up with the prayer: POR TANTO, pedimos respetuosamente al Hon. Juzgado se sirva expedir una inmediata orden de interdicto prohibitorio preliminar a la pagadora compaia demandada, para que se abstenga de cambiar la

Engracia de Jesus 10/54 of P3,500.00

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presente FORMA DE PAGO, ...; y, despues de los tramites judiciales correspondientes, que el Hon. Juzgado se sirva dictar sentencia declarando definitivo el mismo interdicto prohibitorio, y condenando a los 3 demandados individuales Manuela de Jesus, Engracia de Jesus y Pablo de Jesus a pagar dicho 10% de compensacion, deduciendolo de sus P1,850.80 de "shares" o participaciones respectivas en la renta mensual, de acuerdo con la presents forma de pago. x x x x3 Upon the foregoing complaint filed on October 3, 1966, the respondent judge, on a P500.00-bond, issued ex-parte, on October 4, 1966, a writ of preliminary injunction, which reads: It is hereby ordered by the undersigned Judge of the Court of Manila City that, until further orders, you, the said The Shell Co. of the Philippines, Ltd. and all your attorneys, representatives, agents, and any other person assisting you, refrain from modifying the present "FORMA DE PAGO"; The Shell Co. of the Philippines, shall pay the monthly rentals with check to be issued in the name of Maxima de Jesus alone, who shall cash and distribute the amount of same, among the ten co-owners, previous deduction of ten per cent (10%) thereof. On the same date, October 4, 1966, in obedience to the writ of preliminary injunction, Shell delivered to Maxima de Jesus the sum of P3,500.00, covering the October, 1966 rental. The jurisdictional question having been brought direct to this Court, we issued, on application, a cease-and-desist order bearing date of November 18, 1966. 1. As starting point, we have the rule-long in standing and frequent in application that jurisdiction over the subject matter is conferred only by the Constitution or law. It cannot be fixed by the will of the parties; it cannot be acquired through, or waived, enlarged or diminished by, any act or omission of the parties. Neither is it conferred by acquiescence of the court.4 Constitutionally viewed, apportionment of jurisdiction is vested in Congress.5 Congress may not delegate that power.6 We may not even look to the Rules of Court in search of jurisdiction jurisdictional boundaries. For indeed, the constitutional authority of the Supreme Court on this point is circumscribed in the zone properly denominated as the promulgation of "rules concerning pleading, practice, and procedure in all courts and the admission to the practice of law";7 and, consequently to determine the "means, ways or manner in which said jurisdiction, as fixed by the Constitution and acts of Congress, shall be exercised".8 Rules of Court must yield to substantive laws9 of which jurisdiction is a segment. A mistake in statutory jurisdiction may not be corrected by executive fiat, "but by legislation".10 Well may we profit from the wise pronouncement in Manila Railroad Co. vs. Attorney-General, supra, at pages 529-530, thus: "Certain statutes confer jurisdiction, power, or authority. Others provide for the procedure by which that power or authority is projected into judgment. The one class deals with the powers of the court in the real and substantive sense; the other with the procedure by which such powers are put into action. The one is the thing itself ; the other is the vehicle by which the thing is transferred from the court to the parties. The whole purpose and object of procedure is to make the powers of the court fully and completely available for justice. ... The purpose of such a procedure is not to restrict the jurisdiction of the court over the subject matter, but to give it effective facility in righteous action. ..." 2. And now we come to the jurisdictional area allocated to inferior courts. A rule, the validity of which is recognized, is that jurisdiction of an inferior court will not be presumed; "it must appear clearly from statute or it will not be held to exist."11 Such jurisdiction cannot be broadened upon "doubtful inferences" drawn from statutes. Absent a statutory grant, neither convenience nor assumed justice or propriety of the exercise thereof in a particular class of cases "can justify the assumption of jurisdiction" by said courts.12 3. Jurisprudence teaches that the averments of the complaint, taken as a whole, are what determine the nature of the action, and therefore, the court's jurisdiction.13 But just exactly what does Maxima de Jesus desire in her complaint below? In plain language, she asks of the court to compel two sets of defendants to toe the line: Shell to continue with the previous manner of payment (forma de pago) of rentals by means of a check drawn in her favor alone; and the dissenting coowners to pay her the 10% of the rentals as compensation to which she claims she is entitled as administratrix of the property per agreement. By this she hopes to pay herself, as against her defendant co-owners, the 10% of the latter's share in the monthly rentals (P1,850.80 from October 1966, to December 31, 1975; and P2,074.07 from thence to December 31, 1980). A careful and considerate examination of the complaint below as a whole brings to the fore the fact that plaintiff Maxima de Jesus asks that these defendants comply faithfully with their respective commitments. Implicit, too, in the complaint is the demand that her said co-owners recognize her as administratrix. It is in the context just recited that plaintiff's action below comes within the concept of specific performance of contract. And in this posture, we express the view that jurisdiction resides in the court of first instance. For, specific performance the subject of the litigation "is not capable of pecuniary estimation".14

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A case with factual environment similar to the present is Manufacturer's Distributors, Inc. vs. Yu Siu Liong, L21285, April 29, 1966. There, plaintiff sued defendant in the City Court of Manila to accept delivery of 74,500 pieces of plastifilm bags, balance of 100,000 pieces ordered by defendant, which the latter for no justifiable reason refused to accept. The prayer of the complaint is that defendant be ordered to pay plaintiff P3,376.00, total value of the 100,000 pieces of plastifilm bags. Defendant moved to dismiss. Ground: The subject matter of the litigation is "specific performance" and, therefore, within the exclusive jurisdiction of the court of first instance. The City Court upheld defendant, dismissed the complaint. And the Court of First Instance affirmed. Before this Coat, plaintiff contended that "the subject of the litigation was the 100,000 pieces of plastifilm bags contracted for by defendant at a total price of P3,376.00, and, therefore, it was susceptible of pecuniary estimation". This Court, in an opinion by Mr. Justice Jose B. L. Reyes, ruled that the City Court of Manila had no jurisdiction, and declared: That plaintiff's complaint also sought the payment by the defendant of P3,376.00 plus interest and attorney's fees, does not give a pecuniary estimation to the litigation, for the payment of such amounts can only be ordered as a consequence of the specific performance primarily sought. In other words, such payment would be but an incident or consequence of defendant's liability for specific performance. If no such liability is judicially declared, the payment can not be awarded. Hence, the amounts sought do not represent the value of the subject of litigation. This Court there lifted from Mebane Cotton Breeding St'n vs. Sides, 257 SW 302; 21 C.J.S., 59, note, the following, which is indeed illuminating: The Court has no jurisdiction of a suit for specific performance of a contract, although the damages alleged for its breach, if permitted, are within the amount of which that court has jurisdiction. It will avail respondents nothing when they say that what they seek is to prevent Maxima de Jesus from being defrauded of her 10% compensation to only P185.08, covering the October, 1966 rental; and that should defendants below insist in defrauding her of her share corresponding to any other month, in respondents' language, "entonces se podra repetir igual demanda por ese mes".15 Reasons there are which will stop us from giving our imprimatur to this advocacy. Courts will be swamped with her complaints. Multiplicity of suits is obnoxious to the administration of justice. Besides, the breach of contract charged against defendants below is total and indivisible. Monthly rentals will have to run through a number of years. There is an unqualified refusal to perform the contract. Such refusal goes to the entire contract. It is treated as a complete breach. Therefore, but one action specific performance may be presented. For that action may not be split; successive actions may not be maintained.16 Especially is this principle true in the case before us. For, nowhere in the complaint filed on October 3, 1966, is there an averment that at the time jurisdiction was sought in the City Court, the October, 1966 rental was already due and payable. As a matter of fact, in Annex 2 of respondents' answer before this Court, which is Shell's answer to the complaint below, the following averment in paragraph 13 appears: "SHELL has to pay the monthly rentals of P3,500 within the first ten (10) days of each contract month." Nothing in the statute books would confer jurisdiction on city courts over actions where specific performance of contract is primarily sought. Result: The city court has no jurisdiction over the subject matter.17 4. Nor does the law grant the city courts power to take cognizance of a case for final injunction. On the contrary, such authority is expressly granted by statute to courts of first instance in the exercise of their original jurisdiction.18 And the city court is without jurisdiction to hear and determine the case for final injunction against Shell. . 5. But let us assume that what plaintiff below claims, as against her co-owners, is but a judgment for the small sum of P185.08, her compensation for the month of October, 1966. Nonetheless, the city court remains without jurisdiction. This is because the sum of money action may not be divorced from the injunction suit. Both of them are the subject of only one complaint. For, really, without a mandatory injunction to Shell to issue the checks in plaintiff's favor, the certainty of collecting her alleged compensation becomes problematical. The action then is indivisible. And, the city court's jurisdiction must yield to the jurisdiction of the higher court of first instance. Expediency and convenience so demand.19 6. Where much space was devoted by counsel for the parties herein is on the question of the power of the city court to issue the disputed writ of preliminary injunction earlier transcribed. Historically speaking, the 1901 original organic act of courts in the Philippines (Act 136 of the Philippine Commission) was silent on the power of the city (Justice of the peace) court to issue preliminary injunction. Neither did the old 1901 Code of Civil Procedure (Act 190) grant this power to said court. When a later statute, Act 2041 of the Philippine Legislature (1911), did empower said court to issue preliminary injunction, its exercise was limited to cases involving forcible entry. And, subsequent legislation's also carry this provision, viz: Act 2131, effective February 1, 1912; Act 3764, effective November 26, 1930; Act 3881, effective November 14, 1931; and the present Judiciary Act of 1948, as amended.

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To be sure temporary injunctions could also be issued in cases other than forcible entry; but then only municipal courts in provincial capitals are privileged to grant the same, and solely in the absence of the district judge.20 In Piit vs. de Lara, 58 Phil. 765, 766-767,21 this Court was asked to rule on the question of whether a justice of the peace may issue a writ of preliminary injunction in an illegal detainer suit. The answer was "No". Because the law limits the issuance of such writ only to forcible entry cases. We then ruled out the preliminary injunction in the illegal detainer case as in excess of his jurisdiction. The strong point on which respondents herein root their argument is Section 2 of Rule 58, which reads: SEC. 2. Who may grant preliminary injunction. A preliminary injunction may be granted by the judge of any court in which the action is pending, or by a Justice of the Court of Appeals or of the Supreme Court. It may also be granted by the judge of a Court of First Instance in any action pending in an inferior court within his district. They place the accent on the phrase "any court in which the action is pending." Argue respondents: Since the case is pending in the city court, it has jurisdiction to issue preliminary injunction. This ratiocination suffers from infirmities. First, we have ruled that the city court has no jurisdiction over the subject matter; in consequence, it is powerless to grant an ancillary remedy therein. Second, the first sentence of Section 2 should be read in context. The last sentence of the quoted statute, namely, that injunction "may also be granted by the judge of a Court of First Instance in any action pending in an inferior court within his district", emphasizes the point that the city court, except in the cases where it is specifically authorized by statute, cannot grant preliminary injunction. Third, as adverted to elsewhere in this opinion, absent an explicit and precise grant of jurisdiction in the city court, no amount of expensive construction would give such court that jurisdiction. At any rate, the party plaintiff is not without speedy remedy. He may seek injunctive assistance from the court of first instance. Upon the view we take of this case, we hereby grant the petition for certiorari and prohibition; the preliminary injunction we issued herein is declared final; and the respondent court is directed to dismiss Civil Case No. 153460, entitled "Maxima de Jesus, asistida de su marido Salvador Barrios, Demandantes versus Manuela de Jesus, Engracia de Jesus, Pablo de Jesus, y The Shell Company of the Philippines, Ltd., Demandados". Costs against respondents other than the respondent judge. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Castro, JJ., concur.

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Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 101538 June 23, 1992 AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian, Augusto Benedicto Santos, petitioner, vs. NORTHWEST ORIENT AIRLINES and COURT OF APPEALS, respondents.

CRUZ, J.: This case involves the Proper interpretation of Article 28(1) of the Warsaw Convention, reading as follows: Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the court of the domicile of the carrier or of his principal place of business, or where he has a place of business through which the contract has been made, or before the court at the place of destination. The petitioner is a minor and a resident of the Philippines. Private respondent Northwest Orient Airlines (NOA) is a foreign corporation with principal office in Minnesota, U.S.A. and licensed to do business and maintain a branch office in the Philippines. On October 21, 1986, the petitioner purchased from NOA a round-trip ticket in San Francisco. U.S.A., for his flight from San Francisco to Manila via Tokyo and back. The scheduled departure date from Tokyo was December 20, 1986. No date was specified for his return to San Francisco. 1 On December 19, 1986, the petitioner checked in at the NOA counter in the San Francisco airport for his scheduled departure to Manila. Despite a previous confirmation and re-confirmation, he was informed that he had no reservation for his flight from Tokyo to Manila. He therefore had to be wait-listed. On March 12, 1987, the petitioner sued NOA for damages in the Regional Trial Court of Makati. On April 13, 1987, NOA moved to dismiss the complaint on the ground of lack of jurisdiction. Citing the above-quoted article, it contended that the complaint could be instituted only in the territory of one of the High Contracting Parties, before: 1. the court of the domicile of the carrier; 2. the court of its principal place of business; 3. the court where it has a place of business through which the contract had been made; 4. the court of the place of destination. The private respondent contended that the Philippines was not its domicile nor was this its principal place of business. Neither was the petitioner's ticket issued in this country nor was his destination Manila but San Francisco in the United States. On February 1, 1988, the lower court granted the motion and dismissed the case. 2 The petitioner appealed to the Court of

Appeals, which affirmed the decision of the lower court. 3 On June 26, 1991, the petitioner filed a motion for reconsideration, but the same was denied. 4 The petitioner then came to this Court, raising substantially the same issues it submitted in the Court of Appeals.
The assignment of errors may be grouped into two major issues, viz: (1) the constitutionality of Article 28(1) of the Warsaw Convention; and (2) the jurisdiction of Philippine courts over the case. The petitioner also invokes Article 24 of the Civil Code on the protection of minors. I THE ISSUE OF CONSTITUTIONALITY A. The petitioner claims that the lower court erred in not ruling that Article 28(1) of the Warsaw Convention violates the constitutional guarantees of due process and equal protection. 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

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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." 5 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. The petitioner contends that Article 28(1) cannot be applied in the present case because it is unconstitutional. He argues that there is no substantial distinction between a person who purchases a ticket in Manila and a person who purchases his ticket in San Francisco. The classification of the places in which actions for damages may be brought is arbitrary and irrational and thus violates the due process and equal protection clauses. It is well-settled that courts will assume jurisdiction over a constitutional question only if it is shown that the essential requisites of a judicial inquiry into such a question are first satisfied. Thus, there must be an actual case or controversy involving a conflict of legal rights susceptible of judicial determination; the constitutional question must have been opportunely raised by the proper party; and the resolution of the question is unavoidably necessary to the decision of the case itself. 6 Courts generally avoid having to decide a constitutional question. This attitude is based on the doctrine of separation of powers, which enjoins upon the departments of the government a becoming respect for each other's acts. The treaty which is the subject matter of this petition was a joint legislative-executive act. The presumption is that it was first carefully studied and determined to be constitutional before it was adopted and given the force of law in this country. The petitioner's allegations are not convincing enough to overcome this presumption. Apparently, the Convention considered the four places designated in Article 28 the most convenient forums for the litigation of any claim that may arise between the airline and its passenger, as distinguished from all other places. At any rate, we agree with the respondent court that this case can be decided on other grounds without the necessity of resolving the constitutional issue. B. The petitioner claims that the lower court erred in not ruling that Art. 28(1) of the Warsaw Convention is inapplicable because of a fundamental change in the circumstances that served as its basis. The petitioner goes at great lengths to show that the provisions in the Convention were intended to protect airline companies under "the conditions prevailing then and which have long ceased to exist." He argues that in view of the significant developments in the airline industry through the years, the treaty has become irrelevant. Hence, to the extent that it has lost its basis for approval, it has become unconstitutional. The petitioner is invoking the doctrine of rebus sic stantibus. According to Jessup, "this doctrine constitutes an attempt to formulate a legal principle which would justify non-performance of a treaty obligation if the conditions with relation to which the parties contracted have changed so materially and so unexpectedly as to create a situation in which the exaction of performance would be unreasonable." 7 The key element of this doctrine is the vital change in the condition of the contracting parties that they

could not have foreseen at the time the treaty was concluded.
The Court notes in this connection the following observation made in Day v. Trans World Airlines, Inc.: 8 The Warsaw drafters wished to create a system of liability rules that would cover all the hazards of air travel . . . The Warsaw delegates knew that, in the years to come, civil aviation would change in ways that they could not foresee. They wished to design a system of air law that would be both durable and flexible enough to keep pace with these changes . . . The ever-changing needs of the system of civil aviation can be served within the framework they created. It is true that at the time the Warsaw Convention was drafted, the airline industry was still in its infancy. However, that circumstance alone is not sufficient justification for the rejection of the treaty at this time. The changes recited by the petitioner were, realistically, not entirely unforeseen although they were expected in a general sense only. In fact, the Convention itself, anticipating such developments, contains the following significant provision: Article 41. Any High Contracting Party shall be entitled not earlier than two years after the coming into force of this convention to call for the assembling of a new international conference in order to consider any improvements which may be made in this convention. To this end, it will communicate with the Government of the French Republic which will take the necessary measures to make preparations for such conference. But the more important consideration is that the treaty has not been rejected by the Philippine government. The doctrine of rebus sic stantibus does not operate automatically to render the treaty inoperative. There is a necessity for a formal act of rejection, usually made by the head of State, with a statement of the reasons why compliance with the treaty is no longer required. In lieu thereof, the treaty may be denounced even without an expressed justification for this action. Such denunciation is authorized under its Article 39, viz: Article 39. (1) Any one of the High Contracting Parties may denounce this convention by a notification addressed to the Government of the Republic of Poland, which shall at once inform the Government of each of the High Contracting Parties.

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(2) Denunciation shall take effect six months after the notification of denunciation, and shall operate only as regards the party which shall have proceeded to denunciation. Obviously. rejection of the treaty, whether on the ground of rebus sic stantibus or pursuant to Article 39, is not a function of the courts but of the other branches of government. This is a political act. The conclusion and renunciation of treaties is the prerogative of the political departments and may not be usurped by the judiciary. The courts are concerned only with the interpretation and application of laws and treaties in force and not with their wisdom or efficacy. C. The petitioner claims that the lower court erred in ruling that the plaintiff must sue in the United States, because this would deny him the right to access to our courts. The petitioner alleges that the expenses and difficulties he will incur in filing a suit in the United States would constitute a constructive denial of his right to access to our courts for the protection of his rights. He would consequently be deprived of this vital guaranty as embodied in the Bill of Rights. Obviously, the constitutional guaranty of access to courts refers only to courts with appropriate jurisdiction as defined by law. It does not mean that a person can go to any court for redress of his grievances regardless of the nature or value of his claim. If the petitioner is barred from filing his complaint before our courts, it is because they are not vested with the appropriate jurisdiction under the Warsaw Convention, which is part of the law of our land. II THE ISSUE OF JURISDICTION. A. The petitioner claims that the lower court erred in not ruling that Article 28(1) of the Warsaw Convention is a rule merely of venue and was waived by defendant when it did not move to dismiss on the ground of improper venue. By its own terms, the Convention applies to all international transportation of persons performed by aircraft for hire. International transportation is defined in paragraph (2) of Article 1 as follows: (2) For the purposes of this convention, the expression "international transportation" shall mean any transportation 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 transportation or a transshipment, are situated [either] within the territories of two High Contracting Parties . . . Whether the transportation is "international" is determined by the contract of the parties, which in the case of passengers is the ticket. When the contract of carriage provides for the transportation of the passenger between certain designated terminals "within the territories of two High Contracting Parties," the provisions of the Convention automatically apply and exclusively govern the rights and liabilities of the airline and its passenger. Since the flight involved in the case at bar is international, the same being from the United States to the Philippines and back to the United States, it is subject to the provisions of the Warsaw Convention, including Article 28(1), which enumerates the four places where an action for damages may be brought. Whether Article 28(1) refers to jurisdiction or only to venue is a question over which authorities are sharply divided. While the petitioner cites several cases holding that Article 28(1) refers to venue rather than jurisdiction, 9 there are later cases cited by the private

respondent supporting the conclusion that the provision is jurisdictional. 10

Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by consent or waiver upon d court which otherwise would have no jurisdiction over the subject-matter of an action; but the venue of an action as fixed by statute may be changed by the consent of the parties and an objection that the plaintiff brought his suit in the wrong county may be waived by the failure of the defendant to make a timely objection. In either case, the court may render a valid judgment. Rules as to jurisdiction can never be left to the consent or agreement of the parties, whether or not a prohibition exists against their alteration. 11 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. This issue was analyzed in the leading case of Smith v. Canadian Pacific Airways, Ltd., 12 where it was held: . . . Of more, but still incomplete, assistance is the wording of Article 28(2), especially when considered in the light of Article 32. Article 28(2) provides that "questions of procedure shall be governed by the law of the court to which the case is submitted" (Emphasis supplied). Section (2) thus may be read to leave for domestic decision questions regarding the suitability and location of a particular Warsaw Convention case. 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

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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. The petitioner submits that since Article 32 states that the parties are precluded "before the damages occurred" from amending the rules of Article 28(1) as to the place where the action may be brought, it would follow that the Warsaw Convention was not intended to preclude them from doing so "after the damages occurred." Article 32 provides: Art. 32. Any clause contained in the contract and all special agreements entered into before the damage occurred by which the parties purport to infringe the rules laid down by this convention, whether by deciding the law to be applied, or by altering the rules as to jurisdiction, shall be null and void. Nevertheless for the transportation of goods, arbitration clauses shall be allowed, subject to this convention, if the arbitration is to take place within one of the jurisdictions referred to in the first paragraph of Article 28. His point is that since the requirements of Article 28(1) can be waived "after the damages (shall have) occurred," the article should be regarded as possessing the character of a "venue" and not of a "jurisdiction" provision. Hence, in moving to dismiss on the ground of lack of jurisdiction, the private respondent has waived improper venue as a ground to dismiss. The foregoing examination of Article 28(1) in relation to Article 32 does not support this conclusion. In any event, we agree that even granting arguendo that Article 28(1) is a venue and not a jurisdictional provision, dismissal of the case was still in order. The respondent court was correct in affirming the ruling of the trial court on this matter, thus: Santos' claim that NOA waived venue as a ground of its motion to dismiss is not correct. True it is that NOA averred in its MOTION TO DISMISS that the ground thereof is "the Court has no subject matter jurisdiction to entertain the Complaint" which SANTOS considers as equivalent to "lack of jurisdiction over the subject matter . . ." However, the gist of NOA's argument in its motion is that the Philippines is not the proper place where SANTOS could file the action meaning that the venue of the action is improperly laid. Even assuming then that the specified ground of the motion is erroneous, the fact is the proper ground of the motion improper venue has been discussed therein. Waiver cannot be lightly inferred. In case of doubt, it must be resolved in favor of non-waiver if there are special circumstances justifying this conclusion, as in the petition at bar. As we observed in Javier vs. Intermediate Court of Appeals: 13 Legally, of course, the lack of proper venue was deemed waived by the petitioners when they failed to invoke it in their original motion to dismiss. Even so, the motivation of the private respondent should have been taken into account by both the trial judge and the respondent court in arriving at their decisions. The petitioner also invokes KLM Royal Dutch Airlines v. RTC, 14 a decision of our Court of Appeals, where it was held that Article

28(1) is a venue provision. However, the private respondent avers that this was in effect reversed by the case of Aranas v. United Airlines, 15 where the same court held that Article 28(1) is a jurisdictional provision. Neither of these cases is binding on this Court, of course, nor was either of them appealed to us. Nevertheless, we here express our own preference for the later case of Aranas insofar as its pronouncements on jurisdiction conform to the judgment we now make in this petition.
B. The petitioner claims that the lower court erred in not ruling that under Article 28(1) of the Warsaw Convention, this case was properly filed in the Philippines, because Manila was the destination of the plaintiff. The Petitioner contends that the facts of this case are analogous to those in Aanestad v. Air Canada. 16 In that case, Mrs. Silverberg

purchased a round-trip ticket from Montreal to Los Angeles and back to Montreal. The date and time of departure were specified but not of the return flight. The plane crashed while on route from Montreal to Los Angeles, killing Mrs. Silverberg. Her administratrix filed an action for damages against Air Canada in the U.S. District Court of California. The defendant moved to dismiss for lack of jurisdiction but the motion was denied thus:
. . . It is evident that the contract entered into between Air Canada and Mrs. Silverberg as evidenced by the ticket booklets and the Flight Coupon No. 1, was a contract for Air Canada to carry Mrs. Silverberg to Los Angeles on a certain flight, a certain time and a certain class, but that the time for her to return remained completely in her power. Coupon No. 2 was only a continuing offer by Air Canada to give her a ticket to return to Montreal between certain dates. . . . The only conclusion that can be reached then, is that "the place of destination" as used in the Warsaw Convention is considered by both the Canadian C.T.C. and the United States C.A.B. to describe at least two "places of destination," viz., the "place of destination" of a particular flight either an "outward destination" from the "point of origin" or from the "outward point of destination" to any place in Canada. Thus the place of destination under Art. 28 and Art. 1 of the Warsaw Convention of the flight on which Mrs. Silverberg was killed, was Los Angeles according to the ticket, which was the contract between the parties and the suit is properly filed in this Court which has jurisdiction. The Petitioner avers that the present case falls squarely under the above ruling because the date and time of his return flight to San Francisco were, as in the Aanestad case, also left open. Consequently, Manila and not San Francisco should be considered the petitioner's destination.

9
The private respondent for its part invokes the ruling in Butz v. British Airways, 17 where the United States District Court (Eastern

District of Pennsylvania) said:

. . . Although the authorities which addressed this precise issue are not extensive, both the cases and the commentators are almost unanimous in concluding that the "place of destination" referred to in the Warsaw Convention "in a trip consisting of several parts . . . is the ultimate destination that is accorded treaty jurisdiction." . . . But apart from that distinguishing feature, I cannot agree with the Court's analysis in Aanestad; whether the return portion of the ticket is characterized as an option or a contract, the carrier was legally bound to transport the passenger back to the place of origin within the prescribed time and. the passenger for her part agreed to pay the fare and, in fact, did pay the fare. Thus there was mutuality of obligation and a binding contract of carriage, The fact that the passenger could forego her rights under the contract does not make it any less a binding contract. Certainly, if the parties did not contemplate the return leg of the journey, the passenger would not have paid for it and the carrier would not have issued a round trip ticket. We agree with the latter case. The place of destination, within the meaning of the Warsaw Convention, is determined by the terms of the contract of carriage or, specifically in this case, the ticket between the passenger and the carrier. Examination of the petitioner's ticket shows that his ultimate destination is San Francisco. Although the date of the return flight was left open, the contract of carriage between the parties indicates that NOA was bound to transport the petitioner to San Francisco from Manila. Manila should therefore be considered merely an agreed stopping place and not the destination. The petitioner submits that the Butz case could not have overruled the Aanestad case because these decisions are from different jurisdictions. But that is neither here nor there. In fact, neither of these cases is controlling on this Court. If we have preferred the Butz case, it is because, exercising our own freedom of choice, we have decided that it represents the better, and correct, interpretation of Article 28(1). Article 1(2) also draws a distinction between a "destination" and an "agreed stopping place." It is the "destination" and not an "agreed stopping place" that controls for purposes of ascertaining jurisdiction under the Convention. The contract is a single undivided operation, beginning with the place of departure and ending with the ultimate destination. The use of the singular in this expression indicates the understanding of the parties to the Convention that every contract of carriage has one place of departure and one place of destination. An intermediate place where the carriage may be broken is not regarded as a "place of destination." C. The petitioner claims that the lower court erred in not ruling that under Art. 28(1) of the Warsaw Convention, this case was properly filed in the Philippines because the defendant has its domicile in the Philippines. The petitioner argues that the Warsaw Convention was originally written in French and that in interpreting its provisions, American courts have taken the broad view that the French legal meaning must govern. 18 In French, he says, the "domicile" of the carrier

means every place where it has a branch office.

The private respondent notes, however, that in Compagnie Nationale Air France vs. Giliberto, 19 it was held: The plaintiffs' first contention is that Air France is domiciled in the United States. They say that the domicile of a corporation includes any country where the airline carries on its business on "a regular and substantial basis," and that the United States qualifies under such definition. The meaning of domicile cannot, however, be so extended. The domicile of a corporation is customarily regarded as the place where it is incorporated, and the courts have given the meaning to the term as it is used in article 28(1) of the Convention. ( See Smith v. Canadian Pacific Airways, Ltd. (2d Cir. 1971), 452 F2d 798, 802; Nudo v. Societe Anonyme Belge d' Exploitation de la Navigation Aerienne Sabena Belgian World Airlines (E.D. pa. 1962). 207 F. Supp, 191; Karfunkel v. Compagnie Nationale Air France (S.D.N.Y. 1977), 427 F. Suppl. 971, 974). Moreover, the structure of article 28(1), viewed as a whole, is also incompatible with the plaintiffs' claim. The article, in stating that places of business are among the bases of the jurisdiction, sets out two places where an action for damages may be brought; the country where the carrier's principal place of business is located, and the country in which it has a place of business through which the particular contract in question was made, that is, where the ticket was bought, Adopting the plaintiffs' theory would at a minimum blur these carefully drawn distinctions by creating a third intermediate category. It would obviously introduce uncertainty into litigation under the article because of the necessity of having to determine, and without standards or criteria, whether the amount of business done by a carrier in a particular country was "regular" and "substantial." The plaintiff's request to adopt this basis of jurisdiction is in effect a request to create a new jurisdictional standard for the Convention. Furthermore, it was argued in another case 20 that: . . . In arriving at an interpretation of a treaty whose sole official language is French, are we bound to apply French law? . . . We think this question and the underlying choice of law issue warrant some discussion . . . We do not think this statement can be regarded as a conclusion that internal French law is to be "applied" in the choice of law sense, to determine the meaning and scope of the Convention's terms. Of course, French legal usage must be considered in arriving at an accurate English translation of the French. But when an accurate English translation is made and agreed upon, as here, the inquiry into meaning does not then revert to a quest for a past or present French law to be "applied" for revelation of the proper scope of the terms. It does not follow from the fact that the treaty is written in French that in interpreting it, we are forever chained to French law, either as it existed when the treaty was written or in its present state of development. There is no suggestion in the treaty that French law was intended to govern the meaning of Warsaw's terms, nor have we found any indication to this effect in its legislative history or from our study of its application and interpretation by other courts. Indeed, analysis of the cases indicates that the courts, in interpreting and applying the Warsaw Convention, have, not considered themselves bound to apply French law simply because the Convention is written in French. . . .

10
We agree with these rulings. Notably, the domicile of the carrier is only one of the places where the complaint is allowed to be filed under Article 28(1). By specifying the three other places, to wit, the principal place of business of the carrier, its place of business where the contract was made, and the place of destination, the article clearly meant that these three other places were not comprehended in the term "domicile." D. The petitioner claims that the lower court erred in not ruling that Art. 28(1) of the Warsaw Convention does not apply to actions based on tort. The petitioner alleges that the gravamen of the complaint is that private respondent acted arbitrarily and in bad faith, discriminated against the petitioner, and committed a willful misconduct because it canceled his confirmed reservation and gave his reserved seat to someone who had no better right to it. In short. the private respondent committed a tort. Such allegation, he submits, removes the present case from the coverage of the Warsaw Convention. He argues that in at least two American cases, 21 it was held that Article 28(1) of the Warsaw Convention does not apply if the action is based on tort. This position is negated by Husserl v. Swiss Air Transport Company, 22 where the article in question was interpreted thus: . . . Assuming for the present that plaintiff's claim is "covered" by Article 17, Article 24 clearly excludes any relief not provided for in the Convention as modified by the Montreal Agreement. It does not, however, limit the kind of cause of action on which the relief may be founded; rather it provides that any action based on the injuries specified in Article 17 "however founded," i.e., regardless of the type of action on which relief is founded, can only be brought subject to the conditions and limitations established by the Warsaw System. Presumably, the reason for the use of the phrase "however founded," in two-fold: to accommodate all of the multifarious bases on which a claim might be founded in different countries, whether under code law or common law, whether under contract or tort, etc.; and to include all bases on which a claim seeking relief for an injury might be founded in any one country. In other words, if the injury occurs as described in Article 17, any relief available is subject to the conditions and limitations established by the Warsaw System, regardless of the particular cause of action which forms the basis on which a plaintiff could seek relief . . . The private respondent correctly contends that the allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the comprehension of the Warsaw Convention. The petitioner has apparently misconstrued the import of Article 25(l) of the Convention, which reads as follows: Art. 25 (1). The carrier shall not be entitled to avail himself of the provisions of this Convention which exclude or limit his liability. if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court to which the case is submitted, is considered to be equivalent to willful misconduct. It is understood under this article that the court called upon to determine the applicability of the limitation provision must first be vested with the appropriate jurisdiction. Article 28(1) is the provision in the Convention which defines that jurisdiction. Article 22 23 merely fixes

the monetary ceiling for the liability of the carrier in cases covered by the Convention. If the carrier is indeed guilty of willful misconduct, it can avail itself of the limitations set forth in this article. But this can be done only if the action has first been commenced properly under the rules on jurisdiction set forth in Article 28(1).
III THE ISSUE OF PROTECTION TO MINORS The petitioner calls our attention to Article 24 of the Civil Code, which states: Art. 24. In all contractual property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection. Application of this article to the present case is misplaced. The above provision assumes that the court is vested with jurisdiction to rule in favor of the disadvantaged minor, As already explained, such jurisdiction is absent in the case at bar. CONCLUSION A number of countries have signified their concern over the problem of citizens being denied access to their own courts because of the restrictive provision of Article 28(1) of the Warsaw Convention. Among these is the United States, which has proposed an amendment that would enable the passenger to sue in his own domicile if the carrier does business in that jurisdiction. The reason for this proposal is explained thus: In the event a US citizen temporarily residing abroad purchases a Rome to New York to Rome ticket on a foreign air carrier which is generally subject to the jurisdiction of the US, Article 28 would prevent that person from suing the carrier in the US in a "Warsaw Case" even though such a suit could be brought in the absence of the Convention. The proposal was incorporated in the Guatemala Protocol amending the Warsaw Convention, which was adopted at Guatemala City on March 8, 1971. 24 But it is still ineffective because it has not yet been ratified by the required minimum number of contracting parties.

Pending such ratification, the petitioner will still have to file his complaint only in any of the four places designated by Article 28(1) of the Warsaw Convention.

11
The proposed amendment bolsters the ruling of this Court that a citizen does not necessarily have the right to sue in his own courts simply because the defendant airline has a place of business in his country. The Court can only sympathize with the petitioner, who must prosecute his claims in the United States rather than in his own country at least inconvenience. But we are unable to grant him the relief he seeks because we are limited by the provisions of the Warsaw Convention which continues to bind us. It may not be amiss to observe at this point that the mere fact that he will have to litigate in the American courts does not necessarily mean he will litigate in vain. The judicial system of that country in known for its sense of fairness and, generally, its strict adherence to the rule of law. WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered. Narvasa, C.J., Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ., concu

12
SECOND DIVISION [G.R. No. 57127. August 5, 1992.] RHODORA DEL CASTILLO, Petitioner, v. HON. CANDIDO AGUINALDO, and SPOUSES ALBERTO OUANO and CHRISTINA RETUYA-OUANO, Respondents. Escasinas, Partner & Associates for Petitioner. Pablo B. Badong & Associates for Private Respondents.

SYLLABUS

1. REMEDIAL LAW; JURISDICTION; DETERMINED BY THE AVERMENTS IN THE COMPLAINT; CASE AT BAR. Settled is the rule that jurisdiction of the court and the nature of the action are determined by the averments in the complaint. The complaint alleges that demand to vacate the premises was made in 1977, which is not disputed by petitioner. Since the complaint filed by the respondents was in 1981, which is definitely more than one year from the termination of possession by the herein petitioner, the proper action to be filed is an accion publiciana or an action for recovery of possession. 2. ID.; CIVIL PROCEDURE; MOTION TO DISMISS; REQUIREMENTS THAT IT MAY BE ACTED UPON BY THE COURT. Petitioners motion to dismiss did not contain a notice of the time and place of hearing, and is therefore a useless piece of paper with no legal effect. Rule 15 of the Rules of Court provides: "Sec. 4: Notice of a motion shall be served by the applicant to all parties concerned, at least three (3) days before the hearing thereof, together with a copy of the motion, and of any affidavits and other papers accompanying it. The court, however, for good cause may hear a motion on shorter notice, especially on matters which the court may dispose of on its own motion. "Sec. 5: The notice shall be directed to the parties concerned, and shall state the time and place for the hearing of the motion. "Sec. 6: No motion shall be acted upon by the court, without proof of service of the notice thereof, except when the court is satisfied that the rights of the adverse party or parties are not affected. 3. ID.; ID.; ID.; ID.; EFFECT OF FAILURE TO COMPLY THEREOF. Any motion that does not comply with the foregoing rules should not be accepted for filing and if filed, is not entitled to judicial cognizance and does not affect any reglementary period involved for the filing of the requisite pleading. Thus, where the motion is directed to the Clerk of Court, not to the parties and merely states that the same is submitted "for the resolution of the court upon receipt thereof" said motion is fatally defective. Not having complied with the rules, the "Motion to Dismiss" filed by herein petitioner did not stay the running of the reglementary period to file an answer. Consequently, the Order of Default and the Judgment of Default by the trial court is in order and the averments in the Motion to Dismiss can be disregarded. 4. ID.; ID.; UNLAWFUL DETAINER; DISTINGUISHED FROM RECOVERY OF POSSESSION. The case of Spouses Medina and Bernal v. Valdellon [G.R. No. 38510, 63 SCRA 278, (1975)], is illuminating in pointing out the distinction between accion publiciana or recovery of possession and unlawful detainer. "The nature of the action embodied in the complaint is one for recovery of possession brought before the Court of First Instance by the alleged owners of a piece of land against the defendants who were supposed to have unlawfully continued in possession since 1969 when they were supposed to return it to plaintiffs, plus damages. That the action is not for unlawful detainer contemplated in Rule 70 of the Rules of Court, which falls under the exclusive original jurisdiction of the city courts or municipal courts, is very apparent because an action of unlawful detainer is defined as withholding by a person from another for not more than one year, of the possession of a land or building to which the latter is entitled after the expiration or termination of the formers right to hold possession by virtue of a contract express or implied."

DECISION

NOCON, J.:

This is a special civil action of certiorari, prohibition, mandamus and injunction with an urgent prayer for the issuance of a restraining order filed by the petitioner which seeks to annul the Order of respondent Court, 1 the dispositive portion of which reads:
jgc:chan roble s.com.p h

"WHEREFORE, finding the application for the issuance ex-parte by this Honorable Court of the writ of preliminary mandatory injunction to be sufficient in form and substance and to be founded and meritorious, the same is hereby GRANTED. Accordingly, upon the filing by plaintiffs of a bond in the amount of Five Thousand (P5,000.00) Pesos to protect the defendants from whatever damages they may sustain under the circumstances heretofore described, the said bond to be approved by this Honorable Court, let the corresponding WRIT OF PRELIMINARY MANDATORY INJUNCTION issue forthwith ex-parte, commanding the defendants, their collective helpers, laborers, privies, and others who may come in aid of them to immediately vacate the commercial building subject-matter of the above-entitled case and to turn over the physical possession and control of said premises to the plaintiffs and for them not to return thereto until further orders from this Honorable Court, and ordering the sheriff concerned to see to the effective enforcement of the said writ.
chanrob lesvi rtua lawlib rary

SO ORDERED." 2 The facts of the case are as follows:

cha nro b1es vi rtua l 1aw lib ra ry

Respondents are owners of a parcel of residential/commercial land consisting of One Hundred Ninety-Two (192) square meters, described as a three (3) story, three (3) door building, strategically located along the national highway of Subangdaku, Mandaue City, which would easily earn a monthly rental of a few thousand pesos.

13
Tan Ching Hai and spouses Domingo and Ester Tan happen to be close friends of herein respondents, and were allowed to use the entire building on their pretense that they do not have a place to stay and upon agreement that the same shall be used for residential purposes only and would peacefully and willingly surrender the premises to the respondents in case of need by the latter. Respondents did not require any amount of rental for the use of the aforesaid building. However, the Tan spouses, out of their conscience paid a meager amount of Two Hundred Forty (P240.00) Pesos not as rental but as a token of gratitude. Tan Ching Hai and spouses Tan have been using and in fact been doing business out of the building since January, 1970 until sometime in 1977 when respondents asked the former to vacate the aforesaid building. They now refuse to vacate said building. Moreover, the spouses violated their undertakings to herein respondents consisting of the fact that strangers, like herein petitioner Rhodora del Castillo, were made to stay in the premises and portions of the building were converted to a factory, in gross violation of their previous commitment. Conferences were had to resolve in a peaceful manner the surrender of the premises. Petitioner del Castillo then agreed to voluntarily vacate the premises in question peacefully and without further demand on January 31, 1981. This, petitioner failed to do in spite of a grace period given to her which expired on February 28, 1981. There being no intention by the petitioner to vacate the premises, respondents were forced to file a civil case 3 for damages amounting to Sixty Thousand (P60,000.00) Pesos and for the recovery of possession of realty and or specific performance, with application for preliminary mandatory injunction. On March 19, 1981, the trial Judge issued an Order 4 granting respondents application for preliminary mandatory injunction, and herein petitioner was ordered to immediately vacate the premises in question. On March 26, 1981 and within the reglementary period, petitioner instead of filing an answer, filed a "Motion to Dismiss" on the ground that the Court had no jurisdiction over the subject matter or nature of the action or suit, and that the complaint is not verified as required by law. The "Motion to Dismiss" however, did not contain a notice of the time and place of hearing. Accordingly, the trial court issued on April 10, 1981 two (2) Orders 5 viz: 1. One, declaring herein petitioners in default; and 2. Another, denying herein petitioners "Motion to Dismiss" On April 18, 1981, petitioners filed their Motion to Set Aside Order of Default and Motion to Dismiss. 6 Two days later, or on April 20, 1981, the trial court rendered its decision against herein petitioner. Hence, the filing of the instant petition raising as issues the following:
c hanrobles vi rt ual lawli bra ry chan rob1e s virtual 1aw l ibra ry

1. Whether the trial court has jurisdiction over the subject matter or nature of the action or suit which is a simple case of ejectment; and 2. Whether the trial court has committed a grave abuse of discretion when it caused to issue a writ of preliminary mandatory injunction and placed the plaintiffs in possession of the property. Actually, the question before the Court is whether the case at bar is an ejectment case and therefore, within the jurisdiction of the city or municipal courts, or a case for recovery of possession, falling within the jurisdiction of the then Court of First Instance. Settled is the rule that jurisdiction of the court and the nature of the action are determined by the averments in the complaint. 7 The complaint alleges that demand to vacate the premises was made in 1977, which is not disputed by petitioner. Since the complaint filed by the respondents was in 1981, which is definitely more than one year from the termination of possession by the herein petitioner, the proper action to be filed is an accion publiciana or an action for recovery of possession. Likewise, petitioners motion to dismiss did not contain a notice of the time and place of hearing, and is therefore a useless piece of paper with no legal effect. Rule 15 of the Rules of Court provides:
jgc:chan roble s.com. ph

"Sec. 4: Notice of a motion shall be served by the applicant to all parties concerned, at least three (3) days before the hearing thereof, together with a copy of the motion, and of any affidavits and other papers accompanying it. The court, however, for good cause may hear a motion on shorter notice, especially on matters which the court may dispose of on its own motion. "Sec. 5: The notice shall be directed to the parties concerned, and shall state the time and place for the hearing of the motion. "Sec. 6: No motion shall be acted upon by the court, without proof of service of the notice thereof, except when the court is satisfied that the rights of the adverse party or parties are not affected.
chanroble s.com : virtual law lib rary

Any motion that does not comply with the foregoing rules should not be accepted for filing and if filed, is not entitled to judicial cognizance and does not affect any reglementary period involved for the filing of the requisite pleading. Thus, where the motion is directed to the Clerk of Court, not to the parties and merely states that the same is submitted "for the resolution of the court upon receipt thereof" said motion is fatally defective. 8 In the instant case, the notice of hearing in the petitioners "Motion to Dismiss" was addressed to the Clerk of Court in this wise:
cha nrob 1es vi rtua l 1aw lib rary

THE CLERK OF COURT CFI, BRANCH IX GREETINGS:

chanrob1es vi rtua l 1aw lib rary

14
Please submit the foregoing motion for the kind consideration of the Honorable Court immediately upon your receipt hereof without need of presence of counsel and further arguments. 9 Not having complied with the rules, the "Motion to Dismiss" filed by herein petitioner did not stay the running of the reglementary period to file an answer. Consequently, the Order of Default and the Judgment of Default by the trial court is in order and the averments in the Motion to Dismiss can be disregarded. As to the issue of jurisdiction, the case of Spouses Medina and Bernal v. Valdellon 10 is illuminating in pointing out the distinction between accion publiciana or recovery of possession and unlawful detainer. "The nature of the action embodied in the complaint is one for recovery of possession brought before the Court of First Instance by the alleged owners of a piece of land against the defendants who were supposed to have unlawfully continued in possession since 1969 when they were supposed to return it to plaintiffs, plus damages. That the action is not for unlawful detainer contemplated in Rule 70 of the Rules of Court, which falls under the exclusive original jurisdiction of the city courts or municipal courts, is very apparent because an action of unlawful detainer is defined as withholding by a person from another for not more than one year, of the possession of a land or building to which the latter is entitled after the expiration or termination of the formers right to hold possession by virtue of a contract express or implied." The court a quo committed no error in declaring petitioner in default. The demand by the herein respondents to vacate the premises was made as early as 1977. The complaint for recovery of possession was filed by the respondents in 1981 which is more than one year from the expiration and/or termination of possession. The instant case then, is an accion publiciana or for recovery of possession and not an ejectment case.
chanroble s.com:c rala w:red

WHEREFORE, finding no grave abuse of discretion on the part of the trial judge, in issuing the Order appealed from, the petition is hereby DISMISSED. SO ORDERED. Narvasa, C.J., Padilla and Regalado, JJ., concur

15
Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 96107 June 19, 1995 CORAZON JALBUENA DE LEON, petitioner, vs. HON. COURT OF APPEALS (SPECIAL SECOND DIVISION) and ULDARICO INAYAN, respondents.

ROMERO, J.: In this petition for review, we are asked to set aside the amended decision of the Court of Appeals dated November 8, 1990 in "Corazon Jalbuena de Leon v. Uldarico Inayan," (CA-G.R. CV No. 19777) 1 which reversed its original
decision dated May 24, 1990. 2

The subject property in the case at bench involves two parcels of irrigated riceland covering an area of 117,785 square meters located in Barangays Guintas and Bingke, Napnod, Leganes, Iloilo. Jesus Jalbuena, the owner of the land, entered into a verbal lease contract in 1970 with Uldarico Inayan, for one year renewable for the same period. Inayan, private respondent herein, bound himself to deliver 252 cavans of palay each year as rental to be paid during the first ten days of January. Private respondent who was a godson of Jesus Jalbuena, was allowed to continue with the lease from year to year. Petitioner Corazon Jalbuena de Leon is the daughter of Jesus Jalbuena and the transferee of the subject property. Although private respondent cultivated the subject property through hired men, the cavans of palay were paid annually until 1983 when Inayan ceased paying the agreed rental and instead, asserted dominion over the land. When asked by the petitioner to vacate the land, he refused to do so, prompting the latter to bring an action in court. In March 1984, herein petitioner filed a complaint against private respondent before the Regional Trial Court of Iloilo City for "Termination of Civil Law Lease; Recovery of Possession, Recovery of Unpaid Rentals and Damages." Private respondent, in his Answer, claimed that the land had been tenanted by his father since 1938 and that he has already been issued Certificates of Land Transfer (CLT) for the subject property. These Certificates of Land Transfer were subsequently canceled by the then Ministry of Agrarian Reform on November 22, 1983 upon a finding that said lands were owned by Jesus Jalbuena and that the CLTs were erroneously issued. 3 On April 11, 1984, the lower court issued an order adopting the procedure in agrarian cases. The dispositive portion of the trial court's decision dated February 26, 1988 in favor of petitioner De Leon reads: WHEREFORE, Premises considered, judgment is hereby rendered: 1. Declaring the lease contract between plaintiff and defendant as a civil law lease, and that the same has already been terminated due to defendant's failure to pay his rentals from 1983 up to the present; 2. Ordering defendant Uldarico Inayan and his privies and successors-in-interest to immediately vacate the land subject-matter of this complaint and to return possession thereof to plaintiff; 3. Ordering defendant Uldarico Inayan to pay plaintiff Corazon Jalbuena de Leon, one thousand two hundred sixty (1,260) cavans of palay representing unpaid rentals from 1983 up to 1987, or its money equivalent computed at the current market price of palay, less whatever amount may have been deposited by defendant with the Court during the pendency of this case, which deposit should be released in favor of plaintiff; 4. Ordering defendant Inayan to pay to plaintiff Jalbuena de Leon the sum of P38,501.28 representing the unpaid irrigation fees, and all fees thereafter until possession of the land has been transferred to the plaintiff;

16
5. Ordering defendant Inayan to pay to plaintiff Jalbuena de Leon the sum of P3,000.00 as attorney' s fees; P1,000.00 as litigation expenses, and P2,000.00 as moral damages, plus costs; and 6. Dismissing defendant's counterclaim for lack of merit. 4 On appeal to the Court of Appeals, private respondent raised the sole issue of jurisdiction and alleged that the lower court, acting as Court of Agrarian Relations, had no jurisdiction over the action. The respondent appellate court, on May 24, 1990, affirmed the trial court's decision, disposing as follows: WHEREFORE, premises considered, the decision appealed from should be, as it is hereby AFFIRMED, with a MODIFICATION that the period within which appellant should be ordered to pay the rentals in arrears now covers the years 1983 to 1990. Costs against appellant. 5 It held that while jurisdiction must exist as a matter of law, private respondent's attack on the jurisdiction of the lower court must fail for he is guilty of estoppel. 6 Despite several opportunities to question the jurisdiction of the lower court,
he failed to do so. Moreover, it was he who insisted, through his misrepresentations, that the case, involving, as it does, purely agrarian issues, should be referred to the Ministry of Agrarian Reform. 7 Finally, the appellate court held that since regional trial courts, by express provision of B.P. 129, Section 24, now have exclusive original jurisdiction over agrarian cases, but still applying the special rules of agrarian procedure, it was no error for the court below, even if acting as an agrarian court, to resolve a controversy involving a civil lease. 8

Private respondent's motion to reconsider the above decision was granted by the Court of Appeals on November 8, 1990. Respondent court then set aside its earlier decision and dismissed the civil case filed by petitioner below (Civil Case No. 15628) for want of jurisdiction. In its amended decision, the appellate court held that petitioner's complaint below was anchored on accin interdictal, a summary action for recovery of physical possession that should have been brought before the proper inferior court. To make private respondent a deforciant so that the unlawful detainer suit may be properly filed, it is necessary to allege when demand to pay rent and to vacate were made. The court found that this requisite was not specifically met in petitioner's complaint below. Such failure on her part is fatal to her cause since the one-year period within which a detainer suit may be instituted had not yet elapsed when Civil Case No. 15628 was filed. Therefore, the court below was devoid of jurisdiction to entertain the case. 9 Hence this petition for review. It is petitioner's contention that the Court of Appeals erred in holding that the case below is an unlawful detainer action. Since the parties did not confine themselves to issues pertaining solely to possession but also to the nature of the lease contract, the case is not one of unlawful detainer but one incapable of pecuniary estimation. Next, petitioner argues that the issue of lack of jurisdiction should not have been resolved in favor of private respondent who had voluntarily submitted to the jurisdiction of the court a quo and raised the issue only after an adverse decision was rendered against him. Aside from emphasizing the correctness of respondent court's ruling that the case below was a mere ejectment case, private respondent raises the issue of res judicata in his comment. Private respondent Inayan claims that the issue in the instant petition, i.e. whether or not the trial court, acting as an agrarian court, had jurisdiction over the unlawful detainer suit filed by petitioner, had already been ruled upon by the Court of Appeals in CA G.R. SP No. 15700 entitled "Uldarico Inayan v. Hon. Alonsagay and Corazon Jalbuena" and the petition for review of said decision had already been denied by this Court in G.R. No. 89312. 10 The petition is impressed with merit. The primary issue presented here revolves around the jurisdiction of the trial court, then acting as a court of agrarian relations employing agrarian procedure, to try the suit filed by petitioner. Jurisdiction of the court over the subject matter is conferred only by the Constitution or by law. 11 It is determinable on
the basis of allegations in the complaint. 12

An error in jurisdiction can be raised at any time and even for the first time on appeal. 13 Barring highly meritorious
and exceptional circumstances, 14 neither estoppel nor waiver may be raised as defenses to such an error. 15

In order to determine whether the court below had jurisdiction, it is necessary to first ascertain the nature of the complaint filed before it. A study of the complaint instituted by petitioner in the lower court reveals that the case is, contrary to the findings of the respondent appellate court, not one of unlawful detainer.

17
An unlawful detainer suit (accin interdictal) together with forcible entry are the two forms of an ejectment suit that may be filed to recover possession of real property. Aside from the summary action of ejectment, accin publicianaor the plenary action to recover the right of possession and accin reivindicatoria or the action to recover ownership which includes recovery of possession, make up the three kinds of actions to judicially recover possession. 16 Illegal detainer consists in withholding by a person from another of the possession of a land or building to which the latter is entitled after the expiration or termination of the former's right to hold possession by virtue of a contract, express or implied. 17 An ejectment suit is brought before the proper inferior court to recover physical possession only or
possession de facto and not possession de jure, where dispossession has lasted for not more than one year. Forcible entry and unlawful detainer are quieting processes and the one-year time bar to the suit is in pursuance of the summary nature of the action. 18 The use of summary procedure in ejectment cases is intended to provide an expeditious means of protecting actual possession or right to possession of the property. They are not processes to determine the actual title to an estate. If at all, inferior courts are empowered to rule on the question of ownership raised by the defendant in such suits, only to resolve the issue of possession. 19 Its determination on the ownership issue is, however, not conclusive.

Accin publiciana is the plenary action to recover the right of possession when dispossession has lasted for more than one year or when dispossession was effected by means other than those mentioned in Rule 70. 20 Under
these circumstances, a plenary action 21 may be brought before the regional trial court. 22

Accin reivindicatoria, which is an action to recover ownership, including the recovery of possession, should also be filed in the regional trial court. Petitioner's complaint was for "Termination of Civil Law Lease; Recovery of Possession; Recovery of Unpaid Rentals and Damages" 23 After alleging the facts regarding the lease of the subject property, including Inayan's refusal to
pay rent and to vacate, petitioner prayed that the trial court declare the civil law lease (and not "tenancy or agricultural lease") terminated. Plaintiff likewise prayed that defendant be ordered to vacate the premises, pay back rentals, unpaid irrigation fees, moral and exemplary damages and litigation fees.

Clearly, the case involves more than just the issue of possession. It was necessary for the trial court below to determine whether the lease was civil and not an agricultural or tenancy relationship and whether its termination was in order. More specifically, the complaint emphasized, in paragraph 4: That in entering into the contract, Jesus Jalbuena and defendant Uldarico Inayan definitely agreed that the contract was to be CIVIL LAW LEASE NOT TENANCY OR AGRICULTURAL LEASE, for a period of one (1) year renewable for the same period at the option and agreement of the parties; 24 As correctly determined by the trial court, one of the issues in the case below was whether or not the contract entered into by the plaintiff and defendant was a civil law lease or an agricultural lease. If the former, the next issue was whether the lease contract between the parties had been terminated in 1983 for failure of defendant to pay his annual rental. 25 A detainer suit exclusively involves the issue of physical possession. The case below, however, did not concern merely the issue of possession but as well, the nature of the lease contracted by petitioner's predecessor-in-interest and private respondent. It likewise involved the propriety of terminating the relationship contracted by said parties, as well as the demand upon defendant to deliver the premises and pay unpaid rentals, damages and incidental fees. Where the issues of the case extend beyond those commonly involved in unlawful detainer suits, such as for instance, the respective rights of parties under various contractual arrangements and the validity thereof, the case is converted from a mere detainer suit to one "incapable of pecuniary estimation," thereby placing it under the exclusive original jurisdiction of the regional trial courts (formerly the courts of first instance). 26 Not being merely a case of ejectment, the regional trial court possessed jurisdiction to try and resolve the case. Still on the question of jurisdiction, private respondent Inayan, as appellant before the respondent court, claimed that the trial court, acting as a court of agrarian relations, did not have jurisdiction over the complaint filed by petitioner because the latter did not concern itself with tenancy or agrarian matters. The Court of Appeals, in its original decision, ruled that private respondent was guilty of estoppel. Accordingly, he can not successfully raise the issue. In the past, the principle of estoppel has been used by the courts to avoid a clear case of injustice. Its use as a defense to a jurisdictional error is more of an exception rather than the rule. The circumstances outlining estoppel must be unequivocal and intentional, for it is an exception to standard legal norms and is generally applied only in highly exceptional and justifiable cases. 27 We find that the situation in the case at bench falls within the ambit of justifiable cases where estoppel may be applied. The trial court's recourse to agrarian procedure was undoubtedly provoked by private respondent Inayan's

18
insistence on the existence of a tenancy relationship with petitioner. Private respondent cannot now use these same misrepresentations to assert the court's lack of jurisdiction. He cannot invoke the court's jurisdiction to secure affirmative relief against petitioner and, after failing to obtain such relief, repudiate or question that same jurisdiction. 28 Participation in judicial proceedings where the court was devoid of jurisdiction is not normally considered as estoppel because the jurisdiction of a court is mandated by law. Estoppel is likewise not appreciated where a mistaken belief in the court's jurisdiction is maintained. But private respondent's case is different for it does not involve an honest mistake. He is directly responsible for the trial court's use of the special rules of agrarian procedure. His insistence brought about the want of jurisdiction he conveniently asserted before the appellate court, and only after an adverse decision was leveled against him. Private respondent cannot be allowed to seek refuge under the protective mantle of the law after he has abused and made a mockery of it. He is, therefore, considered estopped from asserting the court's want of jurisdiction to try the case. Moreover, the case was ostensibly one that involved agrarian matters, as alleged by private respondent. Hence the trial court cannot be faulted for its use of agrarian procedure. The respondent court also correctly held: Finally, and more importantly, while it is true that when the trial court decreed that the procedure outlined in P.D. 946 was to be observed at the trial of the case at bar, it, in effect assumed its character as an agrarian court which is a court of limited jurisdiction, and that since agrarian matters are solely cognizable by agrarian courts in the exercise of their limited jurisdiction (Depositario vs. Herbas 121 SCRA 756) conversely, agrarian courts have no jurisdiction in cases where there is no tenancy relation between the parties (Dumlao vs. De Guzman, 1 SCRA 144). We believe, however, that the dictum enunciated in the Dumlao case obtains only when, as before, the then C.F.I. and C.A.R. are two separate and distinct entities. Consequently, the foregoing legal principle no longer finds much relevance under the present system, said agrarian courts having been integrated into the Regional Trial Courts which, by express mandate of Section 24 of B.P. 129, shall have exclusive original jurisdiction over agrarian cases although they are ordained to continue applying the special rules of procedure provided for said cases. This being the case, it is no error for the court below, acting as an agrarian court, to resolve a controversy involving a civil lease since it is already a settled rule that inasmuch as the RTC is a court of general jurisdiction, whether a particular matter should be resolved by it in the exercise of its general jurisdiction, or in its limited jurisdiction, or in its limited jurisdiction, is not a jurisdictional question but a procedural question involving a mode of practice which, therefore, may be waived (Manalo vs. Mariano, L-33850, Jan. 22, 1976; Santos vs. Banayo, L-31854, Sept. 9, 1982). 29 (Emphasis ours.) On the matter of res judicata raised by private respondent, we conclude that the same does not find application in instant petition. The issues herein and in the petition in G.R. No. 89312 30 are not the same. In the latter, the issue
involved execution pending appeal granted by the trial court judge to petitioner Jalbuena De Leon. The Court of Appeals 31enjoined the respondent judge from enforcing the execution pending appeal after having found no valid and compelling reason to justify said execution. Then too, private respondent asserted, and the appellate court found, that an agrarian court has no jurisdiction in a case where there exists no tenancy relation between the parties. The court said:

In any event, the matter of jurisdiction of respondent court having been impugned and said issue permeating and going as it does into the very competence of the trial court to act on CAR Case No. 15628, it behooves us to tread softly and give the benefit of the doubt to petitioner, for should execution pending appeal be allowed and the judgment is later ordered vacated on the ground that the trial court had no jurisdiction to hear the case, then it would be well-nigh impossible to restore petitioner to his former status. 32 From the foregoing quote, we find that the decision of the appellate court did not categorically rule on the matter of jurisdiction but only made mention of it in passing and in ruling upon the real issue of the correctness of execution pending appeal ordered by the respondent judge. The decision in CA-G.R. SP No. 15700 became final after the petition for review of said decision was dismissed by the Court for failure to pay the prescribed legal fees and to attach duplicate original or certified true copies of the questioned decision. 33 In sum, we have concluded that the case filed by petitioner below, not being one of unlawful detainer, the regional trial court had jurisdiction to hear and try the case. Moreover, as shown in the foregoing paragraphs, private respondent is estopped from asserting the lower court's lack of jurisdiction.

19
WHEREFORE, the petition is GRANTED. The amended decision of the Court of Appeals dated November 8, 1990 in CA G.R. CV No. 19777 ("Corazon Jalbuena de Leon v. Uldarico Inayan") is SET ASIDE and the original decision dated May 24, 1990 is REINSTATED. Costs against private respondent. SO ORDERED. Feliciano and Vitug, JJ., concur. Melo and Francisco, JJ., took no part.

20
Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 138822 January 23, 2001

EVANGELINE ALDAY, petitioner, vs. FGU INSURANCE CORPORATION, respondent. GONZAGA-REYES, J.: On 5 May 1989, respondent FGU Insurance Corporation filed a complaint with the Regional Trial Court of Makati1alleging that petitioner Evangeline K. Alday owed it P114,650.76, representing unliquidated cash advances, unremitted costs of premiums and other charges incurred by petitioner in the course of her work as an insurance agent for respondent.2 Respondent also prayed for exemplary damages, attorney's fees, and costs of suit.3Petitioner filed her answer and by way of counterclaim, asserted her right for the payment of P104,893.45, representing direct commissions, profit commissions and contingent bonuses earned from 1 July 1986 to 7 December 1986, and for accumulated premium reserves amounting to P500,000.00. In addition, petitioner prayed for attorney's fees, litigation expenses, moral damages and exemplary damages for the allegedly unfounded action filed by respondent.4 On 23 August 1989, respondent filed a "Motion to Strike Out Answer With Compulsory Counterclaim And To Declare Defendant In Default" because petitioner's answer was allegedly filed out of time.5However, the trial court denied the motion on 25 August 1989 and similarly rejected respondent's motion for reconsideration on 12 March 1990.6 A few weeks later, on 11 April 1990, respondent filed a motion to dismiss petitioner's counterclaim, contending that the trial court never acquired jurisdiction over the same because of the non-payment of docket fees by petitoner.7 In response, petitioner asked the trial court to declare her counterclaim as exempt from payment of docket fees since it is compulsory and that respondent be declared in default for having failed to answer such counterclaim.8 In its 18 September 1990 Order, the trial court9 granted respondent's motion to dismiss petitioner's counterclaim and consequently, denied petitioner's motion. The court found petitioner's counterclaim to be merely permissive in nature and held that petitioner's failure to pay docket fees prevented the court from acquiring jurisdiction over the same.10 The trial court similar denied petitioner's motion for reconsideration on 28 February 1991.
1wphi1.nt

On 23 December 1998, the Court of Appeals11 sustained the trial court, finding that petitioner's own admissions, as contained in her answer, show that her counterclaim is merely permissive. The relevant portion of the appellate court's decision12 is quoted herewith Contrary to the protestations of appellant, mere reading of the allegations in the answer a quo will readily show that her counterclaim can in no way be compulsory. Take note of the following numbered paragraphs in her answer: "(14) That, indeed, FGU's cause of action which is not supported by any document other than the self-serving 'Statement of Account' dated March 28, 1988 x x x (15) That it should be noted that the cause of action of FGU is not the enforcement of the Special Agent's Contract but the alleged 'cash accountabilities which are not based on written agreement x x x. x x x x

(19) x x x A careful analysis of FGU's three-page complaint will show that its cause of action is not for specific performance or enforcement of the Special Agent's Contract rather, it is for the payment of the alleged cash accountabilities incurred by defendant during the period form [sic] 1975 to 1986 which claim is executory and has not been ratified. It is the established rule that unenforceable contracts, like this purported money claim of FGU, cannot be sued upon or enforced unless ratified, thus it is as if they have no effect. x x x." To support the heading "Compulsory Counterclaim" in her answer and give the impression that the counterclaim is compulsory appellant alleged that "FGU has unjustifiably failed to remit to defendant despite repeated demands in gross violation of their Special Agent's Contract x x x." The reference to said contract was included purposely to mislead. While on one hand appellant alleged that appellee's cause of action had nothing to do with the Special Agent's Contract, on the other hand, she claim that FGU violated said contract which gives rise of [sic] her cause of action. Clearly, appellant's cash accountabilities cannot be the offshoot of appellee's alleged violation of the aforesaid contract.

21
On 19 May 1999, the appellate court denied petitioner's motion for reconsideration,13 giving rise to the present petition. Before going into the substantive issues, the Court shall first dispose of some procedural matters raised by the parties. Petitioner claims that respondent is estopped from questioning her non-payment of docket fees because it did not raise this particular issue when it filed its motion - the "Motion to Strike out Answer With Compulsory Counterclaim And To Declare Defendant In Default" - with the trial court; rather, it was only nine months after receiving petitioner's answer that respondent assailed the trial court's lack of jurisdiction over petitioner's counterclaims based on the latter's failure to pay docket fees.14 Petitioner's position is unmeritorious. Estoppel by laches arises from the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned or declined to assert it.15 In the case at bar, respondent cannot be considered as estopped from assailing the trial court's jurisdiction over petitioner's counterclaim since this issue was raised by respondent with the trial court itself - the body where the action is pending - even before the presentation of any evidence by the parties and definitely, way before any judgment could be rendered by the trial court. Meanwhile, respondent questions the jurisdiction of the Court of Appeals over the appeal filed by petitioner from the 18 September 1990 and 28 February 1991 orders of the trial court. It is significant to note that this objection to the appellate court's jurisdiction is raised for the first time before this Court; respondent never having raised this issue before the appellate court. Although the lack of jurisdiction of a court may be raised at any stage of the action, a party may be estopped from raising such questions if he has actively taken part in the very proceedings which he questions, belatedly objecting to the court's jurisdiction in the event that the judgment or order subsequently rendered is adverse to him.16 In this case, respondent actively took part in the proceedings before the Court of Appeals by filing its appellee's brief with the same.17 Its participation, when taken together with its failure to object to the appellate court's jurisdiction during the entire duration of the proceedings before such court, demonstrates a willingness to abide by the resolution of the case by such tribunal and accordingly, respondent is now most decidedly estopped from objecting to the Court of Appeals' assumption of jurisdiction over petitioner's appeal.18 The basic issue for resolution in this case is whether or not the counterclaim of petitioner is compulsory or permissive in nature. A compulsory counterclaim is one which, being cognizable by the regular courts of justice, arises out of or is connected with the transaction or occurrence constituting the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.19 In Valencia v. Court of Appeals,20 this Court capsulized the criteria or tests that may be used in determining whether a counterclaim is compulsory or permissive, summarized as follows: 1. Are the issues of fact and law raised by the claim and counterclaim largely the same? 2. Would res judicata bar a subsequent suit on defendant's claim absent the compulsory counterclaim rule? 3. Will substantially the same evidence support or refute plaintiff's claim as well s defendant's counterclaim? 4. Is there any logical relation between the claim and the counterclaim? Another test, applied in the more recent case of Quintanilla v. Court of Appeals,21 is the "compelling test of compulsoriness" which requires "a logical relationship between the claim and counterclaim, that is, where conducting separate trials of the respective claims of the parties would entail a substantial duplication of effort and time by the parties and the court." As contained in her answer, petitioner's counterclaims are as follows: (20) That defendant incorporates and repleads by reference all the foregoing allegations as may be material to her Counterclaim against FGU. (21) That FGU is liable to pay the following just, valid and legitimate claims of defendant: (a) the sum of at least P104,893.45 plus maximum interest thereon representing, among others, direct commissions, profit commissions and contingent bonuses legally due to defendant; and (b) the minimum amount of P500,000.00 plus the maximum allowable interest representing defendant's accumulated premium reserve for 1985 and previous years, which FGU has unjustifiably failed to remit to defendant despite repeated demands in gross violation of their Special Agent's Contract and in contravention of the principle of law that "every person must, in the exercise

22
of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith." (22) That as a result of the filing of this patently baseless, malicious and unjustified Complaint, and FGU's unlawful, illegal and vindictive termination of their Special Agent's Contract, defendant was unnecessarily dragged into this litigation and to defense [sic] her side and assert her rights and claims against FGU, she was compelled to hire the services of counsel with whom she agreed to pay the amount of P30,000.00 as and for attorney's fees and stands to incur litigation expenses in the amount estimated to at least P20,000.00 and for which FGU should be assessed and made liable to pay defendant. (23) That considering further the malicious and unwarranted action of defendant in filing this grossly unfounded action, defendant has suffered and continues to suffer from serious anxiety, mental anguish, fright and humiliation. In addition to this, defendant's name, good reputation and business standing in the insurance business as well as in the community have been besmirched and for which FGU should be adjudged and made liable to pay moral damages to defendant in the amount of P300,000.00 as minimum. (24) That in order to discourage the filing of groundless and malicious suits like FGU's Complaint, and by way of serving [as] an example for the public good, FGU should be penalized and assessed exemplary damages in the sum of P100,000.00 or such amount as the Honorable Court may deem warranted under the circumstances.22 Tested against the abovementioned standards, petitioner's counterclaim for commissions, bonuses, and accumulated premium reserves is merely permissive. The evidence required to prove petitioner's claims differs from that needed to establish respondent's demands for the recovery of cash accountabilities from petitioner, such as cash advances and costs of premiums. The recovery of respondent's claims is not contingent or dependent upon establishing petitioner's counterclaim, such that conducting separate trials will not result in the substantial duplication of the time and effort of the court and the parties. One would search the records in vain for a logical connection between the parties' claims. This conclusion is further reinforced by petitioner's own admissions since she declared in her answer that respondent's cause of action, unlike her own, was not based upon the Special Agent's Contract.23 However, petitioner's claims for damages, allegedly suffered as a result of the filing by respondent of its complaint, are compulsory.24 There is no need for need for petitioner to pay docket fees for her compulsory counterclaim.25 On the other hand, in order for the trial court to acquire jurisdiction over her permissive counterclaim, petitioner is bound to pay the prescribed docket fees.26 The rule on the payment of filing fees has been laid down by the Court in the case ofSun Insurance Office, Ltd. V. Hon. Maximiano Asuncion271. 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 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. The above mentioned ruling in Sun Insurance has been reiterated in the recent case of Susan v. Court of Appeals.28 In Suson, the Court explained that although the payment of the prescribed docket fees is a jurisdictional requirement, its non-payment does not result in the automatic dismissal of the case provided the docket fees are paid within the applicable prescriptive or reglementary period. Coming now to the case at bar, it has not been alleged by respondent and there is nothing in the records to show that petitioner has attempted to evade the payment of the proper docket fees for her permissive counterclaim. As a matter of fact, after respondent filed its motion to dismiss petitioner's counterclaim based on her failure to pay docket fees, petitioner immediately filed a motion with the trial court, asking it to declare her counterclaim as compulsory in nature and therefore exempt from docket fees and, in addition, to declare that respondent was in default for its failure to answer her counterclaim.29 However, the trial court dismissed petitioner's counterclaim. Pursuant to this Court's ruling in Sun Insurance, the trial court should have instead given petitioner a reasonable time, but in no case beyond the applicable prescriptive or reglementary period, to pay the filing fees for her permissive counterclaim.

23
Petitioner asserts that the trial court should have declared respondent in default for having failed to answer her counterclaim.30 Insofar as the permissive counterclaim of petitioner is concerned, there is obviously no need to file an answer until petitioner has paid the prescribed docket fees for only then shall the court acquire jurisdiction over such claim.31 Meanwhile, the compulsory counterclaim of petitioner for damages based on the filing by respondent of an allegedly unfounded and malicious suit need not be answered since it is inseparable from the claims of respondent. If respondent were to answer the compulsory counterclaim of petitioner, it would merely result in the former pleading the same facts raised in its complaint.32 WHEREFORE, the assailed Decision of the Court of Appeals promulgated on 23 December 1998 and its 19 May 1999 Resolution are hereby MODIFIED. The compulsory counterclaim of petitioner for damages filed in Civil Case No. 89-3816 is ordered REINSTATED. Meanwhile, the Regional Trial Court of Makati (Branch 134) is ordered to require petitioner to pay the prescribed docket fees for her permissive counterclaim (direct commissions, profit commissions, contingent bonuses and accumulated premium reserves), after ascertaining that the applicable prescriptive period has not yet set in.33 SO ORDERED.
1w phi 1.nt

Melo, Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concu

24

THIRD DIVISION

[G.R. No. 155009. April 12, 2005]

SIMEON M. VALDEZ, petitioner, CORPORATION, respondent. DECISION

GARCIA, J.:

vs. CHINA

BANKING

Assailed and sought to be set aside in this petition for review on certiorari under Rule 45 of the Rules of Court are the following issuances of the Court of Appeals in CA-G.R. CV No. 24946, to wit:
1. Decision dated February 28, 2002[1], affirming an earlier decision of the Regional Trial Court at Manila in an action for sum of money thereat commenced by the herein respondent against petitioner and Creative Texwood Corporation; and 2. Resolution dated August 23, 2002, denying petitioners motion for reconsideration.

The factual milieu: On January 11, 1978, respondent China Banking Corporation (Chinabank), represented by its senior vice-president Gilbert Dee, and Creative Texwood Corporation (CREATIVE), represented by its president, herein petitioner Simeon M. Valdez, executed a Credit Agreement whereunder Chinabank agreed to grant CREATIVE a credit facility in the amount of US$1,000,000.00 to finance the latters importation of raw materials, spare parts and supplies for its manufacturing projects. Simultaneously with the execution of the aforementioned Credit Agreement, and in order to assure payment of the credit facility thereunder granted, CREATIVE, again represented by petitioner as its President, executed in favor of Chinabank a Promissory Note for the same amount, undertaking to pay said amount one year thenceforth or until January 11, 1979. On the same date - January 11, 1978 CREATIVE, as principal and petitioner, as surety, further executed in favor of Chinabank a Surety Agreement whereunder petitioner Valdez bound himself unto Chinabank the prompt payment on maturity date of the aforesaid promissory note. The next day, January 12, 1978, pursuant to said credit agreement, Chinabank drew and issued a check for US$1,000,000.00 with CREATIVE as payee. Subsequently, CREATIVE indorsed the check back to Chinabank for payment, which the latter did. On December 15, 1986, following the failure of both CREATIVE and petitioner to comply with their obligations despite repeated demands, Chinabank filed against both a complaint for a sum of money before the Regional Trial Court at Manila, thereat docketed as Civil Case No. 86-38740 which was raffled to Branch 35 thereof. In his separate answer, petitioner, after the usual denial of the material allegations of the complaint, interposed the defense that the subject Credit Agreement is fictitious and simulated; that he signed said agreement and Promissory Note in his official capacity as president of CREATIVE and not in his personal capacity; and that the Surety Agreement attached to the complaint is not the one executed and signed by him because what he signed was a pro-forma document with blank spaces still unfilled.

25

On July 31, 1987, the trial court dismissed the complaint for failure of plaintiff Chinabank to prosecute for an unreasonable length of time. However, upon Chinabanks motion for reconsideration, the trial court reinstated the complaint, and, on Chinabanks further motion, declared defendant CREATIVE as in default and allowed Chinabank to adduce ex parte its evidence against the former. Pre-trial was thereafter set between plaintiff Chinabank and defendant-petitioner. On May 20, 1988, the trial court, upon Chinabanks motion, declared petitioner as in default for his and his counsels failure to appear at the scheduled pre-trial. However, upon petitioners motion, the trial court set aside its default order and set the case anew for pre-trial. With no amicable settlement having been reached by the parties, trial ensued. Eventually, in a decision dated November 20, 1989, the trial court rendered judgment for plaintiff Chinabank and against defendants CREATIVE and petitioner, thus: WHEREFORE, judgment is rendered: (1) ordering defendants Creative Texwood Corporation and Simeon M. Valdez, jointly and severally, to pay to the plaintiff the principal amount of P18,069,674.38, the interest thereon at the rate of per annum computed from December 15, 1986, the date the complaint was filed, until full payment of the principal obligation, another 1 - % per month computed also from the same date until full payment of the principal obligation, as penalty, and the amount of P3,613,934.00 for attorneys fees; and (2) ordering defendant Creative Texwood Corporation to pay the plaintiff the amount equivalent to 3% per annum also computed from December 15, 1986, on the amount of the drawdown, as arrangement fee. SO ORDERED. (Petition, Annex F; Rollo, pp. 66-69) In its decision, the trial court, finding no reason to doubt the authenticity and due execution of the surety agreement, held that petitioners liability to Chinabank arose from his execution of the same agreement where he warranted unto Chinabank the prompt payment at maturity date of the promissory note. The trial court also deb unked petitioners protestation in his memorandum that his liability under the same surety agreement was extinguished pursuant to Article 2079[2] of the Civil Code when Chinabank granted CREATIVE an extension of time for the payment of the loan. Partly says the trial court in its decision: We do not agree. Defendant Valdez admits in his memorandum that after his co-defendant corporation failed to pay its loan on due date, a demand letter dated July 16, 1979 was sent by the plaintiff to defendant corporation to pay its overdue obligation. This first demand letter was followed by two more demand letters dated November 26, 1979 and May 20, 1981, respectively, both addressed to the said defendant corporation. The mere fact that plaintiff neglected to sue immediately and initiated this court action only on December 15, 1986, does not relieve and discharge defendant Valdez from his liability under the Surety Agreement, because such delay in filing the action does not necessarily imply any change in the efficacy of the contract or liability of the principal debtor. (See Bank of P.I. vs. Albadejo, 53 Phil. 141; Paras, Civil Code, Vol. V, 1982 Ed., pp. 806 & 810). (Rollo, p. 68) From the aforementioned decision of the trial court, both Chinabank and petitioner went to the Court of Appeals in CA-G.R. CV No. 24946. For failure of Chinabank to file its brief within the reglementary period, the appellate court declared its appeal abandoned and accordingly dismissed the same. Chinabanks motion for reconsideration proved unavailing From the appellate courts dismissal of its appeal, Chinabank went to this Court in G.R. No. 97066 via a petition for review on certiorari under Rule 45 of the Rules of Court. In a

26

Resolution dated March 4, 1991,[3] this Court dismissed Chinabanks petition. Attempt at a reconsideration similarly proved futile, as in fact an Entry of Judgment[4] was rendered declaring the dismissal of Chinabanks petition final and executory. Meanwhile, with petitioner Valdez having filed his Brief on time, the Court of Appeals proceeded to resolve his appeal. And, in a decision dated February 28, 2002,[5] the appellate court dismissed petitioners appeal and affirmed the appealed decision of the trial court, thus: WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for lack of merit the appealed decision of the Regional Trial Court, Branch 35, Manila, is AFFIRMED. SO ORDERED. His motion for reconsideration having been denied by the same court in its Resolution of August 23, 2003,[6] petitioner Simeon Valdez is now with us via the present recourse, it being his submissions that:
I.

THE COURT OF APPEALS ERRED IN ACTING ON PETITIONERS APPEAL THEN ALREADY MOOT AND ACADEMIC DUE TO THE DISMISSAL OF THE BANKS APPEAL AND THE ADOPTION OF THE 1997 RULES OF CIVIL PROCEDURE.
II.

THE COURT OF APPEALS ERRED IN RENDERING THE QUESTIONED DECISION AND RESOLUTION WHICH ARE ALREADY UNENFORCEABLE BY EXECUTION DUE TO PRESCRIPTION.
III.

THE COURT OF APPEALS ERRED IN SETTING ASIDE PETITIONERS FAILURE TO ASSIGN LACK OF CONSIDERATION AS AN ERROR CONSIDERING THE RESULTING UNJUST ENRICHMENT.
IV.

THERE WAS AN ERROR IN MAKING PETITIONER LIABLE AS THERE WAS NO SHOWING THAT THE BANK GOT HIS CONSENT IN THE EXTENSION OF THE ONEYEAR LOAN PERIOD.
V.

THE QUESTIONED DECISION AND RESOLUTION OF THE COURT OF APPEALS ARE AGAINST THE RULE OF FINALITY OF JUDGMENT AND PUBLIC POLICY. We DENY. It is petitioners thesis that the decision of the trial court which he and respondent Chinabank appealed to the Court of Appeals in CA G.R. CV No. 24946 was vacated when Chinabanks similar appeal therefrom was dismissed with finality. Petitioners argument lacks legal moorings. Under Section 9 (3) of Batas Pambansa Blg. 129, as amended, the Court of Appeals has exclusive appellate jurisdiction over final judgments or decisions of regional trial courts. Here, there is no issue at all that petitioner had perfected his appeal from the

27

decision of the trial court. The well-settled rule is that jurisdiction, once acquired, continues until the case is finally terminated.[7]Since petitioner invoked the authority of the Court of Appeals when he filed his appellants brief in that court, that same court can resolve petitioners appeal regardless of the dismissal of that of his adversarys. Petitioner claims failure on the part of respondent Chinabank to establish that the credit agreement between it and CREATIVE is supported by a consideration. According to petitioner, a credit line was created under the said Credit Agreement which fixed the loan limit that may be availed of by [Creative] to cover a series of transactions encountered in importation of its raw materials, spare parts and supplies, while Chinabanks complaint before the trial court did not contain any allegation on any drawdown from the subject credit line by [Creative]. Upon this premise, petitioner argues that Chinabank is practically with no cause of action at all. To petitioner, Chinabank has to present evidence of importation by CREATIVE, like shipping documents, which is necessary to establish drawdowns on the US$1,000,000.00 credit facility. Unfortunately, so petitioner adds, respondent Chinabank did not present any such document. We are not persuaded. As aptly noted by the appellate court, it is already too late in the day for petitioner to raise an issue on the alleged deficiency of allegations in Chinabanks complaint to bolster his theory of lack of alleged consideration for the parties credit agreement. Under Rule 9, Section 1, of the Rules of Court, defenses which were not raised in the answer are deemed waived. Petitioner never pleaded in his answer the defense he presently invokes, namely, the alleged lack of consideration for the subject credit agreement. His newly minted defense of lack of consideration must therefore be struck down, the time for interposing the same having been already passe. In any event, absence of consideration is the least persuasive argument petitioner could proffer, if at all he could, colliding as it does with the very allegations in his answer, particularly paragraphs 9 and 14 thereof, to wit: 9. That while answering defendant did affix his signature to Annex `C [surety agreement] as co-obligor, he did so merely to accommodate his co-defendant corporation who actually received the proceeds thereof and if ever the co-defendant corporation has been unable to pay its obligation to the plaintiff the same was due to the acts and/or omissions of co-defendant corporation. 14. Defendants have already made a substantial payment on the said account but which plaintiff in bad faith did not properly applied and credited to defendants account. (Emphasis supplied). With his foregoing admissions, we are simply at a loss to understand how petitioner could now turn his back from his answer and insist on his preposterous claim of lack of consideration. Petitioner additionally posits that there was no showing as to when the principal got a drawdown or drawdowns for US$875,468.72, and that [T]he US$1,000,000.00 was definitely not the loan under litigation, but there must have been another drawdown or other drawdowns. The drawdown or drawdowns cannot be presumed to have been made within the period guaranteed by the petitioner. To petitioners mind, the inconsistency between the amount demanded by Chinabank in its complaint, which is US$875,468.72, and the amount of the promissory note, which is for US$1,000,000.00, is an indication that Chinabank had granted CREATIVE an extension of the loan. Prescinding therefrom, petitioner insists that he could not be liable to Chinabank because he did not consent to the extension for the repayment of the original loan of US$1,000,000.00. Petitioners argument cannot hold water.

28

As it is, petitioner is attempting to create a new issue of fact at this late stage of the proceedings. A perusal of his answer fails to yield any indication of his intent to craft an issue based on the inconsistency between the amount appearing in the promissory note and that demanded by Chinabank. To allow petitioner to pursue such a defense would undermine basic considerations of due process. Points of law, theories, issues and arguments not brought to the attention of the trial court will not be and ought not to be considered by a reviewing court, as these cannot be raised for the first time on appeal. It would be unfair to the adverse party who would have no opportunity to present further evidence material to the new theory not ventilated before the trial court.[8] The Court is the neutral administrator of justice, not the corrector of unsound business judgments. Having freely assumed the obligations of a surety, petitioner cannot now evade those obligations by raising factual issues not proper in this Court. Under Rule 45 of the Rules of Court, this Courts main preoccupation is to resolve questions of law not issues of facts. WHEREFORE, the petition is DENIED, and the assailed decision and resolution of the Court of Appeals AFFIRMED. Costs against petitioner. SO ORDERED. Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concu

29

FIRST DIVISION

HEIRS OF VALERIANO S. CONCHA, SR. NAMELY: TERESITA CONCHAPARAN, VALERIANO P. CONCHA, JR., RAMON P. CONCHA, EDUARDO P. CONCHA, REPRESENTED BY HIS LEGAL GUARDIAN, REYNALDO P. CONCHA, ALBERTO P. CONCHA, BERNARDO P. CONCHA and GLORIA P. CONCHA-NUNAG, Petitioners,

G.R. No. 158121

Present: PUNO, C.J., Chairperson, YNARES-SANTIAGO, SANDOVAL-GUTIERREZ, CORONA, and AZCUNA, JJ.

- versus -

SPOUSES GREGORIO J. LUMOCSO[1] and BIENVENIDA GUYA, CRISTITA J. LUMOCSO VDA. DE DAAN, AND SPOUSES JACINTO J. LUMOCSO and BALBINA T. LUMOCSO,[2] Respondents.

Promulgated: December 12, 2007

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

DECISION PUNO, C.J.: On appeal by certiorari under Rule 45 of the Rules of Court are the

30

decision[3] and resolution[4] of the Court of Appeals (CA) in CA-G.R. SP No. 59499, annulling the resolutions[5] and order[6] of the Regional Trial Court (RTC) of Dipolog City, Branch 9, in Civil Case Nos. 5188, 5433 and 5434 which denied the separate motions to dismiss and Joint Motion for Reconsideration filed by the respondents. The relevant facts are undisputed. Petitioners, heirs of spouses Dorotea and Valeriano Concha, Sr., claim to be the rightful owners of Lot No. 6195 (Civil Case No. 5188), a one-hectare portion of Lot No. 6196-A (Civil Case No. 5433), and a one-hectare portion of Lot Nos. 6196-B and 7529-A (Civil Case No. 5434), all situated in Cogon, Dipolog City, under Section 48(b) of Commonwealth Act No. 141 (C.A. No. 141), otherwise known as the Public Land Act. Respondent siblings Gregorio Lumocso (Civil Case No. 5188), Cristita Lumocso Vda. de Daan (Civil Case No. 5433) and Jacinto Lumocso (Civil Case No. 5434), are the patent holders and registered owners of the subject lots. The records show that on August 6, 1997, Valeriano Sr.[7] and his children, petitioners Valeriano Jr., Ramon, Eduardo, Alberto, Bernardo, Teresita, Reynaldo, and Gloria, all surnamed Concha, filed a complaint for Reconveyance and/or Annulment of Title with Damages against "Spouses Gregorio Lomocso and Bienvenida Guya." They sought to annul Free Patent No. (IX-8)985 and the corresponding Original Certificate of Title (OCT) No. P22556 issued in the name of "Gregorio Lumocso" covering Lot No. 6195. The case was raffled to the RTC of Dipolog City, Branch 9, and docketed as Civil Case No. 5188. In their Amended Complaint, petitioners prayed that judgment be rendered:
1. Declaring Free Patent No. (IX-8)985 and Original Certificate of Title No. 22556 issued to defendants as null and void ab initio; 2. Declaring Lot No. 6195 or 1.19122-hectare as private property of the plaintiffs under Sec. 48(b) of CA No. 141 otherwise known as the Public Land Act as amended by RA 1942; 3. Ordering the defendant Lomocsos to reconvey the properties (sic) in question Lot No. 6195 or the 1.19122 hectares in favor of the plaintiffs within 30 days from the finality of the decision in this case and if they refuse, ordering the Clerk of Court of this Honorable Court to execute the deed of reconveyance with like force and effect as if executed by the defendant[s] themselves; 4. Ordering defendant Lomocsos to pay P60,000.00 for the 21 forest trees illegally cut; P50,000.00 for moral damages; P20,000.00 for Attorneys fees; P20,000.00 for litigation expenses; and to pay the cost of the proceedings; 5. Declaring the confiscated three (sic) flitches kept in the area of the plaintiffs at Dampalan San Jose, Dipolog with a total volume of 2000 board feet a[s] property of the plaintiff [they] being cut, collected and taken from the land possessed, preserved, and owned by the plaintiffs;

31

6. The plaintiffs further pray for such other reliefs and remedies which this Honorable Court may deem just and equitable in the premises.[8]

On September 3, 1999, two separate complaints for Reconveyance with Damages were filed by petitioners,[9] this time against "Cristita Lomocso Vda. de Daan" for a one-hectare portion of Lot No. 6196-A and "Spouses Jacinto Lomocso and Balbina T. Lomocso" for a onehectare portion of Lot Nos. 6196-B and 7529-A. The two complaints were also raffled to Branch 9 of the RTC of Dipolog City and docketed as Civil Case Nos. 5433 and 5434,

32

respectively. In Civil Case No. 5433, petitioners prayed that judgment be rendered:
1. Declaring [a] portion of Lot 6196-A titled under OCT (P23527) 4888 equivalent to one hectare located at the western portion of Lot 4888 as private property of the plaintiffs under Sec. 48(B) CA 141 otherwise known as Public Land OCT (sic) as amended by RA No. 1942; 2. Ordering the defendant to reconvey the equivalent of one (1) hectare forested portion of her property in question in favor of the plaintiffs within 30 days from the finality of the decision in this case segregating one hectare from OCT (P23527) 4888, located at its Western portion and if she refuse (sic), ordering the Clerk of Court of this Honorable Court to execute the deed of reconveyance with like force and effect, as if executed by the defenda[n]t herself; 3. Ordering defendant to pay P30,000.00 for the 22 forest trees illegally cut; P20,000.00 for moral damages; P20,000.00 for Attorney's fees; P20,000.00 for litigation expenses; and to pay the cost of the proceedings.[10]

In Civil Case No. 5434, petitioners prayed that judgment be rendered:

1. Declaring [a] portion of Lot 7529-A under OCT (P-23207) 12870 and Lot 6196-B OCT (P-20845) 4889 equivalent to one hectare located as (sic) the western portion of said lots as private property of the plaintiffs under Sec. 48(b) of [C.A. No.] 141 otherwise know[n] as the [P]ublic [L]and [A]ct as amended by RA 1942; 2. Ordering the defendants to reconvey the equivalent of one (1) hectare forested portion of their properties in question in favor of the plaintiffs within 30 days from the finality of the decision in this case segregating one hectare from OCT (P-23207) 12870 and OCT (T20845)-4889 all of defendants, located at its Western portion and if they refuse, ordering the Clerk of Court of this Honorable Court to execute the deed of reconveyance with like force and effect as if executed by the defendants themselves[;] 3. Ordering defendants to pay P20,000.00 for the six (6) forest trees illegally cut; P20,000.00 for moral damages; P20,000.00 for Attorney's fees; P20,000.00 for litigation expenses; and to pay the cost of the proceedings.[11]

The three complaints[12] commonly alleged: a) that on May 21, 1958, petitioners' parents (spouses Valeriano Sr. and Dorotea Concha) acquired by homestead a 24-hectare parcel of land situated in Cogon, Dipolog City; b) that since 1931, spouses Concha "painstakingly preserved" the forest in the 24-hectare land, including the excess four (4) hectares "untitled forest land" located at its eastern portion; c) that they possessed this excess 4 hectares of land (which consisted of Lot No. 6195, one-hectare portion of Lot No. 6196-A and one-hectare portion of Lot Nos. 6196-B and 7529-A) "continuously, publicly, notoriously, adversely, peacefully, in good faith and in concept of the (sic) owner since 1931;" d) that they continued possession and occupation of the 4-hectare land after the death of Dorotea Concha on December 23, 1992 and Valeriano Sr. on May 12, 1999; e) that the Concha spouses "have preserved the forest trees standing in [the subject lots] to the exclusion of the defendants (respondents) or other persons from 1931" up to November 12, 1996 (for Civil Case No. 5188) or January 1997 (for Civil Case Nos. 5433 and 5434) when respondents, "by force, intimidation, [and] stealth forcibly entered the premises, illegally cut, collected, [and] disposed" of 21 trees (for Civil Case No. 5188), 22 trees (for Civil Case No. 5433) or 6 trees (for Civil Case No. 5434); f) that "the

33

land is private land or that even assuming it was part of the public domain, plaintiffs had already acquired imperfect title thereto" under Sec. 48(b) of C.A. No. 141, as amended by Republic Act (R.A.) No. 1942; g) that respondents allegedly cut into flitches the trees felled in Lot No. 6195 (Civil Case No. 5188) while the logs taken from the subject lots in Civil Case Nos. 5433 and 5434 were sold to a timber dealer in Katipunan, Zamboanga del Norte; h) that respondents "surreptitiously" filed free patent applications over the lots despite their full knowledge that petitioners owned the lots; i) that the geodetic engineers who conducted the original survey over the lots never informed them of the

34

survey to give them an opportunity to oppose respondents' applications; j) that respondents' free patents and the corresponding OCTs were issued "on account of fraud, deceit, bad faith and misrepresentation"; and k) that the lots in question have not been transferred to an innocent purchaser. On separate occasions, respondents moved for the dismissal of the respective cases against them on the same grounds of: (a) lack of jurisdiction of the RTC over the subject matters of the complaints; (b) failure to state causes of action for reconveyance; (c) prescription; and (d) waiver, abandonment, laches and estoppel.[13] On the issue of jurisdiction, respondents contended that the RTC has no jurisdiction over the complaints pursuant to Section 19(2) of Batas Pambansa Blg. (B.P.) 129, as amended by R.A. No. 7691, as in each case, the assessed values of the subject lots are less than P20,000.00. Petitioners opposed,[14] contending that the instant cases involve actions the subject matters of which are incapable of pecuniary estimation which, under Section 19(1) of B.P. 129, as amended by R.A. 7691, fall within the exclusive original jurisdiction of the RTCs. They also contended that they have two main causes of action: for reconveyance and for recovery of the value of the trees felled by respondents. Hence, the totality of the claims must be considered which, if computed, allegedly falls within the exclusive original jurisdiction of the RTC. The trial court denied the respective motions to dismiss of respondents. [15] The respondents filed a Joint Motion for Reconsideration,[16] to no avail.[17] Dissatisfied, respondents jointly filed a Petition for Certiorari, Prohibition and Preliminary Injunction with Prayer for Issuance of Restraining Order Ex Parte[18] with the CA, docketed as CA-G.R. SP No. 59499. In its Decision,[19] the CA reversed the resolutions and order of the trial court. It held that even assuming that the complaints state a cause of action, the same have been barred by the statute of limitations. The CA ruled that an action for reconveyance based on fraud prescribes in ten (10) years, hence, the instant complaints must be dismissed as they involve titles issued for at least twenty-two (22) years prior to the filing of the complaints. The CA found it unnecessary to resolve the other issues. Hence, this appeal in which petitioners raise the following issues, viz:
FIRST WHETHER OR NOT RESPONDENT COURT OF APPEALS (FORMER FIRST DIVISION) ERRED IN REVERSING THE ORDER OF THE COURT A QUO DENYING THE MOTION FOR DISMISSAL, CONSIDERING THE DISMISSAL OF A PARTY COMPLAINT IS PREMATURE AND TRIAL ON THE MERITS SHOULD BE CONDUCTED TO THRESH OUT EVIDENTIARY MATTERS.

35

SECOND - WHETHER OR NOT THE RESPONDENT COURT OF APPEALS (FORMER FIRST DIVISION) ERRED IN DISMISSING THE PETITIONERS' COMPLAINTS ON [THE] GROUND OF PRESCRIPTION. THIRD WHETHER OR NOT THE RESPONDENT COURT OF APPEALS (FORMER FIRST DIVISION) ERRED IN CONCLUDING THAT THERE IS NO DOCUMENTARY EVIDENCE ON RECORD TO SHOW THAT PETITIONERS OWN THE SUBJECT FOREST

36

PORTION OF THE PROPERTIES ERRONEOUSLY INCLUDED IN THE TITLES OF PRIVATE RESPONDENTS. FOURTH - WHETHER OR NOT THE PETITION OF HEREIN PRIVATE RESPONDENTS FILED WITH THE RESPONDENT COURT OF APPEALS (FORMER FIRST DIVISION) SHOULD HAVE BEEN DISMISSED OUTRIGHTLY FOR PRIVATE RESPONDENTS' THEREIN FAILURE TO COMPLY WITH THE MANDATORY REQUIREMENT OF SECTION 1 RULE 65 OF THE RULES OF COURT TO SUBMIT CERTIFIED TRUE COPIES OF THE ASSAILED ORDERS OF THE TRIAL COURT WHICH RENDERED THEIR PETITION (CA G.R. 59499) DEFICIENT IN FORM AND SUBSTANCE CITING THE CASE OF CATUIRA VS. COURT OF APPEALS (172 SCRA 136).[20]

In their memorandum,[21] respondents reiterated their arguments in the courts below that: a) the complaints of the petitioners in the trial court do not state causes of action for reconveyance; b) assuming the complaints state causes of action for reconveyance, the same have already been barred by prescription; c) the RTC does not have jurisdiction over the subject matter of the instant cases; d) the claims for reconveyance in the complaints are barred by waiver, abandonment, or otherwise extinguished by laches and estoppel; and e) there is no special reason warranting a review by this Court. Since the issue of jurisdiction is determinative of the resolution of the instant case yet the CA skirted the question, we resolved to require the parties to submit their respective Supplemental Memoranda on the issue of jurisdiction.[22] In their Supplemental Memorandum,[23] petitioners contend that the nature of their complaints, as denominated therein and as borne by their allegations, are suits for reconveyance, or annulment or cancellation of OCTs and damages. The cases allegedly involve more than just the issue of

37

title and possession since the nullity of the OCTs issued to respondents and the reconveyance of the subject properties were also raised as issues. Thus, the RTC has jurisdiction under Section 19(1) of B.P. 129, which provides that the RTC has jurisdiction "[i]n all civil actions in which the subject of the litigation is incapable of pecuniary estimation." Petitioners cited: a) Raymundo v. CA[24] which set the criteria for determining whether an action is one not capable of pecuniary estimation; b) Swan v. CA[25]where it was held that an action for annulment of title is under the jurisdiction of the RTC; c) Santos v. CA[26] where it was similarly held that an action for annulment of title, reversion and damages was within the jurisdiction of the RTC; and d) Commodities Storage and ICE Plant Corporation v. CA[27] where it was held that "[w]here the action affects title to the property, it should be filed in the RTC where the property is located." Petitioners also contend that while it may be argued that the assessed values of the subject properties are within the original jurisdiction of the municipal trial court (MTC), they have included in their prayers "any interest included therein" consisting of 49 felled natural grown trees illegally cut by respondents. Combining the assessed values of the properties as shown by their respective tax declarations and the estimated value of the trees cut, the total amount prayed by petitioners exceeds twenty thousand pesos (P20,000.00). Hence, they contend that the RTC has jurisdiction under Section 19(2) of B.P. 129. Jurisdiction over the subject matter is the power to hear and determine cases of the general class to which the proceedings in question belong.[28] It is conferred by law and an objection based on this ground cannot be waived by the parties.[29] To determine whether a court has jurisdiction over the subject matter of a case, it is important to determine the nature of the cause of action and of the relief sought.[30] The trial court correctly held that the instant cases involve actions for reconveyance.[31] An action for reconveyance respects the decree of registration as incontrovertible but seeks the transfer of property, which has been wrongfully or erroneously registered in other persons' names, to its rightful and legal owners, or to those who claim to have a better right.[32] There is no special ground for an action for reconveyance. It is enough that the aggrieved party has a legal claim on the property superior to that of the registered owner[33] and that the property has not yet passed to the hands of an innocent purchaser for value.[34] The reliefs sought by the petitioners in the instant cases typify an action for reconveyance. The following are also the common allegations in the three complaints that are sufficient to constitute causes of action for reconveyance, viz:
(a) That plaintiff Valeriano S. Concha, Sr. together with his spouse Dorotea Concha have painstakingly preserve[d] the forest standing in the area [of their 24-hectare homestead]

38

including the four hectares untitled forest land located at the eastern portion of the forest from 1931 when they were newly married, the date they acquired this property by occupation or possession;[35] (b) That spouses Valeriano S. Concha Sr. and Dorotea P. Concha have preserved the forest trees standing in [these parcels] of land to the exclusion of the defendants Lomocsos or other persons from 1931 up to November 12, 1996 [for Civil Case No. 5188] and January 1997 [for Civil Case Nos. 5433 and 5434] when defendants[,] by force, intimidation, [and] stealth[,] forcibly entered the premises, illegal[ly] cut, collected, disposed a total of [twenty-one (21) trees for Civil Case No. 5188, twenty-two (22) trees for Civil Case No. 5433 and six (6) trees for Civil Case No. 5434] of various sizes;[36] (c) That this claim is an assertion that the land is private land or that even assuming it was part of the public domain, plaintiff had already acquired imperfect title thereto under Sec. 48(b) of [C.A.] No. 141[,] otherwise known as the Public Land Act[,] as amended by [R.A.] No. [7691];[37] (d) That [respondents and their predecessors-in-interest knew when they] surreptitiously filed[38] [their respective patent applications and were issued their respective] free patents and original certificates of title [that the subject lots belonged to the petitioners];[39] (e) [That respondents' free patents and the corresponding original certificates of titles were issued] on account of fraud, deceit, bad faith and misrepresentation;[40] and (f) The land in question has not been transferred to an innocent purchaser.[41]

These cases may also be considered as actions to remove cloud on one's title as they are intended to procure the cancellation of an instrument constituting a claim on petitioners' alleged title which was used to injure or vex them in the enjoyment of their alleged title.[42] Being in the nature of actions for reconveyance or actions to remove cloud on one's title, the applicable law to determine which court has jurisdiction is Section 19(2) of B.P. 129, as amended by R.A. No. 7691, viz:
Section 19. Jurisdiction in Civil Cases.-- Regional Trial Courts shall exercise exclusive original jurisdiction: x x x (2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts; x x x.

In the cases at bar, it is undisputed that the subject lots are situated in Cogon, Dipolog City and their assessed values are less than P20,000.00, to wit:
Civil Case No. 5188 5433 Lot No. 6195 6196-A Assessed Value P1,030.00 4,500.00

39

5434

6196-B 7529-A

4,340.00 1,880.00.[43]

Hence, the MTC clearly has jurisdiction over the instant cases. Petitioners' contention that this case is one that is incapable of pecuniary estimation under the exclusive original jurisdiction of the RTC pursuant to Section 19(1) of B.P. 129 is erroneous. In a number of cases, we have held that actions for reconveyance [44] of or for cancellation of title[45] to or to quiet title[46] over real property are actions that fall under the classification of cases that involve "title to, or possession of, real property, or any interest therein." The original text of Section 19(2) of B.P. 129 as well as its forerunner, Section 44(b) of R.A. 296,[47] as amended, gave the RTCs (formerly courts of first instance)exclusive original jurisdiction "[i]n all civil actions which involve the title to, or possession of, real property, or any interest therein, except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts, [MTCs], and Municipal Circuit Trial Courts (conferred upon the city and municipal courts under R.A. 296, as amended)." 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[48] in 1994 which expanded the exclusive original jurisdiction of the first level courts to include "all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs." 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."[49] The cases of Raymundo v. CA[50] and Commodities Storage and ICE Plant Corporation v. CA,[51] relied upon by the petitioners, are inapplicable to the cases at bar. Raymundo involved a complaint for mandatory injunction, not one for reconveyance or

40

annulment of title. The bone of contention was whether the case was incapable of pecuniary estimation considering petitioner's contention that the pecuniary claim of the complaint was only attorney's fees of P10,000, hence, the MTC had jurisdiction. The Court defined the criterion for determining whether an action is one that is incapable of pecuniary estimation and held that the issue of whether petitioner violated the provisions of the Master Deed and Declaration of Restriction of the Corporation is one that is incapable of pecuniary estimation. The claim for attorney's fees was merely incidental to the principal action, hence, said amount was not determinative of the court's jurisdiction. Nor can Commodities Storage and ICE Plant Corporation provide any comfort to petitioners for the issue resolved by the Court in said case was venue and not jurisdiction. The action therein was for damages, accounting and fixing of redemption period which was filed on October 28, 1994, before the passage of R.A. No. 7691. In resolving the issue of venue, the Court held that "[w]here the action affects title to property, it should be instituted in the [RTC] where the property is situated. The Sta. Maria Ice Plant & Cold Storage is located in Sta. Maria, Bulacan. The venue in Civil Case No. 94-727076 was therefore improperly laid."

41

Worse, the cases of Swan v. CA[52] and Santos v. CA[53] cited by the petitioners, contradict their own position that the nature of the instant cases falls under Section 19(1) of B.P. 129. The complaints in Swan and Santos were filed prior to the enactment of R.A. No. 7691. In Swan, the Court held that the action being one for annulment of title, the RTC had original jurisdiction under Section 19(2) of B.P. 129. In Santos, the Court similarly held that the complaint for cancellation of title, reversion and damages is also one that involves title to and possession of real property under Section 19(2) of B.P. 129. Thus, while the Court held that the RTC had jurisdiction, the Court classified actions for "annulment of title" and "cancellation of title, reversion and damages" as civil actions that involve "title to, or possession of, real property, or any interest therein" under Section 19(2) of B.P. 129. Petitioners' contention that the value of the trees cut in the subject properties constitutes "any interest therein (in the subject properties)" that should be computed in addition to the respective assessed values of the subject properties is unavailing. Section 19(2) of B.P. 129, as amended by R.A. No. 7691, is clear that the RTC shall exercise jurisdiction "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)." It is true that the recovery of the value of the trees cut from the subject properties may be included in the term "any interest therein." However, 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.[54] In this case, there is no dispute that the assessed values of the subject properties as shown by their tax declarations are less than P20,000.00. Clearly, jurisdiction over the instant cases belongs not to the RTC but to the MTC. IN VIEW WHEREOF, the decision of the Court of Appeals is hereby AFFIRMED that the RTC of Dipolog City, Branch 9, has no jurisdiction in Civil Case Nos. 5188, 5433 and 5434. No costs. SO ORDERED.

42

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-34840 July 20, 1982 MARIO RODIS MAGASPI, JUSTINO R. MAGASPI, BALDOMERA M. ALEJANDRO, and MANOLITA M. CORTEZ,petitioners, vs. HONORABLE JOSE R. RAMOLETE, Judge of the Court of First Instance of Cebu, ESPERANZA V. GARCIA, Clerk of Court of First Instance of Cebu, THE SHELL COMPANY OF THE PHILIPPINES LIMITED and/or THE SHELL REFINING COMPANY (Phil.) INC., CENTRAL VISAYAN REALTY & INVESTMENTS CO., INC., CEBU CITY SAVINGS & LOAN ASSOCIATION and the GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES,respondents.

ABAD SANTOS, J.: This is a petition for certiorari to review the actuations of the Court of First Instance of Cebu in Civil Case No.R11882 in respect of the correct amount to be paid for the filing of the case as provided in Sec. 5, par. (a), Rule 141 of the Rules of Court. On September 16, 1970, the petitioners filed a complaint for the recovery of ownership and possession of a parcel of land with damages against The Shell Co. of the Philippines, Ltd. and/or The Shell Refining Co. (Phil.) Inc., Central Visayan Realty & Investment Co., Inc. and Cebu City Savings & Loan Association in the Court of First Instance of Cebu. Upon filing and the payment of P60.00 as docketing fee and P10.00 for sheriff fees, the complaint was assigned Civil Case No. R11882. The complaint contains, among other prayers, the following: 3. To declare Transfer Certificate of Title No. 41215 issued in the name of the defendant Central Visayan Realty & Investment Co., Inc. as null and void and hence of no legal effect; 4. That the herein plaintiffs in their capacity as heirs of the deceased spouses Crispulo Magaspi and Rosalia Rodis be declared as owners of the land in question; 5. That once declared as null and void, The Register of Deeds for the City and Province of Cebu be ordered to cancel the abovementioned Transfer Certificate of Title and issue another in their place in the name of the herein plaintiffs; 6. To order the defendants, The Shell Company of the Philippines Limited, formerly known as The Asiatic Petroleum Co. (P.I.), Ltd., and/or The Shell Refining Company (Phil), Inc., to pay the plaintiffs the amount of P3,500.00 a month representing unpaid monthly rentals starting from June 2, 1948 up to May 15, 1968, and to order all the defendants jointly and solidarity to pay the plaintiffs the amount of P3,500.00 a month representing unpaid monthly rentals starting from May 16, 1968 up to the date that the land is actually delivered to the herein plaintiffs; 7. To order the defendants jointly and solidarily to return the ownership and possession of the lot in question to the herein plaintiffs; 8. To order the defendants jointly and solidarity to pay the plaintiffs the amount of P500,000.00 as moral damages and at. attorney's fees in the amount of P250,000.00 and the cost of this action; 9. Exemplary damages be imposed on the defendants jointly and solidarity in the amount of P500,000.00 as an example and deterrent to any similar acts in the future. On September 18, 1970, Central Visayan Realty & Investment Co., Inc. and Cebu City Savings and Loan Assn. filed a motion to compel the plaintiffs to pay the correct amount for docket fee. The motion, omitting the confusing footnotes, reads: 1. That the complaint of the plaintiffs contains or states two, if not three alternative causes of action:

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a) Reconveyance of real property. Par. 4. That the herein plaintiffs in their capacity as heirs of the deceased spouses Crispulo Magaspi and Rosalia Rodis be declared as owners of the land in question; Par. 5. That once declared null and void, the Register of Deeds for the City and Province of Cebu are ordered to cancel the above-mentioned Transfer Certificate of Title and issue another in their place in the names of the herein plaintiffs. If the plaintiffs are unable to have the property reconveyed and the title cancelled, having passed to an innocent purchaser for value, their recourse would be for damages, i.e., recovery of the value of the land and other damages. b) Recovery of the value of the land and Damages. 1. To order the defendants, to pay plaintiffs the amount of P3,500.00 a month representing unpaid monthly rentals starting from June 2, 1948 up to May 15, 1968, and to order all the defendants jointly and severally to pay the plaintiffs the amount of P3,500.00 a month starting from May 16, 1968 up to the date that the land is actually delivered to herein plaintiffs; 2. To order the defendants jointly and solidarily to pay the plaintiffs the amount of P500,000-00 as moral damages and attorney's fees in the amount of P250,000.00; 3. Exemplary damages be imposed on the defendants jointly and severally in the amount of P500,000.00; 4. That because of the unlawful occupation and usurpation the plaintiffs suffered damages in the amount of P1,250,000.00 which is the reasonable market value of the land in question it being a first class commercial land. c) Cancellation of Titles. 1. To declare Transfer Certificate of Title No. 41215 null and void; 2. That each of these alternative causes of action is distinct and separate from each other. Each may be instituted by plaintiffs against the defendants and the same may constitute a valid cause of action. Each constitutes an appropriate basis therefore, for determining the correct amount of the docket fee in this case; 3. That in the suit for reconveyance, the recovery of the improvements existing on the land is deemed included, since defendant Cebu City Savings is alleged to be a builder in bad faith. The value of existing improvement, i.e., assessed value is P70,000.00: 4. Therefore, the docket fee should be: Docket fee Land and Improvement at P87,280.00 assessed value .................... P100.00 Recovery of Value of the Land and damages: a) P1,250,000.00 Land value b) 500,000.00 Moral Damages c) 500,000.00 Exemplary Damages d) 250,000.00 Attorney,s fees e) 890,633.24 Monthly rentals up to date of filing of complaint 6,632.00 . P3,390,633.24 (Six Thousand Seven Hundred Thirty Two Pesos) 6,732.00

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5. That under the Old Rules of Court, Sec. 5, Rule 130 provides that it is the sum claimed, 'exclusive of interest and damages while under the new Rules of Court, Sec. 5, Rule 141, it is the sum claimed, 'exclusive of interest,' the word 'damages' having been excluded purposely, indicating the intent to include damages in the computation of the docket fee; WHEREFORE, it is respectfully prayed that the plaintiffs be made to pay the correct docket fee within the time prescribed by this Honorable Court, as properly computed by the Clerk of Court and failing to pay the same within the prescribed period to dismiss the case. Further, until such time as the correct docket fee is paid, the time for filing of responsive pleadings by the defendants be suspended. The motion was opposed by the plaintiffs (petitioners herein) who claimed that the main cause of action was the recovery of a piece of land and on the basis of its assessed valued, P60.00 was the correct docketing fee and that although the Revised Rules of Court do not exclude damages in the computation of the docket fee, damages are nonetheless still to be excluded. On October 5, 1970, the presiding judge ordered the Clerk of Court to comment on the motion and the opposition. The following comment was submitted: 1. That in the matter of fixing the amount of fees that shall be collected by the Clerks of Court of First Instance for the filing of an action or proceeding, Section 5, Rule 141 of the Rules of Court provides as follows: Sec. 5. Clerks of Court of First Instance. (a) For filing an action or proceeding, or a permissive counterclaim or crossclaim not arising out of the same transaction subject of the complaint, a thirdparty complaint and a complaint in intervention and for all services in the same, if the sum claimed, exclusive of interest, or the value of the property in litigation, or the value of the estate, is: 1 . Less than P200.00.......................................................................P16.00 2 P200.00 or more but less than P600.00....................................... 24.00 3 P600.00 or more but less than P3,000.00.................................... 32.00 4 P3,000.00 or more but less than P5,000.00................................. 40.00 5 P5,000.00 or more but less than P20,000.00............................... 60.00 6 P20,000.00 or more but less than P50,000.00..............................80.00 7 P50,000.00 or more but less than P100,000.00.............................. 100 8 P100,000.00 or more but less than P150,000.00........................ 150.00 9 And for each Pl,000.00 in excess of P150,000.00......................... 2.00 10 When the value of the case cannot be estimated ..................200.00 11 When the case does not concern property (naturalization, adoption, legal separation, etc.) ....................................................................................................32.00 12 In forcible entry and illegal detainer cases appealed from inferior cases ...........................................................................................................................................20.00 If the case concerns real estate, the assessed value thereof shall be considered in computing the fees. (Emphasis supplied) In case the value of the property or estate of 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. 2. That a reading of the complaint in this case would show that the action is not only for recovery of property but also for actual and moral damages as well as for attorney's fees;

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3. That under the provisions of Sec. 5, Rule 141 of the Rules of Court, already cited above, it appears that for the purpose of determining the amount of the fees that should be collected for the filing of an action or proceeding, the basis should be the totality of the sum or sums claimed, exclusive of interest, except in the case of real estate where the assessed value thereof shall be considered in computing the fees; 4. That in the light of the foregoing, it is the opinion of the undersigned that the basis for computing the fees for the filing of the complaint in this case should be as follows: (a) Assessed value of the land (please see par. 4 of the complaint) ...................................................................................................P17,280.00 (b) Moral damages .......................................................................500,000.00 (c) Attorney's fees....................................................................... 250,000.00 (d) Monthly rentals at P3,500.00 a month up to the filing of complaint ..................................................... 890,633.24 TOTAL P1,657,913.24 Accordingly, the correct amount of the legal fees for the filing of this case should be fixed at P3,164.00 plus P2.00 Legal Research fee; On October 14, 1970, Judge Mateo Canonoy issued the following order: This is a motion of the defendants to order the plaintiffs to pay a filing fee of P6,730.00 on the ground that the total demand of the said plaintiffs (the value of the land, which is P17,280.00, plus the damages amounting to P3,390,633.24) should be the basis for computing the filing fee and not the value of the land alone. The plaintiffs paid the amount of P60.00 as filing fee in this case. Examining the allegations of the complaint, the Court is constrained to sustain the Manifestation or contention of the Clerk of Court, dated October 14, 1970. The damages are not merely incidental or ancillary but are principal demands. Besides, Rule 141, Sec. 5 (a) of the new Rules of Court no longer excludes damages, like interest, from computing the filing fees. (The Old Rules of Court, Rule 130, Sec. 5 (a), expressly includes damages and interest in the exemption.) The exclusion of damages from the exemption in the computation of the filing fees in the new Rules of Court is intentional, since oftentimes, as in the present case, the claim for damages far exceeds the value of the land. To thus exempt the plaintiffs from paying the filing fee for damages is against reason. Besides, in determining the jurisdiction of the court, the amount of damages claimed is taken into account. The opinion of Undersecretary Guillermo Santos that the Court ought to be left alone to determine the question of the filing fee of cases pending therein without any interference from the Secretary of Justice (Attorney General) is commendable. IN VIEW OF THE FOREGOING, the Court hereby overrules the opposition of the plaintiffs and orders them to pay an additional sum of P3,104.00 as filing fees. On October 19, 1970, the Shell companies filed their respective answers. On October 23, 1970, Central Visayan Realty and Cebu City Savings filed the following manifestation: 1. That this Honorable Court issued an Order, dated October 14th,1970 for the plaintiffs to pay an additional P3,104.00 docket fee, per computation and manifestation of the Clerk of Court; 2. That the Clerk of Court manifestations is predicted on the following:

Damages: a) Moral Damages P500,000.00 b) Attorney's fees P250,000.00 c) Monthly Rental P890,633.24

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P1,640,633.24 and excusably excluded was the exemplary damages sought (Par. 22 Complaint, Par. 9, Prayer) in the amount of Five Hundred Thousand Pesos (P500,000.00); WHEREFORE, it is respectfully prayed that in the computation of the correct docket fee, besides the sum of P3,104.00, an additional sum of Pl,000.00 be imposed in accordance with Sec. 5 (Par. 9) Rule 141 of the Rules of Court; and should the plaintiffs within a period fixed by this Honorable Court fail to pay the same, the complaint be dismissed with prejudice, and for such other reliefs as this Honorable Court may deem just under the premises. On November 3, 1970, the plaintiffs filed a motion for leave to amend the complaint so as to include the Government of the Republic of the Philippines as a defendant. The amended complaint still sought the return of the lot in question but the pecuniary claim was limited to the following: 8. To order the defendants jointly and solidarily except the Government of the Republic of the Philippines moral damages in such amount as this Court may determine and attorney's fees in the amount of P100,000.00 and the cost of this action; 9. Exemplary damages be imposed on the defendants jointly and solidarily except the Government of the Republic of the Philippines in the amount as this Court may deem just and proper as an example and deterrent to any similar acts in the future. (Emphasis supplied.) On November 12, 1970, the defendants (herein respondents filed an opposition to the admission of the amended complaint. They based their opposition on the following grounds: 1. That while the only reason given for the amendment of the complaint is the inclusion of the Government of the Philippines as an indispensable party; the plaintiffs have taken the improper liberty of amending portions of the allegations in the complaint and even has eliminated entire paragraph, thus: a) By not mentioning the previously alleged value of the land at P1,250,000.00 in paragraph 19; b) By not mentioning the previously averred to monthly rentals due at P3,500.00 from June 2, 1948, or computed at P890,633.24; c) By eliminating completely the claim for moral damages of P500.000.00 and reducing attorney's fees from P250,000.00 to P100,000.00 under par. 21; d) By not mentioning the amount previously claimed as exemplary damages in the sum of P500,000.00, as alleged in par. 21: substituting thereto, the averment that, the amount of these various claims for damages will be proven during the trial of the case; 2. That these amendments are obviously intended to circumvent, it not entirely subvert, the lawful Order of this Honorable Court for the plaintiff to pay the amount of P3,104.00 as docket fee, on the basis of the total amount claimed for damages (plus Pl,000.00 docket fee on the P500,000.00 exemplary damages, pending resolution before this Honorable Court); 3. That if the amended complaint is admitted as it is, plaintiffs would effect, have their cakes and eat it too, in the manner of speaking; 4. That the payment of the correct and in this case, by an Order of this Honorable Court of the docket fee, is a condition precedent for the complaint, amended or otherwise, of the plaintiff to be given due course; On November 16, 1970, Judge Canonoy admitted the amended complaint although the plaintiffs had not yet complied with his Order of October 14, 1970, that they should pay an additional P3,104.00 docket fee. On December 2, 1970, Central Visayan Realty and Cebu City Savings filed the following motion: l. That this Honorable Court issued an Order dated October 14, 1970, for the plaintiffs to pay an additional docket fee of P3,104.00;

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2. That such an Order has not been complied with by the plaintiffs nor an appeal or a petition for review filed and the same has become final; 3. That Sec. 3 Rule 17 of the Rules of Court provides that if plaintiff fails: to comply with these rules of any order of the court, the action may be dismissed upon motion of the defendant, or upon the court's own motion. 4. That the filing of the answer by these defendants is premised on the payment of the correct or as ordered docket fee by the plaintiffs; for which reason, no answer has yet been filed; WHEREFORE, it is respectfully prayed that the plaintiffs be ordered to pay the additional docket fee within seven (7) days, otherwise the complaint will be dismissed with prejudice. The above motion was opposed by the plaintiffs on the ground that the amended complaint which had been admitted by the court had replaced the original complaint. On February 12, 1971, the Republic filed its answer to the amended complaint and the plaintiffs filed a reply on February 23, 1971. On March 13, 1971, Central Visayan Realty and Cebu City Savings filed a petition to have their motion of December 2, 1970, resolved by the court. On April 3, 1971, Judge Jose R. Ramolete who had replaced Judge Canonoy issued the following order: This is a petition of the defendants praying for the resolution of their motion dated December 3, 1970. This motion was brought about by virtue of the order of this Court dated October 14, 1970, ordering the plaintiffs to pay additional docket fees of P3,104.00. Going over the record of the case, it appears that after the issuance of the above order, the plaintiffs filed their amended complaint which was also admitted on November 16, 1970. At the hearing of tills petition the parties supported their respective positions with oral arguments after which they submitted the matter for resolution. It is a rule that the correct docket fee must be paid before the Court will act on the petition or complaint. The Court of Justice is not called upon to act on a complaint or a petition in the absence of payment of a corresponding docket fee. (Garcia vs. Vasquez, 28 SCRA 330, 331.) Before the payment of the docket fee, the case is not deemed registered and docketed (Lazaro vs. Endencia, 57 Phil., 552; Malimit vs. Degamo, 12 SCRA 454; Lee vs. Republic, 10 SCRA, 67). In the light of the above rulings on the matter, the original complaint, up to the present, is not deemed registered or docketed. It follows, therefore, that there is likewise no amended complaint deemed to have been filed and admitted. The Court, therefore, is of the view that up to the present the parties are in the same situation as they were before this proceeding was started. It cannot also order the plaintiffs to comply with the order of this Court dated October 14, 1970, because it has not yet acquired jurisdiction over them neither can it order the dismissal of the complaint for non-compliance of the order of October 14, 1970, by the plaintiffs, for obvious reasons. The plaintiffs are given the choice to pay the docket fee assessed or to forego this proceeding. The petitioners assail the above order. They insist that they had correctly paid the docketing fee in the amount of P60.00, or in the alternative, that if they are to pay an additional docketing fee, it should be based on the amended complaint. For initial determination is the question as to whether or not Civil Case No. 11882 may be considered as having been filed and docketed when P60.00 was paid to the Clerk of Court even on the assumption that said payment was not sufficient in amount. The rule is well-settled that a case is deemed filed only upon payment of the docket fee regardless of the actual date of its filing in court., (Malimit vs. Degamo, No. L-17850, Nov. 28, 1964, 12 SCRA 450, 120 Phil. 1247; Lee vs. Republic, L-15027, Jan. 31, 1964, 10 SCRA 65.) Is the case at bar covered by the above rule? It is not because the question posed in the Malimit and Lee cases was the timeliness of the payment of the docket fee whereas the case at bar has no reference to the time of payment but concerns the amount that has to be paid.

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The case of Garcia vs. Vasquez, L-26808, May 23, 1969, 28 SCRA 330, mentioned in the order of Judge Ramolete will be discussed below. And as to Lazaro vs. Endencia, 37 Phil. 552 (1932), it does not appear to have relevance to the question. In that case an appeal in an ejectment case was made and the appellant deposited only P8.00 as docket fee instead of P16.00 as required by law. It was only after the period for perfecting an appeal that the appellant deposited the additional P8.00 to complete the amount of said docket fee. This Court dismissed the appeal on the ground "that payment of the full amount of the docket fees is an indispensable step for the perfection of an appeal." (At p. 5 5 3.) The case at bar can be distinguished from the Lazaro case in at least two respects, namely: (a) The Lazaro case involved the timeliness of the perfection of the appeal which was made to depend in turn on the timeliness of the full payment of the docket fee whereas the instant case does not involve an appeal nor the timeliness of the payment of the docket fee; and (b) in the Lazaro case, the amount (P8.00) which was initially paid was palpably inadequate, whereas in the case at bar there is an honest difference of opinion as to the correct amount to be paid as docket fee. The Garcia case, supra, appears to favor the petitioners. In that case, a will was sought to be probated in Special Proceeding No. 62818. Docket fees amounting to P940.00 were paid. Later, a second will was sought to be probated in the same special proceeding. This Court held that there was no need to pay a separate docket fee because the probate of the second will was not sought in another proceeding. We hold that under the circusmtances, Civil Case No. R. 11882 was docketed upon the payment of P60.00 although said amount is insufficient. Accordingly, the trial court had acquired jurisdiction over the case and the proceedings thereafter had were proper and regular. The next question is in respect of the correct amount to be paid as docket fee. Judge Canonoy on October 14, 1970, ordered the payment of P3,104.00 as additional docket fee based on the original complaint. However, the petitioners assert as an alternative view, that the docket fee be based on the amended complaint which was admitted on November 14, 1970, also by Judge Canonoy. The petitioners have a point. "When a pleading is amended, the original pleading is deemed abandoned. The original ceases to perform any further function as a pleading. The case stands for trial on the amended pleading only. " (1 Moran, Rules of Court, 363 119701, citing Reynes v. Compania General de Tobacos de Filipinas, 21 Phil. 417; Reyman v. Director of Lands, 34 Phil, 428.) On the basis of the foregoing, the additional docket fee to be paid by the petitioners should be based on their amended complaint. WHEREFORE, the petition is hereby granted: the petitioners shall be assessed a docket fee on the basis of the amended complaint; and after all of the lawful fees shall have been paid, the proceedings in Civil Case No. R-11882 shall be resumed. No special pronouncement as to costs. SO ORDERED. Barredo (Chairman), Aquino, Concepcion, Jr., Guerrero and De Castro, JJ., concur. Escolin, J., concur in the result.

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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-57757 August 31, 1987 PHILIPPINE NATIONAL BANK, petitioner, vs. THE HONORABLE COURT OF APPEALS, PRAGMACIO VITUG AND MAXIMO VITUG, respondents.

GANCAYCO, J.: Does the presumption of conjugality of properties acquired by the spouses during coverture provided for in Article 160 of the Civil Code apply to property covered by a Torrens certificate of title in the name of the widow? This is the issue posed in this petition to review on certiorari of the decision of the Court of Appeals in CA-G.R. No. 60903 which is an action for reconveyance and damages. * On November 28, 1952, Donata Montemayor, through her son, Salvador M. Vitug, mortgaged to the Philippine National Bank (PNB) several parcels of land covered by Transfer Certificate of Title (TCT) No. 2289 Pampanga to guarantee the loan granted by the PNB to Salvador Jaramilla and Pedro Bacani in the amount of P40,900.00 which was duly registered in the Office of the Register of Deeds of Pampanga. 1 On December 1, 1963, Donata Montemayor also mortgaged in favor of PNB certain properties covered by TCT Nos. 2887 and 2888-Pampanga to guarantee the payment of the loan account of her son Salvador Vitug in the amount of P35,200.00, which mortgage was duly registered in the Register of Deeds of Pampanga. 2 The above-mentioned Transfer Certificates of Titles covering said properties were all in the name of Donata Montemayor, of legal age, Filipino, widow and a resident of Lubao, Pampanga at the time they were mortgaged to PNB 3 and were free from all hens and encumbrances. 4 Salvador Vitug failed to pay his account so the bank foreclosed the mortgaged properties covered by TCT Nos. 2887 and 2888. They were sold at public auction on May 20, 1968 in which the PNB was the highest bidder. The titles thereto were thereafter consolidated in the name of PNB. Likewise, Salvador Jaramilla and Pedro Bacani failed to settle their accounts with the PNB so the latter foreclosed the properties covered by TCT No. 2889 which were sold at public auction and likewise PNB was the buyer thereof. On August 30, 1968, a certificate of sale was issued by the Register of Deeds covering said properties in favor of the PNB. When the title of the PNB was consolidated a new title was issued in its name. 5 On September 2, 1969, the PNB sold the properties covered by TCT Nos. 2887 and 2888 Pampanga to Jesus M. Vitug, Anunciacion V. de Guzman, Prudencia V. Fajardo, Salvador Vitug and Aurora V. Gutierrez in those names the corresponding titles were issued. 6 During the lifetime of Clodualdo Vitug he married two times. His first wife was Gervacia Flores with whom he had 3 children, namely, Victor, Lucina and Julio all surnamed Vitug. Victor now dead is survived by his 5 children: Leonardo, Juan, Candida Francisco and Donaciano, an surnamed Vitug. Juan Vitug is also dead and is survived by his only daughter Florencia Vitug. The second wife of Clodualdo Vitug was Donata Montemayor with whom he had 8 children, namely, Pragmacio, Maximo, Jesus, Salvador, Prudencio and Anunciacion, all surnamed Vitug, the late Enrique Vitug represented by his wife Natalia Laquian, and the late Francisco Vitug who is survived by 11 children, namely, Antonio, Francisco, Aurora, Pedro, Honorio, Corazon, Anselmo, Benigno, Eligio Jesus and Luz. Clodualdo Vitug died intestate on May 20, 1929 so his estate was settled and distributed in Special Proceeding No. 422 in the Court of First Instance of Pampanga wherein Donata Montemayor was the Administratrix. 7 Meanwhile, on May 12,1958, Donata Montemayor executed a contract of lease of Lot No. 24, which is covered by TCT No. 2887-R in favor of her children Pragmacio and Maximo both surnamed Vitug. This lease was extended on August 31, 1963. By virtue of a general power of attorney executed by Donata Montemayor on Sept. 19, 1966 in favor of Pragmacio Vitug, the latter executed a contract of lease on Sept. 19, 1967 of the said lot in favor of Maximo Vitug. 8

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On March 21, 1970 Pragmacio Vitug and Maximo Vitug filed an action for partition and reconveyance with damages in the Court of First Instance of Pampanga against Marcelo Mendiola, special administrator of the intestate estate of Donata Montemayor who died earlier, Jesus Vitug, Sr., Salvador, Natalia, Prudencia, Anunciacion, all surnamed Vitug, Antonio, Francisco, Aurora, Pedro, Honorio, Corazon, Anselmo, Benigno, Eligio Jesus and Luz, all surnamed Fajardo and the PNB. The subject of the action is 30 parcels of land which they claim to be the conjugal property of the spouses Donata Montemayor and Clodualdo Vitug of which they claim a share of 2/11 of 1/2 thereof. They assailed the mortgage to the PNB and the public auction of the properties as null and void. They invoked the case of Vitug vs. Montemayor, L-5297 decided by this Court on Oct. 20, 1953 which is an action for partition and liquidation of the said 30 parcels of land wherein the properties were found to be conjugal in nature. In a decision of Sept. 15, 1975, the lower court dismissed the complaint with costs against the plaintiffs and ordered them to pay attorney's fees of P5,000.00 to the defendant's counsel. Plaintiffs then interposed an appeal to the Court of Appeals, wherein in due course a decision was rendered on May 20, 1981, the dispositive part of which reads as follows: WHEREFORE, in the light of the foregoing, the decision appealed from is hereby reversed and set aside, and another one entered in accordance with the tenor of the prayer of appellant's complaint with the modification that the sale at public auction of the 22 parcels be considered valid with respect to the 1/2 thereof. No costs. Hence the herein petition for certiorari filed by the PNB raising the following assignments of error: I THE RESPONDENT COURT OF APPEALS ERRED IN APPLYING TO THE CASE AT BAR THE RULING OF THIS HONORABLE SUPREME COURT IN FLORENCIA VITUG VS. DONATA MONTEMAYOR, ET AL., 91 PHIL. 286 (1953) BECAUSE: A. BETWEEN A PROVISION OF A SPECIAL LAW AND THE JUDICIAL INTERPRETATION AND/OR APPLICATION OF A PROVISION OF A GENERAL LAW, THE FORMER PREVAILS. B. THE DOCTRINE OF STARE DECISIS IS NOT A MECHANICAL FORMULA OF ADHERENCE. C. PNB WAS NOT A PARTY, AND HAD NO KNOWLEDGE OF THE ABOVECITED CASE. D. SIMILARLY, PRAGMACIO VITUG AND MAXIMO VITUG WERE NOT PARTIES IN SAID CASE. II THE RESPONDENT COURT OF APPEALS ERRED IN NOT RECOGNIZING THE CONCLUSIVENESS OF THE CERTIFICATE, OF TITLE, AS PROVIDED IN ACT 496, AS AMENDED (THE LAND REGISTRATION). III THE RESPONDENT COURT OF APPEALS ERRED IN IGNORING THE CONCLUSIVENESS OF OWNERSHIP OF DONATA MONTEMAYOR OVER THE PROPERTIES WHICH WERE REGISTERED EXCLUSIVELY IN HER NAME WHEN PRIVATE RESPONDENTS (PRAGMACIO VITUG AND MAXIMO VITUG), AS LESSEES, ENTERED INTO A CONTRACT OF LEASE WITH DONATA MONTEMAYOR AS THE OWNER-LESSOR. IV THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT PNB WAS A MORTGAGEE IN BAD FAITH. The petition is impressed with merit. When the subject properties were mortgaged to the PNB they were registered in the name of Donata Montemayor, widow. Relying on the torrens certificate of title covering said properties the mortgage loan applications of Donata

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were granted by the PNB and the mortgages were duly constituted and registered in the office of the Register of Deeds. In processing the loan applications of Donata Montemayor, the PNB had the right to rely on what appears in the certificates of title and no more. On its face the properties are owned by Donata Montemayor, a widow. The PNB had no reason to doubt nor question the status of said registered owner and her ownership thereof. Indeed, there are no liens and encumbrances covering the same. The well-known rule in this jurisdiction is that a person dealing with a registered land has a right to rely upon the face of the torrens certificate of title and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man make such inquiry. 9 A torrens title concludes all controversy over ownership of the land covered by a final degree of registration. 10Once
the title is registered the owner may rest assured without the necessity of stepping into the portals of the court or sitting in the mirador de su casa to avoid the possibility of losing his land. 11

Article 160 of the Civil Code provides as follows: Art. 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife. The presumption applies to property acquired during the lifetime of the husband and wife. In this case, it appears on the face of the title that the properties were acquired by Donata Montemayor when she was already a widow. When the property is registered in the name of a spouse only and there is no showing as to when the property was acquired by said spouse, this is an indication that the property belongs exclusively to said spouse. 12 And this presumption
under Article 160 of the Civil Code cannot prevail when the title is in the name of only one spouse and the rights of innocent third parties are involved. 13

The PNB had a reason to rely on what appears on the certificates of title of the properties mortgaged. For all legal purposes, the PNB is a mortgagee in goodfaith for at the time the mortgages covering said properties were constituted the PNB was not aware to any flaw of the title of the mortgagor. 14 True it is that in the earlier cases decided by this Court, namely Vitug VS. Montemayor decided on May 15, 1952, which is an action for recovery of possession of a share in said parcels of land, 15 and in the subsequent action for partition
between the same parties decided on Oct. 20, 1953, 16 this court found the 30 parcels of land in question to be conjugal in nature and awarded the corresponding share to the property of Florencia Vitug, an heir of the late Clodualdo Vitug from the first marriage. In said cases this Court affirmed the decision of the lower court. In the dispositive part of the decision of the trial court it made the observation that "but from the conduct of Clodualdo Vitug and Donata Montemayor during the existence of their marital life, the inference is clear that Clodualdo had the unequivocal intention of transmitting the full ownership of the 30 parcels of land to his wife Donata Montemayor, thus considering the 1/2 of the funds of the conjugal property so advanced for the purchase of said parcels of land as reimbursible to the estate of Clodualdo Vitug on his death. 17 That must be the reason why the property was registered in the name of Donata Montemayor as widow after the death of Clodualdo Vitug. 18

At any rate, although actions for recovery of real property and for partition are real actions, however, they are actions in personam that bind only the particular individuals who are parties thereto. 19 The PNB not being a party in said cases
is not bound by the said decisions. Nor does it appear that the PNB was aware of the said decisions when it extended the above describe mortgage loans. Indeed, if the PNB knew of the conjugal nature of said properties it would not have approved the mortgage applications covering said properties of Donata Montemayor without requiring the consent of all the other heirs or co-owners thereof. Moreover, when said properties were sold at public auction, the PNB was a purchaser for 20 value in good faith. So its right thereto is beyond question.

Pragmacio and Maximo Vitug are now estopped from questioning the title of Donata Montemayor to the said properties. They never raised the conjugal nature of the property nor took issue as to the ownership of their mother, Donata Montemayor, over the same. Indeed private respondents were among the defendants in said two cases wherein in their answers to the complaint they asserted that the properties in question are paraphernal properties belonging exclusively to Donata Montemayor and are not conjugal in nature. 21 Thus they leased the properties from
their mother Donata Montemayor for many years knowing her to be the owner. They were in possession of the property for a long time and they knew that the same were mortgaged by their mother to the PNB and thereafter were sold at public auction, but they did not do anything. 22 It is only after 17 years that they remembered to assert their rights. Certainly, they are guilty of laches. 23

Moreover, as correctly held by the lower court. Pragmacio and Maximo Vitug as occupants and lessees of the property in question cannot now dispute the ownership of their mother over the same who was their lessor. 24 WHEREFORE, the subject decision of the respondent Court of Appeals is hereby REVERSED and set aside and another decision is hereby rendered DISMISSING the complaint and ordering private respondents to pay attomey's fees and expenses of litigation to petitioner PNB in the amount of P20,000.00 and the costs of the suit. SO ORDERED. Teehankee, C.J., Narvasa and Cruz, JJ., concur. Paras, J., concur in the result

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SECOND DIVISION [G.R. No. 101374. July 30, 1993.] FORTUNE LIFE AND GENERAL INSURANCE CO., INC., Petitioners, v. THE COURT OF APPEALS and DELSAN TRANSPORT LINES, INC., Respondents. Raymundo A. Armovit for Petitioner. Sycip, Salazar, Hernandez & Gatmaitan for Private Respondent.

SYLLABUS

1. REMEDIAL LAW; APPEALS; INSTANCES WHEN THE TRIAL COURT MAY EXERCISE "RESIDUAL" JURISDICTION AFTER PERFECTION OF APPEAL; NOT APPLICABLE IN CASE AT BAR. There is no controversy that the appeal of petitioner has been perfected. As a necessary consequence thereof, the trial court was divested or jurisdiction over the case. Section 9, Rule 41 of the Rules of Court mentions three (3) instances when the trial court is allowed to exercise "residual" jurisdiction after the perfection of the appeal, namely: (1) to issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal; (2) to approve compromises offered by the parties prior to the transmittal of the record on appeal to the appellate court; and (3) to permit the prosecution of paupers appeals. Petitioner relies on the first instance as basis for its stand that the trial court has the authority to hear its application for damages. Its reliance thereon is misplaced. Although the application for damages is beyond the scope of the matter to be litigated by the appeal, there is no "protection and preservation" of its "rights" to speak of. Respondent court was emphatic in its disquisition on this subject matter: "The private respondents application for damages being heard by the respondent court may not be considered an exception to Section 9 of Rule 41 of the Rules of Court. The provision speaks of protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal. The action for damages, in fact, and in actuality, however, is an act of vindication, is punitive in nature and not an act to protect and preserve, but to punish and make one party, the petitioner, to pay damages for having availed of a writ of execution pending appeal . . .." . . "It is, moreover, clear that the pursuit of damages against the bond posted by the petitioner in this case, is a futile undertaking for by its express language, approved by the respondent court, the bond may only be answerable in damages where two conditions concur: one, that judgment has, in fact, been rendered on appeal, and second, that the judgment appealed from has been reversed on appeal. The very proceedings before the respondent court, now sought to be struck down, are the very reason preventing the realization of these conditions." Thus, the trial court had no more jurisdiction to issue the disputed orders inasmuch as the case had already come under the exclusive appellate jurisdiction of the respondent court. 2. ID.; ID.; ID.; DOCTRINE OF ESTOPPEL; NOT APPRECIATED IN CASE AT BAR. Nor are we inclined to sanction the application of the doctrine of estoppel by laches to the prejudice of privateRespondent. This doctrine is an equitable principle applied to promote but never to defeat justice. It should be noted that private respondent opposed petitioners application for damages by citing Section 5, Rule 39 of the Rules of Court and, in effect, questioning the trial courts jurisdiction thereon. Additionally, private respondent set up the defense of lack of jurisdiction, in its motion for reconsideration dated March 5, 1990. There was no unreasonable delay by private respondent in assailing the jurisdiction of the trial court. Adherence to our exceptional ruling in Tijam v. Sibonghanoy and other cases is unwarranted. Instead, we uphold the fundamental rule that a court of justice could only validly act upon a cause of action or subject matter of a case over which it has jurisdiction and said jurisdiction is one conferred by law; and cannot be acquired through, or waived by any act or omission of the parties. [Dy, Et Al., v. NLRC, Et Al., G.R. No. 68544, 145 SCRA 211 (1986) citing Lagman v. Court of Appeals, 44 SCRA 234].

DECISION

NOCON, J.:

This is a petition for review on certiorari seeking reversal of the decision of public respondent Court of Appeals, dated February 7, 1991, in CA-G.R. SP No. 21046; and its resolution dated August 12, 1991. 1 The antecedent facts, briefly stated, are as follows:
chan rob1e s virtual 1aw l ibra ry

In Civil Case No. 85-29991, entitled "Delsan Transport Lines, Inc. v. Fortune Life and General Insurance Company, Inc.," the Regional Trial Court of Manila rendered judgment dated November 21, 1985, in favor of plaintiff, the dispositive portion of which reads:
jgc:chan roble s.com.p h

"FOR ALL THE FOREGOING CONSIDERATIONS, the Court orders the defendant (Fortune Life) to:

chanro b1es vi rtua l 1aw lib ra ry

1. Pay plaintiff (Delsan) the amount of P1,952,302.00 with double the ceiling as that prescribed by the Monetary Board after thirty (30) days from submission of proof of loss to defendant;

53
2. Pay plaintiff (Delsan) the sum of P50,000.00 as and for exemplary damages; 3. Pay plaintiff (Delsan) the amount of P50,000.00 as and for attorneys fees; and 4. The cost of suit. "SO ORDERED." 2 On December 11, 1985, private respondent Delsan Transport Lines, Inc. filed a motion for execution pending appeal. It invoked as "good reason" petitioners alleged fraud and deceit in not informing the former of the latters change in corporate name. Its motion was supported by a bond which states, in relevant portion:
jgc:c han robles. com.ph

"NOW THEREFORE, we DELSAN TRANSPORT LINES, INC. as Principal and FIRST INTEGRATED BONDING AND IN SURANCE CO. INC., a corporation duly organized and existing under the (sic) virtue of the laws of the Philippines with, principal office at 7th Floor, Victoria Building, U.N. Avenue, Ermita, Manila, Philippines, as Surely, hereby jointly and severally bind ourselves in the sum of PESOS, FIVE HUNDRED THOUSAND (P500,000.00) only, Philippine Currency, in favor of the appellant in the event the judgment in the case is reversed by the Appellate Court." 3 The motion was opposed by petitioner. While the motion was pending, or on December 20, 1985, petitioner filed its notice of appeal. On January 2, 1986, the trial court issued a writ of execution pending appeal. Petitioner filed a motion for reconsideration but this was denied. The Sheriff garnished its bank deposit and levied upon its properties. Petitioner then filed a petition for certiorari before the Court of Appeals. The trial courts order granting the writ of execution pending appeal was set aside on the ground that, inter alia, the alleged "good reason" of private respondent was insufficient to justify the issuance of said writ. This Court affirmed the action of the Court of Appeals in G.R. No. 75461. On August 16, 1986, petitioner filed before the trial court an application for damages against the bond and private Respondent. This was opposed by private respondent, citing Section 5, Rule 39 of the Rules of Court which provides:
jg c:chan roble s.com.p h

"SEC. 5. Effect of reversal of executed judgment. Where the judgment executed is reversed totally or partially on appeal, on trial court, on motion, after the case is remanded to it, may issue such orders of restitutions as equity and justice may warrant under the circumstances."
cralaw virtua 1aw lib rary

On August 11, 1988, the trial court issued an order which, in part, reads:

jgc:chanroble s.com. ph

"Factual background of the case which gave rise to this application for damages, show that a decision was rendered by the Court against the herein defendant and on December 20, 1985, the latter filed its Notice of appeal; a motion for execution pending appeal was filed by the plaintiff and on December 11, 1985, the plaintiff offered to post a bond in support of its motion for execution pending appeal, conditioned to answer for any damages which the defendant may suffer by reason of the execution . . .; that on the basis of the said offer, the Court granted execution pending appeal in its Order of January 2, 1986, fixing the amount of the bond at P500,000.00; on March 31, 1986 the plaintiff filed a surety bond which, however, is different in tenor and condition from what the plaintiff offered. The Court, laboring under the terms of plaintiffs motion, issued a writ of execution pending appeal. The said variance in the conditions between the bond offered to be filed and that which was actually filed remains unexplained, in fact they discovered said variance only after this application was filed. The Court needs to receive evidence to enable it to resolve the issue whether or not such bond filed should answer for any damages sustained, and if in the affirmative, the extent of such damages. The resolution of the said application for damages at this stage will facilitate the conclusion of the entire case for all parties, in that any appeal will comprehend in a single instance the incident at bar along with the main case, which also will be economical in money and time for the parties and the courts as well. "The Court therefore resolves to receive evidence against the plaintiff and the First Integrated Bonding Co., Inc., on the application for damages." 4 The trial court then proceeded to receive petitioners evidence, having issued an order on December 18, 1989, ruling that private respondent had waived its right to cross-examine petitioners witness. Private respondent filed a motion for reconsideration which was denied on February 6, 1990. On March 5, 1990, private respondent filed another motion for reconsideration assailing the trial courts jurisdiction in issuing the orders dated August 11, 1988, December 18, 1989 and February 6, 1990. It prayed that the records of the case be elevated immediately to the appellate court pursuant to the notice of appeal which was filed by petitioner. On May 15, 1990, the trial court denied private respondents motion, based on the following:
jg c:chan rob les.com. ph

"Submitted for the Courts resolution, is a Motion for Reconsideration dated March 5, 1990 filed by plaintiff alleging that appeal having been perfected, this Court has already lost jurisdiction to entertain defendants Application for Damages filed on August 16, 1986, so that all orders of this Court relative to said application, more particularly the orders dated August 11, 1988, December 18, 1989 and February 6, 1990 should be set aside as null and void. "Defendant, in its Comment/Opposition to Motion for Reconsideration on March 26, 1990, argues that the rule that once the appeal is perfected the Trial Court loses its jurisdiction only comprehends matters subject of the appeal and not those purely collateral or supplemental, and lying outside the issues framed in the appeal. Defendant also invokes the rule that damages enforceable against a bond, supporting a provisional relief dissolved because improvidently issued, must be proved before judgment in the main case becomes final, or the same will be barred. "The Court agrees with the defendants statement on what the rule is in (sic) respect to proceedings to claim damages on a bond. More appropriately since the records of the case are still with the Court and have not been elevated to the Court of Appeals. "The Supreme Court has already ruled with finality on the impropriety of the levy of execution pending appeal on

54
defendants properties. This Court as far back as its order of September 9, 1988 had already declared that the resolution of the said application for damages will facilitate the conclusion of the entire case for all parties any appeal will encompass the main case as well as the present incident to pave the way for a single decision of all litigated issues. The former counsel and all the parties have even agreed to this procedure for reasons above stated. This is in accord with law and jurisdiction, not to mention sound procedural policy." 5 Thereafter, private respondent filed a petition for certiorari, prohibition and mandamus before public respondent Court of Appeals seeking to annul the August 11, 1988, December 18, 1989, February 6, 1990 and May 15, 1990 orders of the trial court; to prohibit the trial court from conducting further proceedings; and to compel the trial court to forward the records of the case to the appellate court since it has lost jurisdiction over the case in view of the appeal of petitioner. On February 7, 1991, respondent court ruled in favor of private Respondent. The dispositive portion of its decision reads:
jgc:chan robles. com.ph

"WHEREFORE, the writs prayed for are hereby granted, and the orders of August 11, 1988, December 18, 1989, February 16 (sic), 1990 and May 15, 1990 are hereby annulled and set aside. The respondent court is ordered to desist from further proceedings in Civil Case No. 85-29991, and ordered to elevate immediately to this Court the records of the said case. No costs. "SO ORDERED." 6 For lack of merit, the motion for reconsideration was denied in its resolution dated August 12, 1991. 7 Hence, the present petition for review on certiorari. The sole issue raised herein is: upon perfection of petitioners appeal of the trial courts decision, does said court retain jurisdiction to hear the application for damages against the bond that was posted in support of private respondents motion for execution pending appeal? Petitioner insists that even upon perfection of its appeal from the decision on the merits, the trial court retains jurisdiction to hear its application for damages. The general rule is, petitioner states, once the appeal from a trial court judgment has been perfected said court loses jurisdiction over the case. By way of exception, it retains jurisdiction, inter alia, to issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal. Under the facts of this case, upon perfection of the appeal to respondent court, the trial court lost its jurisdiction over the case only insofar as the subject matter of the appeal is concerned but not the right of petitioner to recover damages against the bond. The cause of action in the first is the occurrence of the risk insured under the marine policy whereas in the second, it is the breach of the condition in the bond, to wit: "to answer for any damages which the defendant may suffer by reason of the execution." Granting arguendo that the trial court lacked jurisdiction to entertain the claim for damages, private respondent is estopped by laches from raising the same. The decision and resolution of respondent court, which petitioner asks this Court to set aside, deserve our affirmance. There is no controversy that the appeal of petitioner has been perfected. As a necessary consequence thereof, the trial court was divested or jurisdiction over the case. 8 Section 9, Rule 41 of the Rules of Court mentions three (3) instances when the trial court is allowed to exercise "residual" jurisdiction after the perfection of the appeal, namely: (1) to issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal; (2) to approve compromises offered by the parties prior to the transmittal of the record on appeal to the appellate court; and (3) to permit the prosecution of paupers appeals. Petitioner relies on the first instance as basis for its stand that the trial court has the authority to hear its application for damages. Its reliance thereon is misplaced. Although the application for damages is beyond the scope of the matter to be litigated by the appeal, there is no "protection and preservation" of its "rights" to speak of. Respondent court was emphatic in its disquisition on this subject matter:
jgc:chan robles. com.ph

"The private respondents application for damages being heard by the respondent court may not be considered an exception to Section 9 of Rule 41 of the Rules of Court. The provision speaks of protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal. The action for damages, in fact, and in actuality, however, is an act of vindication, is punitive in nature and not an act to protect and preserve, but to punish and make one party, the petitioner, to pay damages for having availed of a writ of execution pending appeal . . ." 9 x x x

"It is, moreover, clear that the pursuit of damages against the bond posted by the petitioner in this case, is a futile undertaking for by its express language, approved by the respondent court, the bond may only be answerable in damages where two conditions concur: one, that judgment has, in fact, been rendered on appeal, and second, that the judgment appealed from has been reversed on appeal. The very proceedings before the respondent court, now sought to be struck down, are the very reason preventing the realization of these conditions." 10 Thus, the trial court had no more jurisdiction to issue the disputed orders inasmuch as the case had already come under the exclusive appellate jurisdiction of the respondent court. Nor are we inclined to sanction the application of the doctrine of estoppel by laches to the prejudice of private Respondent. This doctrine is an equitable principle applied to promote but never to defeat justice. 11 It should be noted that private respondent opposed petitioners application for damages by citing Section 5, Rule 39 of the Rules of Court and, in effect, questioning the trial courts jurisdiction thereon. Additionally, private respondent set up the defense of lack of jurisdiction, in its motion for reconsideration dated March 5, 1990. There was no unreasonable delay by private respondent in assailing the jurisdiction of the trial court. Adherence to our exceptional ruling in Tijam v. Sibonghanoy 12 and other cases is unwarranted. Instead, we uphold the fundamental rule that a court of justice could only validly act upon a cause of action or subject matter of a case over which it has jurisdiction and said jurisdiction is one conferred by law; and cannot be acquired through, or waived by any act or omission of the parties. 13 WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals dated February 7, 1991 and its resolution

55
dated August 12, 1991 are AFFIRMED. SO ORDERED. Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur