KAZUHIRO HASEGAWA and NIPPON ENGINEERING

CONSULTANTS CO., LTD., vs MINORU KITAMURA,

Hasegawa vs. Kitamura, G.R. No. 149177 November
23,
2007
DECISION
NACHURA, J.:
Before the Court is a petition for review
on certiorari under Rule 45 of the Rules of Court
assailing the April 18, 2001 Decision[1] of the Court of
Appeals (CA) in CA-G.R. SP No. 60827, and the July 25,
2001
Resolution[2] denying
the
motion
for
reconsideration thereof.
On March 30, 1999, petitioner Nippon Engineering
Consultants Co., Ltd. (Nippon), a Japanese consultancy
firm providing technical and management support in
the infrastructure projects of foreign governments,
[3]
entered into an Independent Contractor Agreement
(ICA) with respondent Minoru Kitamura, a Japanese
national permanently residing in the Philippines. [4] The
agreement provides that respondent was to extend
professional services to Nippon for a year starting
on April 1, 1999.[5] Nippon then assigned respondent to
work as the project manager of the Southern Tagalog
Access Road (STAR) Project in the Philippines, following
the company's consultancy contract with the Philippine
Government.[6]
When the STAR Project was near completion, the
Department of Public Works and Highways (DPWH)
engaged
the
consultancy
services
of Nippon,
on January 28, 2000, this time for the detailed
engineering and construction supervision of the
Bongabon-Baler Road Improvement (BBRI) Project.
[7]
Respondent was named as the project manager in
the contract's Appendix 3.1.[8]
On February
28,
2000,
petitioner
Kazuhiro
Hasegawa, Nippon's
general
manager
for
its
International Division, informed respondent that the
company had no more intention of automatically
renewing his ICA. His services would be engaged by
the company only up to the substantial completion of
the STAR Project on March 31, 2000, just in time for
the ICA's expiry.[9]
Threatened
with
impending
unemployment,
respondent, through his lawyer, requested a
negotiation conference and demanded that he be
assigned to the BBRI project. Nipponinsisted that
respondents contract was for a fixed term that had
already expired, and refused to negotiate for the
renewal of the ICA.[10]
As he was not able to generate a positive response
from the petitioners, respondent consequently initiated
on June 1, 2000 Civil Case No. 00-0264 for specific

performance
and
damages
the Regional Trial Court of Lipa City.[11]

with

For their part, petitioners, contending that the ICA had

been perfected in Japan and executed by and between
Japanese nationals, moved to dismiss the complaint for
lack of jurisdiction. They asserted that the claim for
improper pre-termination of respondent's ICA could
only be heard and ventilated in the proper courts
of Japan following
the
principles
of lex
loci
celebrationis and lex contractus.[12]
In the meantime, on June 20, 2000, the DPWH
approved Nippon's request for the replacement of
Kitamura by a certain Y. Kotake as project manager of
the BBRI Project.[13]
On June 29, 2000, the RTC, invoking our ruling
in Insular Government v. Frank[14] that matters
connected with the performance of contracts are
regulated by the law prevailing at the place of
performance,[15] denied the motion to dismiss. [16] The
trial court subsequently denied petitioners' motion for
reconsideration,[17] prompting them to file with the
appellate court, on August 14, 2000, their first Petition
for Certiorari under Rule 65 [docketed as CA-G.R. SP
No. 60205].[18] On August 23, 2000, the CA resolved to
dismiss the petition on procedural groundsfor lack of
statement of material dates and for insufficient
verification and certification against forum shopping.
[19]
An Entry of Judgment was later issued by the
appellate court on September 20, 2000.[20]
Aggrieved by this development, petitioners filed with
the CA, on September 19, 2000, still within the
reglementary
period,
a second Petition
for Certiorari under Rule 65 already stating therein the
material dates and attaching thereto the proper
verification and certification. This second petition,
which substantially raised the same issues as those in
the first, was docketed as CA-G.R. SP No. 60827.[21]
Ruling on the merits of the second petition, the
appellate court rendered the assailed April 18,
2001 Decision[22] finding no grave abuse of discretion in
the trial court's denial of the motion to dismiss. The CA
ruled, among others, that the principle of lex loci
celebrationis was not applicable to the case, because
nowhere in the pleadings was the validity of the
written agreement put in issue. The CA thus declared
that the trial court was correct in applying instead the
principle of lex loci solutionis.[23]
Petitioners'
motion
for
reconsideration
was
subsequently denied by the CA in the assailed July 25,
2001 Resolution.[24]
Remaining steadfast in their stance despite the series
of denials, petitioners instituted the instant Petition for
Review on Certiorari[25] imputing the following errors to
the appellate court:
A. THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN FINDING THAT THE TRIAL

COURT VALIDLY EXERCISED JURISDICTION OVER

THE INSTANT CONTROVERSY, DESPITE THE
FACT THAT THE CONTRACT SUBJECT MATTER OF
THE PROCEEDINGS A QUO WAS ENTERED INTO
BY AND BETWEEN TWO JAPANESE NATIONALS,
WRITTEN WHOLLY IN THE JAPANESE LANGUAGE
AND EXECUTED IN TOKYO, JAPAN.
B. THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN OVERLOOKING THE NEED TO
REVIEW OUR ADHERENCE TO THE PRINCIPLE
OF LEX LOCI SOLUTIONISIN THE LIGHT OF
RECENT
DEVELOPMENT[S]
IN
PRIVATE
INTERNATIONAL LAWS.[26]
The pivotal question that this Court is called upon to
resolve is whether the subject matter jurisdiction of
Philippine courts in civil cases for specific performance
and damages involving contracts executed outside the
country by foreign nationals may be assailed on the
principles of lex loci celebrationis, lex contractus, the
state of the most significant relationship rule, or forum
non conveniens.
However, before ruling on this issue, we must first
dispose of the procedural matters raised by the
respondent.
Kitamura contends that the finality of the appellate
court's decision in CA-G.R. SP No. 60205 has already
barred the filing of the second petition docketed as CAG.R. SP No. 60827 (fundamentally raising the same
issues as those in the first one) and the instant petition
for review thereof.
We do not agree. When the CA dismissed CA-G.R. SP
No. 60205 on account of the petition's defective
certification of non-forum shopping, it was a dismissal
without prejudice.[27] The same holds true in the CA's
dismissal of the said case due to defects in the formal
requirement of verification[28] and in the other
requirement in Rule 46 of the Rules of Court on the
statement of the material dates.[29] The dismissal being
without prejudice, petitioners can re-file the petition, or
file a second petition attaching thereto the appropriate
verification and certificationas they, in fact didand
stating therein the material dates, within the
prescribed period[30] in Section 4, Rule 65 of the said
Rules.[31]
The dismissal of a case without prejudice signifies the
absence of a decision on the merits and leaves the
parties free to litigate the matter in a subsequent
action as though the dismissed action had not been
commenced. In other words, the termination of a case
not on the merits does not bar another action involving
the same parties, on the same subject matter and
theory.[32]
Necessarily, because the said dismissal is without
prejudice and has no res judicata effect, and even if
petitioners still indicated in the verification and
certification of the secondcertiorari petition that the

first had already been dismissed on procedural

grounds,[33] petitioners are no longer required by the
Rules to indicate in their certification of non-forum
shopping in the instant petition for review of the
second certiorari petition, the status of the aforesaid
first petition before the CA. In any case, an omission in
the certificate of non-forum shopping about any event
that
will
not
constitute res judicata and litis pendentia, as in the
present case, is not a fatal defect. It will not warrant
the dismissal
and
nullification
of
the
entire
proceedings, considering that the evils sought to be
prevented by the said certificate are no longer present.
[34]

The Court also finds no merit in respondent's

contention that petitioner Hasegawa is only authorized
to
verify
and
certify,
on
behalf
of Nippon,
the certiorari petition filed with the CA and not the
instant petition. True, the Authorization [35] dated
September 4, 2000, which is attached to the
second certiorari petition and which is also attached to
the instant petition for review, is limited in scopeits
wordings indicate that Hasegawa is given the authority
to sign for and act on behalf of the company only in
the petition filed with the appellate court, and that
authority cannot extend to the instant petition for
review.[36] In a plethora of cases, however, this Court
has liberally applied the Rules or even suspended its
application whenever a satisfactory explanation and a
subsequent fulfillment of the requirements have been
made.[37] Given that petitioners herein sufficiently
explained their misgivings on this point and appended
to their Reply[38] an updated Authorization[39] for
Hasegawa to act on behalf of the company in the
instant petition, the Court finds the same as sufficient
compliance with the Rules.
However, the Court cannot extend the same liberal
treatment to the defect in the verification and
certification. As respondent pointed out, and to which
we agree, Hasegawa is truly not authorized to act on
behalf of Nippon in this case. The aforesaid September
4, 2000 Authorization and even the subsequent August
17, 2001 Authorization were issued only by Nippon's
president and chief executive officer, not by the
company's board of directors. In not a few cases, we
have ruled that corporate powers are exercised by the
board of directors; thus, no person, not even its
officers, can bind the corporation, in the absence of
authority
from
the
board.[40] Considering
that
Hasegawa verified and certified the petition only on his
behalf and not on behalf of the other petitioner, the
petition has to be denied pursuant to Loquias v. Office
of the Ombudsman.[41] Substantial compliance will not
suffice in a matter that demands strict observance of
the Rules.[42] While technical rules of procedure are
designed not to frustrate the ends of justice,
nonetheless, they are intended to effect the proper and
orderly disposition of cases and effectively prevent the
clogging of court dockets.[43]
Further, the Court has observed that petitioners
incorrectly filed a Rule 65 petition to question the trial

court's denial of their motion to dismiss. It is a wellestablished

rule
that
an
order
denying
a motion to dismiss
is
interlocutory,
and cannot be the subject of the extraordinary petition
for certiorari or mandamus. The appropriate recourse
is to file an answer and to interpose as defenses the
objections raised in the motion, to proceed to trial,
and, in case of an adverse decision, to elevate the
entire case by appeal in due course. [44] While there are
recognized exceptions to this rule, [45] petitioners' case
does not fall among them.
This brings us to the discussion of the substantive
issue of the case.
Asserting that the RTC of Lipa City is an inconvenient
forum, petitioners question its jurisdiction to hear and
resolve the civil case for specific performance and
damages filed by the respondent. The ICA subject of
the litigation was entered into and perfected
in Tokyo, Japan, by Japanese nationals, and written
wholly in the Japanese language. Thus, petitioners
posit that local courts have no substantial relationship
to the parties[46] following the [state of the] most
significant relationship rule in Private International Law.
[47]

The Court notes that petitioners adopted an additional

but different theory when they elevated the case to the
appellate court. In the Motion to Dismiss[48] filed with
the trial court, petitioners never contended that the
RTC is an inconvenient forum. They merely argued that
the applicable law which will determine the validity or
invalidity of respondent's claim is that of Japan,
following the principles of lex loci celebrationis and lex
contractus.[49] While not abandoning this stance in their
petition before the appellate court, petitioners
on certiorari significantly invoked the defense of forum
non conveniens.[50] On petition for review before this
Court, petitioners dropped their other arguments,
maintained the forum non conveniens defense, and
introduced their new argument that the applicable
principle is the [state of the] most significant
relationship rule.[51]
Be that as it may, this Court is not inclined to deny this
petition merely on the basis of the change in theory, as
explained in Philippine Ports Authority v. City of Iloilo.
[52]
We only pointed out petitioners' inconstancy in their
arguments to emphasize their incorrect assertion of
conflict of laws principles.
To elucidate, in the judicial resolution of conflicts
problems, three consecutive phases are involved:
jurisdiction, choice of law, and recognition and
enforcement of judgments. Corresponding to these
phases are the following questions: (1) Where can or
should litigation be initiated? (2) Which law will the
court apply? and (3) Where can the resulting judgment
be enforced?[53]
Analytically, jurisdiction and choice of law are two
distinct concepts.[54] Jurisdiction considers whether it is
fair to cause a defendant to travel to this state; choice

of law asks the further question whether the

application of a substantive law which will determine
the merits of the case is fair to both parties. The power
to exercise jurisdiction does not automatically give a
state constitutional authority to apply forum law. While
jurisdiction and the choice of the lex fori will often
coincide, the minimum contacts for one do not always
provide the necessary significant contacts for the
other.[55] The question of whether the law of a state can
be applied to a transaction is different from the
question of whether the courts of that state have
jurisdiction to enter a judgment.[56]
In this case, only the first phase is at issuejurisdiction.
Jurisdiction, however, has various aspects. For a court
to validly exercise its power to adjudicate a
controversy, it must have jurisdiction over the plaintiff
or the petitioner, over the defendant or the
respondent, over the subject matter, over the issues of
the case and, in cases involving property, over
the res or the thing which is the subject of the
litigation.[57] In assailing the trial court's jurisdiction
herein, petitioners are actually referring to subject
matter jurisdiction.
Jurisdiction over the subject matter in a judicial
proceeding is conferred by the sovereign authority
which establishes and organizes the court. It is given
only by law and in the manner prescribed by law. [58] It
is further determined by the allegations of the
complaint irrespective of whether the plaintiff is
entitled to all or some of the claims asserted therein.
[59]
To succeed in its motion for the dismissal of an
action for lack of jurisdiction over the subject matter of
the claim,[60] the movant must show that the court or
tribunal cannot act on the matter submitted to it
because no law grants it the power to adjudicate the
claims.[61]
In the instant case, petitioners, in their motion to
dismiss, do not claim that the trial court is not properly
vested by law with jurisdiction to hear the subject
controversy for, indeed, Civil Case No. 00-0264 for
specific performance and damages is one not capable
of pecuniary estimation and is properly cognizable by
the RTC of Lipa City.[62] What they rather raise as
grounds to question subject matter jurisdiction are the
principles
of lex
loci
celebrationis and lex
contractus, and the state of the most significant
relationship rule.
The Court finds the invocation of these grounds
unsound.
Lex loci celebrationis relates to the law of the place of
the ceremony[63] or the law of the place where a
contract
is
made.[64] The
doctrine
of lex
contractus or lex loci contractusmeans the law of the
place where a contract is executed or to be performed.
[65]
It controls the nature, construction, and validity of
the contract[66] and it may pertain to the law voluntarily
agreed upon by the parties or the law intended by
them either expressly or implicitly.[67] Under the state of
the most significant relationship rule, to ascertain what
state law to apply to a dispute, the court should

determine which state has the most substantial

connection to the occurrence and the parties. In a case
involving a contract, the court should consider where
the contract was made, was negotiated, was to be
performed, and the domicile, place of business, or
place of incorporation of the parties. [68] This rule takes
into account several contacts and evaluates them
according to their relative importance with respect to
the particular issue to be resolved.[69]
Since these three principles in conflict of laws make
reference to the law applicable to a dispute, they are
rules proper for the second phase, the choice of law.
[70]
They determine which state's law is to be applied in
resolving the substantive issues of a conflicts problem.
[71]
Necessarily, as the only issue in this case is that of
jurisdiction,
choice-of-law
rules
are
not
only
inapplicable but also not yet called for.
Further, petitioners' premature invocation of choice-oflaw rules is exposed by the fact that they have not yet
pointed out any conflict between the laws of Japan and
ours. Before determining which law should apply, first
there should exist a conflict of laws situation requiring
the application of the conflict of laws rules.[72] Also,
when the law of a foreign country is invoked to provide
the proper rules for the solution of a case, the
existence of such law must be pleaded and proved.[73]
It should be noted that when a conflicts case, one
involving a foreign element, is brought before a court
or administrative agency, there are three alternatives
open to the latter in disposing of it: (1) dismiss the
case, either because of lack of jurisdiction or refusal to
assume jurisdiction over the case; (2) assume
jurisdiction over the case and apply the internal law of
the forum; or (3) assume jurisdiction over the case and
take into account or apply the law of some other State
or States.[74] The courts power to hear cases and
controversies is derived from the Constitution and the
laws. While it may choose to recognize laws of foreign
nations, the court is not limited by foreign sovereign
law short of treaties or other formal agreements, even
in matters regarding rights provided by foreign
sovereigns.[75]

Neither can the other ground raised, forum non

conveniens,[76] be used to deprive the trial court of its
jurisdiction herein. First, it is not a proper basis for a
motion to dismiss because Section 1, Rule 16 of the
Rules of Court does not include it as a ground.
[77]
Second, whether a suit should be entertained or
dismissed on the basis of the said doctrine depends
largely upon the facts of the particular case and is
addressed to the sound discretion of the trial court.
[78]
In this case, the RTC decided to assume jurisdiction.
Third, the propriety of dismissing a case based on this
principle requires a factual determination; hence, this
conflicts principle is more properly considered a matter
of defense.[79]
Accordingly, since the RTC is vested by law with the
power to entertain and hear the civil case filed by
respondent and the grounds raised by petitioners to
assail that jurisdiction are inappropriate, the trial and
appellate courts correctly denied the petitioners
motion to dismiss.
WHEREFORE, premises
considered,
the
petition for review on certiorari is DENIED.

SO ORDERED.
-------------------------------

2.

Choice of Law Which law will the court

apply? Once a local court takes cognizance, it does not
mean that the local laws must automatically apply. The
In March 1999, Nippon Engineering Consultants Co., court must determine which substantive law when
Ltd,
a
Japanese
firm,
was
contracted
by applied to the merits will be fair to both parties.
the Department of Public Works and Highways (DPWH)3.
Recognition
and
Enforcement
of
to supervise the construction of the Southern Tagalog Judgment Where can the resulting judgment be
Access Road. In April 1999, Nippon entered into an enforced?
independent contractor agreement (ICA) with Minoru This case is not yet in the second phase because upon
Kitamura for the latter to head the said project. The the
RTCs
taking
cognizance
of
the
ICA was entered into in Japan and is effective for a case, Hasegawaimmediately filed a motion to dismiss,
period of 1 year (so until April 2000). In January 2000, which was denied. He filed a motion for
DPWH awarded the Bongabon-Baler Road project to reconsideration, which was also denied. Then he
Nippon. Nippon subsequently assigned Kitamura to bypassed the proper procedure by immediately filing a
head the road project. But in February 2000, petition for certiorari. The question of which law should
Kazuhiro Hasegawa, the general manager of Nippon be applied should have been settled in the trial court
informed Kitamura that they are pre-terminating his had Hasegawa not
improperly
appealed
the
contract. Kitamura sought Nippon to reconsider but interlocutory order denying his MFR.
Nippon refused to negotiate. Kitamura then filed a -----------------complaint for specific performance and damages
against Nippon in the RTC of Lipa.
G.R. No. 162416
January 31, 2006
Hasegawa filed a motion to dismiss on the ground that
the contract was entered in Japan hence, applying the
CHESTER
DE
JOYA, Petitioner,
principle of lex loci celebracionis, cases arising from
the contract should be cognizable only by Japanese vs.
courts. The trial court denied the motion. Eventually, JUDGE PLACIDO C. MARQUEZ, in his capacity as
Nippon filed a petition for certiorari with the Supreme Presiding Judge of Branch 40, Manila-RTC,
Court.
PEOPLE OF THE PHILIPPINES and THE SECRETARY
Hasegawa, on appeal significantly changed its theory, OF THE DEPARTMENT OF JUSTICE, Respondents.
this time invoking forum non conveniens; that the RTC
is an inconvenient forum because the parties are
Japanese nationals who entered into a contract in D E C I S I O N
Japan. Kitamura on the other hand invokes the trial
courts ruling which states that matters connected with AZCUNA, J.:
the performance of contracts are regulated by the law
prevailing at the place of performance, so since the This is a petition for certiorari and prohibition that
obligations in the ICA are executed in the Philippines,
seeks the Court to nullify and set aside the warrant of
courts here have jurisdiction.
ISSUE: Whether or not the complaint against Nippon arrest issued by respondent judge against petitioner in
Criminal Case No. 03-219952 for violation of Article
should be dismissed.
HELD: No. The trial court did the proper thing in taking 315, par. 2(a) of the Revised Penal Code in relation to
cognizance of it.
Presidential Decree (P.D.) No. 1689. Petitioner asserts
In the first place, the case filed by Kitamura is a that respondent judge erred in finding the existence of
complaint for specific performance and damages. Such probable cause that justifies the issuance of a warrant
case is incapable of pecuniary estimation; such cases
of arrest against him and his co-accused.
are within the jurisdiction of the regional trial court.
Hasegawa filed his motion to dismiss on the ground of
forum non conveniens. However, such ground is not Section 6, Rule 112 of the Revised Rules of Criminal
one of those provided for by the Rules as a ground for Procedure provides:
dismissing a civil case.
The Supreme Court also emphasized that the Sec. 6. When warrant of arrest may issue. (a)
contention that Japanese laws should apply is
By the Regional Trial Court. Within ten (10) days
premature. In conflicts cases, there are three phases
and each next phase commences when one is settled, from the filing of the complaint or information, the
judge shall personally evaluate the resolution of the
to wit:
1.
Jurisdiction Where should litigation be prosecutor and its supporting evidence. He may
initiated? Court must have jurisdiction over the subject immediately dismiss the case if the evidence on record
matter, the parties, the issues, the property, the res. clearly fails to establish probable cause. If he finds
Also considers, whether it is fair to cause a defendant probable cause, he shall issue a warrant of
to travel to this state; choice of law asks the further
arrest, or a commitment order if the accused has
question whether the application of a substantive law
which will determine the merits of the case is fair to already been arrested pursuant to a warrant
issued by the judge who conducted the
both parties.
preliminary investigation or when the complaint

or information was filed pursuant to section 7 of

this Rule. In case of doubt on the existence of
probable cause, the judge may order the prosecutor to
present additional evidence within five (5) days from
notice and the issuance must be resolved by the court
within thirty (30) days from the filing of the complaint
or information.
x x x1
This Court finds from the records of Criminal Case No.
03-219952 the following documents to support the
motion of the prosecution for the issuance of a warrant
of arrest:
1. The report of the National Bureau of Investigation to
Chief State Prosecutor Jovencito R. Zuo as regards
their investigation on the complaint filed by private
complainant Manuel Dy Awiten against Mina Tan Hao @
Ma. Gracia Tan Hao and Victor Ngo y Tan for syndicated
estafa. The report shows that Hao induced Dy to invest
more than a hundred million pesos in State Resources
Development Management Corporation, but when the
latters investments fell due, the checks issued by Hao
in favor of Dy as payment for his investments were
dishonored for being drawn against insufficient funds
or that the account was closed.2
2. Affidavit-Complaint of private complainant Manuel
Dy Awiten.3
3. Copies of the checks issued by private complainant
in favor of State Resources Corporation.4
4. Copies of the checks issued to private complainant
representing the supposed return of his investments in
State Resources.5
5. Demand letter sent by private complainant to Ma.
Gracia Tan Hao.6
6. Supplemental Affidavit of private complainant to
include the incorporators and members of the board of
directors
of
State
Resources
Development
Management Corporation as participants in the
conspiracy to commit the crime of syndicated estafa.
Among those included was petitioner Chester De Joya.7
7. Counter-Affidavits of Chester De Joya and the other
accused, Ma. Gracia Hao and Danny S. Hao.
Also included in the records are the resolution issued
by State Prosecutor Benny Nicdao finding probable
cause to indict petitioner and his other co-accused for
syndicated estafa,8 and a copy of the Articles of

Incorporation of State Resources Development

Management Corporation naming petitioner as
incorporator and director of said corporation.
This Court finds that these documents sufficiently
establish the existence of probable cause as required
under Section 6, Rule 112 of the Revised Rules of
Criminal Procedure. Probable cause to issue a warrant
of arrest pertains to facts and circumstances which
would lead a reasonably discreet and prudent person
to believe that an offense has been committed by the
person sought to be arrested. It bears remembering
that "in determining probable cause, the average man
weighs facts and circumstances without resorting to
the calibrations of our technical rules of evidence of
which his knowledge is nil. Rather, he relies on the
calculus of common sense of which all reasonable men
have an abundance."9 Thus, the standard used for the
issuance of a warrant of arrest is less stringent than
that used for establishing the guilt of the accused. As
long as the evidence presented shows a prima
facie case against the accused, the trial court judge
has sufficient ground to issue a warrant of arrest
against him.
The foregoing documents found in the records and
examined by respondent judge tend to show that
therein private complainant was enticed to invest a
large sum of money in State Resources Development
Management Corporation; that he issued several
checks amounting to P114,286,086.14 in favor of the
corporation; that the corporation, in turn, issued
several checks to private complainant, purportedly
representing the return of his investments; that said
checks were later dishonored for insufficient funds and
closed account; that petitioner and his co-accused,
being incorporators and directors of the corporation,
had knowledge of its activities and transactions. These
are all that need to be shown to establish probable
cause for the purpose of issuing a warrant of arrest. It
need not be shown that the accused are indeed guilty
of the crime charged. That matter should be left to the
trial. It should be emphasized that before issuing
warrants of arrest, judges merely determine personally
the probability, not the certainty, of guilt of an
accused. Hence, judges do not conduct a de
novo hearing to determine the existence of probable
cause. They just personally review the initial
determination of the prosecutor finding a probable
cause to see if it is supported by substantial
evidence.10 In case of doubt on the existence of
probable cause, the Rules allow the judge to order the
prosecutor to present additional evidence. In the
present case, it is notable that the resolution issued by
State Prosecutor Benny Nicdao thoroughly explains the

bases for his findings that there is probable cause to

charge all the accused with violation of Article 315,
par. 2(a) of the Revised Penal Code in relation to P.D.
No. 1689.
The general rule is that this Court does not review the
factual findings of the trial court, which include the
determination of probable cause for the issuance of
warrant of arrest. It is only in exceptional cases where
this Court sets aside the conclusions of the prosecutor
and the trial judge on the existence of probable cause,
that is, when it is necessary to prevent the misuse of
the strong arm of the law or to protect the orderly
administration of justice. The facts obtaining in this
case do not warrant the application of the
exception.lavvph!l.ne+
In addition, it may not be amiss to note that petitioner
is not entitled to seek relief from this Court nor from
the trial court as he continuously refuses to surrender
and submit to the courts jurisdiction. Justice Florenz D.
Regalado explains the requisites for the exercise of
jurisdiction and how the court acquires such
jurisdiction, thus:
x x x Requisites for the exercise of jurisdiction and how
the court acquires such jurisdiction:
a. Jurisdiction over the plaintiff or petitioner: This is
acquired by the filing of the complaint, petition or
initiatory pleading before the court by the plaintiff or
petitioner.
b. Jurisdiction
over
the
defendant
or
respondent: This is acquired by the voluntary
appearance or submission by the defendant or
respondent to the court or by coercive process
issued by the court to him, generally by the
service of summons.
c. Jurisdiction over the subject matter: This is conferred
by law and, unlike jurisdiction over the parties, cannot
be conferred on the court by the voluntary act or
agreement of the parties.

by the actual or constructive seizure by the court of

the thing in question, thus placing it in custodia legis,
as in attachment or garnishment; or by provision of law
which recognizes in the court the power to deal with
the property or subject matter within its territorial
jurisdiction, as in land registration proceedings or suits
involving civil status or real property in the Philippines
of a non-resident defendant.
Justice Regalado continues to explain:
In two cases, the court acquires jurisdiction to try the
case, even if it has not acquired jurisdiction over the
person of a nonresident defendant, as long as it has
jurisdiction over the res, as when the action involves
the personal status of the plaintiff or property in the
Philippines in which the defendant claims an interest.
In such cases, the service of summons by publication
and notice to the defendant is merely to comply with
due process requirements. Under Sec. 133 of the
Corporation Code, while a foreign corporation doing
business in the Philippines without a license cannot
sue or intervene in any action here, it may be sued or
proceeded against before our courts or administrative
tribunals.11
Again, there is no exceptional reason in this case to
allow petitioner to obtain relief from the courts without
submitting to its jurisdiction. On the contrary, his
continued refusal to submit to the courts jurisdiction
should give this Court more reason to uphold the
action of the respondent judge. The purpose of a
warrant of arrest is to place the accused under the
custody of the law to hold him for trial of the charges
against him. His evasive stance shows an intent to
circumvent and frustrate the object of this legal
process. It should be remembered that he who invokes
the courts jurisdiction must first submit to its
jurisdiction.
WHEREFORE, the petition is DISMISSED.
No costs.
SO ORDERED.

d. Jurisdiction over the issues of the case: This is

determined and conferred by the pleadings filed in the
case by the parties, or by their agreement in a pre-trial
order or stipulation, or, at times by their implied
consent as by the failure of a party to object to
evidence on an issue not covered by the pleadings, as
provided in Sec. 5, Rule 10.
e. Jurisdiction over the res (or the property or thing
which is the subject of the litigation). This is acquired

----------G.R. No. 173946

June 19, 2013

BOSTON EQUITY RESOURCES, INC., Petitioner,

vs.
COURT
OF
APPEALS
AND
LOLITA
G.
TOLEDO, Respondents.

DECISION
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari
seeking to reverse and set aside: (1) the
Decision,1 dated 28 February 2006 and (2) the
Resolution,2 dated 1 August 2006 of the Court of
Appeals in CA-G.R. SP No. 88586. The challenged
decision granted herein respondent's petition for
certiorari upon a finding that the trial court committed
grave abuse of discretion in denying respondent's
motion to dismiss the complaint against her. 3Based on
this finding, the Court of Appeals reversed and set
aside the Orders, dated 8 November 2004 4 and 22
December 2004,5 respectively, of the Regional Trial
Court (RTC) of Manila, Branch 24.
The Facts
On 24 December 1997, petitioner filed a complaint for
sum of money with a prayer for the issuance of a writ
of preliminary attachment against the spouses Manuel
and Lolita Toledo.6 Herein respondent filed an Answer
dated 19 March 1998 but on 7 May 1998, she filed a
Motion for Leave to Admit Amended Answer 7 in which
she alleged, among others, that her husband and codefendant, Manuel Toledo (Manuel), is already
dead.8 The death certificate9 of Manuel states "13 July
1995" as the date of death. As a result, petitioner filed
a motion, dated 5 August 1999, to require respondent
to disclose the heirs of Manuel.10 In compliance with
the verbal order of the court during the 11 October
1999 hearing of the case, respondent submitted the
required names and addresses of the heirs.11 Petitioner
then filed a Motion for Substitution, 12 dated 18 January
2000, praying that Manuel be substituted by his
children as party-defendants. It appears that this
motion was granted by the trial court in an Order dated
9 October 2000.13
Pre-trial thereafter ensued and on 18 July 2001, the
trial court issued its pre-trial order containing, among
others, the dates of hearing of the case.14
The trial of the case then proceeded. Herein petitioner,
as plaintiff, presented its evidence and its exhibits
were thereafter admitted.
On 26 May 2004, the reception of evidence for herein
respondent was cancelled upon agreement of the
parties. On 24 September 2004, counsel for herein
respondent was given a period of fifteen days within
which to file a demurrer to evidence. 15 However, on 7
October 2004, respondent instead filed a motion to

dismiss the complaint, citing the following as grounds:

(1) that the complaint failed to implead an
indispensable party or a real party in interest; hence,
the case must be dismissed for failure to state a cause
of action; (2) that the trial court did not acquire
jurisdiction over the person of Manuel pursuant to
Section 5, Rule 86 of the Revised Rules of Court; (3)
that the trial court erred in ordering the substitution of
the deceased Manuel by his heirs; and (4) that the
court must also dismiss the case against Lolita Toledo
in accordance with Section 6, Rule 86 of the Rules of
Court.16
The trial court, in an Order dated 8 November 2004,
denied the motion to dismiss for having been filed out
of time, citing Section 1, Rule 16 of the 1997 Rules of
Court which states that: "Within the time for but before
filing the answer to the complaint or pleading asserting
a claim, a motion to dismiss may be made x x
x."17Respondents motion for reconsideration of the
order of denial was likewise denied on the ground that
"defendants attack on the jurisdiction of this Court is
now barred by estoppel by laches" since respondent
failed to raise the issue despite several chances to do
so.18
Aggrieved, respondent filed a petition for certiorari
with the Court of Appeals alleging that the trial court
seriously erred and gravely abused its discretion in
denying her motion to dismiss despite discovery,
during the trial of the case, of evidence that would
constitute a ground for dismissal of the case.19
The Court of Appeals granted the petition based on the
following grounds:
It is elementary that courts acquire jurisdiction over
the person of the defendant x x x only when the latter
voluntarily appeared or submitted to the court or by
coercive process issued by the court to him, x x x. In
this case, it is undisputed that when petitioner Boston
filed the complaint on December 24, 1997, defendant
Manuel S. Toledo was already dead, x x x. Such being
the case, the court a quo could not have acquired
jurisdiction over the person of defendant Manuel S.
Toledo.
x x x the court a quos denial of respondents motion to
dismiss was based on its finding that respondents
attack on the jurisdiction of the court was already
barred by laches as respondent failed to raise the said
ground in its [sic] amended answer and during the pretrial, despite her active participation in the
proceedings.

However, x x x it is well-settled that issue on

jurisdiction may be raised at any stage of the
proceeding, even for the first time on appeal. By timely
raising the issue on jurisdiction in her motion to
dismiss x x x respondent is not estopped from raising
the question on jurisdiction.

In essence, what is at issue here is the correctness of

the trial courts orders denying respondents motion to
dismiss.
The Ruling of the Court
We find merit in the petition.

Moreover, when issue on jurisdiction was raised by

respondent, the court a quo had not yet decided the
case, hence, there is no basis for the court a quo to
invoke estoppel to justify its denial of the motion for
reconsideration;
It should be stressed that when the complaint was
filed, defendant Manuel S. Toledo was already dead.
The complaint should have impleaded the estate of
Manuel S. Toledo as defendant, not only the wife,
considering that the estate of Manuel S. Toledo is an
indispensable party, which stands to be benefited or
be injured in the outcome of the case. x x x

Motion to dismiss filed out of time

To begin with, the Court of Appeals erred in granting
the writ of certiorari in favor of respondent. Well
settled is the rule that the special civil action for
certiorari is not the proper remedy to assail the denial
by the trial court of a motion to dismiss. The order of
the trial court denying a motion to dismiss is merely
interlocutory, as it neither terminates nor finally
disposes of a case and still leaves something to be
done by the court before a case is finally decided on
the merits.21 Therefore, "the proper remedy in such a
case is to appeal after a decision has been rendered." 22

xxxx
Respondents motion to dismiss the complaint should
have been granted by public respondent judge as the
same was in order. Considering that the obligation of
Manuel S. Toledo is solidary with another debtor, x x x,
the claim x x x should be filed against the estate of
Manuel S. Toledo, in conformity with the provision of
Section 6, Rule 86 of the Rules of Court, x x x.20
The Court of Appeals denied petitioners motion for
reconsideration. Hence, this petition.
The Issues
Petitioner claims that the Court of Appeals erred in not
holding that:
1. Respondent is already estopped from questioning
the trial courts jurisdiction;
2. Petitioner never failed to implead an indispensable
party as the estate of Manuel is not an indispensable
party;
3. The inclusion of Manuel as party-defendant is a
mere misjoinder of party not warranting the dismissal
of the case before the lower court; and
4. Since the estate of Manuel is not an indispensable
party, it is not necessary that petitioner file its claim
against the estate of Manuel.

As the Supreme Court held in Indiana Aerospace

University v. Comm. on Higher Education: 23
A writ of certiorari is not intended to correct every
controversial interlocutory ruling; it is resorted only to
correct a grave abuse of discretion or a whimsical
exercise of judgment equivalent to lack of jurisdiction.
Its function is limited to keeping an inferior court within
its jurisdiction and to relieve persons from arbitrary
acts acts which courts or judges have no power or
authority in law to perform. It is not designed to correct
erroneous findings and conclusions made by the
courts. (Emphasis supplied)
Even assuming that certiorari is the proper remedy,
the trial court did not commit grave abuse of discretion
in denying respondents motion to dismiss. It, in fact,
acted correctly when it issued the questioned orders as
respondents motion to dismiss was filed SIX YEARS
AND FIVE MONTHS AFTER SHE FILED HER AMENDED
ANSWER. This circumstance alone already warranted
the outright dismissal of the motion for having been
filed in clear contravention of the express mandate of
Section 1, Rule 16, of the Revised Rules of Court. Under
this provision, a motion to dismiss shall be filed within
the time for but before the filing of an answer to the
complaint or pleading asserting a claim.24
More importantly, respondents motion to dismiss was
filed after petitioner has completed the presentation of
its evidence in the trial court, giving credence to
petitioners and the trial courts conclusion that the
filing of the motion to dismiss was a mere ploy on the

part of respondent to delay the prompt resolution of

the case against her.
Also worth mentioning is the fact that respondents
motion to dismiss under consideration herein is not the
first motion to dismiss she filed in the trial court. It
appears that she had filed an earlier motion to
dismiss26 on the sole ground of the unenforceability of
petitioners claim under the Statute of Frauds, which
motion was denied by the trial court. More telling is the
following narration of the trial court in its Order
denying respondents motion for reconsideration of the
denial of her motion to dismiss:
As can be gleaned from the records, with the
admission of plaintiffs exhibits, reception of
defendants evidence was set on March 31, and April
23, 2004 x x x . On motion of the defendants, the
hearing on March 31, 2004 was cancelled.
On April 14, 2004, defendants sought the issuance of
subpoena ad testificandum and duces tecum to one
Gina M. Madulid, to appear and testify for the
defendants on April 23, 2004. Reception of defendants
evidence was again deferred to May 26, June 2 and
June 30, 2004, x x x.
On May 13, 2004, defendants sought again the
issuance of a subpoena duces tecum and ad
testificandum to the said Gina Madulid. On May 26,
2004, reception of defendants [sic] evidence was
cancelled upon the agreement of the parties. On July
28, 2004, in the absence of defendants witness,
hearing was reset to September 24 and October 8,
2004 x x x.
On September 24, 2004, counsel for defendants was
given a period of fifteen (15) days to file a demurrer to
evidence. On October 7, 2004, defendants filed instead
a Motion to Dismiss x x x.27
Respondents act of filing multiple motions, such as the
first and earlier motion to dismiss and then the motion
to dismiss at issue here, as well as several motions for
postponement, lends credibility to the position taken
by petitioner, which is shared by the trial court, that
respondent is
deliberately impeding the early disposition of this case.
The filing of the second motion to dismiss was,
therefore, "not only improper but also dilatory." 28 Thus,
the trial court, "far from deviating or straying off
course from established jurisprudence on the matter, x
x x had in fact faithfully observed the law and legal
precedents in this case."29 The Court of Appeals,

therefore, erred not only in entertaining respondents

petition for certiorari, it likewise erred in ruling that the
trial court committed grave abuse of discretion when it
denied respondents motion to dismiss.
On whether or not respondent is estopped from
questioning the jurisdiction of the trial court
At the outset, it must be here stated that, as the
succeeding discussions will demonstrate, jurisdiction
over the person of Manuel should not be an issue in
this case. A protracted discourse on jurisdiction is,
nevertheless, demanded by the fact that jurisdiction
has been raised as an issue from the lower court, to
the Court of Appeals and, finally, before this Court. For
the sake of clarity, and in order to finally settle the
controversy and fully dispose of all the issues in this
case, it was deemed imperative to resolve the issue of
jurisdiction.
1. Aspects of Jurisdiction
Petitioner calls attention to the fact that respondents
motion to dismiss questioning the trial courts
jurisdiction was filed more than six years after her
amended answer was filed. According to petitioner,
respondent had several opportunities, at various
stages of the proceedings, to assail the trial courts
jurisdiction but never did so for six straight years.
Citing the doctrine laid down in the case of Tijam, et al.
v. Sibonghanoy, et al.30 petitioner claimed that
respondents failure to raise the question of jurisdiction
at an earlier stage bars her from later questioning it,
especially since she actively participated in the
proceedings conducted by the trial court.
Petitioners argument is misplaced, in that, it failed to
consider that the concept of jurisdiction has several
aspects, namely: (1) jurisdiction over the subject
matter; (2) jurisdiction over the parties; (3) jurisdiction
over the issues of the case; and (4) in cases involving
property, jurisdiction over the res or the thing which is
the subject of the litigation.31
The aspect of jurisdiction which may be barred from
being assailed as a result of estoppel by laches is
jurisdiction over the subject matter. Thus, in Tijam, the
case relied upon by petitioner, the issue involved was
the authority of the then Court of First Instance to hear
a case for the collection of a sum of money in the
amount of P1,908.00 which amount was, at that time,
within the exclusive original jurisdiction of the
municipal courts.

In subsequent cases citing the ruling of the Court in

Tijam, what was likewise at issue was the jurisdiction of
the trial court over the subject matter of the case.
Accordingly, in Spouses Gonzaga v. Court of
Appeals,32 the issue for consideration was the authority
of the regional trial court to hear and decide an action
for reformation of contract and damages involving a
subdivision lot, it being argued therein that jurisdiction
is vested in the Housing and Land Use Regulatory
Board pursuant to PD 957 (The Subdivision and
Condominium Buyers Protective Decree). In Lee v.
Presiding Judge, MTC, Legaspi City, 33 petitioners argued
that the respondent municipal trial court had no
jurisdiction over the complaint for ejectment because
the issue of ownership was raised in the pleadings.
Finally, in People v. Casuga,34 accused-appellant
claimed that the crime of grave slander, of which she
was charged, falls within the concurrent jurisdiction of
municipal courts or city courts and the then courts of
first instance, and that the judgment of the court of
first instance, to which she had appealed the municipal
court's conviction, should be deemed null and void for
want of jurisdiction as her appeal should have been
filed with the Court of Appeals or the Supreme Court.
In all of these cases, the Supreme Court barred the
attack on the jurisdiction of the respective courts
concerned over the subject matter of the case based
on estoppel by laches, declaring that parties cannot be
allowed to belatedly adopt an inconsistent posture by
attacking the jurisdiction of a court to which they
submitted their cause voluntarily.35
Here, what respondent was questioning in her motion
to dismiss before the trial court was that courts
jurisdiction over the person of defendant Manuel. Thus,
the principle of estoppel by laches finds no application
in this case. Instead, the principles relating to
jurisdiction over the person of the parties are pertinent
herein.
The Rules of Court provide:
RULE
EFFECT OF FAILURE TO PLEAD

Section 1. Defenses and objections not pleaded.

Defenses and objections not pleaded either in a motion
to dismiss or in the answer are deemed waived.
However, when it appears from the pleadings or the
evidence on record that the court has no jurisdiction
over the subject matter, that there is another action
pending between the same parties for the same cause,
or that the action is barred by a prior judgment or by
statute of limitations, the court shall dismiss the claim.

RULE
MOTIONS

15

Sec. 8. Omnibus motion. Subject to the provisions of

Section 1 of Rule 9, a motion attacking a pleading,
order, judgment, or proceeding shall include all
objections then available, and all objections not so
included shall be deemed waived.
Based on the foregoing provisions, the "objection on
jurisdictional grounds which is not waived even if not
alleged in a motion to dismiss or the answer is lack of
jurisdiction over the subject matter. x x x Lack of
jurisdiction over the subject matter can always be
raised anytime, even for the first time on appeal, since
jurisdictional issues cannot be waived x x x subject,
however, to the principle of estoppel by laches."36
Since the defense of lack of jurisdiction over the
person of a party to a case is not one of those
defenses which are not deemed waived under Section
1 of Rule 9, such defense must be invoked when an
answer or a motion to dismiss is filed in order to
prevent a waiver of the defense. 37 If the objection is
not raised either in a motion to dismiss or in the
answer, the objection to the jurisdiction over the
person of the plaintiff or the defendant is deemed
waived by virtue of the first sentence of the abovequoted Section 1 of Rule 9 of the Rules of Court.38
The Court of Appeals, therefore, erred when it made a
sweeping pronouncement in its questioned decision,
stating that "issue on jurisdiction may be raised at any
stage of the proceeding, even for the first time on
appeal" and that, therefore, respondent timely raised
the issue in her motion to dismiss and is, consequently,
not estopped from raising the question of jurisdiction.
As the question of jurisdiction involved here is that
over the person of the defendant Manuel, the same is
deemed waived if not raised in the answer or a motion
to dismiss. In any case, respondent cannot claim the
defense since "lack of jurisdiction over the person,
being subject to waiver, is a personal defense which
can only be asserted by the party who can thereby
waive it by silence."39
2. Jurisdiction over the person of a defendant is
acquired through a valid service of summons; trial
court did not acquire jurisdiction over the person of
Manuel Toledo
In the first place, jurisdiction over the person of Manuel
was never acquired by the trial court. A defendant is
informed of a case against him when he receives
summons. "Summons is a writ by which the defendant

is notified of the action brought against him. Service of

such writ is the means by which the court acquires
jurisdiction over his person."40
In the case at bar, the trial court did not acquire
jurisdiction over the person of Manuel since there was
no valid service of summons upon him, precisely
because he was already dead even before the
complaint against him and his wife was filed in the trial
court. The issues presented in this case are similar to
those in the case of Sarsaba v. Vda. de Te.41
In Sarsaba, the NLRC rendered a decision declaring
that Patricio Sereno was illegally dismissed from
employment and ordering the payment of his
monetary claims. To satisfy the claim, a truck in the
possession of Serenos employer was levied upon by a
sheriff of the NLRC, accompanied by Sereno and his
lawyer, Rogelio Sarsaba, the petitioner in that case. A
complaint for recovery of motor vehicle and damages,
with prayer for the delivery of the truck pendente lite
was eventually filed against Sarsaba, Sereno, the NLRC
sheriff and the NLRC by the registered owner of the
truck. After his motion to dismiss was denied by the
trial court, petitioner Sarsaba filed his answer. Later
on, however, he filed an omnibus motion to dismiss
citing, as one of the grounds, lack of jurisdiction over
one of the principal defendants, in view of the fact that
Sereno was already dead when the complaint for
recovery of possession was filed.
Although the factual milieu of the present case is not
exactly similar to that of Sarsaba, one of the issues
submitted for resolution in both cases is similar:
whether or not a case, where one of the named
defendants was already dead at the time of its filing,
should be dismissed so that the claim may be pursued
instead in the proceedings for the settlement of the
estate of the deceased defendant. The petitioner in the
Sarsaba Case claimed, as did respondent herein, that
since one of the defendants died before summons was
served on him, the trial court should have dismissed
the complaint against all the defendants and the claim
should be filed against the estate of the deceased
defendant. The petitioner in Sarsaba, therefore, prayed
that the complaint be dismissed, not only against
Sereno, but as to all the defendants, considering that
the RTC did not acquire jurisdiction over the person of
Sereno.42 This is exactly the same prayer made by
respondent herein in her motion to dismiss.
The Court, in the Sarsaba Case, resolved the issue in
this wise:

x x x We cannot countenance petitioners argument

that the complaint against the other defendants should
have been dismissed, considering that the RTC never
acquired jurisdiction over the person of Sereno. The
courts failure to acquire jurisdiction over ones person
is a defense which is personal to the person claiming
it. Obviously, it is now impossible for Sereno to invoke
the same in view of his death. Neither can petitioner
invoke such ground, on behalf of Sereno, so as to reap
the benefit of having the case dismissed against all of
the defendants. Failure to serve summons on Serenos
person will not be a cause for the dismissal of the
complaint against the other defendants, considering
that they have been served with copies of the
summons and complaints and have long submitted
their respective responsive pleadings. In fact, the other
defendants in the complaint were given the chance to
raise all possible defenses and objections personal to
them in their respective motions to dismiss and their
subsequent answers.43 (Emphasis supplied.)
Hence, the Supreme Court affirmed the dismissal by
the trial court of the complaint against Sereno only.
Based on the foregoing pronouncements, there is no
basis for dismissing the complaint against respondent
herein. Thus, as already emphasized above, the trial
court correctly denied her motion to dismiss.
On whether or not the estate of Manuel
Toledo is an indispensable party
Rule 3, Section 7 of the 1997 Rules of Court states:
SEC. 7. Compulsory joinder of indispensable parties.
Parties-in-interest without whom no final determination
can be had of an action shall be joined either as
plaintiffs or defendants.
An indispensable party is one who has such an interest
in the controversy or subject matter of a case that a
final adjudication cannot be made in his or her
absence, without injuring or affecting that interest. He
or she is a party who has not only an interest in the
subject matter of the controversy, but "an interest of
such nature that a final decree cannot be made
without affecting that interest or leaving the
controversy in such a condition that its final
determination may be wholly inconsistent with equity
and good conscience. It has also been considered that
an indispensable party is a person in whose absence
there cannot be a determination between the parties
already before the court which is effective, complete or
equitable." Further, an indispensable party is one who

must be included in an action before it may properly

proceed.44
On the other hand, a "person is not an indispensable
party if his interest in the controversy or subject
matter is separable from the interest of the other
parties, so that it will not necessarily be directly or
injuriously affected by a decree which does complete
justice between them. Also, a person is not an
indispensable party if his presence would merely
permit complete relief between him or her and those
already parties to the action, or if he or she has no
interest in the subject matter of the action." It is not a
sufficient reason to declare a person to be an
indispensable party simply because his or her
presence will avoid multiple litigations.45
Applying the foregoing pronouncements to the case at
bar, it is clear that the estate of Manuel is not an
indispensable party to the collection case, for the
simple reason that the obligation of Manuel and his
wife, respondent herein, is solidary.
The contract between petitioner, on the one hand and
respondent and respondents husband, on the other,
states:
FOR VALUE RECEIVED, I/We jointly and severally46 (in
solemn) promise to pay BOSTON EQUITY RESOURCES,
INC. x x x the sum of PESOS: [ONE MILLION FOUR
HUNDRED (P1,400,000.00)] x x x.47
The provisions and stipulations of the contract were
then followed by the respective signatures of
respondent as "MAKER" and her husband as "COMAKER."48 Thus, pursuant to Article 1216 of the Civil
Code, petitioner may collect the entire amount of the
obligation from respondent only. The aforementioned
provision states: "The creditor may proceed against
any one of the solidary debtors or some or all of them
simultaneously. The demand made against one of them
shall not be an obstacle to those which may
subsequently be directed against the others, so long as
the debt has not been fully collected."
In other words, the collection case can proceed and the
demands of petitioner can be satisfied by respondent
only, even without impleading the estate of Manuel.
Consequently, the estate of Manuel is not an
indispensable party to petitioners complaint for sum of
money.
However, the Court of Appeals, agreeing with the
contention of respondent, held that the claim of
petitioner should have been filed against the estate of

Manuel in accordance with Sections 5 and 6 of Rule 86

of the Rules of Court. The aforementioned provisions
provide:
SEC. 5. Claims which must be filed under the notice. If
not filed, barred; exceptions. All claims for money
against the decedent, arising from contract, express or
implied, whether the same be due, not due, or
contingent, all claims for funeral expenses and
judgment for money against the decedent, must be
filed within the time limited in the notice; otherwise,
they are barred forever, except that they may be set
forth as counterclaims in any action that the executor
or administrator may bring against the claimants. x x
x.
SEC. 6. Solidary obligation of decedent. Where the
obligation of the decedent is solidary with another
debtor, the claim shall be filed against the decedent as
if he were the only debtor, without prejudice to the
right of the estate to recover contribution from the
other debtor. x x x.
The Court of Appeals erred in its interpretation of the
above-quoted provisions.
In construing Section 6, Rule 87 of the old Rules of
Court, the precursor of Section 6, Rule 86 of the
Revised Rules of Court, which latter provision has been
retained in the present Rules of Court without any
revisions, the Supreme Court, in the case of Manila
Surety & Fidelity Co., Inc. v. Villarama, et. al., 49 held:50
Construing Section 698 of the Code of Civil Procedure
from whence [Section 6, Rule 87] was taken, this Court
held that where two persons are bound in solidum for
the same debt and one of them dies, the whole
indebtedness can be proved against the estate of the
latter, the decedents liability being absolute and
primary; x x x. It is evident from the foregoing that
Section 6 of Rule 87 provides the procedure should the
creditor desire to go against the deceased debtor, but
there is certainly nothing in the said provision making
compliance with such procedure a condition precedent
before an ordinary action against the surviving solidary
debtors, should the creditor choose to demand
payment from the latter, could be entertained to the
extent that failure to observe the same would deprive
the court jurisdiction to take cognizance of the action
against the surviving debtors. Upon the other hand,
the Civil Code expressly allows the creditor to proceed
against any one of the solidary debtors or some or all
of them simultaneously. There is, therefore, nothing
improper in the creditors filing of an action against the
surviving solidary debtors alone, instead of instituting

a proceeding for the settlement of the estate of the

deceased debtor wherein his claim could be filed.

former being merely procedural, while the latter,

substantive.

The foregoing ruling was reiterated and expounded in

the later case of Philippine National Bank v.
Asuncion51where the Supreme Court pronounced:

Based on the foregoing, the estate of Manuel is not an

indispensable party and the case can proceed as
against respondent only. That petitioner opted to
collect from respondent and not from the estate of
Manuel is evidenced by its opposition to respondents
motion to dismiss asserting that the case, as against
her, should be dismissed so that petitioner can
proceed against the estate of Manuel.

A cursory perusal of Section 6, Rule 86 of the Revised

Rules of Court reveals that nothing therein prevents a
creditor from proceeding against the surviving solidary
debtors. Said provision merely sets up the procedure in
enforcing collection in case a creditor chooses to
pursue his claim against the estate of the deceased
solidary debtor. The rule has been set forth that a
creditor (in a solidary obligation) has the option
whether to file or not to file a claim against the estate
of the solidary debtor. x x x
xxxx
It is crystal clear that Article 1216 of the New Civil
Code is the applicable provision in this matter. Said
provision gives the creditor the right to "proceed
against anyone of the solidary debtors or some or all of
them simultaneously." The choice is undoubtedly left to
the solidary creditor to determine against whom he will
enforce collection. In case of the death of one of the
solidary debtors, he (the creditor) may, if he so
chooses, proceed against the surviving solidary
debtors without necessity of filing a claim in the estate
of the deceased debtors. It is not mandatory for him to
have the case dismissed as against the surviving
debtors and file its claim against the estate of the
deceased solidary debtor, x x x. For to require the
creditor to proceed against the estate, making it a
condition precedent for any collection action against
the surviving debtors to prosper, would deprive him of
his substantive rightsprovided by Article 1216 of the
New Civil Code. (Emphasis supplied.)
As correctly argued by petitioner, if Section 6, Rule 86
of the Revised Rules of Court were applied literally,
Article 1216 of the New Civil Code would, in effect, be
repealed since under the Rules of Court, petitioner has
no choice but to proceed against the estate of [the
deceased debtor] only. Obviously, this provision
diminishes the [creditors] right under the New Civil
Code to proceed against any one, some or all of the
solidary debtors. Such a construction is not sanctioned
by principle, which is too well settled to require
citation, that a substantive law cannot be amended by
a procedural rule. Otherwise stated, Section 6, Rule 86
of the Revised Rules of Court cannot be made to
prevail over Article 1216 of the New Civil Code, the

On whether or not the inclusion of Manuel as

party defendant is a misjoinder of party
Section 11 of Rule 3 of the Rules of Court states that
"neither misjoinder nor non-joinder of parties is ground
for dismissal of an action. Parties may be dropped or
added by order of the court on motion of any party or
on its own initiative at any stage of the action and on
such terms as are just. Any claim against a misjoined
party may be severed and proceeded with separately."
Based on the last sentence of the afore-quoted
provision of law, a misjoined party must have the
capacity to sue or be sued in the event that the claim
by or against the misjoined party is pursued in a
separate case. In this case, therefore, the inclusion of
Manuel in the complaint cannot be considered a
misjoinder, as in fact, the action would have proceeded
against him had he been alive at the time the
collection case was filed by petitioner. This being the
case, the remedy provided by Section 11 of Rule 3
does not obtain here. The name of Manuel as partydefendant cannot simply be dropped from the case.
Instead, the procedure taken by the Court in Sarsaba v.
Vda. de Te,52 whose facts, as mentioned earlier,
resemble those of this case, should be followed herein.
There, the Supreme Court agreed with the trial court
when it resolved the issue of jurisdiction over the
person of the deceased Sereno in this wise:
As correctly pointed by defendants, the Honorable
Court has not acquired jurisdiction over the person of
Patricio Sereno since there was indeed no valid service
of summons insofar as Patricio Sereno is concerned.
Patricio Sereno died before the summons, together
with a copy of the complaint and its annexes, could be
served upon him.
However, the failure to effect service of summons unto
Patricio Sereno, one of the defendants herein, does not
render the action DISMISSIBLE, considering that the
three (3) other defendants, x x x, were validly served
with summons and the case with respect to the

answering defendants may still proceed independently.

Be it recalled that the three (3) answering defendants
have previously filed a Motion to Dismiss the
Complaint which was denied by the Court.
Hence, only the case against Patricio Sereno will be
DISMISSED and the same may be filed as a claim
against the estate of Patricio Sereno, but the case with
respect to the three (3) other accused [sic] will
proceed. (Emphasis supplied.)53
As a result, the case, as against Manuel, must be
dismissed.
In addition, the dismissal of the case against Manuel is
further warranted by Section 1 of Rule 3 of the Rules of
Court, which states that: only natural or juridical
persons, or entities authorized by law may be parties
in a civil action." Applying this provision of law, the
Court, in the case of Ventura v. Militante,54 held:
Parties may be either plaintiffs or defendants. x x x. In
order to maintain an action in a court of justice, the
plaintiff must have an actual legal existence, that is,
he, she or it must be a person in law and possessed of
a legal entity as either a natural or an artificial person,
and no suit can be lawfully prosecuted save in the
name of such a person.
The rule is no different as regards party defendants. It
is incumbent upon a plaintiff, when he institutes a
judicial proceeding, to name the proper party
defendant to his cause of action. In a suit or
proceeding in personam of an adversary character, the
court can acquire no jurisdiction for the purpose of trial
or judgment until a party defendant who actually or
legally exists and is legally capable of being sued, is
brought before it. It has even been held that the
question of the legal personality of a party defendant
is a question of substance going to the jurisdiction of
the court and not one of procedure.
The original complaint of petitioner named the "estate
of Carlos Ngo as represented by surviving spouse Ms.
Sulpicia Ventura" as the defendant.1wphi1 Petitioner
moved to dismiss the same on the ground that the
defendant as named in the complaint had no legal
personality. We agree.
x x x. Considering that capacity to be sued is a
correlative of the capacity to sue, to the same extent,
a decedent does not have the capacity to be sued and
may not be named a party defendant in a court action.
(Emphases supplied.)

Indeed, where the defendant is neither a natural nor a

juridical person or an entity authorized by law, the
complaint may be dismissed on the ground that the
pleading asserting the claim states no cause of action
or for failure to state a cause of action pursuant to
Section 1(g) of Rule 16 of the Rules of Court, because a
complaint cannot possibly state a cause of action
against one who cannot be a party to a civil action.55
Since the proper course of action against the wrongful
inclusion of Manuel as party-defendant is the dismissal
of the case as against him, thus did the trial court err
when it ordered the substitution of Manuel by his heirs.
Substitution is proper only where the party to be
substituted died during the pendency of the case, as
expressly provided for by Section 16, Rule 3 of the
Rules of Court, which states:
Death of party;duty of counsel. Whenever a party to
a pending action dies, and the claim is not thereby
extinguished, it shall be the duty of his counsel to
inform the court within thirty (30) days after such
death of the fact thereof, and to give the name and
address of his legal representative or representatives.
xxx
The heirs of the deceased may be allowed to be
substituted for the deceased, without requiring the
appointment of an executor or administrator x x x.
The
court
shall
forthwith
order
said
legal
representative or representatives to appear and be
substituted within a period of thirty (30) days from
notice. (Emphasis supplied.)
Here, since Manuel was already dead at the time of the
filing of the complaint, the court never acquired
jurisdiction over his person and, in effect, there was no
party to be substituted.
WHEREFORE, the petition is GRANTED. The Decision
dated 28 February 2006 and the Resolution dated 1
August 2006 of the Court of Appeals in CA-G.R. SP No.
88586 are REVERSED and SET ASIDE. The Orders of
the Regional Trial Court dated 8 November 2004 and
22 December 2004, respectively, in Civil Case No. 9786672, are REINSTATED. The Regional Trial Court,
Branch 24, Manila is hereby DIRECTED to proceed with
the trial of Civil Case No. 97-86672 against respondent
Lolita G. Toledo only, in accordance with the above
pronouncements of the Court, and to decide the case
with dispatch.
SO ORDERED.

---------------AGG TRUCKING AND/OR ALEXANG GA

EID,
Petitioners,

- versus -

MELANIO B. YUAG,
Respondent.

abruptly dismissed as a truck driver on

G.R. No. 195033
December 6, 2004 (during or around the
Christmas season), although the exact amount
Present:
of such damage is incapable of exact
determination); and
CARPIO, J.,
Chairperson,(4) EXEMPLARY DAMAGES in the amount of
BRION,
Five Thousand Pesos (Php5,000.00) as a
SERENO,
corrective measure in order to set out an
REYES, and example to serve as a negative incentive or
PERLAS-BERNABE,
deterrent against socially deleterious actions.
Promulgated:
Considering that a person's wage is his/her
means of livelihood i.e., equivalent to life itself,
October 12, this
2011decision is deemed immediately executory
pending appeal, should the private respondent
decide to elevate this case to the Supreme
Court.

x----------------------------------------------------------x
DECISION
SERENO, J.:
In this Petition for Review on Certiorari under Rule 45
with Prayer for Issuance of Writ of Temporary and/or
Permanent Injunction, assailed is the 23 June 2010
Decision of the Court of Appeals (CA), Cagayan de Oro
City, in CA-G.R. SP No. 01854-MIN. [1] Reversing the 30
November 2006 Resolution of the National Labor
Relations
Commission
and
reinstating,
with
modification, the 30 August 2006 Decision of the labor
arbiter, the CA disposed as follows:
WHEREFORE, premises considered, the instant
Petition is hereby GRANTED, and the Resolution
dated November 30, 2006 is hereby
REINSTATED subject to MODIFICATION, thus:
Private respondent Alex Ang Gaeid and/or AAG
Trucking is hereby ORDERED to pay petitioner
Melanio B. Yuag or his heirs or assigns the
following:
(1) FULL BACKWAGES, inclusive of all
allowances, other benefits or their monetary
equivalent computed from the time petitioner's
compensation was withheld from him starting
December 6, 2004 until the time he was
employed by his new employer (Bernie
Ragandang), instead of the date of his
supposed reinstatement which We no longer
require as explained above.
(2) SEPARATION PAY (in lieu of the supposed
reinstatement) equivalent to one-half () month
pay for every year of service. A fraction of at
least six (6) months shall be considered one (1)
whole year.
(3) TEMPERATE DAMAGES in the amount of Five
Thousand Pesos (Php5,000.00) for the financial
loss suffered by the petitioner when he was

SO ORDERED.[2]
The Motion for Reconsideration filed by petitioner was
denied by the CA.[3] Hence, this Petition.
The facts of the case are simple. Petitioner Alex Ang
Gaeid had employed respondent Melanio Yuag as a
driver since 28 February 2002. He alleged that he had
a trucking business, for which he had 41 delivery
trucks driven by 41 drivers, one of whom was
respondent.[4] His clients were Busco Sugar Milling Co.,
Inc., operating in Quezon, Bukidnon; and Coca-cola
Bottlers Company in Davao City and Cagayan de Oro
City.[5] Respondent received his salary on commission
basis of 9% of his gross delivery per trip.He was
assigned to a ten-wheeler truck and was tasked to
deliver sacks of sugar from the Busco Sugar Mill to the
port of Cagayan de Oro.[6] Petitioner noticed that
respondent had started incurring substantial shortages
since 30 September 2004, when he allegedly had a
shortage of 32 bags, equivalent to 48,000; followed
by 50 bags, equivalent to75,000, on 11 November
2004.[7] It was also reported that he had illegally sold
bags of sugar along the way at a lower price, and that
he was banned from entering the premises of the
Busco Sugar Mill.[8] Petitioner asked for an explanation
from respondent who remained quiet.[9]
Alarmed at the delivery shortages, petitioner took it
upon himself to monitor all his drivers, including
respondent, by instructing them to report to him their
location from time to time through their mobile
phones.[10] He also required them to make their
delivery trips in convoy, in order to avoid illegal sale of
cargo along the way.[11]
Respondent, along with 20 other drivers, was tasked to
deliver bags of sugar from Cagayan de Oro City to
Coca-Cola Bottlers Plant in Davao City on 4 December
2004.[12] All drivers, with the exception of Yuag who
could not be reached through his cellphone, reported
their location as instructed. Their reported location
gave evidence that they were indeed in convoy.
[13]
Afterwards, everyone, except Yuag, communicated
that the delivery of their respective cargoes had been
completed.[14] The Coca-Cola Plant in Davao later
reported that the delivery had a suspiciously enormous
shortage.[15]

Respondent reported to the office of the

petitioner on 6 December 2004. Allegedly in a calm
and polite manner, petitioner asked respondent to
explain why the latter had not contacted petitioner for
two days, and he had not gone in convoy with the
other trucks, as he was told to do.[16] Respondent
replied that the battery of his cellphone had broken
down.[17] Petitioner then confronted him allegedly still
in a polite and civilized manner, regarding the large
shortages, but the latter did not answer. [18] Petitioner
afterwards told him to just take a rest or, in their
vernacular, pahulay lang una.[19] This exchange started
the dispute since respondent construed it as a
dismissal. He demanded that it be done in writing, but
petitioner merely reiterated that respondent should
just take a rest in the meanwhile.[20] The former alleged
that respondent had offered to resign and demanded
separation pay. At that time, petitioner could not grant
the demand, as it would entail computation which was
the duty of the cashier.[21] Petitioner asked him to come
back the next day.
Instead of waiting for another day to go back to his
employer, Respondent went to the Department of
Labor-Regional Arbitration Board X, that very day of
the confrontation or on 6 December 2004. There he
filed a Complaint for illegal dismissal, claiming his
separation pay and 13th month pay.[22] Subsequently,
after the delivered goods to the Coca-Cola Plant were
weighed on 9 December 2004, it was found out that
there was a shortage of 111 bags of sugar, equivalent
to 166,000.[23]
Respondent argued that he was whimsically dismissed,
just because he had not been able to answer his
employer's call during the time of the delivery. [24] His
reason for not answering was that the battery pack of
his cellphone had broken down.[25] Allegedly enraged
by that incident, his employer, petitioner herein,
supposedly shouted at him and told him, pahuway
naka.[26] When he asked for a clarification, petitioner
allegedly told him, wala nay daghan istorya, pahulay
na! This statement was translated by the CA thus: No
more talking! Take a rest![27] He then realized that he
was being dismissed. When he asked for his separation
pay, petitioner refused.[28] Respondent thus filed a
Complaint for illegal dismissal.
Ruling of the Labor Arbiter
On 30 August 2006, labor arbiter Nicodemus G.
Palangan
rendered
his
Decision
sustaining
respondent's Complaint for illegal dismissal. [29] The
labor arbiter made a discourse on the existence of an
employer-employee
relationship
between
the
parties. In granting the relief sought by petitioner, the
labor arbiter held as follows:
For failure on the part of the respondent to
substantially prove the alleged infraction
(shortages) committed by complainant and to
afford him the due process mandated by law
before
he
was
eventually
terminated,
complainant's dismissal from his employment is
hereby declared illegal and the respondent is
liable to reinstate him with backwages for one
(1) year but in view of the strained relationship
that is now prevailing between the parties, this

Arbitration Branch finds it more equitable to

grant separation pay instead equivalent to one
(1) month per year of service based on the
average income for the last year of his
employment CY 2004 which is P9,974.51, as
hereby computed: [30]
Thus, the labor arbiter awarded respondent separation
pay and proportionate 13th month pay for 2004 and
13th month pay differential for 2003.[31]
Petitioner appealed to the NLRC, alleging that the
latter erred in finding that respondent had been
illegally dismissed and that the utterance of pahulay
lang una meant actual dismissal. [32] He also alleged
that the pecuniary awards of separation pay,
backwages,
proportionate
13th month
pay and
differential were erroneous. He argued that pahulay
lang una was not an act of dismissal; rather, he merely
wanted to give respondent a break, since the
companys
clients
had
lost
confidence
in
respondent. Thus, the latter allegedly had to wait for
clients other than Busco Sugar Mill and Coca-Cola,
which had banned respondent from entering their
premises.
Ruling of the NLRC
In a Resolution dated 30 November 2006, [33] the NLRC
reversed the labor arbiter's ruling, holding as follows:
While the general rule in dismissal cases is
that the employer has the burden to prove
that the dismissal was for just or authorized
causes and after due process, said burden is
necessarily shifted to the employee if the
alleged dismissal is denied by the employer, as
in this case, because a dismissal is supposedly
a positive and unequivocal act by the
employer. Accordingly, it is the employee that
bears the burden of proving that in fact he was
dismissed. It was then incumbent upon
complainant to prove that he was in fact
dismissed from his job by individual
respondent Alex V. Ang Gaeid effective
December 6, 2004 when the latter told him:
Pahuway naka! (You take a rest). Sadly, he
failed to discharge that burden. Even assuming
that Mr. Gaeid had the intention at that time of
dismissing complainant from his job when he
uttered the said words to him, there is no proof
showing of any overt act subsequently done by
Mr. Gaeid that would suggest he carried out
such intention. There is no notice of
termination served to complainant. Literally
construing the remarks of Mr. Gaeid as having
been dismissed from his job, complainant
immediately filed the instant complaint for
illegal dismissal on the same day without first
ascertaining the veracity of the same. The
how, why and the wherefore of his alleged
dismissal should be clearly demonstrated by
substantial evidence. Complainant failed to do
so; hence, he cannot claim that he was
illegally dismissed from employment.[34]
The NLRC further held thus:

At best, complainant should be considered on

leave of absence without pay pending his new
assignment. Not having been dismissed much
less illegally, complainant is not entitled to the
awarded
benefits
of
backwages
and
separation pay for lack of legal and factual
basis.[35]
The NLRC likewise held that the complainant was not
entitled to 13th month pay, since he was paid on purely
commission basis, an exception under Presidential
Decree No. 851 the law requiring employers to pay
13th month pay to their employees.[36]
Respondent moved for reconsideration,[37] in effect
arguing that petitioner should not be allowed to
change the latters theory. Supposedly, the argument in
the position paper of petitioner was that there was no
employer-employee relationship between them, and
that he was compelled to dismiss respondent because
of the heavy losses the latter was bringing to
petitioner. In
this
Motion
for
Reconsideration,
respondent admitted that his wife had received the
Resolution on 12 January 2007, but that he learned of
it much later, on 7 February 2007, justifying the
untimely filing of the motion.[38]
The NLRC denied the Motion for Reconsideration for
being filed out of time.[39] He and his counsel each
received notice of the NLRC's Resolution dated 30
November 2006, reversing the labor arbiters Decision
on 11 January 2007,[40] but they only filed the motion
25 days after the period to file had already lapsed.
[41]
Respondent, thus, sought recourse from the CA
through a Petition for a Writ of Certiorari under Rule 65.
The CA Ruling
On 23 June 2010, brushing aside the technicality issue,
the CA proceeded to resolve the substantive issues
which it deemed important, such as whether there was
an employer-employee relationship between petitioner
and respondent, and whether it was correct for the
NLRC to declare that respondent was not illegally
dismissed.[42] It completely reversed the NLRC and
came up with the dispositive portion mentioned at the
outset.
The Issues
Petitioner is now before us citing factual errors that the
CA allegedly committed, such as not appreciating
petitioner's lack of intention to dismiss respondent.
These factual errors, however, are beyond this Court to
determine, especially because the records of the
proceedings at the level of the labor arbiter were not
attached to the Petition. The Court is more interested
in the legal issues raised by petitioner and rephrased
by the Court as follows:
I
THE COURT OF APPEALS ERRED IN REVERSING
THE NLRC WITHOUT ANY FINDING OF GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION;
II

THE
COURT
OF
APPEALS
ERRED
IN
ENTERTAINING
RESPONDENT'S
PETITION
NOTWITHSTANDING THE FACT THAT HIS
MOTION FOR RECONSIDERATION OF THE
NLRC'S DECISION WAS FILED OUT OF TIME;
III
THE COURT OF APPEALS ERRED IN GRANTING
AWARDS BEYOND WHAT WAS PRAYED FOR IN
THE COMPLAINT SUCH AS THE AWARD OF
TEMPERATE AND EXEMPLARY DAMAGES
The Court's Ruling
We find the Petition impressed with merit.
A writ of certiorari is a remedy to correct errors of
jurisdiction, for which reason it must clearly show that
the public respondent has no jurisdiction to issue an
order or to render a decision. Rule 65 of the Rules of
Court has instituted the petition for certiorari to correct
acts of any tribunal, board or officer exercising judicial
or quasi-judicial functions with grave abuse of
discretion
amounting
to
lack
or
excess
of
jurisdiction. This remedy serves as a check on acts,
either of excess or passivity, that constitute grave
abuse of discretion of a judicial or quasi-judicial
function. This Court, in San Fernando Rural Bank, Inc.
v. Pampanga Omnibus Development Corporation and
Dominic G. Aquino,[43] explained thus:
Certiorari is a remedy narrow in its scope and
inflexible in character. It is not a general utility
tool in the legal workshop. Certiorari will issue
only to correct errors of jurisdiction and not to
correct errors of judgment. An error of
judgment is one which the court may commit in
the exercise of its jurisdiction, and which error is
reviewable only by an appeal. Error of
jurisdiction is one where the act complained of
was issued by the court without or in excess of
jurisdiction and which error is correctible only
by the extraordinary writ of certiorari. As long
as the court acts within its jurisdiction, any
alleged errors committed in the exercise of its
discretion will amount to nothing more than
mere errors of judgment, correctible by an
appeal if the aggrieved party raised factual and
legal issues; or a petition for review under Rule
45 of the Rules of Court if only questions of law
are involved.
A cert[iorari] writ may be issued if the court
or quasi-judicial body issues an order with grave
abuse of discretion amounting to excess or lack
of jurisdiction. Grave abuse of discretion implies
such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction
or, in other words, where the power is exercised
in an arbitrary manner by reason of passion,
prejudice, or personal hostility, and it must be
so patent or gross as to amount to an evasion
of a positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in
contemplation of law. Mere abuse of discretion

is not enough. Moreover, a party is entitled to a

writ of certiorari only if there is no appeal nor
any plain, speedy or adequate relief in the
ordinary course of law.
The raison detre for the rule is that when a
court exercises its jurisdiction, an error
committed while so engaged does not deprive it
of the jurisdiction being exercised when the
error was committed. If it did, every error
committed by a court would deprive it of its
jurisdiction and every erroneous judgment
would be a void judgment. In such a situation,
the administration of justice would not survive.
Hence, where the issue or question involved
affects the wisdom or legal soundness of the
decision not the jurisdiction of the court to
render said decision the same is beyond the
province of a special civil action for certiorari.[44]
(citations omitted)
Petitioner is correct in its argument that there must
first be a finding on whether the NLRC committed
grave abuse of discretion and on what these acts
were. In this case, the CA seemed to have forgotten
that its function in resolving a petition for certiorari
was to determine whether there was grave abuse of
discretion amounting to lack or excess of jurisdiction
on the part of public respondent NLRC. The CA
proceeded to review the records and to rule on issues
that were no longer disputed during the appeal to the
NLRC, such as the existence of an employer-employee
relationship. The pivotal issue before the NLRC was
whether petitioners telling respondent to take a rest, or
to have a break, was already a positive act of
dismissing him. This issue was not discussed by the
CA.
A reading of the assailed Decision will readily reveal
the patent errors of the CA. On page 11 of its Decision,
it held as follows: The NLRC likewise concluded that
petitioner was not entitled to separation pay because
he was not a regular employee of private respondent,
he (the petitioner) being paid on purely commission or
pakyaw basis. The CA took off from that point to give a
discussion on regular employment and further held:
To Us, private respondent's advice to take a rest
theory is nothing but a mere ploy to reinforce
his hypothesis that the petitioner is not a
regular employee. What makes this worse is
that the NLRC bought private respondent's
aforesaid theory hook, line and sinker and ruled
that the petitioner was neither dismissed from
work, he (the petitioner) being considered
merely on leave of absence without pay, nor is
he (the petitioner) entitled to separation pay on
the ground that he was paid on purely
commission or pakyaw basis which is in legal
parlance, in effect, implies that the petitioner is
not a regular employee of the private
respondent, but a mere seasonal worker or
independent contractor.
It is most disturbing to see how the CA regarded labor
terms paid on commission, pakyaw and seasonal
worker as one and the same. In labor law, they are

different and have distinct meanings, which we do not

need to elaborate on in this Petition as they are not the
issue here. It should also be remembered that a
regular status of employment is not based on how the
salary is paid to an employee. An employee may be
paid purely on commission and still be considered a
regular employee.[45] Moreover, a seasonal employee
may also be considered a regular employee.[46]
Further, the appreciation by the CA of the NLRC
Resolution was erroneous. The fact is that the refusal
by the NLRC to grant separation pay was merely
consistent with its ruling that there was no
dismissal. Since respondent was not dismissed, much
less
illegally
dismissed, separation
pay
was
unnecessary. The CA looked at the issue differently and
erroneously, as it held that the NLRC refused to grant
the award of separation pay because respondent had
not been found to be a regular employee. The NLRC
had in fact made no such ruling. These are flagrant
errors that are reversible by this
Court. They should be corrected for the sake not only
of the litigants, but also of the CA, so that it would
become more circumspect in its appreciation of the
records before it.
We reviewed the NLRC Resolution that reversed the LA
Decision and found nothing in it that was whimsical,
unreasonable or patently violative of the law. It was the
CA which erred in finding faults that were inexistent in
the NLRC Resolution.
On the issue of the propriety of entertaining the
Petition for Certiorari despite the prescribed Motion for
Reconsideration with the NLRC, we find another error
committed by the CA. The pertinent provisions of the
2005 Rules of Procedure of the NLRC are as follows:
Rule
VII,
Section 14.
Motions
for
Reconsideration. Motions for reconsideration of
any order, resolution or decision of the
Commission shall not be entertained except
when based on palpable or patent errors,
provided that the motion is under oath and
filed within ten (10) calendar days from receipt
of the order, resolution or decision, with proof
of service that a copy of the same has been
furnished, within the reglementary period, the
adverse party and provided further, that only
one such motion from the same party shall be
entertained.
Rule VIII, Section 2. Finality of decisions of the
Commission. (a) Finality of the decisions,
resolutions or orders of the Commission.
Except as provided in Rule XI, Section 10, the
decisions,
resolutions
orders
of
the
Commission/Division shall become executory
after (10) calendar days from receipt of the
same.
When respondent
Reconsideration of
Resolution within
Resolution attained

failed to file a Motion for

the NLRCs 30 November 2006
the reglementary period, the
finality and could no longer be

modified by the Court of Appeals. The Court has ruled

as follows:
[I]t is a fundamental rule that when a final
judgment becomes executory, it thereby
becomes immutable and unalterable. The
judgment may no longer be modified in any
respect, even if the modification is meant to
correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of
whether the modification is attempted to be
made by the court rendering it or by the
highest Court of the land. The only recognized
exceptions are the correction of clerical errors
or the making of so-called nunc pro tunc
entries which cause no prejudice to any party,
and, of course, where the judgment is
void. Any amendment or alteration which
substantially affects a final and executory
judgment is null and void for lack of
jurisdiction, including the entire proceedings
held for that purpose.[47]
It cannot be argued that prescriptive periods are mere
procedural rules and technicalities, which may be
brushed aside at every cry of injustice, and may be
bent and broken by every appeal to pity. The Courts
ruling in Videogram Regulatory Board v. Court of
Appeals finds application to the present case:
There are certain procedural rules that must
remain inviolable, like those setting the
periods for perfecting an appeal or filing a
petition for review, for it is doctrinally
entrenched that the right to appeal is a
statutory right and one who seeks to avail of
that right must comply with the statute or
rules. The rules, particularly the requirements
for
perfecting
an
appeal
within
the
reglementary period specified in the law, must
be strictly followed as they are considered
indispensable interdictions against needless
delays and for orderly discharge of judicial
business. Furthermore, the perfection of an
appeal in the manner and within the period
permitted by law is not only mandatory but
also jurisdictional and the failure to perfect the
appeal renders the judgment of the court final
and executory. Just as a losing party has the
right to file an appeal within the prescribed
period, the winning party also has the
correlative right to enjoy the finality of the
resolution of his/her case.
These periods are carefully guarded and
lawyers are well-advised to keep track of their
applications. After all, a denial of a petition for
being time-barred is a decision on the merits.
Similarly, a motion for reconsideration filed out of time
cannot reopen a final and executory judgment of the
NLRC. Untimeliness in filing motions or petitions is not
a mere technical or procedural defect, as leniency
regarding this requirement will impinge on the right of
the winning litigant to peace of mind resulting from the
laying to rest of the controversy.

As to the third issue, since the CA could no longer

modify the NLRC Resolution, it logically follows that the
modification of the award cannot be done either. Had
the Resolution not yet attained finality, the CA could
have granted some other relief, even if not specifically
sought by petitioner, if such ruling is proper under the
circumstances. Rule 65 of the Rules of Court provides:
Section. 8. Proceedings after comment is
filed. After the comment or other pleadings
required by the court are filed, or the time for
the filing thereof has expired, the court may
hear the case or require the parties to submit
memoranda. If after such hearing or filing of
memoranda or upon the expiration of the
period for filing, the court finds that the
allegations of the petition are true, it shall
render judgment for such relief to which the
petitioner is entitled.
However, the NLRC Resolution sought to be set aside
had become final and executory 25 days before
respondent filed his Motion for Reconsideration. Thus,
subsequent proceedings and modifications are not
allowed and are deemed null and void.
IN VIEW OF THE FOREGOING, the Petition
is GRANTED. The assailed 23 June 2010 Decision of
the Court of Appeals and its 20 December 2010
Resolution are herebySET ASIDE. The 30 November
2006 and 30 March 2010 Resolutions of the NLRC
are AFFIRMED and sustained.
SO ORDERED.
------------G.R. Nos. 197592 & 20262
27, 2013

November

THE
PROVINCE
OF
AKLAN, Petitioner,
vs.
JODY KING CONSTRUCTION AND DEVELOPMENT
CORP., Respondent.
DECISION
VILLARAMA, JR., J.:
These consolidated petitions for review on certiorari
seek to reverse and set aside the following: (1)
Decision1dated
October
18,
2010
and
Resolution2 dated July 5, 2011 of the Court of Appeals
(CA) in CA-G.R. SP No. 111754; and (2) Decision 3 dated
August 31, 2011 and Resolution4 dated June 27, 2012
in CA-G.R. SP No. 114073.
The Facts
On January 12, 1998, the Province of Aklan (petitioner)
and Jody King Construction and Development Corp.
(respondent) entered into a contract for the design and
-construction of the Caticlan Jetty Port and Terminal

(Phase I) in Malay, Aklan. The total project cost

is P38,900,000: P 18,700,000 for the design and
construction of passenger terminal, and P20,200,000
for the design and construction of the jetty port
facility.5 In the course of construction, petitioner issued
variation/change orders for additional works. The
scope of work under these change orders were agreed
upon by petitioner and respondent.6
On January 5, 2001, petitioner entered into a
negotiated
contract with
respondent
for
the
construction of Passenger Terminal Building (Phase II)
also at Caticlan Jetty Port in Malay, Aklan. The contract
price for Phase II is P2,475,345.54.7
On October 22, 2001, respondent made a demand for
the total amount of P22,419,112.96 covering the
following items which petitioner allegedly failed to
settle:
1. Unpaid accomplishments on additional works
undertaken - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 12,396,143.09
2. Refund of taxes levied despite it not being
covered by original contract- - - - - - - - - - - - - - - - - - - - - Php 884,098.59
3. Price escalation (Consistent with Section 7.5,
Original Contract- - - - - - - - - - - - - - - - - - - - - - - - - - - Php 1,291,714.98
4.
Additional
Labor
Cost
resulting
[from]
numerous change orders issued sporadically - - - - - - - Php 3,303,486.60
5. Additional Overhead Cost resulting [from]
numerous Orders issued sporadically - - - - - - - - - - - - Php 1,101,162.60
6.
Interest
resulting
[from]
payment
delays
consistent with Section 7.3.b of the Original
Contract - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 3,442,507.50.8
On July 13, 2006, respondent sued petitioner in the
Regional Trial Court (RTC) of Marikina City (Civil Case
No. 06-1122-MK) to collect the aforesaid amounts.9 On
August 17, 2006, the trial court issued a writ of
preliminary attachment.10
Petitioner denied any unpaid balance and interest due
to respondent. It asserted that the sums being claimed
by respondent were not indicated in Change Order No.
3 as approved by the Office of Provincial Governor. Also

cited was respondents June 10, 2003 letter absolving

petitioner from liability for any cost in connection with
the Caticlan Passenger Terminal Project.11
After trial, the trial court rendered its Decision 12 on
August 14, 2009, the dispositive portion of which
reads:
WHEREFORE, foregoing premises considered, judgment
is hereby rendered in favor of plaintiff Jody King
Construction And Development Corporation and
against defendant Province of Aklan, as follows:
1. ordering the defendant to pay to the plaintiff the
amount of Php7,396,143.09 representing the unpaid
accomplishment on additional works undertaken by
the plaintiff;
2. ordering the defendant to refund to the plaintiff the
amount of Php884,098.59 representing additional 2%
tax levied upon against the plaintiff;
3. ordering the defendant to pay to the plaintiff price
escalation in the amount of Php1,291,714.98 pursuant
to Section 7.5 of the original contract;
4. ordering the defendant to pay to the plaintiff the
amount of Php3,303,486.60 representing additional
labor cost resulting from change orders issued by the
defendant;
5. ordering the defendant to pay to the plaintiff the
sum of Php1,101,162.00 overhead cost resulting from
change orders issued by the defendant;
6. ordering the defendant to pay the sum of
Php3,442,507.50 representing interest resulting from
payment delays up to October 15, 2001 pursuant to
Section 7.3.b of the original contract;
7. ordering the defendant to pay interest of 3% per
month from unpaid claims as of October 16, 2001 to
date of actual payment pursuant to Section 7.3.b[;]
8. ordering the [defendant] to pay to the plaintiff the
sum of Php500,000.00 as moral damages;
9. ordering the defendant to pay to the plaintiff the
sum of Php300,000.00 as exemplary damages;
10. ordering the defendant to pay the plaintiff the sum
of Php200,000.00, as and for attorneys fees; and
11. ordering the defendant to pay the cost of suit.

SO ORDERED.13
Petitioner filed its motion for reconsideration 14 on
October 9, 2009 stating that it received a copy of the
decision on September 25, 2009. In its Order 15 dated
October 27, 2009, the trial court denied the motion for
reconsideration upon verification from the records that
as shown by the return card, copy of the decision was
actually received by both Assistant Provincial
Prosecutor Ronaldo B. Ingente and Atty. Lee T. Manares
on September 23, 2009. Since petitioner only had until
October 8, 2009 within which to file a motion for
reconsideration, its motion filed on October 9, 2009
was filed one day after the finality of the decision. The
trial court further noted that there was a deliberate
attempt on both Atty. Manares and Prosecutor Ingente
to mislead the court and make it appear that their
motion for reconsideration was filed on time. Petitioner
filed a Manifestation16 reiterating the explanation set
forth
in
its
Rejoinder
to
respondents
comment/opposition and motion to dismiss that the
wrong date of receipt of the decision stated in the
motion for reconsideration was due to pure
inadvertence attributable to the staff of petitioners
counsel. It stressed that there was no intention to
mislead the trial court nor cause undue prejudice to
the case, as in fact its counsel immediately corrected
the error upon discovery by explaining the attendant
circumstances in the Rejoinder dated October 29,
2009.
On November 24, 2009, the trial court issued a writ of
execution ordering Sheriff IV Antonio E. Gamboa, Jr. to
demand from petitioner the immediate payment
of P67,027,378.34 and tender the same to the
respondent. Consequently, Sheriff Gamboa served
notices of garnishment on Land Bank of the
Philippines, Philippine National Bank and Development
Bank of the Philippines at their branches in Kalibo,
Aklan for the satisfaction of the judgment debt from
the funds deposited under the account of petitioner.
Said banks, however, refused to give due course to the
court order, citing the relevant provisions of statutes,
circulars and jurisprudence on the determination of
government monetary liabilities, their enforcement and
satisfaction.17
Petitioner filed in the CA a petition for certiorari with
application for temporary restraining order (TRO) and
preliminary injunction assailing the Writ of Execution
dated November 24, 2009, docketed as CA-G.R. SP No.
111754.
On December 7, 2009, the trial court denied
petitioners notice of appeal filed on December 1,

2009. Petitioners motion for reconsideration of the

December 7, 2009 Order was likewise denied. 18 On
May 20, 2010, petitioner filed another petition for
certiorari in the CA questioning the aforesaid orders
denying due course to its notice of appeal, docketed as
CA-G.R. SP No. 114073.
By Decision dated October 18, 2010, the CAs First
Division dismissed the petition in CA-G.R. SP No.
111754 as it found no grave abuse of discretion in the
lower courts issuance of the writ of execution.
Petitioner filed a motion for reconsideration which was
likewise denied by the CA. The CA stressed that even
assuming as true the alleged errors committed by the
trial court, these were insufficient for a ruling that
grave abuse of discretion had been committed. On the
matter of execution of the trial courts decision, the
appellate court said that it was rendered moot by
respondents filing of a petition before the Commission
on Audit (COA).
On August 31, 2011, the CAs Sixteenth Division
rendered its Decision dismissing the petition in CA-G.R.
SP No. 114073. The CA said that petitioner failed to
provide valid justification for its failure to file a timely
motion for reconsideration; counsels explanation that
he believed in good faith that the August 14, 2009
Decision of the trial court was received on September
25, 2009 because it was handed to him by his
personnel only on that day is not a justifiable excuse
that would warrant the relaxation of the rule on
reglementary period of appeal. The CA also held that
petitioner is estopped from invoking the doctrine of
primary jurisdiction as it only raised the issue of COAs
primary jurisdiction after its notice of appeal was
denied and a writ of execution was issued against it.
The Cases
In G.R. No. 197592, petitioner submits the following
issues:
I.
WHETHER OR NOT THE DECISION DATED 14 AUGUST
2009 RENDERED BY THE REGIONAL TRIAL COURT,
BRANCH 273, MARIKINA CITY AND THE WRIT OF
EXECUTION DATED 24 NOVEMBER 2009 SHOULD BE
RENDERED VOID FOR LACK OF JURISDICTION OVER
THE SUBJECT MATTER OF THE CASE.
II.
WHETHER OR NOT THE REGIONAL TRIAL COURT,
BRANCH 273, MARIKINA CITY GRAVELY ABUSED ITS

DISCRETION AMOUNTING TO LACK OR IN EXCESS OF

JURISDICTION IN RENDERING THE DECISION DATED 14
AUGUST 2009 AND ISSUING THE WRIT OF EXECUTION
DATED 24 NOVEMBER 2009 EVEN IT FAILED TO
DISPOSE ALL THE ISSUES OF THE CASE BY NOT
RESOLVING PETITIONERS "URGENT MOTION TO
DISCHARGE
EX-PARTE
WRIT
OF
PRELIMINARY
ATTACHMENT" DATED 31 AUGUST 2006.
III.
WHETHER OR NOT THE WRIT OF EXECUTION DATED 24
NOVEMBER 2009 WHICH WAS HASTILY ISSUED IN
VIOLATION OF SUPREME COURT ADMINISTRATIVE
CIRCULAR NO. 10-2000 SHOULD BE RENDERED VOID.19
The petition in G.R. No. 202623 sets forth the following
arguments:
Petitioner is not estopped in questioning the
jurisdiction of the Regional Trial Court, Branch 273,
Marikina City over the subject matter of the case.20
The petition for certiorari filed before the CA due to the
RTCs denial of petitioners Notice of Appeal was in
accord with jurisprudence.21
The Issues
The controversy boils down to the following issues: (1)
the applicability of the doctrine of primary jurisdiction
to this case; and (2) the propriety of the issuance of
the writ of execution.
Our Ruling
The petitions are meritorious.
COA has primary jurisdiction over private respondents
money claims Petitioner is not estopped from raising
the issue of jurisdiction
The doctrine of primary jurisdiction holds that if a case
is such that its determination requires the expertise,
specialized training and knowledge of the proper
administrative bodies, relief must first be obtained in
an administrative proceeding before a remedy is
supplied by the courts even if the matter may well be
within their proper jurisdiction.22 It applies where a
claim is originally cognizable in the courts, and comes
into play whenever enforcement of the claim requires
the resolution of issues which, under a regulatory
scheme, have been placed within the special
competence of an administrative agency. In such a
case, the court in which the claim is sought to be

enforced may suspend the judicial process pending

referral of such issues to the administrative body for its
view or, if the parties would not be unfairly
disadvantaged, dismiss the case without prejudice.23
The objective of the doctrine of primary jurisdiction is
to guide the court in determining whether it should
refrain from exercising its jurisdiction until after an
administrative agency has determined some question
or some aspect of some question arising in the
proceeding before the court.24
As can be gleaned, respondent seeks to enforce a
claim for sums of money allegedly owed by petitioner,
a local government unit.
Under Commonwealth Act No. 327, 25 as amended by
Section 26 of Presidential Decree No. 1445, 26 it is the
COA which has primary jurisdiction over money claims
against government agencies and instrumentalities.
Section 26. General jurisdiction. The authority and
powers of the Commission shall extend to and
comprehend
all
matters
relating
to
auditing
procedures, systems and controls, the keeping of the
general accounts of the Government, the preservation
of vouchers pertaining thereto for a period of ten
years, the examination and inspection of the books,
records, and papers relating to those accounts; and the
audit and settlement of the accounts of all persons
respecting funds or property received or held by them
in an accountable capacity, as well as the examination,
audit, and settlement of all debts and claims of any
sort due from or owing to the Government or any of its
subdivisions, agencies and instrumentalities. The said
jurisdiction extends to all government-owned or
controlled corporations, including their subsidiaries,
and other self-governing boards, commissions, or
agencies of the Government, and as herein prescribed,
including non-governmental entities subsidized by the
government, those funded by donations through the
government, those required to pay levies or
government share, and those for which the
government has put up a counterpart fund or those
partly funded by the government. (Emphasis supplied.)
Pursuant to its rule-making authority conferred by the
1987 Constitution27 and existing laws, the COA
promulgated the 2009 Revised Rules of Procedure of
the Commission on Audit. Rule II, Section 1 specifically
enumerated those matters falling under COAs
exclusive jurisdiction, which include "money claims due
from or owing to any government agency." Rule VIII,
Section 1 further provides:

Section 1. Original Jurisdiction - The Commission Proper

shall have original jurisdiction over:
a) money claim against the Government; b) request for
concurrence in the hiring of legal retainers by
government agency; c) write off of unliquidated cash
advances and dormant accounts receivable in amounts
exceeding one million pesos (P1,000,000.00); d)
request for relief from accountability for loses due to
acts of man, i.e. theft, robbery, arson, etc, in amounts
in excess of Five Million pesos (P5,000,000.00).
In Euro-Med Laboratories Phil., Inc. v. Province of
Batangas,28 we ruled that it is the COA and not the RTC
which has primary jurisdiction to pass upon petitioners
money claim against respondent local government
unit. Such jurisdiction may not be waived by the
parties failure to argue the issue nor active
participation in the proceedings. Thus:
This case is one over which the doctrine of primary
jurisdiction clearly held sway for although petitioners
collection suit for P487,662.80 was within the
jurisdiction of the RTC, the circumstances surrounding
petitioners claim brought it clearly within the ambit of
the COAs jurisdiction.
First, petitioner was seeking the enforcement of a
claim for a certain amount of money against a local
government unit. This brought the case within the
COAs domain to pass upon money claims against the
government or any subdivision thereof under Section
26 of the Government Auditing Code of the Philippines:
The authority and powers of the Commission [on Audit]
shall extend to and comprehend all matters relating to
x x x the examination, audit, and settlement of all
debts and claims of any sort due from or owing to the
Government or any of its subdivisions, agencies, and
instrumentalities. x x x.
The scope of the COAs authority to take cognizance of
claims is circumscribed, however, by an unbroken line
of cases holding statutes of similar import to mean
only liquidated claims, or those determined or readily
determinable from vouchers, invoices, and such other
papers within reach of accounting officers. Petitioners
claim was for a fixed amount and although respondent
took issue with the accuracy of petitioners summation
of its accountabilities, the amount thereof was readily
determinable from the receipts, invoices and other
documents. Thus, the claim was well within the COAs
jurisdiction under the Government Auditing Code of the
Philippines.

Second, petitioners money claim was founded on a

series of purchases for the medical supplies of
respondents public hospitals. Both parties agreed that
these transactions were governed by the Local
Government Code provisions on supply and property
management and their implementing rules and
regulations promulgated by the COA pursuant to
Section 383 of said Code. Petitioners claim therefore
involved compliance with applicable auditing laws and
rules on procurement. Such matters are not within the
usual area of knowledge, experience and expertise of
most judges but within the special competence of COA
auditors and accountants. Thus, it was but proper, out
of fidelity to the doctrine of primary jurisdiction, for the
RTC to dismiss petitioners complaint.
Petitioner argues, however, that respondent could no
longer question the RTCs jurisdiction over the matter
after it had filed its answer and participated in the
subsequent proceedings. To this, we need only state
that the court may raise the issue of primary
jurisdiction sua sponte and its invocation cannot be
waived by the failure of the parties to argue it as the
doctrine exists for the proper distribution of power
between judicial and administrative bodies and not for
the convenience of the parties.29 (Emphasis supplied.)
Respondents collection suit being directed against a
local government unit, such money claim should have
been first brought to the COA. 30 Hence, the RTC should
have suspended the proceedings and refer the filing of
the claim before the COA. Moreover, petitioner is not
estopped from raising the issue of jurisdiction even
after the denial of its notice of appeal and before the
CA.
There are established exceptions to the doctrine of
primary jurisdiction, such as: (a) where there is
estoppel on the part of the party invoking the doctrine;
(b) where the challenged administrative act is patently
illegal, amounting to lack of jurisdiction; (c) where
there is unreasonable delay or official inaction that will
irretrievably prejudice the complainant; (d) where the
amount involved is relatively small so as to make the
rule impractical and oppressive; (e) where the question
involved is purely legal and will ultimately have to be
decided by the courts of justice; (f) where judicial
intervention is urgent; (g) when its application may
cause great and irreparable damage; (h) where the
controverted acts violate due process; (i) when the
issue of non-exhaustion of administrative remedies has
been rendered moot; (j) when there is no other plain,
speedy and adequate remedy; (k) when strong public
interest is involved; and, (l) in quo warranto

proceedings.31 However, none of the foregoing

circumstances is applicable in the present case.
The doctrine of primary jurisdiction does not warrant a
court to arrogate unto itself authority to resolve a
controversy the jurisdiction over which is initially
lodged with an administrative body of special
competence.32 All the proceedings of the court in
violation of the doctrine and all orders and decisions
rendered thereby are null and void.33
Writ of Execution issued in violation of COAs primary
jurisdiction is void
Since a judgment rendered by a body or tribunal that
has no jurisdiction over the subject matter of the case
is no judgment at all, it cannot be the source of any
right or the creator of any obligation. 34 All acts
pursuant to it and all claims emanating from it have no
legal effect and the void judgment can never be final
and any writ of execution based on it is likewise void.35
Clearly, the CA erred in ruling that the RTC committed
no grave abuse of discretion when it ordered the
execution of its judgment against petitioner and
garnishment of the latters funds.
In its Supplement to the Motion for Reconsideration,
petitioner argued that it is the COA and not the RTC
which has original jurisdiction over money claim
against
government
agencies
and
subdivisions.1wphi1 The CA, in denying petitioner's
motion for reconsideration, simply stated that the issue
had become moot by respondent's filing of the proper
petition with the COA. However, respondent's belated
compliance with the formal requirements of presenting
its money claim before the COA did not cure the
serious errors committed by the RTC in implementing
its void decision. The RTC's orders implementing its
judgment rendered without jurisdiction must be set
aside because a void judgment can never be validly
executed.
Finally, the RTC should have exercised utmost caution,
prudence and judiciousness in issuing the writ of
execution and notices of garnishment against
petitioner. The RTC had no authority to direct the
immediate withdrawal of any portion of the garnished
funds from petitioner's depositary banks. 36 Such act
violated the express directives of this Court under
Administrative Circular No. 10-2000, 37 which was
issued "precisely in order to prevent the circumvention
of Presidential Decree No. 1445, as well as of the rules
and procedures of the COA."38 WHEREFORE, both
petitions in G.R. Nos. 197592 and 202623 are

GRANTED. The Decision dated October 18, 2010 and

Resolution dated July 5 2011 of the Court of Appeals in
CA-G.R. SP No. 111754, and Decision dated August 31,
2011 and Resolution dated June 27, 2012 in CA- G.R.
SP No. 114073 are hereby REVERSED and SET ASIDE.
The Decision dated August 14 2009, Writ of Execution
and subsequent issuances implementing the said
decision of the Regional Trial Court of Marikina City in
Civil Case No. 06-1122-MK are all SET ASIDE. No
pronouncement as to costs.
SO ORDERED.
--------------------------------LUCIA
BARRAMEDA
BALLESTEROS,
Petitioner,

VDA.

DE

- versus RURAL
BANK
OF
CANAMAN
INC., represented by its Liquidator,
THE
PHILIPPINE
DEPOSIT
INSURANCE CORPORATION,
Respondent.

G.R. No. 17
Present:

CARPIO, J., C
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ

Promulgated

November 2

X
------------------------------------------------------------------------------------- X
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under
Rule 45 of the Revised Rules of Civil Procedure
assailing the August 15, 2006 Decision [1] of the Court
of Appeals (CA) in CA-G.R. No. 82711, modifying the
decision of the Regional Trial Court of Iriga City, Branch
36 (RTC-Iriga), in Civil Case No. IR-3128, by ordering
the consolidation of the said civil case with Special
Proceeding Case No. M-5290 (liquidation case) before
the Regional Trial Court of Makati City, Branch 59 (RTCMakati).
It appears from the records that on March 17,
2000,
petitioner
Lucia
Barrameda
Vda.
De
Ballesteros (Lucia) filed a complaint for Annulment of
Deed of Extrajudicial Partition, Deed of Mortgage and
Damages with prayer for Preliminary Injunction against
her children, Roy, Rito, Amy, Arabel, Rico, Abe, Ponce
Rex and Adden, all surnamed Ballesteros, and the Rural
Bank of Canaman, Inc., Baao Branch (RBCI) before the
RTC-Iriga. The case was docketed as Civil Case No. IR3128.

In her complaint, Lucia alleged that her deceased

husband, Eugenio, left two (2) parcels of land located
in San Nicolas, Baao, Camarines Sur, each with an area
of 357 square meters; that on March 6, 1995, without
her knowledge and consent, her children executed a
deed of extrajudicial partition and waiver of the estate
of her husband wherein all the heirs, including Lucia,
agreed
to
allot
the
two
parcels
to
Rico
Ballesteros (Rico); that, still, without her knowledge
and consent, Rico mortgaged Parcel B of the estate in
favor of RBCI which mortgage was being foreclosed for
failure to settle the loan secured by the lot; and that
Lucia was occupying Parcel B and had no other place
to live. She prayed that the deed of extrajudicial
partition and waiver, and the subsequent mortgage in
favor of RBCI be declared null and void having been
executed without her knowledge and consent.She also
prayed for damages.
In its Answer, RBCI claimed that in 1979, Lucia sold
one of the two parcels to Rico which represented her
share in the estate of her husband. The extrajudicial
partition, waiver and mortgage were all executed with
the knowledge and consent of Lucia although she was
not able to sign the document. RBCI further claimed
that Parcel B had already been foreclosed way back in
1999 which fact was known to Lucia through the
auctioning notary public. Attorneys fees were pleaded
as counterclaim.
The case was then set for pre-trial conference. During
the pre-trial, RBCIs counsel filed a motion to withdraw
after being informed that Philippine Deposit Insurance
Corporation(PDIC) would handle the case as RBCI had
already been closed and placed under the receivership
of the PDIC. Consequently, on February 4, 2002, the
lawyers of PDIC took over the case of RBCI.
On May 9, 2003, RBCI, through PDIC, filed a motion to
dismiss on the ground that the RTC-Iriga has no
jurisdiction over the subject matter of the action. RBCI
stated that pursuant to Section 30, Republic Act No.
7653 (RA No. 7653), otherwise known as the New
Central Bank Act, the RTC-Makati, already constituted
itself, per its Order dated August 10, 2001, as the
liquidation court to assist PDIC in undertaking the
liquidation of RBCI. Thus, the subject matter of Civil
Case No. IR-3128 fell within the exclusive jurisdiction of
such liquidation court. Lucia opposed the motion.
On July 29, 2003, the RTC-Iriga issued an
order[2] granting the Motion to Dismiss, to wit:
This resolves the Motion to Dismiss filed
by the defendant Rural Bank of Canaman, Inc.,
premised on the ground that this court has no
jurisdiction over the subject matter of the
action. This issue of jurisdiction was raised in
view of the pronouncement of the Supreme
Court in Ong v. C.A. 253 SCRA 105 and in the
case of Hernandez v. Rural Bank of Lucena, Inc.,
G.R. No. L-29791 dated January 10, 1978,
wherein it was held that the liquidation court

shall have jurisdiction to adjudicate all claims

against the bank whether they be against
assets of the insolvent bank, for Specific
Performance, Breach of Contract, Damages or
whatever.

It is in view of this jurisprudential

pronouncement made by no less than the
Supreme Court, that this case is, as far as
defendant Rural Bank of Canaman Inc., is
concerned, hereby ordered DISMISSED without
prejudice on the part of the plaintiff to ventilate
their claim before the Liquidation Court now,
RTC Branch 59, Makati City.
SO ORDERED.
Not in conformity, Lucia appealed the RTC ruling to the
CA on the ground that the RTC-Iriga erred in dismissing
the case because it had jurisdiction over Civil Case No.
IR-3128 under the rule on adherence of jurisdiction.
On August 15, 2006, the CA rendered the questioned
decision ordering the consolidation of Civil Case No. IR3128 and the liquidation case pending before RTCMakati. The appellate court ratiocinated thus:
The consolidation is desirable in order to
prevent confusion, to avoid multiplicity of suits
and
to
save
unnecessary
cost
and
expense. Needless to add, this procedure is well
in accord with the principle that the rules of
procedure shall be liberally construed in order
to promote their object and to assist the parties
in obtaining just, speedy and inexpensive
determination of every action and proceeding
(Vallacar Transit, Inc. v. Yap, 126 SCRA 500
[1983]; Suntay v. Aguiluz, 209 SCRA 500 [1992]
citing Ramos v. Ebarle, 182 SCRA 245 [1990]). It
would be more in keeping with the demands of
equity if the cases are simply ordered
consolidated. Pursuant to Section 2, Rule 1,
Revised Rules of Court, the rules on
consolidation should be liberally construed to
achieve the object of the parties in obtaining
just, speedy and inexpensive determination of
their cases (Allied Banking Corporation v. Court
of Appeals, 259 SCRA 371 [1996]).
The dispositive portion of the decision reads:
IN VIEW OF ALL THE FOREGOING, the
appealed decision is hereby MODIFIED, in such
a way that the dismissal of this case (Civil Case
No. IR-3128) is set aside and in lieu thereof
another
one
is
entered
ordering
the consolidation of said case with the
liquidation case docketed as Special Proceeding
No.
M-5290
before
Branch
59
of
theRegional Trial Court of Makati City,
entitled In Re: Assistance in the Judicial
Liquidation of Rural Bank of Canaman,

Camarines
Sur,
Inc.,
Philippine
Deposit
Corporation, Petitioner. No pronouncement as to
cost.
SO ORDERED.[3]
Lucia filed a motion for reconsideration[4] but it
was denied by the CA in its Resolution dated December
14, 2006.[5]
Hence, the present petition for review on
certiorari anchored on the following
GROUNDS
(I)
THE COURT OF APPEALS ERRED IN NOT
FINDING
THAT
THE REGIONAL TRIAL COURT OF IRIGA CITY
,
BRANCH
36
IS
VESTED
WITH
JURISDICTION TO CONTINUE TRYING AND
ULTIMATELY DECIDE CIVIL CASE NO. IR3128.
(II)
THE COURT OF APPEALS ERRED AND
GRAVELY ABUSED ITS DISCRETION IN
ORDERING THE CONSOLIDATION OF CIVIL
CASE NO. IR-3128 WITH THE LIQUIDATION
CASE
DOCKETED
AS
SPECIAL
PROCEEDINGS
NO.
M-5290
BEFORE
BRANCH
59
OF
THE REGIONAL TRIAL COURT OF MAKATI CI
TY.[6]
Given the foregoing arguments, the Court finds that
the core issue to be resolved in this petition involves a
determination of whether a liquidation court can take
cognizance of a case wherein the main cause of action
is not a simple money claim against a bank ordered
closed, placed under receivership of the PDIC, and
undergoing a liquidation proceeding.
Lucia contends that the RTC-Iriga is vested with
jurisdiction over Civil Case No. 3128, the constitution of
the liquidation court notwithstanding. According to her,
the case was filed before the RTC-Iriga on March 17,
2000 at the time RBCI was still doing business or
before the defendant bank was placed under
receivership of PDIC in January 2001.
She further argues that the consolidation of the
two cases is improper. Her case, which is for
annulment of deed of partition and waiver, deed of
mortgage and damages, cannot be legally brought
before the RTC-Makati with the liquidation case
considering that her cause of action against RBCI is not
a simple claim arising out of a creditor-debtor
relationship, but one which involves her rights and
interest over a certain property irregularly acquired by
RBCI. Neither is she a creditor of the bank, as only the
creditors of the insolvent bank are allowed to file and

ventilate claims before the liquidator, pursuant to the

August 10, 2001 Order of the RTC-Makati which
granted the petition for assistance in the liquidation of
RBCI.
In its Comment,[7] PDIC, as liquidator of RBCI,
counters that the consolidation of Civil Case No. 3128
with the liquidation proceeding is proper. It posits that
the liquidation court of RBCI, having been established,
shall have exclusive jurisdiction over all claims against
the said bank.
After due consideration, the Court finds the
petition devoid of merit.
Lucias argument, that the RTC-Iriga is vested
with jurisdiction to continue trying Civil Case No. IR3128 until its final disposition, evidently falls out from
a
strained
interpretation
of
the
law
and
jurisprudence. She contends that:
Since the RTC-Iriga has already obtained
jurisdiction over the case it should continue
exercising such jurisdiction until the final
termination of the case. The jurisdiction of a
court once attached cannot be ousted by
subsequent happenings or events, although of a
character
which
would
have
prevented
jurisdiction from attaching in the first instance,
and the Court retains jurisdiction until it finally
disposes of the case (Aruego Jr. v. Court of
Appeals, 254 SCRA 711).
When a court has already obtained and
is exercising jurisdiction over a controversy, its
jurisdiction to proceed to final determination of
the case is not affected by a new legislation
transferring jurisdiction over such proceedings
to another tribunal. (Alindao v. Joson, 264 SCRA
211). Once jurisdiction is vested, the same is
retained up to the end of the litigation (Bernate
v. Court of Appeals, 263 SCRA 323).[8]
The afore-quoted cases, cited by Lucia to
bolster the plea for the continuance of her case, find
no application in the case at bench.
Indeed, the Court recognizes the doctrine on
adherence of jurisdiction. Lucia, however, must be
reminded that such principle is not without
exceptions. It is well to quote the ruling of the CA on
this matter, thus:
This Court is not unmindful nor unaware
of the doctrine on the adherence of
jurisdiction. However, the rule on adherence of
jurisdiction
is
not
absolute
and
has
exceptions. One of the exceptions is that when
the change in jurisdiction is curative in
character (Garcia v. Martinez, 90 SCRA 331
[1979]; Calderon, Sr. v. Court of Appeals, 100
SCRA 459 [1980]; Atlas Fertilizer Corporation v.
Navarro, 149 SCRA 432 [1987]; Abad v. RTC of
Manila, Br. Lll, 154 SCRA 664 [1987]).

For sure, Section 30, R.A. 7653 is

curative in character when it declared that the
liquidation court shall have jurisdiction in the
same proceedings to assist in the adjudication
of the disputed claims against the Bank. The
interpretation of this Section (formerly Section
29, R.A. 265) becomes more obvious in the light
of its intent. InManalo v. Court of Appeals (366
SCRA 752, [2001]), the Supreme Court says:
xxx The requirement that all
claims against the bank be pursued in
the liquidation proceedings filed by the
Central Bank is intended to prevent
multiplicity of actions against the
insolvent bank and designed to establish
due process and orderliness in the
liquidation of the bank, to obviate the
proliferation of litigations and to avoid
injustice and arbitrariness (citing Ong v.
CA,
253
SCRA
105
[1996]). The
lawmaking body contemplated that for
convenience, only one court, if possible,
should pass upon the claims against the
insolvent bank and that the liquidation
court should assist the Superintendents
of Banks and regulate his operations
(citing Central Bank of the Philippines, et
al. v. CA, et al., 163 SCRA 482 [1988]).[9]
As regards Lucias contention that jurisdiction already
attached when Civil Case No. IR-3128 was filed with,
and jurisdiction obtained by, the RTC-Iriga prior to the
filing of the liquidation case before the RTC-Makati, her
stance fails to persuade this Court. In refuting this
assertion, respondent PDIC cited the case of Lipana v.
Development Bank of Rizal[10] where it was held that
the time of the filing of the complaint is
immaterial, viz:
It is the contention of petitioners,
however, that the placing under receivership of
Respondent Bank long after the filing of the
complaint removed it from the doctrine in the
said Morfe Case.
This contention is untenable. The time of
the filing of the complaint is immaterial. It is the
execution that will obviously prejudice the other
depositors and creditors.Moreover, as stated in
the said Morfe case, the effect of the judgment
is only to fix the amount of the debt, and not to
give priority over other depositors and
creditors.
The cited Morfe case[11] held that after the
Monetary Board has declared that a bank is insolvent
and has ordered it to cease operations, the Board
becomes the trustee of its assets for the equal benefit
of all the creditors, including depositors. The assets of
the insolvent banking institution are held in trust for
the equal benefit of all creditors, and after its
insolvency, one cannot obtain an advantage or a

preference over another by an attachment, execution

or otherwise.
Thus, to allow Lucias case to proceed
independently of the liquidation case, a possibility of
favorable judgment and execution thereof against the
assets of RBCI would not only prejudice the other
creditors and depositors but would defeat the very
purpose for which a liquidation court was constituted
as well.
Anent the second issue, Lucia faults the CA in
directing the consolidation of Civil Case No. IR-3128
with Special Proceedings No. M-5290. The CA
committed no error.Lucias complaint involving
annulment of deed of mortgage and damages falls
within the purview of a disputed claim in
contemplation of Section 30 of R.A. 7653 (The New
Central Bank Act). The jurisdiction should be lodged
with the liquidation court. Section 30 provides:
Sec. 30. Proceedings in Receivership
and Liquidation. - Whenever, upon report of the
head of the supervising or examining
department, the Monetary Board finds that a
bank or quasi-bank:
(a) is unable to pay its liabilities as they
become due in the ordinary course of business:
Provided, That this shall not include inability to
pay caused by extraordinary demands induced
by financial panic in the banking community;
(b) has insufficient realizable assets, as
determined by the Bangko Sentral, to meet its
liabilities; or
(c) cannot continue in business without
involving probable losses to its depositors or
creditors; or
(d) has wilfully violated a cease and
desist order under Section 37 that has become
final, involving acts or transactions which
amount to fraud or a dissipation of the assets of
the institution; in which cases, the Monetary
Board may summarily and without need for
prior hearing forbid the institution from doing
business in the Philippines and designate the
Philippine Deposit Insurance Corporation as
receiver of the banking institution.
For a quasi-bank, any person of
recognized competence in banking or finance
may be designated as receiver.
The receiver shall immediately gather
and take charge of all the assets and liabilities
of the institution, administer the same for the
benefit of its creditors, and exercise the general
powers of a receiver under the Revised Rules of
Court but shall not, with the exception of
administrative expenditures, pay or commit any
act that will involve the transfer or disposition
of any asset of the institution: Provided, That
the receiver may deposit or place the funds of
the
institution
in
non-speculative
investments. The receiver shall determine as
soon as possible, but not later than ninety (90)
days from take over, whether the institution
may be rehabilitated or otherwise placed in

such a condition that it may be permitted to

resume business with safety to its depositors
and
creditors
and
the
general
public: Provided, That any determination for the
resumption of business of the institution shall
be subject to prior approval of the Monetary
Board.
If the receiver determines that the
institution cannot be rehabilitated or permitted
to resume business in accordance with the next
preceding paragraph, the Monetary Board shall
notify in writing the board of directors of its
findings and direct the receiver to proceed with
the liquidation of the institution. The receiver
shall:
(1) file ex parte with the proper regional
trial court, and without requirement of prior
notice or any other action, a petition for
assistance in the liquidation of the institution
pursuant to a liquidation plan adopted by the
Philippine Deposit Insurance Corporation for
general application to all closed banks. In case
of quasi-banks, the liquidation plan shall be
adopted by the Monetary Board. Upon acquiring
jurisdiction, the court shall, upon motion by the
receiver after due notice, adjudicate disputed
claimsagainst the institution, assist the
enforcement of individual liabilities of the
stockholders, directors and officers, and decide
on other issues as may be material to
implement the liquidation plan adopted. The
receiver shall pay the cost of the proceedings
from the assets of the institution.
(2) convert the assets of the institution
to money, dispose of the same to creditors and
other parties, for the purpose of paying the
debts of such institution in accordance with the
rules on concurrence and preference of credit
under the Civil Code of the Philippines and he
may, in the name of the institution, and with
the assistance of counsel as he may retain,
institute such actions as may be necessary to
collect and recover accounts and assets of, or
defend any action against, the institution. The
assets of an institution under receivership or
liquidation shall be deemed in custodia legis in
the hands of the receiver and shall, from the
moment the institution was placed under such
receivership or liquidation, be exempt from any
order of garnishment, levy, attachment, or
execution. [Emphasis supplied]
xxx
Disputed claims refers to all claims, whether
they be against the assets of the insolvent bank, for
specific performance, breach of contract, damages, or
whatever.[12]Lucias action being a claim against RBCI
can properly be consolidated with the liquidation
proceedings before the RTC-Makati. A liquidation
proceeding has been explained in the case of In Re:
Petition For Assistance in the Liquidation of the Rural
Bank of BOKOD (Benguet), Inc. v. Bureau of Internal
Revenue[13] as follows:

A liquidation proceeding is a single

proceeding which consists of a number of
cases properly classified as "claims." It is
basically a two-phased proceeding. The first
phase is concerned with the approval and
disapproval of claims. Upon the approval of the
petition seeking the assistance of the proper
court in the liquidation of a closed entity, all
money claims against the bank are required to
be filed with the liquidation court. This phase
may end with the declaration by the liquidation
court that the claim is not proper or without
basis. On the other hand, it may also end with
the liquidation court allowing the claim. In the
latter case, the claim shall be classified
whether it is ordinary or preferred, and
thereafter included Liquidator. In either case,
the order allowing or disallowing a particular
claim is final order, and may be appealed by
the party aggrieved thereby.
The second phase involves the approval
by the Court of the distribution plan prepared
by the duly appointed liquidator. The
distribution plan specifies in detail the total
amount available for distribution to creditors
whose claim were earlier allowed. The Order
finally disposes of the issue of how much
property is available for disposal. Moreover, it
ushers in the final phase of the liquidation
proceeding - payment of all allowed claims in
accordance with the order of legal priority and
the approved distribution plan.
xxx
A liquidation proceeding is commenced
by the filing of a single petition by the Solicitor
General with a court of competent jurisdiction
entitled, "Petition for Assistance in the
Liquidation
of
e.g.,
Pacific
Banking
Corporation. All claims against the insolvent
are required to be filed with the liquidation
court. Although the claims are litigated in the
same proceeding, the treatment is individual.
Each claim is heard separately. And the Order
issued relative to a particular claim applies
only to said claim, leaving the other claims
unaffected, as each claim is considered
separate and distinct from the others. x x x
[Emphasis supplied.]
It is clear, therefore, that the liquidation court
has jurisdiction over all claims, including that of Lucia
against the insolvent bank. As declared in Miranda v.
Philippine Deposit Insurance Corporation,[14] regular
courts do not have jurisdiction over actions filed by
claimants against an insolvent bank, unless there is a
clear showing that the action taken by the BSP,
through the Monetary Board, in the closure of financial
institutions was in excess of jurisdiction, or with grave
abuse of discretion. The same is not obtaining in this
present case.

The power and authority of the Monetary Board

to close banks and liquidate them thereafter when
public interest so requires is an exercise of the police
power of the State.Police power, however, is subject to
judicial inquiry. It may not be exercised arbitrarily or
unreasonably and could be set aside if it is either
capricious, discriminatory, whimsical, arbitrary, unjust,
or is tantamount to a denial of due process and equal
protection clauses of the Constitution.[15]
In sum, this Court holds that the consolidation is
proper considering that the liquidation court has
jurisdiction over Lucias action. It would be more in
keeping with law and equity if Lucias case is
consolidated with the liquidation case in order to
expeditiously determine whether she is entitled to
recover the property subject of mortgage from RBCI
and, if so, how much she is entitled to receive from the
remaining assets of the bank.
WHEREFORE, the petition is DENIED.
SO ORDERED.
--------------------G.R. No. 181416

November 11, 2013

MEDICAL
PLAZA
MAKATI
CORPORATION, Petitioner,
vs.
ROBERT H. CULLEN, Respondent.

CONDOMINIUM

DECISION
PERALTA, J.:
This is a petition for review on certiorari under Rule 45
of the Rules of Court assailing the Court of Appeals
(CA)
Decision1 dated
July
10,
2007
and
Resolution2 dated January 25, 2008 in CA-G.R. CV No.
86614. The assailed decision reversed and set aside
the September 9, 2005 Order3 of the Regional Trial
Court (RTC) of Makati, Branch 58 in Civil Case No. 031018; while the assailed resolution denied the separate
motions for reconsideration filed by petitioner Medical
Plaza Makati Condominium Corporation (MPMCC) and
Meridien Land Holding, Inc. (MLHI).
The factual and procedural antecedents are as follows:
Respondent Robert H. Cullen purchased from MLHI
condominium Unit No. 1201 of the Medical Plaza
Makati covered by Condominium Certificate of Title No.
45808 of the Register of Deeds of Makati. Said title was
later cancelled and Condominium Certificate of Title
No. 64218 was issued in the name of respondent.

On September 19, 2002, petitioner, through its

corporate secretary, Dr. Jose Giovanni E. Dimayuga,
demanded from respondent payment for alleged
unpaid association dues and assessments amounting
to P145,567.42. Respondent disputed this demand
claiming that he had been religiously paying his dues
shown by the fact that he was previously elected
president and director of petitioner.4 Petitioner, on the
other hand, claimed that respondents obligation was a
carry-over of that of MLHI.5 Consequently, respondent
was prevented from exercising his right to vote and be
voted for during the 2002 election of petitioners Board
of Directors.6Respondent thus clarified from MLHI the
veracity of petitioners claim, but MLHI allegedly
claimed that the same had already been settled. 7 This
prompted respondent to demand from petitioner an
explanation why he was considered a delinquent payer
despite the settlement of the obligation. Petitioner
failed to make such explanation. Hence, the Complaint
for Damages8 filed by respondent against petitioner
and MLHI, the pertinent portions of which read:
xxxx
6. Thereafter, plaintiff occupied the said condominium
unit no. 1201 and religiously paid all the corresponding
monthly contributions/association dues and other
assessments imposed on the same. For the years 2000
and 2001, plaintiff served as President and Director of
the Medical Plaza Makati Condominium Corporation;
7. Nonetheless, on September 19, 2002, plaintiff was
shocked/surprised to receive a letter from the
incumbent Corporate Secretary of the defendant
Medical Plaza Makati, demanding payment of alleged
unpaid association dues and assessments arising from
plaintiffs condominium unit no. 1201. The said letter
further stressed that plaintiff is considered a
delinquent member of the defendant Medical Plaza
Makati.
x x x;
8. As a consequence, plaintiff was not allowed to file
his certificate of candidacy as director. Being
considered a delinquent, plaintiff was also barred from
exercising his right to vote in the election of new
members of the Board of Directors x x x;
9. x x x Again, prior to the said election date, x x x
counsel for the defendant [MPMCC] sent a demand
letter to plaintiff, anent the said delinquency,
explaining that the said unpaid amount is a carry-over
from the obligation of defendant Meridien. x x x;

10. Verification with the defendant [MPMCC] resulted

to the issuance of a certification stating that
Condominium Unit 1201 has an outstanding unpaid
obligation in the total amount of P145,567.42 as of
November 30, 2002, which again, was attributed by
defendant [MPMCC] to defendant Meridien. x x x;
11. Due to the seriousness of the matter, and the
feeling
that
defendant
Meridien
made
false
representations considering that it fully warranted to
plaintiff that condominium unit 1201 is free and clear
from all liens and encumbrances, the matter was
referred to counsel, who accordingly sent a letter to
defendant Meridien, to demand for the payment of said
unpaid association dues and other assessments
imposed on the condominium unit and being claimed
by defendant [MPMCC]. x x x;
12. x x x defendant Meridien claimed however, that
the obligation does not exist considering that the
matter was already settled and paid by defendant
Meridien to defendant [MPMCC]. x x x;
13. Plaintiff thus caused to be sent a letter to
defendant [MPMCC] x x x. The said letter x x x sought
an explanation on the fact that, as per the letter of
defendant Meridien, the delinquency of unit 1201 was
already fully paid and settled, contrary to the claim of
defendant [MPMCC]. x x x;
14. Despite receipt of said letter on April 24, 2003, and
to date however, no explanation was given by
defendant [MPMCC], to the damage and prejudice of
plaintiff who is again obviously being barred from
voting/participating in the election of members of the
board of directors for the year 2003;
15. Clearly, defendant [MPMCC] acted maliciously by
insisting that plaintiff is a delinquent member when in
fact, defendant Meridien had already paid the said
delinquency, if any. The branding of plaintiff as
delinquent member was willfully and deceitfully
employed so as to prevent plaintiff from exercising his
right to vote or be voted as director of the
condominium corporation; 16. Defendant [MPMCC]s
ominous silence when confronted with claim of
payment made by defendant Meridien is tantamount to
admission that indeed, plaintiff is not really a
delinquent member;
17. Accordingly, as a direct and proximate result of the
said
acts
of
defendant
[MPMCC],
plaintiff
experienced/suffered from mental anguish, moral
shock, and serious anxiety. Plaintiff, being a doctor of
medicine and respected in the community further

suffered from social humiliation and besmirched

reputation thereby warranting the grant of moral
damages in the amount of P500,000.00 and for which
defendant [MPMCC] should be held liable;
18. By way of example or correction for the public
good, and as a stern warning to all similarly situated,
defendant [MPMCC] should be ordered to pay plaintiff
exemplary damages in the amount of P200,000.00;
19. As a consequence, and so as to protect his rights
and interests, plaintiff was constrained to hire the
services of counsel, for an acceptance fee
of P100,000.00 plus P2,500.00 per every court hearing
attended by counsel;
20. In the event that the claim of defendant [MPMCC]
turned out to be true, however, the herein defendant
Meridien should be held liable instead, by ordering the
same to pay the said delinquency of condominium unit
1201 in the amount of P145,567.42 as of November
30, 2002 as well as the above damages, considering
that the non-payment thereof would be the proximate
cause of the damages suffered by plaintiff;9
Petitioner and MLHI filed their separate motions to
dismiss the complaint on the ground of lack of
jurisdiction.10MLHI claims that it is the Housing and
Land Use Regulatory Board (HLURB) which is vested
with the exclusive jurisdiction to hear and decide the
case. Petitioner, on the other hand, raises the following
specific grounds for the dismissal of the complaint: (1)
estoppel as respondent himself approved the
assessment when he was the president; (2) lack of
jurisdiction as the case involves an intra-corporate
controversy; (3) prematurity for failure of respondent
to exhaust all intra-corporate remedies; and (4) the
case is already moot and academic, the obligation
having been settled between petitioner and MLHI.11
On September 9, 2005, the RTC rendered a Decision
granting petitioners and MLHIs motions to dismiss
and, consequently, dismissing respondents complaint.
The trial court agreed with MLHI that the action for
specific performance filed by respondent clearly falls
within the exclusive jurisdiction of the HLURB. 12 As to
petitioner, the court held that the complaint states no
cause of action, considering that respondents
obligation had already been settled by MLHI. It,
likewise, ruled that the issues raised are intracorporate between the corporation and member. 13
On appeal, the CA reversed and set aside the trial
courts decision and remanded the case to the RTC for

further proceedings. Contrary to the RTC conclusion,

the CA held that the controversy is an ordinary civil
action for damages which falls within the jurisdiction of
regular courts.14 It explained that the case hinged on
petitioners refusal to confirm MLHIs claim that the
subject obligation had already been settled as early as
1998 causing damage to respondent.15 Petitioners and
MLHIs motions for reconsideration had also been
denied.16
Aggrieved, petitioner comes before the Court based on
the following grounds:

therein. The averments in the complaint and the

character of the relief sought are the ones to be
consulted. Once vested by the allegations in the
complaint, jurisdiction also remains vested irrespective
of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein. x x x20
Based on the allegations made by respondent in his
complaint, does the controversy involve intracorporate issues as would fall within the jurisdiction of
the RTC sitting as a special commercial court or an
ordinary action for damages within the jurisdiction of
regular courts?

I.
THE COURT A QUO HAS DECIDED A QUESTION OF
SUBSTANCE, NOT THERETOFORE DETERMINED BY THE
SUPREME COURT, OR HAS DECIDED IT IN A WAY NOT IN
ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THE SUPREME COURT WHEN IT
DECLARED THE INSTANT CASE AN ORDINARY ACTION
FOR DAMAGES INSTEAD OF AN INTRA-CORPORATE
CONTROVERSY
COGNIZABLE
BY
A
SPECIAL
COMMERCIAL COURT.
II.
THE COURT A QUO HAS DECIDED THE INSTANT CASE IN
A WAY NOT IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT
WHEN IT TOOK COGNIZANCE OF THE APPEAL WHILE
RAISING ONLY PURE QUESTIONS OF LAW.17
The petition is meritorious.
It is a settled rule that jurisdiction over the subject
matter is determined by the allegations in the
complaint. It is not affected by the pleas or the
theories set up by the defendant in an answer or a
motion to dismiss. Otherwise, jurisdiction would
become dependent almost entirely upon the whims of
the defendant.18 Also illuminating is the Courts
pronouncement in Go v. Distinction Properties
Development and Construction, Inc.:19
Basic as a hornbook principle is that jurisdiction over
the subject matter of a case is conferred by law and
determined by the allegations in the complaint which
comprise a concise statement of the ultimate facts
constituting the plaintiffs cause of action. The nature
of an action, as well as which court or body has
jurisdiction over it, is determined based on the
allegations contained in the complaint of the plaintiff,
irrespective of whether or not the plaintiff is entitled to
recover upon all or some of the claims asserted

In determining whether a dispute constitutes an intracorporate controversy, the Court uses two tests,
namely, the relationship test and the nature of the
controversy test.21
An intra-corporate controversy is one which pertains to
any of the following relationships: (1) between the
corporation, partnership or association and the public;
(2) between the corporation, partnership or association
and the State insofar as its franchise, permit or license
to operate is concerned; (3) between the corporation,
partnership or association and its stockholders,
partners, members or officers; and (4) among the
stockholders,
partners
or
associates
22
themselves. Thus, under the relationship test, the
existence of any of the above intra-corporate relations
makes the case intra-corporate.23
Under the nature of the controversy test, "the
controversy must not only be rooted in the existence of
an intra-corporate relationship, but must as well
pertain to the enforcement of the parties correlative
rights and obligations under the Corporation Code and
the internal and intra-corporate regulatory rules of the
corporation."24 In other words, jurisdiction should be
determined by considering both the relationship of the
parties as well as the nature of the question involved.25
Applying the two tests, we find and so hold that the
case involves intra-corporate controversy. It obviously
arose from the intra-corporate relations between the
parties, and the questions involved pertain to their
rights and obligations under the Corporation Code and
matters relating to the regulation of the corporation.26
Admittedly, petitioner is a condominium corporation
duly organized and existing under Philippine laws,
charged with the management of the Medical Plaza
Makati. Respondent, on the other hand, is the
registered owner of Unit No. 1201 and is thus a
stockholder/member of the condominium corporation.

Clearly, there is an intra-corporate relationship

between the corporation and a stockholder/member.
The nature of the action is determined by the body
rather than the title of the complaint.1wphi1 Though
denominated as an action for damages, an
examination of the allegations made by respondent in
his complaint shows that the case principally dwells on
the propriety of the assessment made by petitioner
against respondent as well as the validity of
petitioners act in preventing respondent from
participating in the election of the corporations Board
of Directors. Respondent contested the alleged unpaid
dues and assessments demanded by petitioner.
The issue is not novel. The nature of an action
involving any dispute as to the validity of the
assessment of association dues has been settled by
the Court in Chateau de Baie Condominium
Corporation v. Moreno.27 In that case, respondents
therein filed a complaint for intra-corporate dispute
against the petitioner therein to question how it
calculated the dues assessed against them, and to ask
an accounting of association dues. Petitioner, however,
moved for the dismissal of the case on the ground of
lack of jurisdiction alleging that since the complaint
was against the owner/developer of a condominium
whose condominium project was registered with and
licensed by the HLURB, the latter has the exclusive
jurisdiction. In sustaining the denial of the motion to
dismiss, the Court held that the dispute as to the
validity of the assessments is purely an intra-corporate
matter between petitioner and respondent and is thus
within the exclusive jurisdiction of the RTC sitting as a
special commercial court. More so in this case as
respondent repeatedly questioned his characterization
as a delinquent member and, consequently,
petitioners decision to bar him from exercising his
rights to vote and be voted for. These issues are clearly
corporate and the demand for damages is just
incidental. Being corporate in nature, the issues should
be threshed out before the RTC sitting as a special
commercial court. The issues on damages can still be
resolved in the same special commercial court just like
a regular RTC which is still competent to tackle civil law
issues incidental to intra-corporate disputes filed
before it.28
Moreover, Presidential Decree No. 902-A enumerates
the cases over which the Securities and Exchange
Commission (SEC) exercises exclusive jurisdiction:
xxxx

b) Controversies arising out of intra-corporate or

partnership
relations,
between
and
among
stockholders, members or associates; between any or
all of them and the corporation, partnership or
association of which they are stockholders, members,
or associates, respectively; and between such
corporation, partnership or association and the State
insofar as it concerns their individual franchise or right
to exist as such entity; and
c) Controversies in the election or appointment of
directors, trustees, officers, or managers of such
corporations, partnerships, or associations.29
To be sure, this action partakes of the nature of an
intra-corporate controversy, the jurisdiction over which
pertains to the SEC. Pursuant to Section 5.2 of Republic
Act No. 8799, otherwise known as the Securities
Regulation Code, the jurisdiction of the SEC over all
cases enumerated under Section 5 of Presidential
Decree No. 902-A has been transferred to RTCs
designated by this Court as Special Commercial
Courts.30 While the CA may be correct that the RTC has
jurisdiction, the case should have been filed not with
the regular court but with the branch of the RTC
designated as a special commercial court. Considering
that the RTC of Makati City, Branch 58 was not
designated as a special commercial court, it was not
vested with jurisdiction over cases previously
cognizable by the SEC.31 The CA, therefore, gravely
erred in remanding the case to the RTC for further
proceedings.
Indeed, Republic Act (RA) No. 9904, or the Magna Carta
for Homeowners and Homeowners Associations,
approved on January 7, 2010 and became effective on
July 10, 2010, empowers the HLURB to hear and decide
inter-association and/or intra-association controversies
or conflicts concerning homeowners associations.
However, we cannot apply the same in the present
case as it involves a controversy between a
condominium unit owner and a condominium
corporation. While the term association as defined in
the law covers homeowners associations of other
residential real property which is broad enough to
cover a condominium corporation, it does not seem to
be the legislative intent. A thorough review of the
deliberations of the bicameral conference committee
would show that the lawmakers did not intend to
extend the coverage of the law to such kind of
association. We quote hereunder the pertinent portion
of the Bicameral Conference Committees deliberation,
to wit:

THE CHAIRMAN (SEN. ZUBIRI). Lets go back, Mr. Chair,

very quickly on homeowners.
THE ACTING CHAIRMAN (REP. ZIALCITA). Ang sa akin
lang, I think our views are similar, Your Honor, Senator
Zubiri, the entry of the condominium units might just
complicate the whole matters. So wed like to put it on
record that were very much concerned about the
plight of the Condominium Unit Homeowners
Association. But this could very well be addressed on a
separate bill that Im willing to co-sponsor with the
distinguished Senator Zubiri, to address in the
Condominium Act of the Philippines, rather than
address it here because it might just create a red
herring into the entire thing and it will just complicate
matters, hindi ba?
THE CHAIRMAN (SEN. ZUBIRI). I also agree with you
although I sympathize with them---although we
sympathize with them and we feel that many times
their rights have been also violated by abusive
condominium corporations. However, there are certain
things that we have to reconcile. There are certain
issues that we have to reconcile with this version.
In the Condominium Code, for example, they just
raised
a
very
peculiar
situation
under
the
Condominium Code --- Condominium Corporation Act.
Its five years the proxy, whereas here, its three years.
So there would already be violation or there will be
already a problem with their version and our version.
Sino ang matutupad doon? Will it be our version or
their version?
So I agree that has to be studied further. And because
they have a law pertaining to the condominium
housing units, I personally feel that it would complicate
matters if we include them. Although I agree that they
should be looked after and their problems be looked
into.
Probably we can ask our staff, Your Honor, to come up
already with the bill although we have no more time.
Hopefully we can tackle this again on the 15th
Congress. But I agree with the sentiments and the
inputs of the Honorable Chair of the House panel.
May we ask our resource persons to also probably give
comments?
Atty. Dayrit.
MR. DAYRIT.

Yes I agree with you. There are many, I think, practices

in their provisions in the Condominium Law that may
be conflicting with this version of ours.
For instance, in the case of, lets say, the
condominium, the so-called common areas and/or
maybe so called open spaces that they may have,
especially common areas, they are usually owned by
the condominium corporation. Unlike a subdivision
where the open spaces and/or the common areas are
not necessarily owned by the association. Because
sometimes --- generally these are donated to the
municipality or to the city. And it is only when the city
or municipality gives the approval or the conformity
that this is donated to the homeowners association.
But generally, under PD [Presidential Decree] 957, its
donated. In the Condominium Corporation, hindi. Lahat
ng mga open spaces and common areas like corridors,
the function rooms and everything, are owned by the
corporation. So thats one main issue that can be
conflicting.
THE CHAIRMAN (SEN. ZUBIRI). Ill just ask for a oneminute suspension so we can talk.
THE ACTING CHAIRMAN (REP. ZIALCITA). Unless you
want to put a catchall phrase like what we did in the
Senior Citizens Act. Something like, to the extent --paano ba iyon? To the extent that it is practicable and
applicable, the rights and benefits of the homeowners,
are hereby extended to the --- mayroon kaming
ginamit na phrase eh...to the extent that it be
practicable and applicable to the unit homeoweners, is
hereby extended, something like that. Its a catchall
phrase. But then again, it might create a...
MR. JALANDONI. It will become complicated. There will
be a lot of conflict of laws between the two laws.
THE ACTING CHAIRMAN (REP. ZIALCITA). Kaya nga eh.
At saka, I dont know. I think the --- mayroon naman
silang protection sa ano eh, di ba? Buyers decree doon
sa Condominium Act. Im sure there are provisions
there eh. Huwag na lang, huwag na lang.
MR. JALANDONI. Mr. Chairman, I think it would be best
if your previous comments that youd be supporting an
amendment.1wphi1 I think that would be --- Well, that
would be the best course of action with all due respect.
THE ACTING CHAIRMAN (REP. ZIALCITA). Yeah. Okay.
Thank you. So iyon na lang final proposal naming yung
catchall phrase, "With respect to the..."32
xxxx

THE CHAIRMAN (SEN. ZUBIRI). xxx And so, what is their

final decision on the definition of homeowners?
THE ACTING CHAIRMAN (REP. ZIALCITA).
We stick to the original, Mr. Chairman. Well just open
up a whole can of worms and a whole new ball game
will come into play. Besides, I am not authorized,
neither are you, by our counterparts to include the
condominium owners.
THE CHAIRMAN (SEN. ZUBIRI).

Clearly, condominium corporations are not covered by

the amendment. Thus, the intra-corporate dispute
between petitioner and respondent is still within the
jurisdiction of the RTC sitting as a special commercial
court and not the HLURB. The doctrine laid down by
the Court in Chateau de Baie Condominium
Corporation v. Moreno35 which in turn cited Wack Wack
Condominium Corporation, et al v. CA 36 is still a good
law.
WHEREFORE, we hereby GRANT the petition and
REVERSE the Court of Appeals Decision dated July 10,
2007 and Resolution dated January 25, 2008 in CA-G.R.
CV No. 86614. The Complaint before the Regional Trial
Court of Makati City, Branch 58, which is not a special
commercial court, docketed as Civil Case No. 03-1018
is ordered DISMISSED for lack of jurisdiction. Let the
case be REMANDED to the Executive Judge of the
Regional Trial Court of Makati City for re-raffle purposes
among the designated special commercial courts.

Basically that is correct. We are not authorized by the

Senate nor because we have discussed this lengthily
on the floor, actually, several months on the floor. And
we dont have the authority as well for other Bicam
members to add a provision to include a separate
entity that has already their legal or their established
Republic Act tackling on that particular issue. But we
just like to put on record, we sympathize with the
plight of our friends in the condominium associations SO ORDERED.
and we will just guarantee them that we will work on
an amendment to the Condominium Corporation Code. --------------------So with that we skipped, that is correct, we have to
NORTH EXPRESS, INC., and ALEXANDER
go back to homeowners association definition, PANTRANCO
Your
Honor, because we had skipped it altogether. So just BUNCAN, petitioners, vs. STANDARD INSURANCE
INC.,
and
MARTINA
quickly going back to Page 7 because there are COMPANY,
GICALE,respondents.
amendments to the definition of homeowners. If it is
alright with the House Panel, adopt the opening phrase
of Subsection 7 of the Senate version as opening D E C I S I O N
phrase of Subsection 10 of the reconciled version.
SANDOVAL-GUTIERREZ, J.:
33
xxxx
Before
us
is
a
petition
for
review
To be sure, RA 4726 or the Condominium Act was on certiorari assailing the Decision[1] dated July 23
enacted to specifically govern a condominium. Said 1999 and Resolution[2] dated November 4, 1999 of the
law sanctions the creation of the condominium Court of Appeals in CA-G.R. CV No. 38453,
corporation which is especially formed for the purpose entitled Standard Insurance Company, Inc., and
of holding title to the common area, in which the Martina Gicale vs. PANTRANCO North Express, Inc.,
holders of separate interests shall automatically be and Alexander Buncan.
members or shareholders, to the exclusion of others, in
In the afternoon of October 28, 1984, Crispin
proportion to the appurtenant interest of their
respective units.34 The rights and obligations of the Gicale was driving the passenger jeepney owned by his
condominium unit owners and the condominium mother Martina Gicale, respondent herein. It was then
raining. While driving north bound along the National
corporation are set forth in the above Act.
Highway in Talavera, Nueva Ecija, a passenger bus,
owned by Pantranco North Express, Inc., petitioner,
driven by Alexander Buncan, also a petitioner, was
trailing behind. When the two vehicles were
negotiating a curve along the highway, the passenger
bus overtook the jeepney. In so doing, the passenger
bus hit the left rear side of the jeepney and sped away.

Crispin reported the incident to the Talavera Police

Station and respondent Standard Insurance Co., Inc.
(Standard), insurer of the jeepney. The total cost of the
repair was P21,415.00, but respondent Standard paid
only P8,000.00. Martina Gicale shouldered the balance
of P13,415.00.
Thereafter, Standard and Martina, respondents,
demanded reimbursement from petitioners Pantranco
and its driver Alexander Buncan, but they refused. This
prompted respondents to file with the Regional Trial
Court (RTC), Branch 94, Manila, a complaint for sum of
money.
In their answer, both petitioners specifically denied
the allegations in the complaint and averred that it is
the Metropolitan Trial Court, not the RTC, which has
jurisdiction over the case.
On June 5, 1992, the trial court rendered a
Decision[3] in favor of respondents Standard and
Martina, thus:
WHEREFORE, and in view of the foregoing
considerations, judgment is hereby rendered in favor of
the plaintiffs, Standard Insurance Company and
Martina Gicale, and against defendants Pantranco Bus
Company and Alexander Buncan, ordering the latter to
pay as follows:
(1) to pay plaintiff Standard Insurance the amount
of P8,000.00 with interest due thereon from November
27, 1984 until fully paid;
(2) to pay plaintiff Martina Gicale the amount
of P13,415.00 with interest due thereon from October
22, 1984 until fully paid;
(3) to pay the sum of P10,000.00 for attorneys fees;
(4) to pay the expenses of litigation and the cost of
suit.
SO ORDERED.
On appeal, the Court of Appeals, in a
Decision[4] dated July 23, 1999, affirmed the trial courts
ruling, holding that:
The appellants argue that appellee Gicales claim
of P13,415.00 and appellee insurance companys claim
of P8,000.00 individually fell under the exclusive
original jurisdiction of the municipal trial court. This is
not correct because under the Totality Rule provided
for under Sec. 19, Batas Pambansa Bilang 129, it is the

sum of the two claims

jurisdictional amount.

that

determines

the

xxx
In the case at bench, the total of the two claims is
definitely more than P20,000.00 which at the time of
the incident in question was the jurisdictional amount
of the Regional Trial Court.
Appellants contend that there was a misjoinder of
parties. Assuming that there was, under the Rules of
Court (Sec. 11, Rule 7) as well as under the Rules of
Civil Procedure (ditto), the same does not affect the
jurisdiction of the court nor is it a ground to dismiss the
complaint.
xxx
It does not need perspicacity in logic to see that
appellees Gicales and insurance companys individual
claims against appellees (sic) arose from the same
vehicular accident on October 28, 1984 involving
appellant Pantrancos bus and appellee Gicales jeepney.
That being the case, there was a question of fact
common to all the parties: Whose fault or negligence
caused the damage to the jeepney?
Appellants submit that they were denied their day in
court because the case was deemed submitted for
decision without even declaring defendants in default
or to have waived the presentation of evidence. This is
incorrect. Of course, the court did not declare
defendants in default because that is done only when
the defendant fails to tender an answer within the
reglementary period. When the lower court ordered
that the case is deemed submitted for decision that
meant that the defendants were deemed to have
waived their right to present evidence. If they failed to
adduce their evidence, they should blame nobody but
themselves. They failed to be present during the
scheduled hearing for the reception of their evidence
despite notice and without any motion or explanation.
They did not even file any motion for reconsideration
of the order considering the case submitted for
decision.
Finally, contrary to the assertion of the defendantappellants, the evidence preponderantly established
their liability for quasi-delict under Article 2176 of the
Civil Code.
Petitioners filed a motion for reconsideration but
was denied by the Appellate Court in a Resolution
dated November 4, 1999.

Hence, this petition for review on certiorari raising

the following assignments of error:
I
WHETHER OR NOT THE TRIAL COURT HAS
JURISDICTION OVER THE SUBJECT OF THE ACTION
CONSIDERING
THAT
RESPONDENTS
RESPECTIVE
CAUSE OF ACTION AGAINST PETITIONERS DID NOT
ARISE OUT OF THE SAME TRANSACTION NOR ARE
THERE QUESTIONS OF LAW AND FACTS COMMON TO
BOTH PETITIONERS AND RESPONDENTS.
II
WHETHER OR NOT PETITIONERS ARE LIABLE TO
RESPONDENTS CONSIDERING THAT BASED ON THE
EVIDENCE ADDUCED AND LAW APPLICABLE IN THE
CASE AT BAR, RESPONDENTS HAVE NOT SHOWN ANY
RIGHT TO THE RELIEF PRAYED FOR.
III
WHETHER OR NOT PETITIONERS WERE DEPRIVED OF
THEIR RIGHT TO DUE PROCESS.
For their part, respondents contend that their
individual claims arose out of the same vehicular
accident and involve a common question of fact and
law. Hence, the RTC has jurisdiction over the case.
I
Petitioners insist that the trial court has no
jurisdiction over the case since the cause of action of
each respondent did not arise from the same
transaction and that there are no common questions of
law and fact common to both parties. Section 6, Rule 3
of the Revised Rules of Court,[5] provides:
Sec. 6. Permissive joinder of parties. All persons in
whom or against whom any right to relief in respect to
or arising out of the same transaction or series of
transactions is alleged to exist, whether jointly,
severally, or in the alternative, may, except as
otherwise provided in these Rules, join as plaintiffs or
be joined as defendants in one complaint, where any
question of law or fact common to all such plaintiffs or
to all such defendants may arise in the action; but the
court may make such orders as may be just to prevent
any plaintiff or defendant from being embarrassed or
put to expense in connection with any proceedings in
which he may have no interest.

Permissive joinder of parties requires that: (a) the

right to relief arises out of the same transaction or
series of transactions; (b) there is a question of law or
fact common to all the plaintiffs or defendants; and (c)
such joinder is not otherwise proscribed by the
provisions of the Rules on jurisdiction and venue.[6]
In this case, there is a single transaction common
to all, that is, Pantrancos bus hitting the rear side of
the jeepney. There is also a common question of fact,
that is, whether petitioners are negligent. There being
a single transaction common to both respondents,
consequently, they have the same cause of action
against petitioners.
To determine identity of cause of action, it must be
ascertained whether the same evidence which is
necessary to sustain the second cause of action would
have been sufficient to authorize a recovery in the
first.[7] Here, had respondents filed separate suits
against petitioners, the same evidence would have
been presented to sustain the same cause of action.
Thus, the filing by both respondents of the complaint
with the court below is in order. Such joinder of parties
avoids multiplicity of suit and ensures the convenient,
speedy and orderly administration of justice.
Corollarily, Section 5(d), Rule 2 of the same Rules
provides:
Sec. 5. Joinder of causes of action. A party may in one
pleading assert, in the alternative or otherwise, as
many causes of action as he may have against an
opposing party, subject to the following conditions:
xxx
(d) Where the claims in all the causes of action are
principally for recovery of money the aggregate
amount claimed shall be the test of jurisdiction.
The above provision presupposes that the different
causes of action which are joined accrue in favor of the
same plaintiff/s and against the same defendant/s and
that no misjoinder of parties is involved. [8] The issue of
whether respondents claims shall be lumped together
is determined by paragraph (d) of the above provision.
This paragraph embodies the totality rule as
exemplified by Section 33 (1) of B.P. Blg. 129 [9] which
states, among others, that where there are several
claims or causes of action between the same or
different parties, embodied in the same complaint, the
amount of the demand shall be the totality of the
claims in all the causes of action, irrespective of

whether the causes of action arose out of the same or

different transactions.
As previously stated, respondents cause of action
against petitioners arose out of the same transaction.
Thus, the amount of the demand shall be the totality of
the claims.
Respondent Standards claim is P8,000.00, while
that of respondent Martina Gicale is P13,415.00, or a
total of P21,415.00. Section 19 of B.P. Blg. 129
provides that the RTC has exclusive original jurisdiction
over all other cases, in which the demand, exclusive of
interest and cost or the value of the property in
controversy, amounts to more than twenty thousand
pesos (P20,000.00). Clearly, it is the RTC that has
jurisdiction over the instant case. It bears emphasis
that when the complaint was filed, R.A. 7691
expanding the jurisdiction of the Metropolitan,
Municipal and Municipal Circuit Trial Courts had not yet
taken effect. It became effective on April 15, 1994.

by the trial court. Subsequently, said counsel filed a

notice to withdraw. After respondents had presented
their evidence, the trial court, upon petitioners motion,
reset the hearing to another date. On this date,
Pantranco failed to appear. Thus, the trial court warned
Pantranco that should it fail to appear during the next
hearing, the case will be submitted for resolution on
the basis of the evidence presented. Subsequently,
Pantrancos new counsel manifested that his client is
willing to settle the case amicably and moved for
another postponement. The trial court granted the
motion. On the date of the hearing, the new counsel
manifested that Pantrancos employees are on strike
and moved for another postponement. On the next
hearing, said counsel still failed to appear. Hence, the
trial court considered the case submitted for decision.
We have consistently held that the essence of due
process is simply an opportunity to be heard, or an
opportunity to explain ones side or an opportunity to
seek for a reconsideration of the action or ruling
complained of.[11]

II
The finding of the trial court, affirmed by the
Appellate Court, that petitioners are negligent and thus
liable to respondents, is a factual finding which is
binding upon us, a rule well-established in our
jurisprudence. It has been repeatedly held that the trial
court's factual findings, when affirmed by the Appellate
Court, are conclusive and binding upon this Court, if
they are not tainted with arbitrariness or oversight of
some fact or circumstance of significance and
influence. Petitioners have not presented sufficient
ground to warrant a deviation from this rule.[10]
III
There is no merit in petitioners contention that
they were denied due process. Records show that
during the hearing, petitioner Pantrancos counsel filed
two motions for resetting of trial which were granted

Petitioner Pantranco filed an answer and

participated during the trial and presentation of
respondents evidence. It was apprised of the notices of
hearing issued by the trial court. Indeed, it was
afforded fair and reasonable opportunity to explain its
side of the controversy. Clearly, it was not denied of its
right to due process. What is frowned upon is the
absolute lack of notice and hearing which is not
present here.
WHEREFORE, the petition is DENIED. The assailed
Decision dated July 23 1999 and Resolution dated
November 4, 1999 of the Court of Appeals in CA-G.R.
CV No. 38453 are hereby AFFIRMED. Costs against
petitioners.
SO ORDERED.
---------------