G.R. No. 189789.

September 16, 2013

THE HEIRS OF THE SPOUSES AGUSTIN CALIGUIRAN AND MARIA SINGAYAN,
NAMELY: OSCAR, RICO, ROMILIO, LITA AND ROMEO, ALL SURNAMED
CALIGUIRAN, ET AL.
vs.
HON. JEZARENE C. AQUINO, PRES. JUDGE RTC-TUGUEGARAO CITY, BR. 5,
HEIRS OF THE SPOUSES CANDIDO APOSTOL AND ENGRACIA PAGULAYAN, ET
AL.

NOTICE

Sirs/Medames :
Please take notice that the Court, First Division, issued a Resolution dated September
16, 2013 which reads as follows:
"G.R. No. 189789 (The Heirs of the Spouses Agustin Caliguiran and Maria
Singayan, namely: Oscar, Rico, Romilio, Lita and Romeo, all surnamed
Caliguiran, et al. vs. Hon. Jezarene C. Aquino, Pres. Judge RTC-Tuguegarao City,
Br. 5, Heirs of the Spouses Candido Apostol and Engracia Pagulayan, et al.).
This is a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure
wherein petitioners seek to annul and set aside, on the ground of grave abuse of
discretion tantamount to lack or in excess of jurisdiction, the Order 1 dated August 13,
2009 issued by the Regional Trial Court (RTC) of Tuguegarao City, Branch 5 in Civil
Case No. 6285 for Reivindicacion or Reconveyance, Quieting of Title with Damages.
The assailed Order dismissed without prejudice the aforementioned civil suit on the
ground that the value of the subject property was below the minimum assessed value of
P20,000.00, which would bring a real action under the jurisdiction of the RTC.
Thus, petitioners filed the present petition arguing 'whether or not the respondent judge
committed grave abuse of discretion in dismissing the petitioners' complaint pending
before his sala since December 23, 2003, after petitioners rested their case, and the
private respondents had already presented two (2) witnesses merely because the
assessed value of the properties subject of the case is less than P20,000.00 without
considering the allegations of the complaint.' 2
A thorough examination of the merits of this case would reveal that no grave abuse of
discretion tantamount to lack or in excess of jurisdiction was committed by respondent
Judge when he issued the assailed August 13, 2009 Order.

Grave abuse of discretion exists where an act is performed with a capricious or

whimsical exercise of judgment equivalent to lack of jurisdiction. The abuse of discretion
must be patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as
where the power is exercised in an arbitrary and despotic manner by reason of passion
or personal hostility. 3
In this case, none of the attendnt circumstances that characterize grave abuse of
discretion can be ascribed to the act of respondent Judge in issuing the assailed August
13, 2009 Order. Instead, respondent Judge properly applied the applicable law
on jurisdiction after hearing both parties. Particularly, Section 19 (2) of Batas Pambansa
Blg. 129, as amended, which defines the jurisdiction of the RTC over real actions,
provides as follows:
(2)In all civil actions which involve the title to, or possession of, real
property, or any interest therein, where the assessed value of the
property involved exceeds Twenty thousand pesos (P20,000.00) or for
civil actions in Metro Manila, where such value exceeds Fifty thousand
pesos (P50,000.00) except actions for forcible entry into and unlawful
detainer of lands or buildings, originaljurisdiction over which is conferred
upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts[.]
An action for quieting of title is a real action, the jurisdiction over which is determined by
the assessed value of the property.
The following pronouncement in Bank of Commerce v. San Pablo, Jr., 4 is instructive:
The mortgage of the subject property to the Bank of Commerce,
annotated on the Spouses San Pablo's TCT, constitutes a cloud on their
title to the subject property, which may, at first, appear valid and
effective, but is allegedly invalid or voidable for having been made
without their knowledge and authority as registered owners. We thus
have established that the case filed by the spouses San Pablo before
the MTC is actually an action for quieting of title, a real action,
the jurisdiction over which is determined by the assessed value of the
property. The assessed value of the subject property located in Mandaue
City, as alleged in the complaint, is P4,900.00, which aptly falls within
the jurisdiction of the MTC.
Well-settled is the rule that jurisdiction over the subject matter of a case is conferred by
law and is determined by the allegations in the complaint and the character of the relief
sought, irrespective of whether the plaintiff is entitled to all or some of the claims
asserted therein. 5 Moreover, Section 1, Rule 9 of the 1997 Rules of Civil Procedure
states that when it appears from the pleadings or the evidence on record that the court

has no jurisdiction over the subject matter, the court shall motu proprio dismiss the
claim, to wit:
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.
(Emphases supplied.)
The total assessed value of the subject lots in the case at bar is only P11,300.00 as
evidenced by the tax declarations covering the said lots which were submitted by
petitioners themselves in court. 6 Thus, respondent Judge properly dismissed the civil
suit for lack of jurisdiction.
WHEREFORE, the petition is DISMISSED. The Order dated August 13, 2009 of the
Regional Trial Court of Tuguegarao City, Branch 5 in Civil Case No. 6285
is AFFIRMED."
SO ORDERED."

G.R. No.173861

July 14, 2014

JAY CANDELARIA and ERIC BASIT, Petitioners,

vs.
REGIONAL TRIAL COURT, BRANCH 42, CITY OF SAN FERNANDO; (Pampanga)
represented by its Presiding Judge HON. MARIA AMIFAITH S. FIDER-REYES,
OFFICE OF THE PROVINCIAL PROSECUTOR, CITY OF SAN FERNANDO,
PAMPANGA and ALLIED DOMECQ PHILIPPINES, INC., Respondents.

DECISION
DEL CASTILLO, J.:
In this Petition for Certiorari with Application for Preliminary Injunction1 filed under Rule
65 of the Rules of Court, petitioners Jay Candelaria and Eric Basit (petitioners) seek to
nullify and set aside two Orders of the Regional Trial Court (RTC), Branch 42, City of
San Fernando, Pampanga, to wit: Order dated October 12, 20052 denying their Motion
to Suppress/Exclude Evidence3 and Order dated July 14, 20064 denying their Motion
for Reconsideration5 thereto.

Factual Antecedents

During an alleged buy-bust operation conducted in the evening of June 22, 2001,
petitioners werearrested at the corner of Gueco St. and MacArthur Highway, Balibago,
Angeles City for delivering, with the intention to sell, five cases of counterfeit
FundadorBrandy. On the strength of the Joint Affidavit6 of the police operatives,
petitioners were formally charged in an Information7 dated July 6, 2004 with violation of

Section 155 in relation to Section 170 of Republic Act No. 8293, otherwise known as the
IntellectualProperty Code of the Philippines. After they were arraigned and had pleaded
not guilty to the charge on May 31, 2005,8 petitioners filed on June 17, 2005 a Motion to
Suppress/Exclude Evidence9 based on inadmissibility of evidence. They contended that
the evidence the prosecution intended to present were obtained in violation of their
constitutional right against unreasonable searches and seizures. This is considering that
at the time the alleged counterfeit productswere seized, they were neither committing
nor attempting to commit a crime in the presence of the arresting officers as to justify
the conduct of search and seizure following their unlawful arrest.

Ruling of the Regional Trial Court

On October 12, 2005, the RTC issued the first assailed Order10 denying the Motion to
Suppress/Exclude Evidence. Observing that the motion was anchored on petitioners
alleged illegal arrest, it cited jurisprudence11 wherein it was held that any objection to
an arrest must be made before an accused enters his plea on arraignment. Having
failed to move for the quashal of the information before the arraignment, an accused is
estopped from questioning the legality of his arrest. Notwithstanding this reference, the
RTC based its denial of the subject motion on its examination of the Joint Affidavit of the
arresting officers. According to the said court, since it appears from the said affidavit that
the search and seizure was incidental to a valid warrantless arrest of the accused who
were caught in flagrante delicto, any evidence obtained during such search and seizure
is admissible in evidence.

Not satisfied, petitioners filed a Motion for Reconsideration,12 which the RTC denied in
its assailed Order13 of July 14, 2006.

Issue

Hence, the present recourse under Rule65 of the Rules ofCourt, anchored on the sole
ground of:

WHETHER X X X THE REGIONAL TRIAL COURT, BRANCH 42 OF THE CITY OF SAN

FERNANDO, PAMPANGA COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DENYING THE MOTION
OF THE PETITIONERS TO SET THE CASE FOR SUPPRESSION HEARING.14

The Petition is bereft of merit.

Petitioners failed to allege that there is no appeal nor any plain, speedy and adequate
remedy in the ordinary course
of law.

It is to be stressed that in every special civil action underRule 65, a party seeking the
writ whether for certiorari, prohibition or mandamus, must be able to show that his or her
resort to such extraordinary remedy is justified by the absence of an appeal or any
plain, speedy and adequate remedy in the ordinary course of law. "[H]e must allege in
his petition and establish facts to show that any other existing remedy is not speedy or
adequate x x x."15 As held in Visca v. Secretary of Agriculture and Natural
Resources:16

x x x [I]t is incumbent upon an applicant for a writ of certiorarito allege with certainty in
his verified petition facts showing that "there is no appeal, nor any plain, speedy and
adequate remedy in the ordinary course of law," because this is an indispensable
ingredient of a valid petition for certiorari. "Being a special civil action, petitionerappellant must allege and prove that he has no other speedy and adequate remedy."
"Where the existence of a remedy by appeal or some other plain, speedy and adequate
remedy precludes the granting of the writ, the petitioner must allegefacts showing that
any existing remedy is impossible or unavailing, or that excuse petitioner for not having
availed himself of such remedy. A petition for certiorari which does not comply with the
requirements of the rules may be dismissed.17

Pursuant to the foregoing, the instant Petition for Certiorariis dismissible for failure to
allege that there is no appeal, nor any plain, speedy and adequate remedy in the
ordinary course oflaw as to justify resort to certiorari.

Assuming the assailed October 12, 2005

Order to be erroneous, the mistake is an
error in judgment which is beyond the
ambit of certiorari.

In Triplex Enterprises, Inc. v. PNB-Republic Bank,18 the Court held that:

The writ of certiorari is restricted to truly extraordinary cases wherein the act of the
lower court or quasi-judicial body is wholly void. Moreover, it is designed to correct
errors of jurisdiction and not errors in judgment. The rationale of this 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 is committed. Otherwise, every
mistake made by a court will deprive it of its jurisdiction and every erroneousjudgment
will be a void judgment.

When the court has jurisdiction over the case and person of the defendant, any mistake
in the application of the law and the appreciation of evidence committed by a court may
becorrected only by appeal. The determination made by the trial court regarding the
admissibility of evidence is but an exercise of its jurisdiction and whatever fault it may
have perpetrated in making such a determination is an error in judgment, not of
jurisdiction. Hence, settled is the rule that rulings of the trial court on procedural
questions and on admissibility of evidence during the course of a trial are interlocutory
in nature and may not be the subject of a separate appeal or review on certiorari. They
must be assigned as errors and reviewed in the appeal properly taken from the decision
rendered by the trial court on the merits of the case.19

Here, it is undisputed that the RTC had jurisdiction over the case and the person of the
petitioners. As such, any perceived error in its interpretation of the law and its
assessment of evidence is correctibleby appeal, not certiorari, as the same would only
be considered an error ofjudgment and not of jurisdiction. In particular, the RTCs denial
of the Motion to Suppress/Exclude Evidence based on its assessment that the evidence
sought to be suppressed/excluded isadmissible, was done in the proper exercise of its

jurisdiction. Assuming that the RTCs determination is erroneous, the mistake is clearly
not anerror of jurisdiction but of judgment which is not correctible by certiorari.

No grave abuse of discretion.

Even assuming that petitioners resort of certiorariis proper, the Petition must still be
dismissed for their failure toshow that the RTC acted in grave abuse of discretion as to
amount to lack of jurisdiction. "Grave abuse of discretion is the capricious and whimsical
exercise of judgment on the part of the public officer concerned which is equivalentto an
excess or lack of jurisdiction. The abuse of discretion must be sopatent and gross as to
amountto an evasion of a positive duty or a virtual refusal to perform a duty enjoined by
law, or to act at all in contemplation of law as where the power is exercised in an
arbitrary and despotic manner by reason of passion or hostility."20

In this case, petitionersmiserably failed to show how the RTC supposedly abused its
discretion.1a\^/phi1 In fact, we note that the main issue raised by petitioners in their
Petition is when is the proper timeto file a motion to suppress/exclude evidence.21 They
even conceded that this is a pure question of law.22

In any case, our perusal of the records shows that the RTC did not abuse, much more,
gravely abuse its discretion. The RTC thoroughly considered the pleadings submitted by
the parties, to wit: Motion to Suppress/Exclude Evidence; Opposition (to the Motion to
Suppress Evidence); Reply; Rejoinder; and SurRejoinder; as well as the Joint affidavit
submitted by the arresting officers. Only after a careful analysis of the submissions of
the parties did the RTC render its judgment.

Petitioners violated the principle

of hierarchy of courts.

It also did not escape our attention that from the RTC, petitioners made a direct
recourse to this Court. This is against the well-settled principle dictating that a petition
for certiorariassailing the interlocutory orders of the RTC should be filed with the Court

of Appeals and not directly with the Supreme Court. It was held in Rayos v. City of
Manila23 that:

Indeed, this Court, the Court of Appeals and the Regional Trial Courts exercise
concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto,
habeas corpus and injunction. However, such concurrence in jurisdiction does not give
petitioners unbridled freedom of choice of court forum. In Heirs of Bertuldo Hinog v.
Melicor, citing People v. Cuaresma, the Court held:

This Court's original jurisdiction to issue writs of certiorari is not exclusive. It is shared by
this Court with Regional Trial Courts and with the Court of Appeals. This concurrence of
jurisdiction is not, however, to be taken as according to parties seeking any of the writs
an absolute, unrestrained freedom of choice of the court to which application therefor
will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of
the venue of appeals, and also serves as a general determinant of the appropriate
forum for petitions for the extraordinary writs. A becoming regard for that judicial
hierarchy most certainly indicates that petitions for the issuance of extraordinary writs
against fiq;t level ("inferior") courts should be filed with the Regional Trial Court, and
those against the latter, with the Court of Appeals. A direct invocation of the Supreme
Court's original jurisdiction to issue these writs should be allowed only when there are
special and important reasons therefor, clearly and specifically set out in the petition.
This is [an] established policy. It is a policy necessary to prevent inordinate demands
upon the Court's time and attention which are better devoted to those matters within its
exclusive jurisdiction, and to prevent further over-crowding of the Court's docket.24

Clearly, a direct invocation of this Court's original jurisdiction may only be allowed if
there are special and important reasons clearly and specifically set out in the petition
which, however, are not obtaining in this case.

WHEREFORE, premises considered, the Petition for Certiorari is DISMISSED.

SO ORDERED.

SECOND DIVISION

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.3 Based on this finding, the Court of Appeals reversed and set
aside the Orders, dated 8 November 20044 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 Answer7 in which she alleged, among
others, that her husband and co-defendant, 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."17 Respondents 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
pre-trial, 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.

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

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.

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.

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

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 9
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 15
MOTIONS

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 above-quoted
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 "CO-MAKER."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.

The foregoing ruling was reiterated and expounded in the later case of Philippine
National Bank v. Asuncion51 where the Supreme Court pronounced:

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 former being merely procedural,
while the latter, substantive.

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.

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 party-defendant 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 partydefendant 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. x x x

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. 97-86672, 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.

THIRD DIVISION

G.R. No. 208232

March 10, 2014

SURVIVING HEIRS OF ALFREDO R. BAUTISTA, namely: EPIFANIA G. BAUTISTA and

ZOEY G. BAUTISTA, Petitioners,
vs.
FRANCISCO LINDO and WELHILMINA LINDO; and HEIRS OF FILIPINA DAQUIGAN,
namely: MA. LOURDES DAQUIGAN, IMELDA CATHERINE DAQUIGAN, IMELDA
DAQUIGAN and CORSINO DAQUIGAN, REBECCA QUIAMCO and ANDRES
QUIAMCO, ROMULO LORICA and DELIA LORICA, GEORGE CAJES and LAURA
CAJES, MELIDA BANEZ and FRANCISCO BANEZ, MELANIE GOFREDO, GERV
ACIO CAJES and ISABEL CAJES, EGMEDIO SEGOVIA and VERGINIA SEGOVIA,
ELSA N. SAM, PEDRO M. SAM and LINA SAM, SANTIAGO MENDEZ and MINA
MENDEZ, HELEN M. BURTON and LEONARDO BURTON, JOSE JACINTO and
BIENVENIDA JACINTO, IMELDA DAQUIGAN, LEO MA TIGA and ALICIA MATIGA,
FLORENCIO ACEDO JR., and LYLA VALERIO, Respondents.

DECISION

VELASCO, JR., J.:

The Case

This is a Petition for Review on Certiorari under Rule 45 assailing the April 25, 2013
Order of the Regional Trial Court (RTC) in Civil Case No. (1798)-021 as well as its
Order of July 3, 2013 denying reconsideration.

The Facts

Alfredo R. Bautista (Bautista), petitioners predecessor, inherited in 1983 a free-patent

land located in Poblacion, Lupon, Davao Oriental and covered by Original Certificate of
Title (OCT) No. (1572) P-6144. A few years later, he subdivided the property and sold it
to several vendees, herein respondents, via a notarized deed of absolute sale dated
May 30, 1991. Two months later, OCT No. (1572) P-6144 was canceled and Transfer
Certificates of Title (TCTs) were issued in favor of the vendees.1

Three years after the sale, or on August 5, 1994, Bautista filed a complaint for
repurchase against respondents before the RTC, Branch 32, Lupon, Davao Oriental,
docketed as Civil Case No. 1798,2 anchoring his cause of action on Section 119 of
Commonwealth Act No. (CA) 141, otherwise known as the "Public Land Act," which
reads:

SECTION 119. Every conveyance of land acquired under the free patent or homestead
provisions, when proper, shall be subject to repurchase by the applicant, his widow, or
legal heirs, within a period of five years from the date of the conveyance.

Respondents, in their Answer, raised lack of cause of action, estoppel, prescription, and
laches, as defenses.

Meanwhile, during the pendency of the case, Bautista died and was substituted by
petitioner Epifania G. Bautista (Epifania).

Respondents Francisco and Welhilmina Lindo later entered into a compromise

agreement with petitioners, whereby they agreed to cede to Epifania a three thousand
two hundred and thirty square meter (3,230 sq.m.)-portion of the property as well as to

waive, abandon, surrender, and withdraw all claims and counterclaims against each
other. The compromise was approved by the RTC in its Decision dated January 27,
2011, the fallo of which reads:

WHEREFORE, a DECISION is hereby rendered based on the above-quoted

Compromise Agreement and the parties are enjoined to strictly comply with the terms
and conditions of the same.

SO ORDERED.3

Other respondents, however, filed a Motion to Dismiss4 dated February 4, 2013,

alleging that the complaint failed to state the value of the property sought to be
recovered. Moreover, they asserted that the total selling price of all the properties is only
sixteen thousand five hundred pesos (PhP 16,500), and the selling price or market
value of a property is always higher than its assessed value. Since Batas Pambansa
Blg. (BP) 129, as amended, grants jurisdiction to the RTCs over civil actions involving
title to or possession of real property or interest therein where the assessed value is
more than PhP 20,000, then the RTC has no jurisdiction over the complaint in question
since the property which Bautista seeks to repurchase is below the PhP 20,000
jurisdictional ceiling.

RTC Ruling5

Acting on the motion, the RTC issued the assailed order dismissing the complaint for
lack of jurisdiction. The trial court found that Bautista failed to allege in his complaint
that the value of the subject property exceeds 20 thousand pesos. Furthermore, what
was only stated therein was that the total and full refund of the purchase price of the
property is PhP 16,500. This omission was considered by the RTC as fatal to the case
considering that in real actions, jurisdictional amount is determinative of whether it is the
municipal trial court or the RTC that has jurisdiction over the case.

With respect to the belated filing of the motion, the RTC, citing Cosco Philippines
Shipping, Inc. v. Kemper Insurance Company,6 held that a motion to dismiss for lack of

jurisdiction may be filed at any stage of the proceedings, even on appeal, and is not lost
by waiver or by estoppel. The dispositive portion of the assailed Order reads:

WHEREFORE, the complaint for Repurchase, Consignation, with Preliminary Injunction

and Damages is hereby dismissed for lack of jurisdiction.

SO ORDERED.7

Assignment of Errors

Their motion for reconsideration having been denied, petitioners now seek recourse
before this Court with the following assigned errors:

THE PUBLIC RESPONDENT RTC ERRED IN ADMITTING THE MOTION TO DISMISS

DATED FEBRUARY 4, 2013, BELATEDLY FILED BY THE PRIVATE RESPONDENTS
IN THE CASE.

II

THE PUBLIC RESPONDENT RTC ERRED IN HOLDING THAT THE INSTANT CASE
FOR REPURCHASE IS A REAL ACTION.8

The Issue

Stated differently, the issue for the Courts resolution is: whether or not the RTC erred in
granting the motion for the dismissal of the case on the ground of lack of jurisdiction
over the subject matter.

Arguments

Petitioners argue that respondents belatedly filed their Motion to Dismiss and are now
estopped from seeking the dismissal of the case, it having been filed nine (9) years after
the filing of the complaint and after they have actively participated in the proceedings.
Additionally, they allege that an action for repurchase is not a real action, but one
incapable of pecuniary estimation, it being founded on privity of contract between the
parties. According to petitioners, what they seek is the enforcement of their right to
repurchase the subject property under Section 119 of CA 141.

Respondents, for their part, maintain that since the land is no longer devoted to
agriculture, the right of repurchase under said law can no longer be availed of, citing
Santana v. Marias.9 Furthermore, they suggest that petitioners intend to resell the
property for a higher profit, thus, the attempt to repurchase. This, according to
respondents, goes against the policy and is not in keeping with the spirit of CA 141
which is the preservation of the land gratuitously given to patentees by the State as a
reward for their labor in cultivating the property. Also, the Deed of Absolute Sale
presented in evidence by Bautista was unilaterally executed by him and was not signed
by respondents. Lastly, respondents argue that repurchase is a real action capable of
pecuniary estimation.

Our Ruling

The petition is meritorious.

Jurisdiction of courts is granted by the Constitution and pertinent laws.

Jurisdiction of RTCs, as may be relevant to the instant petition, is provided in Sec. 19 of

BP 129, which reads:

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

1) In all civil actions in which the subject of the litigation is incapable of pecuniary
estimation;

2) In all civil actions which involve the title to, or possession of, real property, or any
interest therein, where the assessed value of the property involved exceeds Twenty
thousand pesos (P20,000.00) or, for civil actions in Metro Manila, where such value
exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon
the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.

On the other hand, jurisdiction of first level courts is prescribed in Sec. 33 of BP 129,
which provides:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in civil cases.Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts shall exercise:

xxxx

3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of,
real property, or any interest therein where the assessed value of the property or
interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions
in Metro Manila, where such assessed value does not exceed Fifty thousand pesos
(P50,000.00) exclusive of interest, damages of whatever kind, attorneys fees, litigation
expenses and costs: Provided, That in cases of land not declared for taxation purposes,

the value of such property shall be determined by the assessed value of the adjacent
lots.

The core issue is whether the action filed by petitioners is one involving title to or
possession of real property or any interest therein or one incapable of pecuniary
estimation.

The course of action embodied in the complaint by the present petitioners predecessor,
Alfredo R. Bautista, is to enforce his right to repurchase the lots he formerly owned
pursuant to the right of a free-patent holder under Sec. 119 of CA 141 or the Public
Land Act.

The Court rules that the complaint to redeem a land subject of a free patent is a civil
action incapable of pecuniary estimation.

It is a well-settled rule that jurisdiction of the court is determined by the allegations in the
complaint and the character of the relief sought.10 In this regard, the Court, in Russell v.
Vestil,11 wrote that "in determining whether an action is one the subject matter of which
is not capable of pecuniary estimation this Court has adopted the criterion of first
ascertaining the nature of the principal action or remedy sought. If it is primarily for the
recovery of a sum of money, the claim is considered capable of pecuniary estimation,
and whether jurisdiction is in the municipal courts or in the RTCs would depend on the
amount of the claim." But where the basic issue is something other than the right to
recover a sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in terms of money, and,
hence, are incapable of pecuniary estimation. These cases are cognizable exclusively
by RTCs.12

Settled jurisprudence considers some civil actions as incapable of pecuniary estimation,

viz:

1. Actions for specific performance;

2. Actions for support which will require the determination of the civil status;

3. The right to support of the plaintiff;

4. Those for the annulment of decisions of lower courts;

5. Those for the rescission or reformation of contracts;13

6. Interpretation of a contractual stipulation.14

The Court finds that the instant cause of action to redeem the land is one for specific
performance.

The facts are clear that Bautista sold to respondents his lots which were covered by a
free patent. While the deeds of sale do not explicitly contain the stipulation that the sale
is subject to repurchase by the applicant within a period of five (5) years from the date
of conveyance pursuant to Sec. 119 of CA 141, still, such legal provision is deemed
integrated and made part of the deed of sale as prescribed by law. It is basic that the
law is deemed written into every contract.15 Although a contract is the law between the
parties, the provisions of positive law which regulate contracts are deemed written
therein and shall limit and govern the relations between the parties.16 Thus, it is a
binding prestation in favor of Bautista which he may seek to enforce. That is precisely
what he did. He filed a complaint to enforce his right granted by law to recover the lot
subject of free patent. Ergo, it is clear that his action is for specific performance, or if not
strictly such action, then it is akin or analogous to one of specific performance. Such
being the case, his action for specific performance is incapable of pecuniary estimation
and cognizable by the RTC.

Respondents argue that Bautistas action is one involving title to or possession of real
property or any interests therein and since the selling price is less than PhP 20,000,
then jurisdiction is lodged with the MTC. They rely on Sec. 33 of BP 129.

Republic Act No. 769117 amended Sec. 33 of BP 129 and gave Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts exclusive original
jurisdiction in all civil actions which involve title to, or possession of, real property, or any
interest therein where the assessed value of the property or interest therein does not
exceed twenty thousand pesos (PhP 20,000) or, in civil actions in Metro Manila, where
such assessed value does not exceed fifty thousand pesos (PhP 50,000) exclusive of
interest, damages of whatever kind, attorneys fees, litigation expenses and costs.

At first blush, it appears that the action filed by Bautista involves title to or possession of
the lots he sold to respondents. Since the total selling price is less than PhP 20,000,
then the MTC, not the RTC, has jurisdiction over the case. This proposition is incorrect
for the re-acquisition of the lots by Bautista or herein successors-in-interests, the
present petitioners, is but incidental to and an offshoot of the exercise of the right by the
latter to redeem said lots pursuant to Sec. 119 of CA 141. The reconveyance of the title
to petitioners is solely dependent on the exercise of such right to repurchase the lots in
question and is not the principal or main relief or remedy sought. Thus, the action of
petitioners is, in reality, incapable of pecuniary estimation, and the reconveyance of the
lot is merely the outcome of the performance of the obligation to return the property
conformably to the express provision of CA 141.

Even if we treat the present action as one involving title to real property or an interest
therein which falls under the jurisdiction of the first level court under Sec. 33 of BP 129,
as the total selling price is only PhP 16,000 way below the PhP 20,000 ceiling, still, the
postulation of respondents that MTC has jurisdiction will not hold water. This is because
respondents have actually participated in the proceedings before the RTC and
aggressively defended their position, and by virtue of which they are already barred to
question the jurisdiction of the RTC following the principle of jurisdiction by estoppel.

In Heirs of Jose Fernando v. De Belen, it was held that the party raising defenses to the
complaint, actively participating in the proceedings by filing pleadings, presenting his

evidence, and invoking its authority by asking for an affirmative relief is deemed
estopped from questioning the jurisdiction of the court.18

Here, we note that aside from the belated filing of the motion to dismissit having been
filed nine (9) years from the filing of the complaintrespondents actively participated in
the proceedings through the following acts:

1. By filing their Answer and Opposition to the Prayer for Injunction19 dated September
29, 1994 whereby they even interposed counterclaims, specifically: PhP 501,000 for
unpaid survey accounts, PhP 100,000 each as litigation expenses, PhP 200,000 and
PhP 3,000 per daily appearance by way of attorneys fees, PhP 500,000 as moral
damages, PhP 100,000 by way of exemplary damages, and costs of suit;

2. By participating in Pre-trial;

3. By moving for the postponement of their presentation of evidence;20

4. By presenting their witness;21 and

5. By submitting the compromise agreement for approval.22

Having fully participated in all stages of the case, and even invoking the RTCs authority
by asking for affirmative reliefs, respondents can no longer assail the jurisdiction of the
said trial court. Simply put, considering the extent of their participation in the case, they
are, as they should be, considered estopped from raising lack of jurisdiction as a ground
for the dismissal of the action.1wphi1

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The April
25, 2013 and July 3, 2013 Orders of the Regional Trial Court in Civil Case No. (1798)021 are hereby REVERSED and SET ASIDE.

The Regional Trial Court, Branch 32 in Lupon, Davao Oriental is ORDERED to proceed
with dispatch in resolving Civil Case No. (1798)-021.

No pronouncement as to costs.

SO ORDERED.

FIRST DIVISION

G.R. No. 183795

November 12, 2014

PRUDENTIAL BANK (now Bank of the Philippine Islands) as the duly appointed
ADMINISTRATOR OF THE ESTATE OF JULIANA DIEZ VDA. DE GABRIEL,Petitioner,
vs.
AMADOR A. MAGDAMIT, JR., on his behalf and as substituted heir (son) of AMADOR
MAGDAMIT, SR., and AMELIA F. MAGDAMIT, as substituted heir (Widow) of AMADOR
MAGDAMIT, SR., Respondents.

DECISION

PEREZ, J.:

Before us is a Petition for Review under Rule 45 of the 1997 Rules of Civil Procedure
assailing the Decision1 and Resolution2 of the Court of Appeals (CA) dated 3
September 2007 and 18 July 2008, respectively, in CA-G.R. SP No. 93368, affirming the
Decision of the Regional Trial Court (RTC),3 dated 18 January 2006, in Civil Case No.
05-112499, which reversed the ruling of the Metropolitan Trial Court (MeTC) on the
ground that the MeTC did not acquire jurisdiction over the person of the respondents
due to invalid service of summons.

The facts as culled from the records are as follows:

This is a case of unlawful detainer filed by petitioner Prudential Bank, now Bank of the
Philippine Islands (petitioner), in its capacity as administrator of the Estate of Juliana
Diez Vda. De Gabriel (Estate). It is based on the ground of respondents failure to pay
rentals and refusal to vacate the subject property, which is allegedly part of the Estate
located at 1164 Interior, Julio Nakpil St., Paco, Manila, covered by Transfer Certificate of
Title No. 118317 of the Registry of Deeds of Manila.

In the Original Complaint4 filed before the MeTC, Branch 15 of Manila, petitioner
impleaded Amador A. Magdamit, Jr. (Magdamit, Jr.), as respondent.

Instead of filing an Answer, Magdamit, Jr. filed a Notice of Special Appearance with
Motion to Dismiss. Among others, Magdamit, Jr. argued that (1) petitioner was not duly
authorized through a Board Resolution to institute the complaint, (2) he was not the
occupant of the subject property but instead, his parents, as grantees or awardees of
Juliana Diez Vda. De Gabriel, and (3) the MeTC did not acquire jurisdiction over his
person because the summons was served at his former address at 1164 Interior Julio
Nakpil St., Paco, Manila. On 30 April 2003, petitioner filed a Motion to Strike Out this
pleading on the ground that it is prohibited. Petitioner then filed an Amended Complaint,
this time, impleading both Magdamit, Jr. and Amador Magdamit, Sr. (Magdamit, Sr.).

In an Order5 dated 26 June 2003, the MeTC granted petitioners Motion to Strike Out
Magdamit, Jr.s Notice of Special Appearance with Motion to Dismiss and ordered
Magdamit,Jr. to file an Answer. The Order reads:

After due consideration of the matter and arguments stated therein, the Court resolves
to DENY the defendants Motion to dismiss, it appearing that the summons issued in
this case was served, albeit substituted nevertheless valid. It is of no consequence that
defendant is also presently residing in Bacoor, Cavite. Suffice it to say that summons
was served upon him (although substituted) on the leased premises which plaintiff is
justified in assuming that he is also residing there at. Moreover, it appears that he knew
the person on whom summons was served (together with a copy of the complaint) as a
certain Dara Cabug only that he claims that the latter is not of "suitable age and
discretion" to receive the summons. Simply put, the requirement of due process has
been satisfied. Be that as it may, it would not unduly prejudice the rights of the plaintiff if
defendant is given additional period of five (5) days from notice hereof within which to
file his Answer.6

In response to the Amended Complaint, both Magdamit, Jr. and Magdamit, Sr. filed their
Answers separately. On 9 July 2003, Magdamit, Jr., filed his Answerwith Counterclaim7
(In a Special Appearance Capacity). On the other hand, Magdamit, Sr. filed his Answer8
on 13 November 2003. Magdamit, Sr. argued that the MeTC did not acquire jurisdiction
over his person because the summons was not properly served as the summons was
received by Madel Magalona, who is not authorized to receive summons being a mere
housemaid of Magdamit, Sr.s daughter, Arleen Marie Cabug. Also, Magdamit, Sr.
argued that in the 1960s, the Spouses Francisco and Juliana Gabriel assigned the
subject property to him free of charge as a reward and in recompense for the long,
faithful, and devoted services he rendered to them. Since then, he had been
continuously exercising acts of ownership over the subject property, including payment
of real estate taxes. Magdamit, Sr. further argued that amendment of the Complaint in
order to implead him is improper. According to Magdamit, Sr., amendment cannot be
allowed so as to confer jurisdiction upon a court that never acquired it in the first place,
and the ejectment case cannot be instituted against Magdamit, Jr. because an action to
recover possession cannot be maintained against one who is not in actual or legal
possession thereof.9

Pending litigation of the case, Magdamit, Jr., who was made an original defendant in the
MeTC, substituted his deceased father, Magdamit, Sr.

Ruling of the MeTC

After trial, the MeTC ruled in favor of petitioner. According to the MeTC, "[t]he fact that
the person who received the summons was a 13-year old girl does not make the service
of summons invalid. That she was of sufficient age and discretion is shown by the fact
that she was intelligent enough to immediately bring to the attention of defendant Atty.
Amador Magdamit, Jr. the summons and copy of the complaint she received."10 The
MeTC went on further, stating that Magdamit Sr.s claim of ownership is beyond its
jurisdiction because the onlyissue in an ejectment case is "possession de facto". The
dispositive portion of the MeTC Decision dated 21 March 2005 reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against

defendants Amador Magdamit, Sr.:

1. ordering said defendant and all persons claiming right under him to vacate the
subject three (3) lots covered by TCT No. 118317 of the Registry of Deeds of Manila,
located at and also known as 1164 Interior J. Nakpil St., Paco, Manila and to peacefully
surrender possession thereof to plaintiff;

2. ordering said defendant to pay plaintiff the sum of P180,000.00 representing rentals
or reasonable compensation for the use of the property due from August 2003 up to
February 2005 and P10,000.00 per month thereafter until defendants fully vacate the
subject property;

3. ordering said defendant to pay plaintiff the sum of P20,000.00 as attorneys fees; and

4. to pay the costs. The complaint is dismissed as against defendant Amador Magdamit,
Jr. and the latters counterclaim is likewise dismissed.

SO ORDERED.11

Ruling of the RTC

On appeal, the RTC set aside the decision of the MeTC and dismissed the case for lack
of jurisdiction over the person of the respondents.12 According to the RTC, amending
the original complaint to implead Magdamit, Sr. to cure a defect in the complaint and
introduce a non-existing cause of action, which petitioner did not possess at the outset,
and to confer

jurisdiction upon the court that never acquired jurisdiction in the first place renders the
complaint dismissible. The RTC further stated that because the Return did not clearly
indicate the impossibility of service of summons within a reasonable time upon the
respondents, the process servers resort to substituted service of summons was
unjustified. The decision of the RTC reads:

WHEREFORE, this Court finds merit on the appeal and consequently, the decision on
appeal is hereby set aside, and this case is accordingly dismissed for lack of jurisdiction
over the persons of the defendants.13

Ruling of the CA

Aggrieved, petitioner filed an appeal via a petition for review under Rule 42 of the Rules
of Court beforethe CA. The petitioner argued that the RTC erred in ruling thatthe MeTC
did not acquire jurisdiction over the person of the respondents due to improper service
of summons considering that the respondents participated in the proceedings in the
MeTC by filing a Notice of Appearance with Motion to Dismiss, Answer with
Counterclaim, entering into pre-trial, submitting position papers, and presenting
evidence, which militate against the alleged improper service of summons. On 3
September 2007, the CA denied the petition and affirmed the decision of the RTC.

According to the CA, the Return, with only a general statement and without specifying
the details of the attendant circumstances or of the efforts exerted to serve the
summons, will notsuffice for purposes of complying with the rules of substituted service
of summons. The CA also rejected petitioners contention that respondents voluntary
submission to the jurisdiction of the court cured any defect in the substituted service of
summons when as early as during the infancy of the proceedings in the MeTC,

Magdamit, Jr. seasonably raised the ground of lack of jurisdiction over his person by
filing a Notice of Appearance with Motion to Dismiss, which the respondents incessantly
reiterated in their pleadings even when the case was elevated to the RTC, then to the
CA. The dispositive portion of the decision of the CA reads:

Having found that the MeTC did notacquire jurisdiction over the persons (sic) of
respondents, it would be futile on Our part to still pass upon the other errors assigned
by petitioner. WHEREFORE, premises considered, the petition is DENIED. Costs
against petitioner.

SO ORDERED.14

The motion for reconsideration was likewise denied for lack of merit.

Hence, this Petition, raising the following assignment of errors:

"I. Whether or not the Court of Appeals erred in dismissing the Petition for Review of the
Decision of the Regional Trial Court of Manila dated January 18,2006; and disposing of
only the issue of lack of jurisdiction over the person of respondents for alleged improper
service of summons;

II. Whether or not the Court of Appeals erred in not ruling on the material and
substantial issues in the case; and

III. Whether or not the Court of Appeals erred in affirming the decision of the
Metropolitan Trial Court of Manila dismissing of the Complaint against Magdamit, Jr.,
based on the ground that he was no longer residing at the subject property prior to, and
at the time of the filing of the ejectment complaint."15

The pivotal issue is whether or not the MeTC acquired jurisdiction over the person of the
respondents.

The petition is bereft of merit.

Both respondents, Magdamit, Jr. and Magdamit, Sr. argued that the MeTC did not
acquire jurisdiction overtheir persons due to defective or improper service of summons.
Magdamit,Sr. argued that the MeTC could not have acquired jurisdiction over his person
due to improper/defective service of summons because it was served upon an
incompetent person, the housemaid of his daughter. Magdamit Sr. also argued that the
MeTC did not acquire jurisdiction over him because he was impleaded asa respondent
only after the inherently invalid original complaint was amended. According to
Magdamit, Sr., the original complaint was inherently invalid because it was instituted
against Magdamit, Jr., against whom an action to recover possession cannot be
maintained, because he is not in actual or legal possession thereof. Thus, the
amendment of the inherently invalid original complaint for the purpose of curing a defect
to confer jurisdiction was invalid as the MeTC never acquired jurisdiction in the first
place.16 Pertinent to the position of Magdamit, Sr. is the Sheriffs Return dated 24
October 2003 on the service of summons on Magdamit, Jr. which reads:

1. That, on October 22, 2003, he proceeded to the place of defendant Amador

Magdamit, Sr. at No. 1164 Int. Julio Nakpil St., Paco, Manila, for the purpose of serving
the Summons issued in the above-entitled case, but no service was effected because
he was not around;

2. That, on October 23, 2003, undersigned repaired (sic) anew to the said place but for
the second time, he failed to reached (sic) said defendant. Thus, he elected (sic)
substituted service by serving the said summons together with the copy of the complaint
and annexes attached thereat (sic) to Ms. Madel Magalona, a person of sufficient age
and living thereat who however refused to acknowledge(d) receipt thereof;

3. That, undersigned explained to (this)Ms. Magalona the contents of the said process
in a language she fully understood and adviced (sic) her to gave (sic) the same to her
employer as soon as he arrives.17

On the other hand, Magdamit, Jr. argued that the MeTC did not acquire jurisdiction over
his person because the summons was not served at his residence but at the house of
Magdamit, Sr., and on a person not authorized to receive summons. The Sheriffs
Return dated 25 March 2003 reads:

This is to certify, that on the 24th day of March, 2003, xxx served copy of the Summons
together with the copy of the Complaint and its attachment, upon defendant/s Amador A.
Magdamit, Jr. at 1164 Int., J. Nakpil St., Paco, Manila, by tendering the copy to Dara
Cabug (grand daughter), a person of sufficient age, discretion and residing therein who
however refused to acknowledged (sic) receipt thereof.

That on several occasions despite deligent (sic) efforts exerted to serve the said
processes personally to defendant/s herein the same proved futile. Thus, substituted
service was effected in accordance with the provision of Sec. 8, Rule 14, Rules of
Court.

In view of the foregoing, the original summons is now respectfully returned to the
Honorable Court, DULY SERVED.18

Fundamental is the rule that jurisdiction over a defendant in a civil case is acquired
either through service of summons or through voluntary appearance in court and
submission to its authority. In the absence or when the service of summons upon the
person of the defendant isdefective, the court acquires no jurisdiction over his person,
and a judgment rendered against him is null and void.19

In actionsin personamsuch as ejectment, the court acquires jurisdiction over the person
of the defendant through personal or substituted service of summons. However,
because substituted service is in derogation of the usual method of service and
personal service of summons is preferred over substituted service, parties do not have
unbridled right to resort to substituted service of summons.20 Before substituted service
of summons is resorted to, the parties must: (a) indicate the impossibility of personal
service of summons within a reasonable time; (b) specify the efforts exerted to locate
the defendant; and (c) state that the summons was served upon a person of sufficient

age and discretion who is residing in the address, or who is in charge of the office or
regular place of business of the defendant.21

In Manotoc v. Court of Appeals,22 we have succinctly discussed a valid resort to

substituted service of summons:

We can break down this section into the following requirements to effect a valid
substituted service:

(1) Impossibility of Prompt Personal Service

The party relying on substituted service or the sheriff must show that defendant cannot
be served promptly or there is impossibility of prompt service. Section 8, Rule 14
provides that the plaintiff or the sheriff is given a "reasonable time" to serve the
summons to the defendant in person, but no specific time frame is mentioned.
"Reasonable time" is defined as "so much time as is necessary under the
circumstances for a reasonably prudent and diligent man to do, conveniently, what the
contract or duty requires that should be done, having a regard for the rights and
possibility of loss, if any, to the other party." Under the Rules, the service of summons
has no set period.

However, when the court, clerk of court,or the plaintiff asks the sheriff to make the return
of the summons and the latter submits the return of summons, then the validity of the
summons lapses. The plaintiff may then ask for an alias summons if the service of
summons has failed. What then is a reasonable time for the sheriff to effect a personal
service in order to demonstrate impossibility of prompt service? To the plaintiff,
"reasonable time" means no more than seven (7) days since an expeditious processing
of a complaint is what a plaintiff wants. To the sheriff, "reasonable time" means 15 to 30
days because at the end of the month, it is a practice for the branch clerk of court to
require the sheriff to submit a return of the summons assigned to the sheriff for service.
The Sheriffs Return provides data to the Clerk of Court, which the clerk uses in the
Monthly Report of Cases to be submitted to the Office of the Court Administrator within
the first ten (10) days of the succeeding month. Thus, one month from the issuance of

summons can be considered "reasonable time" with regard to personal service on the
defendant.

Sheriffs are asked to discharge their duties on the service of summons with due care,
utmost diligence, and reasonable promptness and speed so as not to prejudice the
expeditious dispensation of justice. Thus, they are enjoined to try their best efforts to
accomplish personal service on defendant. On the other hand, since the defendant is
expected to try to avoid and evade service of summons, the sheriff must be resourceful,
persevering, canny, and diligent in serving the process on the defendant. For
substituted service of summons to be available, there must be several attempts by the
sheriff to personally serve the summons within a reasonable period [of one month]
which eventually resulted in failure to prove impossibility of prompt service. "Several
attempts" means at least three (3) tries, preferably on at least two different dates. In
addition, the sheriff must cite why such efforts were unsuccessful. It is only then that
impossibility of service can be confirmed or accepted.

(2) Specific Details in the Return

The sheriff must describe in the Return of Summons the facts and circumstances
surrounding the attempted personal service. The efforts made to find the defendant and
the reasons behind the failure must be clearly narrated in detail in the Return.The date
and time of the attempts on personal service, the inquiries made to locate the
defendant, the name/s of the occupants of the alleged residence or house of defendant
and all other acts done, though futile, to serve the summons on defendant must be
specified in the Return to justify substituted service. The form on Sheriffs Return of
Summons on Substituted Service prescribed in the Handbook for Sheriffs published by
the Philippine Judicial Academy requires a narration of the efforts made to find the
defendant personally and the fact of failure. Supreme Court Administrative Circular No.
5 dated November 9, 1989 requires that "impossibility of prompt service should be
shown by stating the efforts made to find the defendant personallyand the failure of
such efforts," which should be made in the proof of service.

(3) A Person of Suitable Age and Discretion

If the substituted service will be effected at defendants house or residence, it should be

left with a person of "suitable age and discretion then residing therein." A person of
suitable age and discretion is one who has attained the age of full legal capacity (18
years old) and is considered to have enough discernment to understand the importance
of a summons. "Discretion" isdefined as "the ability to make decisions which represent a
responsible choice and for which an understanding of what is lawful, right or wise may
be presupposed". Thus, to be of sufficient discretion, suchperson must know how to
read and understand English to comprehend the import of the summons, and fully
realize the need to deliver the summonsand complaint to the defendant at the earliest
possible time for the person to take appropriate action. Thus, the person must have the
"relation of confidence" to the defendant, ensuring that the latter would receive orat
least be notified of the receipt of the summons. The sheriff must therefore determine if
the person found in the alleged dwelling or residence of defendant is of legal age, what
the recipients relationship with the defendant is, and whether said person comprehends
the significance of the receipt of the summons and his duty to immediately deliver it to
the defendant or at least notify the defendant of said receipt of summons. These
matters must be clearly and specifically described in the Return of Summons.

(4) A Competent Person in Charge

If the substituted service will be done at defendants office or regular place of business,
then it should be served on a competent person in charge of the place. Thus, the
person on whom the substituted service will be made must be the one managing the
office or business of defendant, such as the president or manager; and such individual
must have sufficient knowledge tounderstand the obligation of the defendant in the
summons, its importance, and the prejudicial effects arising from inaction on the
summons. Again, these details must be contained in the Return.23 (Emphasis and
underscoring supplied; citations omitted)

The service of summons on Magdamit, Sr. failed to comply with the rule laid down in
Manotoc. The resort to substituted service after just two (2) attempts to personally serve
the summons on Magdamit, Sr., is premature under our pronouncement that:

What then is a reasonable time for the sheriff to effect a personal service in order to
demonstrate impossibility of prompt service? To the plaintiff, "reasonable time"means no

more than seven (7) days since an expeditious processing of a complaint is what a
plaintiff wants. To the sheriff, "reasonable time" means 15 to 30 days because at the
end of the month, it is a practice for the branch clerk of court to require the sheriff to
submit a return of the summons assigned to the sheriff for service. The Sheriffs Return
provides data to the Clerk of Court, which the clerk uses in the Monthly Report of Cases
to be submitted to the Office of the Court Administrator within the first ten (10) days of
the succeeding month. Thus, one month from the issuance of summons can be
considered "reasonable time" with regard to personal service on the defendant.24

Then too, the proof of service failed to specify the details of the attendant
circumstances. The Return merely expressed a general statement that because the
Sheriff failed to reachMagdamit, Sr., he elected substituted service of summons. The
Return failed to state the impossibility to serve summons within a reasonable time. And
the further defect in the service was that the summons was served on a person not of
sufficient discretion, an incompetent person, Madel Magalona, a housemaid of
Magdamit Sr.s daughter, Arleen Marie Cabug.

Similar to the case of Magdamit, Sr., the service of summons on Magdamit, Jr. also
failed to complywith the rules laid down in Manotoc. The summons was served at 1163
Int., J. Nakpil St., Paco, Manila, Magdamit, Jr.s former residence when at the time,
Magdamit, Jr. was residing at 0369 Jupiter St., Progressive Village 20 and 21, Molino I,
Bacoor, Cavite. In Keister v. Navarro,25 we have defined "dwelling house" or
"residence" to refer to a place where the person named in the summons is living at the
time when the service is made, even though he may be temporarily out of the country at
the time to the time of service. Therefore, it is not sufficient for the Sheriff "to leave the
copy at defendant's former dwelling house, residence, or place ofabode, as the case
may be, after his removal therefrom".26

Worse, the Return did not make mention of any attempt to serve the summons at the
actual residence of Magdamit, Jr. The Return merely expressed a general statement
that the sheriff exerted efforts to serve the summons and that the same was futile, "[t]hat
on several occasions despite deligent (sic) efforts exerted to serve the said processes
personally to defendant/s herein the same proved futile," without any statement on the
impossibility of service of summons within a reasonable time. Further, the summons
was served on a certain DaraCabug, a person not of suitable age and discretion, who is
unauthorized to receive the same.

Notably, the requirement additionally is that

Thus, to be of sufficient discretion, such person must know how to read and understand
English to comprehend the import of the summons, and fully realize the need to deliver
the summons and complaint to the defendant at the earliest possible timefor the person
to take appropriate action. Thus, the person must have the "relation of confidence" to
the defendant, ensuring that the latter would receive or at least be notified of the receipt
of the summons. The sheriff must therefore determine if the person found in the alleged
dwelling or residence of defendant is of legal age, what the recipients relationship with
the defendant is, and whether said person comprehends the significance of the receipt
of the summons and his duty to immediately deliver it tothe defendant or at least notify
the defendant of said receipt of summons. These matters must be clearly and
specifically described in the Return of Summons.27

The readily acceptable conclusion inthis case is that the process server at once
resorted to substituted service of summons without exerting enough effort to personally
serve summons on respondents. In Sps. Jose v. Sps. Boyon,28 we discussed the effect
of failure to specify the details of the effort exerted by the process serverto personally
serve summons upon the defendants:

The Return of Summons shows no effort was actually exerted and no positive step
taken by either the process server or petitioners to locate and serve the summons
personally on respondents. At best, the Return merely states the alleged whereabouts
of respondents without indicating that such information was verified from a person who
had knowledge thereof. Certainly, without specifying the details of the attendant
circumstances or of the efforts exerted to serve the summons, a general statement that
such efforts were made will not suffice for purposes of complying withthe rules of
substituted service of summons.29 (Emphasis and underscoring supplied)

In the case at bar, the Returns contained mere general statements that efforts at
personal service were made. Not having specified the details of the attendant
circumstances or of the efforts exerted to serve the summons,30 there was a failure to
comply strictly with all the requirements of substituted service, and as a result the
service of summons is rendered ineffective.31

Filing an Answer does not amount to voluntary appearance

The petitioner asserted that assuming arguendo that the service of summons was
defective, respondents filing of their respective Answers and participation in the
proceedings in the MeTC, such as attending the pre-trial and presenting evidence,
amount to voluntary appearance which vested the MeTC jurisdiction over their persons.

Indeed, despite lack of valid service of summons, the court can still acquire jurisdiction
over the person of the defendant by virtue of the latters voluntary appearance. Section
20, Rule14 of the Rules of Court clearly states:

Sec. 20. Voluntary appearance. The defendants voluntary appearance in the action
shall be equivalent to service of summons. The inclusion in a motion to dismiss of other
grounds aside from lack of jurisdiction over the person shall not be deemed a voluntary
appearance.

However, such is not the case atbar. Contrary to petitioners contention, respondents
are not deemed to have voluntarily submitted to the courts jurisdiction by virtue of filing
an Answer or other appropriate responsive pleadings and by participating in the case.

The mandate under the Rules on Summary Proceedings that govern ejectment cases,
is expeditious administration of justice such that the filing of an Answer is mandatory. To
give effect to the mandatory character and speedy disposition of cases, the defendant is
required to file an answer within ten (10) days from service of summons, otherwise, the
court, motu proprio, or upon motion of the plaintiff, shall render judgment as may be
warranted by the facts alleged in the complaint, limited to the relief prayed for by the
petitioner.32 Through this rule, the parties are precluded from resorting to dilatory
maneuvers.

Compliantly, respondents filed their respective Answers. In the MeTC, at first,

Magdamit, Jr. filed a Notice of Special Appearance with Motion to Dismiss, where he

seasonably raised the issue of lack of jurisdiction, which the MeTC later ordered to be
stricken out. In lieu thereof, Magdamit, Jr. filed an Answer with Counterclaim (In a
Special Appearance Capacity). Again, Magdamit, Jr. reiterated the lack of jurisdiction
over his person and the subject matter. On the other hand, Magdamit, Sr. filed an
Answer with an allegation by special defense that the original complaint

should be dismissed outright because the MeTC did not acquire jurisdiction over his
person and the subject matter.1wphi1 In sum, both respondents filed their Answers via
special appearance.

In Philippine Commercial International Bank v. Spouses Wilson Dy Hong Pi and Lolita

Dy,33 we held that filing of an answer in a special appearance cannot be construed as
voluntary appearance or submission to the courts jurisdiction:

Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the
coercive power of legal processes exerted over his person, or his voluntary appearance
in court. As a general proposition, one who seeks an affirmative relief is deemed to have
submitted to the jurisdiction of the court. It is by reason of this rule that we have had
occasion to declare that the filing of motions to admit answer, for additional time to file
answer, for reconsideration of a default judgment, and to lift order of default with motion
for reconsideration, is considered voluntary submission to the courts jurisdiction. This,
however, is tempered by the concept of conditional appearance, such that a party who
makes a special appearance to challenge, among others, the courts jurisdiction over
his person cannot be considered to have submitted to its authority.

Prescinding from the foregoing, it is thus clear that:

(1) Special appearance operates as an exception to the general rule on voluntary

appearance;

(2) Accordingly, objections to the jurisdiction of the court over the person of the
defendantmust be explicitly made, i.e., set forth in an unequivocal manner; and

(3) Failure to do so constitutes voluntary submission to the jurisdiction of the court,

especially in instanceswhere a pleading or motion seeking affirmative relief is filed and
submitted to the court for resolution.34 (Emphasis supplied and underscoring supplied)

Parallel to our ruling in Philippine Commercial International Bank, the respondents act
of filing their respective Answers with express reservation should not be construed as a
waiver of the lack of jurisdiction of the MeTC over their person because of nonservice/defective/improper service of summons and for lack of jurisdiction over the
subject matter. Hence, sans voluntary submission to the courts jurisdiction, filing an
answer in compliance with the rules on summary procedure in lieu of obtaining an
adverse summary judgment does not amount to voluntary submission. As we already
held, a party who makes a special appearance in court, challenging the jurisdiction of
said court, is not deemed to have submitted himself to the jurisdiction of the court.35 It
should not be construed as voluntary submission to the jurisdiction of the court.

In view of the foregoing, the petition is DENIED. The Decision and

Resolution of the Court of Appeals in CA-G.R. SP No. 93368, which upheld the ruling of
the Regional Trial Court that the Metropolitan Trial Court in Civil Case No. 174798 did
not acquire jurisdiction over the person of the respondents due to invalid service of
summons, are AFFIRMED.

SO ORDERED.

SECOND DIVISION

G.R. No. 186366

July 3, 2013

HEIRS OF JOSE FERNANDO, PETITIONERS,

vs.
REYNALDO DE BELEN, RESPONDENT.

DECISION

PEREZ, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks the
reversal of the 11 February 2009 Decision1 of the Court of Appeals in CA-G.R. CV No.
87588, setting aside the 28 October 2005 Decision2 of the Regional Trial Court (RTC),
Branch 10 of Malolos City, Bulacan, which rendered a favorable finding for the
petitioners in a complaint for recovery of possession docketed as Civil Case No. 180-M98.

The Facts

This case emanated from a complaint for Recovery of Possession3 filed on 6 March
1998 by the petitioners against Reynaldo De Belen, herein respondent, before the RTC,
Branch 10 of Malolos, Bulacan, involving a parcel of land covered by Original Certificate
of Title (OCT) No. RO-487 (997) registered in the name of the late Jose, married to
Lucila Tinio and Apolonia Fernando, wife of Felipe Galvez, consisting of 124,994 square
meters, more or less, which is situated in Baliuag, Bulacan.

In the said complaint, it was alleged that petitioners are the children of the late Jose and
they are in the process of partitioning their inheritance. However, they could not properly
accomplish the partition due to the presence of the respondent who intruded into a

portion of their property and conducted quarrying operations in its immediate vicinity for
so many years, without their knowledge and permission.4

Petitioners, therefore, wrote a letter5 dated 8 April 1997 to the respondent which was
unheeded; thus, a barangay conciliation was resorted to. For failure of the respondent
to appear, a Certification6 was issued by the Barangay Lupon that led to the filing of the
complaint before the RTC of Malolos, Bulacan docketed as Civil Case No. 180-M-98 to
assert and defend their right over the subject property and for the respondent to vacate
the premises and pay rental arrearages in the amount of P24,000.00, attorneys fees of
P10,000.00 and exemplary damages of P20,000.00

Instead of filing an Answer, respondent Reynaldo De Belen filed a Motion to Dismiss7

dated 22 June 1998, setting forth the following grounds: (1) lack of jurisdiction; (2) lack
of cause of action; (3) ambiguity as to the portion of the lot De Belen occupies; and, (4)
incomplete statement of material facts, the complaint having failed to state the identity,
location and area of the lot sought to be recovered.

The petitioners filed their Opposition8 on 17 July 1998, averring that the complaint
states a cause of action and respondent need not be confused because the estate
under OCT No. RO-487 (997) is actually known as Psu-39080 with an area of 124,994
square meters divided into Lot 1 (80,760 square meters), Lot 2 (22,000 square meters),
and Lot 3 (21,521 square meters). Likewise, petitioners also stated that their father,
Jose and the latters sister, Antonia A. Fernando, were co-owners pro-indiviso of the
subject property and that as indicated in their demand letter, they represent the heirs of
Jose and Antonia A. Fernando, both deceased many years ago. Although, a matter of
proof to be presented in the course of the trial, petitioners nonetheless advanced that
Antonia Fernando predeceased her brother Jose and she died without issue; thus, her
undivided share was consolidated with that of her brother.

Finding lack of merit, the motion was denied in an Order9 dated 3 November 1998, with
the trial court ordering herein petitioners to amend the complaint by indicating the
details desired by the respondent in order for the latter to file a responsive pleading.

On 12 February 1999, the Amended Complaint10 with its attachment was filed to which
the respondent moved for a Bill of Particulars,11 specifically questioning the legal basis
for the complaint since the entire property appears to be co-owned by Jose and Antonia
Fernando and it was not particularized in the complaint as to what specific portion
belongs to each of the co-owners.

In addition, the respondent, in his Answer,12 claimed that even the Bill of Particulars13
did not clearly show the exact identity, personal circumstances and relationship of the
individual heirs of the decedent, location, area and size of the subject property. Also,
prescription, estoppel and laches had set in as against the petitioners.

The respondent further argued that the Amended Complaint was prematurely filed due
to the fact that the Certification to File Action was issued in violation of the prescribed
procedure. The respondent likewise insisted on his right of possession over the subject
property as evidenced by the successive transfer from Felipe Galvez to Carmen Galvez
on 11 March 1955; from Carmen Galvez to Florentino San Luis to Reynaldo De Belen
on 4 June 1979, and the receipt for the purchase price of P60,000.00 dated 19 June
1979. He asserted that from the date of his purchase, he has been in exclusive,
continuous, open and public possession of said parcel of land.

Trial on the merits ensued which eventually resulted in the 28 October 2005 Decision of
the RTC which is favorable to the petitioners. Thus:

IN VIEW OF THE FOREGOING, judgment is hereby RENDERED:

(a)

Declaring as null and void and without legal force and effect the "Kasulatan Ng
Pagbibilihang Tuluyan Ng Tumana" dated March 11, 1955 executed by Felipe Galvez in
favor of Carmen Galvez; "Kasulatan Ng Pagbibiling Tuluyan Ng Tumana dated July 28,
1958, registered as Doc. No. 945; Page 59, Book XXIV; Series of 1958 of Notary Public
Fermin Samson executed by Carme[n] Galvez married to Luis Cruz in favor of
Florentino San Luis; and "Kasulatan Ng Bilihang Tuluyan Ng Lupang Tumana" dated

June 04, 1979 executed by Florentino R. San Luis married to Agripina Reyes in favor of
defendant Reynaldo Santos de Belen, entered as Doc. No. 199; Page No. 41; Book No.
79; Series of 1979 covering 9,838 square meters of a parcel of land designated as Lot
1303-B per approved subdivision plan in Cad. Case No. 17, Record No. 788 submitted
before the defunct CFI of Bulacan and granted in a Decision dated December 29, 1929;

(b)

Ordering the reconveyance of the disputed subject property in question including all
improvements thereon as above-described by the defendant to the plaintiffs herein;

(c)

Ordering the defendant to pay plaintiffs the amount of P10,000.00 a month from March
06, 1998 with legal interest until the subject property is actually returned to the plaintiffs;

(d)

Ordering the defendant to pay plaintiffs the amount of P10,000.00 as attorneys fees;

(e)

Ordering the defendant to pay plaintiffs the costs of suit.14

Aggrieved, respondent appealed to the Court of Appeals raising the issues on

jurisdiction for failure of the petitioners to state the assessed value of the subject
property, absence of evidence proving the lawful ownership of the petitioners and the
grant of affirmative reliefs which were not alleged or prayed for.

On 11 February 2009, the Court of Appeals issued the assailed decision setting aside
the decision of the RTC for want of jurisdiction and declaring further that the Amended
Complaint must be dismissed.

Hence, the petition at bench seeking the reversal of the aforementioned decision.

The Issue

The core issue for resolution is whether or not the Court of Appeals committed
reversible error in holding that the RTC did not acquire jurisdiction for failure to allege in
the complaint the assessed value of the subject property.

Our Ruling

The general rule is that the jurisdiction of a court may be questioned at any stage of the
proceedings.15 Lack of jurisdiction is one of those excepted grounds where the court
may dismiss a claim or a case at any time when it appears from the pleadings or the
evidence on record that any of those grounds exists, even if they were not raised in the
answer or in a motion to dismiss.16 So that, whenever it appears that the court has no
jurisdiction over the subject matter, the action shall be dismissed. This defense may be
interposed at any time, during appeal or even after final judgment. Such is
understandable, as this kind of jurisdiction is conferred by law and not within the courts,
let alone the parties, to themselves determine or conveniently set aside.17

A reading of both the complaint and the amended complaint shows that petitioners
failed to state the assessed value of the disputed lot. This fact was highlighted by the
Court of Appeals when it ruled:

Instant complaint for Recovery of Possession failed to specify the assessed value of the
property subject matter of the action. "What determines the nature of the action as well
as which court has jurisdiction over it are the allegations of the complaint and the
character of the relief sought." (Bejar, et. al. v. Caluag, G.R. No. 171277, February 12,

2007). The allegations in the complaint and the relief sought by the party determine the
nature of the action if the title or designation is not clear. The complaint, in the case at
bar, is bereft of any allegation which discloses the assessed value of the property
subject matter thereof. The court a quo therefore, did not acquire jurisdiction over
instant action. The Amended Complaint does not state a valid cause of action.18

Facially, the above disposition finds support from the provisions of Republic Act 7691
(RA 7691),19 the law in effect when the case was filed. Section 1 of RA 7691, amending
Section 19 of Batas Pambansa Bilang 129, pertinently states:

"Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary
Reorganization Act of 1980", is hereby amended to read as follows:

"Section 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
original jurisdiction.

"(1) In all civil actions in which the subject of the litigation is incapable of pecuniary
estimation;

"(2) In all civil actions which involve the title to, or possession of, real property, or any
interest therein, where the assessed value of the property involved exceeds Twenty
thousand pesos (P20,000,00) or, for civil actions in Metro Manila, where such value
exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon
the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;

x x x x.

Thereby guided, the Court of Appeals no longer dwelt on the other issues and matters
raised before it.1wphi1

Jurisprudence has it that in a petition for review on certiorari under Rule 45 of the Rules
of Court, only questions of law may be raised.20 As held in the case of Solmayor v.
Arroyo,21 it is not the function of this Court to analyze and weigh evidence all over
again. This is premised on the presumed thorough appreciation of the facts by the lower
courts. Such that, when the trial court and the appellate court, as in this case, reached
opposite conclusions, a review of the facts may be done. There is a permissible scope
of judicial review on the factual findings of the lower courts as crystallized in Treas v.
People of the Philippines,22 where the Court cited contradictory findings of the Court of
Appeals and the trial court as one of the instances where the resolution of the petition
requires a review of the factual findings of the lower courts and the evidence upon
which they are based.

So too are we reminded that procedural rules are intended to ensure the proper
administration of law and justice and the rules of procedure ought not to be applied in a
very rigid sense, for they are adopted to secure, not override, substantial justice.23

We, accordingly, review the records of this case and note the facts and evidence
ignored by the appellate court. We observe that at the initial stage of this case when the
respondent questioned the jurisdiction of the RTC in a Motion to Dismiss, he solely
assailed the vagueness of the complaint for failure to allege the specific identity of the
subject property and for being prematurely filed. The trial court in its 3 November 1998
Order, settled the issue by declaring that the allegations in the complaint make out for a
case of recovery of ownership and that the petitioners need not wait for the lapse of one
year from the 8 April 1997 demand letter to maintain the accion reinvidicatoria. The trial
court went on to explain that the complaint clearly gives the defendant, herein
respondent, notice of their exclusive and absolute claim of ownership over the entire
property covered by the OCT No. RO-487 (997).

From the said Order, the respondent never raised any objection and did not even opt to
elevate the matter to a higher court via a certiorari case which is a remedy for the
correction of errors of jurisdiction. If indeed respondent was not convinced of the trial
courts ruling, he could have availed of such remedy which is an original and
independent action that does not proceed from the trial that would lead to the judgment
on the merits. As aptly cited in the case of New Frontier Sugar Corporation v. RTC,
Branch 39, Iloilo City,24 when the issue is jurisdiction, an original action for certiorari
may be directed against an interlocutory order of the lower court prior to an appeal from
the judgment.

On the contrary, the respondent acquiesced to the 3 November 1998 Order of the trial
court for him to file his Answer,25 whereby, he asserted ownership over the portion of
the subject property which he occupied. He attached the following proof of his
ownership, to wit: a) Deed of Absolute Sale by Felipe Galvez in favor of Carmen Galvez
dated 11 March 1955;26 b) Deed of Absolute Sale by Carmen Galvez in favor of
Florentino San Luis dated 28 July 1958;27 c) Deed of Absolute Sale by Florentino San
Luis in favor of Reynaldo Santos De Belen dated 4 June 197928 and the corresponding
receipt of the purchase price of P60,000.00 dated 19 June 1979.29

When the pre-trial conference was concluded, the trial court issued several Pre-Trial
Orders,30 specifying the identity and coverage of the subject property being claimed by
the petitioners as well as that portion occupied by the respondent, simplification of facts
involved, and the issues which primarily centered on the validity of the transfer or
disposition made by Felipe Galvez of the paraphernal property of his wife Antonia
Fernando from which transfer the respondent succeeded his right over the portion he
occupied.

During the trial, the petitioners were able to prove that indeed they are the rightful heirs
of Jose and Antonia Fernando and that they have right of ownership over the property
covered by OCT No. RO-487 (997) as described in Plan Psu-39080 of Lots 1302-B and
1303 prepared by Geodetic Engineer Alfredo C. Borja on 15 September 1997.31 It was
also proved through the admission of the respondent that he has been occupying a
portion of Lot 1303 which is the Sapang Bayan, the old river, titled in the name of Jose
and Antonia Fernando. Thus, it was ruled that the Deed of Sale in respondents favor
which was traced from the transfer made by Felix Galvez on 11 March 1955, without
any participation of Antonia Fernando was likewise without any settlement of property
between the said husband and wife and the property remained to be the paraphernal
property of Antonia. Consequently, the trial court declared that the sale between Felipe
Galvez and Carmen Galvez and its subsequent transfers are void ab initio, as Felipe
Galvez was neither the owner nor administrator of the subject property.1wphi1

Further, the trial court went on to state that respondent has not proved his status as a
purchaser in good faith and for value taking cue from the facts and circumstances as
well as the numerous entries found at the dorsal sides of OCT No. RO-487 (997) which
should have put any of the buyers on guard.

After the entire proceedings fully participated in by the respondent, he cannot be

allowed to question the result as having been rendered without jurisdiction. This is the
teaching in Tijam v. Sibonghanoy, et al.32 as reiterated in Soliven v. Fastforms
Philippines, Inc.,33 where the Court ruled:

"While it is true that jurisdiction may be raised at any time, "this rule presupposes that
estoppel has not supervened." In the instant case, respondent actively participated in all
stages of the proceedings before the trial court and invoked its authority by asking for
an affirmative relief. Clearly, respondent is estopped from challenging the trial courts
jurisdiction, especially when an adverse judgment has been rendered." (Italics ours)

Similarly, as this Court held in Pantranco North Express, Inc. v. Court of Appeals,34
participation in all stages of the case before the trial court, that included invoking its
authority in asking for affirmative relief, effectively barred the respondent by estoppel
from challenging the courts jurisdiction. The Court has consistently upheld the doctrine
that while jurisdiction may be assailed at any stage, a litigant who participated in the
court proceedings by filing pleadings and presenting his evidence cannot later on
question the trial courts jurisdiction when judgement unfavorable to him is rendered.

Moreover, and of equal significance, the facts of this case demonstrate the
inapplicability of RA 7691. The argument of respondent that the assessed value of the
subject property places the case outside the jurisdiction of the Regional Trial Court is
belied by respondents own Answer which states that:

xxxx

"16. That the defendants ownership and possession over the parcel of land ought to be
recovered by the plaintiff is valid and legal as evidenced by the following:35

xxxx

(c) Deed of Absolute Sale by Florentino San Luis in favor of Reynaldo Santos de Belen
dated June 4, 1979 (Annex "3" hereof)36 and the corresponding receipt of the purchase
price of P60,000.00 dated June 19, 1979 (Annex "4" hereof)."37

thereby showing that way back in 1979 or nineteen (19) years before this case was
instituted, the value of the property was already well covered by the jurisdictional
amount for cases within the jurisdiction of the RTC.

WHEREFORE, we GRANT the petition and REVERSE the assailed Decision of the
Court of Appeals. The Regional Trial Court Decision is AFFIRMED. Let the records of
this case be remanded to the RTC, Branch 10, Malolos, Bulacan for execution.

SO ORDERED.

Today is Friday, July 03, 2015

search

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 199199

August 27, 2013

MARICRIS D. DOLOT, CHAIRMAN OF THE BAGONG ALYANSANG MAKABAYANSORSOGON, PETITIONER

vs.
HON. RAMON PAJE, IN HIS CAPACITY AS THE SECRETARY OF THE DEPARTMENT
OF ENVIRONMENT AND NATURAL RESOURCES, REYNULFO A. JUAN, REGIONAL
DIRECTOR, MINES AND GEOSCIENCES BUREAU, DENR, HON. RAUL R. LEE,
GOVERNOR, PROVINCE OF SORSOGON, ANTONIO C. OCAMPO, JR., VICTORIA A.
AJERO, ALFREDO M. AGUILAR, AND JUAN M. AGUILAR, ANTONES ENTERPRISES,
GLOBAL SUMMIT MINES DEV'T CORP., AND TR ORE, RESPONDENTS.

DECISION

REYES, J.:

This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing
the Order2 dated September 16, 2011 and Resolution3 dated October 18, 2011 issued
by the Regional Trial Court (RTC) of Sorsogon, Branch 53. The assailed issuances
dismissed Civil Case No. 2011-8338 for Continuing Mandamus, Damages and
Attorneys Fees with Prayer for the Issuance of a Temporary Environment Protection
Order.

Antecedent Facts

On September 15, 2011, petitioner Maricris D. Dolot (Dolot), together with the parish
priest of the Holy Infant Jesus Parish and the officers of Alyansa Laban sa Mina sa
Matnog (petitioners), filed a petition for continuing mandamus, damages and attorneys
fees with the RTC of Sorsogon, docketed as Civil Case No. 2011-8338.4 The petition
contained the following pertinent allegations: (1) sometime in 2009, they protested the

iron ore mining operations being conducted by Antones Enterprises, Global Summit
Mines Development Corporation and TR Ore in Barangays Balocawe and Bon-ot Daco,
located in the Municipality of Matnog, to no avail; (2) Matnog is located in the southern
tip of Luzon and there is a need to protect, preserve and maintain the geological
foundation of the municipality; (3) Matnog is susceptible to flooding and landslides, and
confronted with the environmental dangers of flood hazard, liquefaction, ground
settlement, ground subsidence and landslide hazard; (4) after investigation, they
learned that the mining operators did not have the required permit to operate; (5)
Sorsogon Governor Raul Lee and his predecessor Sally Lee issued to the operators a
small-scale mining permit, which they did not have authority to issue; (6) the
representatives of the Presidential Management Staff and the Department of
Environment and Natural Resources (DENR), despite knowledge, did not do anything to
protect the interest of the people of Matnog;5 and (7) the respondents violated Republic
Act (R.A.) No. 7076 or the Peoples Small-Scale Mining Act of 1991, R.A. No. 7942 or
the Philippine Mining Act of 1995, and the Local Government Code.6 Thus, they prayed
for the following reliefs: (1) the issuance of a writ commanding the respondents to
immediately stop the mining operations in the Municipality of Matnog; (2) the issuance
of a temporary environment protection order or TEPO; (3) the creation of an interagency group to undertake the rehabilitation of the mining site; (4) award of damages;
and (5) return of the iron ore, among others.7

The case was referred by the Executive Judge to the RTC of Sorsogon, Branch 53
being the designated environmental court.8 In the Order9 dated September 16, 2011,
the case was summarily dismissed for lack of jurisdiction.

The petitioners filed a motion for reconsideration but it was denied in the Resolution10
dated October 18, 2011. Aside from sustaining the dismissal of the case for lack of
jurisdiction, the RTC11 further ruled that: (1) there was no final court decree, order or
decision yet that the public officials allegedly failed to act on, which is a condition for the
issuance of the writ of continuing mandamus; (2) the case was prematurely filed as the
petitioners therein failed to exhaust their administrative remedies; and (3) they also
failed to attach judicial affidavits and furnish a copy of the complaint to the government
or appropriate agency, as required by the rules.12

Petitioner Dolot went straight to this Court on pure questions of law.

Issues

The main issue in this case is whether the RTC-Branch 53 has jurisdiction to resolve
Civil Case No. 2011-8338. The other issue is whether the petition is dismissible on the
grounds that: (1) there is no final court decree, order or decision that the public officials
allegedly failed to act on; (2) the case was prematurely filed for failure to exhaust
administrative remedies; and (3) the petitioners failed to attach judicial affidavits and
furnish a copy of the complaint to the government or appropriate agency.

Ruling of the Court

Jurisdiction and Venue

In dismissing the petition for lack of jurisdiction, the RTC, in its Order dated September
16, 2011, apparently relied on SC Administrative Order (A.O.) No. 7 defining the
territorial areas of the Regional Trial Courts in Regions 1 to 12, and Administrative
Circular (Admin. Circular) No. 23-2008,13 designating the environmental courts "to try
and decide violations of environmental laws x x x committed within their respective
territorial jurisdictions."14 Thus, it ruled that its territorial jurisdiction was limited within
the boundaries of Sorsogon City and the neighboring municipalities of Donsol, Pilar,
Castilla, Casiguran and Juban and that it was "bereft of jurisdiction to entertain, hear
and decide [the] case, as such authority rests before another co-equal court."15

Such reasoning is plainly erroneous. The RTC cannot solely rely on SC A.O. No. 7 and
Admin. Circular No. 23-2008 and confine itself within its four corners in determining
whether it had jurisdiction over the action filed by the petitioners.

None is more well-settled than the rule that jurisdiction, which is the power and authority
of the court to hear, try and decide a case, is conferred by law.16 It may either be over
the nature of the action, over the subject matter, over the person of the defendants or
over the issues framed in the pleadings.17 By virtue of Batas Pambansa (B.P.) Blg. 129
or the Judiciary Reorganization Act of 1980, jurisdiction over special civil actions for

certiorari, prohibition and mandamus is vested in the RTC. Particularly, Section 21(1)
thereof provides that the RTCs shall exercise original jurisdiction

in the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas

corpus and injunction which may be enforced in any part of their respective regions.
(Emphasis ours)

A.O. No. 7 and Admin. Circular No. 23-2008 was issued pursuant to Section 18 of B.P.
Blg. 129, which gave the Court authority to define the territory over which a branch of
the RTC shall exercise its authority. These administrative orders and circulars issued by
the Court merely provide for the venue where an action may be filed. The Court does
not have the power to confer jurisdiction on any court or tribunal as the allocation of
jurisdiction is lodged solely in Congress.18 It also cannot be delegated to another office
or agency of the Government.19 Section 18 of B.P. Blg. 129, in fact, explicitly states that
the territory thus defined shall be deemed to be the territorial area of the branch
concerned for purposes of determining the venue of all suits, proceedings or actions. It
was also clarified in Office of the Court Administrator v. Judge Matas20 that

Administrative Order No. 3 [defining the territorial jurisdiction of the Regional Trial
Courts in the National Capital Judicial Region] and, in like manner, Circular Nos. 13 and
19, did not per se confer jurisdiction on the covered regional trial courts or its branches,
such that non-observance thereof would nullify their judicial acts. The administrative
order merely defines the limits of the administrative area within which a branch of the
court may exercise its authority pursuant to the jurisdiction conferred by Batas
Pambansa Blg. 129.21

The RTC need not be reminded that venue relates only to the place of trial or the
geographical location in which an action or proceeding should be brought and does not
equate to the jurisdiction of the court. It is intended to accord convenience to the parties,
as it relates to the place of trial, and does not restrict their access to the courts.22
Consequently, the RTCs motu proprio dismissal of Civil Case No. 2011-8338 on the
ground of lack of jurisdiction is patently incorrect.

At most, the error committed by the petitioners in filing the case with the RTC of
Sorsogon was that of improper venue. A.M. No. 09-6-8-SC or the Rules of Procedure
for Environmental Cases (Rules) specifically states that a special civil action for
continuing mandamus shall be filed with the "[RTC] exercising jurisdiction over the
territory where the actionable neglect or omission occurred x x x."23 In this case, it
appears that the alleged actionable neglect or omission occurred in the Municipality of
Matnog and as such, the petition should have been filed in the RTC of Irosin.24 But
even then, it does not warrant the outright dismissal of the petition by the RTC as venue
may be waived.25 Moreover, the action filed by the petitioners is not criminal in nature
where venue is an essential element of jurisdiction.26 In Gomez-Castillo v. Commission
on Elections,27 the Court even expressed that what the RTC should have done under
the circumstances was to transfer the case (an election protest) to the proper branch.
Similarly, it would serve the higher interest of justice28 if the Court orders the transfer of
Civil Case No. 2011 8338 to the RTC of Irosin for proper and speedy resolution, with the
RTC applying the Rules in its disposition of the case.

At this juncture, the Court affirms the continuing applicability of Admin. Circular No. 232008 constituting the different "green courts" in the country and setting the
administrative guidelines in the raffle and disposition of environmental cases. While the
designation and guidelines were made in 2008, the same should operate in conjunction
with the Rules.

A.M. No. 09-6-8-SC: Rules of Procedure for Environmental Cases

In its Resolution dated October 18, 2011, which resolved the petitioners motion for
reconsideration of the order of dismissal, the RTC further ruled that the petition was
dismissible on the following grounds: (1) there is no final court decree, order or decision
yet that the public officials allegedly failed to act on; (2) the case was prematurely filed
for failure to exhaust administrative remedies; and (3) there was failure to attach judicial
affidavits and furnish a copy of the complaint to the government or appropriate
agency.29 The respondents, and even the Office of the Solicitor General, in behalf of
the public respondents, all concur with the view of the RTC.

The concept of continuing mandamus was first introduced in Metropolitan Manila

Development Authority v. Concerned Residents of Manila Bay.30 Now cast in stone

under Rule 8 of the Rules, the writ of continuing mandamus enjoys a distinct procedure
than that of ordinary civil actions for the enforcement/violation of environmental laws,
which are covered by Part II (Civil Procedure). Similar to the procedure under Rule 65 of
the Rules of Court for special civil actions for certiorari, prohibition and mandamus,
Section 4, Rule 8 of the Rules requires that the petition filed should be sufficient in form
and substance before a court may take further action; otherwise, the court may dismiss
the petition outright. Courts must be cautioned, however, that the determination to give
due course to the petition or dismiss it outright is an exercise of discretion that must be
applied in a reasonable manner in consonance with the spirit of the law and always with
the view in mind of seeing to it that justice is served.31

Sufficiency in form and substance refers to the contents of the petition filed under Rule
8, Section 1:

When any agency or instrumentality of the government or officer thereof unlawfully

neglects the performance of an act which the law specifically enjoins as a duty resulting
from an office, trust or station in connection with the enforcement or violation of an
environmental law rule or regulation or a right therein, or unlawfully excludes another
from the use or enjoyment of such right and there is no other plain, speedy and
adequate remedy in the ordinary course of law, the person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with certainty, attaching thereto
supporting evidence, specifying that the petition concerns an environmental law, rule or
regulation, and praying that judgment be rendered commanding the respondent to do
an act or series of acts until the judgment is fully satisfied, and to pay damages
sustained by the petitioner by reason of the malicious neglect to perform the duties of
the respondent, under the law, rules or regulations. The petition shall also contain a
sworn certification of non-forum shopping.1wphi1

On matters of form, the petition must be verified and must contain supporting evidence
as well as a sworn certification of non-forum shopping. It is also necessary that the
petitioner must be one who is aggrieved by an act or omission of the government
agency, instrumentality or its officer concerned. Sufficiency of substance, on the other
hand, necessitates that the petition must contain substantive allegations specifically
constituting an actionable neglect or omission and must establish, at the very least, a
prima facie basis for the issuance of the writ, viz: (1) an agency or instrumentality of
government or its officer unlawfully neglects the performance of an act or unlawfully
excludes another from the use or enjoyment of a right; (2) the act to be performed by

the government agency, instrumentality or its officer is specifically enjoined by law as a

duty; (3) such duty results from an office, trust or station in connection with the
enforcement or violation of an environmental law, rule or regulation or a right therein;
and (4) there is no other plain, speedy and adequate remedy in the course of law.32

The writ of continuing mandamus is a special civil action that may be availed of "to
compel the performance of an act specifically enjoined by law."33 The petition should
mainly involve an environmental and other related law, rule or regulation or a right
therein. The RTCs mistaken notion on the need for a final judgment, decree or order is
apparently based on the definition of the writ of continuing mandamus under Section 4,
Rule 1 of the Rules, to wit:

(c) Continuing mandamus is a writ issued by a court in an environmental case directing

any agency or instrumentality of the government or officer thereof to perform an act or
series of acts decreed by final judgment which shall remain effective until judgment is
fully satisfied. (Emphasis ours)

The final court decree, order or decision erroneously alluded to by the RTC actually
pertains to the judgment or decree that a court would eventually render in an
environmental case for continuing mandamus and which judgment or decree shall
subsequently become final.

Under the Rules, after the court has rendered a judgment in conformity with Rule 8,
Section 7 and such judgment has become final, the issuing court still retains jurisdiction
over the case to ensure that the government agency concerned is performing its tasks
as mandated by law and to monitor the effective performance of said tasks. It is only
upon full satisfaction of the final judgment, order or decision that a final return of the writ
shall be made to the court and if the court finds that the judgment has been fully
implemented, the satisfaction of judgment shall be entered in the court docket.34 A writ
of continuing mandamus is, in essence, a command of continuing compliance with a
final judgment as it "permits the court to retain jurisdiction after judgment in order to
ensure the successful implementation of the reliefs mandated under the courts
decision."35

The Court, likewise, cannot sustain the argument that the petitioners should have first
filed a case with the Panel of Arbitrators (Panel), which has jurisdiction over mining
disputes under R.A. No. 7942.

Indeed, as pointed out by the respondents, the Panel has jurisdiction over mining
disputes.36 But the petition filed below does not involve a mining dispute. What was
being protested are the alleged negative environmental impact of the small-scale mining
operation being conducted by Antones Enterprises, Global Summit Mines Development
Corporation and TR Ore in the Municipality of Matnog; the authority of the Governor of
Sorsogon to issue mining permits in favor of these entities; and the perceived
indifference of the DENR and local government officials over the issue. Resolution of
these matters does not entail the technical knowledge and expertise of the members of
the Panel but requires an exercise of judicial function. Thus, in Olympic Mines and
Development Corp. v. Platinum Group Metals Corporation,37 the Court stated

Arbitration before the Panel of Arbitrators is proper only when there is a disagreement
between the parties as to some provisions of the contract between them, which needs
the interpretation and the application of that particular knowledge and expertise
possessed by members of that Panel. It is not proper when one of the parties
repudiates the existence or validity of such contract or agreement on the ground of
fraud or oppression as in this case. The validity of the contract cannot be subject of
arbitration proceedings. Allegations of fraud and duress in the execution of a contract
are matters within the jurisdiction of the ordinary courts of law. These questions are
legal in nature and require the application and interpretation of laws and jurisprudence
which is necessarily a judicial function.38 (Emphasis supplied in the former and ours in
the latter)

Consequently, resort to the Panel would be completely useless and unnecessary.

The Court also finds that the RTC erred in ruling that the petition is infirm for failure to
attach judicial affidavits. As previously stated, Rule 8 requires that the petition should be
verified, contain supporting evidence and must be accompanied by a sworn certification
of non-forum shopping. There is nothing in Rule 8 that compels the inclusion of judicial
affidavits, albeit not prohibited. It is only if the evidence of the petitioner would consist of
testimony of witnesses that it would be the time that judicial affidavits (affidavits of

witnesses in the question

petition/complaint.39

and

answer

form)

must

be

attached

to

the

Finally, failure to furnish a copy of the petition to the respondents is not a fatal defect
such that the case should be dismissed. The RTC could have just required the
petitioners to furnish a copy of the petition to the respondents. It should be remembered
that "courts are not enslaved by technicalities, and they have the prerogative to relax
compliance with procedural rules of even the most mandatory character, mindful of the
duty to reconcile both the need to speedily put an end to litigation and the parties right
to an opportunity to be heard."40

WHEREFORE, the petition is GRANTED. The Order dated September 16, 2011 and
Resolution dated October 18, 2011 issued by the Regional Trial Court of Sorsogon,
Branch 53, dismissing Civil Case No. 2011-8338 are NULLIFIED AND SET ASIDE. The
Executive Judge of the Regional Trial Court of Sorsogon is DIRECTED to transfer the
case to the Regional Trial Court of Irosin, Branch 55, for further proceedings with
dispatch. Petitioner Maricris D. Dolot is also ORDERED to furnish the respondents with
a copy of the petition and its annexes within ten (10) days from receipt of this Decision
and to submit its Compliance with the RTC of Irosin.

SO ORDERED.

SECOND DIVISION

G.R. Nos. 154470-71

September 24, 2012

BANK OF COMMERCE, Petitioner,

vs.
PLANTERS DEVELOPMENT BANK and BANGKO SENTRAL NG PILIPINAS,
Respondent.

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

G.R. Nos. 154589-90

BANGKO SENTRAL NG PILIPINAS, Petitioner,

vs.
PLANTERS DEVELOPMENT BANK, Respondent.

DECISION

BRION, J.:

Before the Court are two consolidated petitions for review on certiorari under Rule 45,1
on pure questions of law, filed by the petitioners Bank of Commerce (BOC) and the
Bangko Sentral ng Pilipinas (BSP). They assail the January 10, 2002 and July 23, 2002
Orders (assailed orders) of the Regional Trial Court (RTC) of Makati City, Branch 143, in
Civil Case Nos. 94-3233 and 94-3254. These orders dismissed (i) the petition filed by
the Planters Development Bank (PDB), (ii) the "counterclaim" filed by the BOC, and (iii)
the counter-complaint/cross-claim for interpleader filed bythe BSP; and denied the
BOCs and the BSPs motions for reconsideration.

THE ANTECEDENTS

The Central Bank bills

I. First set of CB bills

The Rizal Commercial Banking Corporation (RCBC) was the registered owner of seven
Central Bank (CB) bills with a total face value of P 70 million, issued on January 2, 1994
and would mature on January 2, 1995.2 As evidenced by a "Detached Assignment"
dated April 8, 1994,3 the RCBC sold these CB bills to the BOC.4 As evidenced by
another "Detached Assignment"5 of even date, the BOC, in turn, sold these CB bills to
the PDB.6 The BOC delivered the Detached Assignments to the PDB.7

On April 15, 1994 (April 15 transaction), the PDB, in turn, sold to the BOC Treasury Bills
worth P 70 million, with maturity date of June 29, 1994, as evidenced by a Trading
Order8 and a Confirmation of Sale.9 However, instead of delivering the Treasury Bills,
the PDB delivered the seven CB bills to the BOC, as evidenced by a PDB Security
Delivery Receipt, bearing a "note: ** substitution in lieu of 06-29-94" referring to the
Treasury Bills.10 Nevertheless, the PDB retained possession of the Detached
Assignments. It is basically the nature of this April 15 transaction that the PDB and the
BOC cannot agree on.

The transfer of the first set of seven CB bills

i. CB bill nos. 45351-53

On April 20, 1994, according to the BOC, it "sold back"11 to the PDB three of the seven
CB bills. In turn, the PDB transferred these three CB bills to Bancapital Development
Corporation (Bancap). On April 25, 1994, the BOC bought the three CB bills from
Bancap so, ultimately, the BOC reacquired these three CB bills,12 particularly
described as follows:

Serial No.:

2BB XM 045351

2BB XM 045352
2BB XM 045353
Quantity:

Three (3)

Denomination:

Php 10 million

Total Face Value:

Php 30 million

ii. CB bill nos. 45347-50

On April 20, 1994, the BOC sold the remaining four (4) CB bills to Capital One Equities
Corporation13 which transferred them to All-Asia Capital and Trust Corporation (All
Asia). On September 30, 1994, All Asia further transferred the four CB bills back to the
RCBC.14

On November 16, 1994, the RCBC sold back to All Asia one of these 4 CB bills. When
the BSP refused to release the amount of this CB bill on maturity, the BOC purchased
from All Asia this lone CB bill,15 particularly described as follows:16

Serial No.:

2BB XM 045348

Quantity:

One (1)

Denomination:

Php 10 million

Total Face Value:

Php 10 million

As the registered owner of the remaining three CB bills, the RCBC sold them to IVI
Capital and Insular Savings Bank. Again, when the BSP refused to release the amount
of this CB bill on maturity, the RCBC paid back its transferees, reacquired these three
CB bills and sold them to the BOC ultimately, the BOC acquired these three CB bills.

All in all, the BOC acquired the first set of seven CB bills.

II. Second set of CB bills

On April 19, 1994, the RCBC, as registered owner, (i) sold two CB bills with a total face
value of P 20 million to the PDB and (ii) delivered to the PDB the corresponding
Detached Assignment.17 The two CB bills were particularly described as follows:

Serial No.:

BB XM 045373

BB XM 045374
Issue date:

January 3, 1994

Maturity date:

January 2, 1995

Denomination:

Php 10 million

Total Face value:

Php 20 million

On even date, the PDB delivered to Bancap the two CB bills18 (April 19 transaction). In
turn, Bancap sold the CB bills to Al-Amanah Islamic Investment Bank of the Philippines,
which in turn sold it to the BOC.19

PDBs move against the transfer of

the first and second sets of CB bills

On June 30, 1994, upon learning of the transfers involving the CB bills, the PDB
informed20 the Officer-in-Charge of the BSPs Government Securities Department,21
Lagrimas Nuqui, of the PDBs claim over these CB bills, based on the Detached
Assignments in its possession. The PDB requested the BSP22 to record its claim in the
BSPs books, explaining that its non-possession of the CB bills is "on account of
imperfect negotiations thereof and/or subsequent setoff or transfer."23

Nuqui denied the request, invoking Section 8 of CB Circular No. 28 (Regulations

Governing Open Market Operations, Stabilization of the Securities Market, Issue,
Servicing and Redemption of the Public Debt)24 which requires the presentation of the
bond before a registered bond may be transferred on the books of the BSP.25

In a July 25, 1994 letter, the PDB clarified to Nuqui that it was not "asking for the
transfer of the CB Bills. rather it intends to put the BSP on formal notice that whoever
is in possession of said bills is not a holder in due course," and, therefore the BSP
should not make payment upon the presentation of the CB bills on maturity.26 Nuqui
responded that the BSP was "not in a position at that point in time to determine who is
and who is not the holder in due course since it is not privy to all acts and time involving
the transfers or negotiation" of the CB bills. Nuqui added that the BSPs action shall be
governed by CB Circular No. 28, as amended.27

On November 17, 1994, the PDB also asked BSP Deputy Governor Edgardo Zialcita
that (i) a notation in the BSPs books be made against the transfer, exchange, or
payment of the bonds and the payment of interest thereon; and (ii) the presenter of the
bonds upon maturity be required to submit proof as a holder in due course (of the first
set of CB bills). The PDB relied on Section 10 (d) 4 of CB Circular No. 28.28 This
provision reads:

(4) Assignments effected by fraud Where the assignment of a registered bond is

secured by fraudulent representations, the Central Bank can grant no relief if the
assignment has been honored without notice of fraud. Otherwise, the Central Bank,
upon receipt of notice that the assignment is claimed to have been secured by
fraudulent representations, or payment of the bond the payment of interest thereon, and
when the bond is presented, will call upon the owner and the person presenting the
bond to substantiate their respective claims.If it then appears that the person presenting
the bond stands in the position of bonafide holder for value, the Central Bank, after
giving the owner an opportunity to assert his claim, will pass the bond for transfer,
exchange or payments, as the case may be, without further question.

In a December 29, 1994 letter, Nuqui again denied the request, reiterating the BSPs
previous stand.

In light of these BSP responses and the impending maturity of the CB bills, the PDB
filed29 with the RTC two separate petitions for Mandamus, Prohibition and Injunction
with prayer for Preliminary Injunction and Temporary Restraining Order, docketed as

Civil Case No. 94-3233 (covering the first set of CB bills) and Civil Case 94-3254
(covering the second set of CB bills) against Nuqui, the BSP and the RCBC.30

The PDB essentially claims that in both the April 15 transaction (involving the first set of
CB bills) and the April 19 transaction (involving the second set of CB bills), there was no
intent on its part to transfer title of the CB bills, as shown by its non-issuance of a
detached assignment in favor of the BOC and Bancap, respectively. The PDB
particularly alleges that it merely "warehoused"31 the first set of CB bills with the BOC,
as security collateral.

On December 28, 1994, the RTC temporarily enjoined Nuqui and the BSP from paying
the face value of the CB bills on maturity.32 On January 10, 1995, the PDB filed an
Amended Petition, additionally impleading the BOC and All Asia.33 In a January 13,
1995 Order, the cases were consolidated.34 On January 17, 1995, the RTC granted the
PDBs application for a writ of preliminary prohibitory injunction.35 In both petitions, the
PDB identically prayed:

WHEREFORE, it is respectfully prayed x x x that, after due notice and hearing, the
Writs of Mandamus, Prohibition and Injunction, be issued; (i) commanding the BSP and
Nuqui, or whoever may take her place -

(a) to record forthwith in the books of BSP the claim of x x x PDB on the [two sets of] CB
Bills in accordance with Section 10 (d) (4) of revised C.B. Circular No. 28; and

(b) also pursuant thereto, when the bills are presented on maturity date for payment, to
call (i) x x x PDB, (ii) x x x RCBC x x x, (iii) x x x BOC x x x, and (iv) x x x ALL-ASIA x x
x; or whoever will present the [first and second sets of] CB Bills for payment, to submit
proof as to who stands as the holder in due course of said bills, and, thereafter, act
accordingly;

and (ii) ordering the BSP and Nuqui to pay jointly and severally to x x x PDB the
following:

(a) the sum of P 100,000.00, as and for exemplary damages;

(b) the sum of at least P 500,000.00, or such amount as shall be proved at the trial, as
and for attorneys fees;

(c) the legal rate of interest from the filing of this Petition until full payment of the sums
mentioned in this Petition; and

(d) the costs of suit.36

After the petitions were filed, the BOC acquired/reacquired all the nine CB bills the
first and second sets of CB bills (collectively, subject CB bills).

Defenses of the BSP and of the BOC37

The BOC filed its Answer, praying for the dismissal of the petition. It argued that the
PDB has no cause of action against it since the PDB is no longer the owner of the CB
bills. Contrary to the PDBs "warehousing theory,"38 the BOC asserted that the (i) April
15 transaction and the (ii) April 19 transaction covering both sets of CB bills - were
valid contracts of sale, followed by a transfer of title (i) to the BOC (in the April 15
transaction) upon the PDBs delivery of the 1st set of CB bills in substitution of the
Treasury Bills the PDB originally intended to sell, and (ii) to Bancap (in the April 19
transaction) upon the PDBs delivery of the 2nd set of CB bills to Bancap, likewise by
way of substitution.

The BOC adds that Section 10 (d) 4 of CB Circular No. 28 cannot apply to the PDBs
case because (i) the PDB is not in possession of the CB bills and (ii) the BOC acquired
these bills from the PDB, as to the 1st set of CB bills, and from Bancap, as to the 2nd
set of CB bills, in good faith and for value. The BOC also asserted a compulsory
counterclaim for damages and attorneys fees.

On the other hand, the BSP countered that the PDB cannot invoke Section 10 (d) 4 of
CB Circular No. 28 because this section applies only to an "owner" and a "person
presenting the bond," of which the PDB is neither. The PDB has not presented to the
BSP any assignment of the subject CB bills, duly recorded in the BSPs books, in its
favor to clothe it with the status of an "owner."39 According to the BSP

Section 10 d. (4) applies only to a registered bond which is assigned. And the issuance
of CB Bills x x x are required to be recorded/registered in BSPs books. In this regard,
Section 4 a. (1) of CB Circular 28 provides that registered bonds "may be transferred
only by an assignment thereon duly executed by the registered owner or his duly
authorized representative x x x and duly recorded on the books of the Central Bank."

xxxx

The alleged assignment of subject CB Bills in PDBs favor is not recorded/registered in

BSPs books.40 (underscoring supplied)

Consequently, when Nuqui and the BSP refused the PDBs request (to record its claim),
they were merely performing their duties in accordance with CB Circular No. 28.

Alternatively, the BSP asked that an interpleader suit be allowed between and among
the claimants to the subject CB bills on the position that while it is able and willing to pay
the subject CB bills face value, it is duty bound to ensure that payment is made to the
rightful owner. The BSP prayed that judgment be rendered:

a. Ordering the dismissal of the PDBs petition for lack of merit;

b. Determining which between/among [PDB] and the other claimants is/are lawfully
entitled to the ownership of the subject CB bills and the proceeds thereof;

c. x x x;

d. Ordering PDB to pay BSP and Nuqui such actual/compensatory and exemplary
damages as the RTC may deem warranted; and

e. Ordering PDB to pay Nuqui moral damages and to pay the costs of the suit.41

Subsequent events

The PDB agreed with the BSPs alternative response for an interpleader

4. PDB agrees that the various claimants should now interplead and substantiate their
respective claims on the subject CB bills. However, the total face value of the subject
CB bills should be deposited in escrow with a private bank to be disposed of only upon
order of the RTC.42

Accordingly, on June 9, 199543 and August 4, 1995,44 the BOC and the PDB entered
into two separate Escrow Agreements.45 The first agreement covered the first set of CB
bills, while the second agreement covered the second set of CB bills. The parties
agreed to jointly collect from the BSP the maturity proceeds of these CB bills and to
deposit said amount in escrow, "pending final determination by Court judgment, or
amicable settlement as to who shall be eventually entitled thereto."46 The BOC and the
PDB filed a Joint Motion,47 submitting these Escrow Agreements for court approval.
The RTC gave its approval to the parties Joint Motion.48 Accordingly, the BSP released
the maturity proceeds of the CB bills by crediting the Demand Deposit Account of the
PDB and of the BOC with 50% each of the maturity proceeds of the amount in
escrow.49

In view of the BOCs acquisition of all the CB bills, All Asia50 moved to be dropped as a
respondent (with the PDBs conformity51), which the RTC granted.52 The RCBC
subsequently followed suit.53

In light of the developments, on May 4, 1998, the RTC required the parties to manifest
their intention regarding the case and to inform the court of any amicable settlement;
"otherwise, th[e] case shall be dismissed for lack of interest."54 Complying with the
RTCs order, the BOC moved (i) that the case be set for pre-trial and (ii) for further
proceeding to resolve the remaining issues between the BOC and the PDB, particularly
on "who has a better right over the subject CB bills."55 The PDB joined the BOC in its
motion.56

On September 28, 2000, the RTC granted the BSPs motion to interplead and,
accordingly, required the BOC to amend its Answer and for the conflicting claimants to
comment thereon.57 In October 2000, the BOC filed its Amended Consolidated Answer
with Compulsory Counterclaim, reiterating its earlier arguments asserting ownership
over the subject CB bills.58

In the alternative, the BOC added that even assuming that there was no effective
transfer of the nine CB bills ultimately to the BOC, the PDB remains obligated to deliver
to the BOC, as buyer in the April 15 transaction and ultimate successor-in-interest of the
buyer (Bancap) in the April 19 transaction, either the original subjects of the sales or the
value thereof, plus whatever income that may have been earned during the pendency of
the case.59

That BOC prayed:

1. To declare BOC as the rightful owner of the nine (9) CB bills and as the party entitled
to the proceeds thereof as well as all income earned pursuant to the two (2) Escrow
Agreements entered into by BOC and PDB.

2. In the alternative, ordering PDB to deliver the original subject of the sales
transactions or the value thereof and whatever income earned by way of interest at
prevailing rate.

Without any opposition or objection from the PDB, on February 23, 2001, the RTC
admitted60 the BOCs Amended Consolidated Answer with Compulsory Counterclaims.

In May 2001, the PDB filed an Omnibus Motion,61 questioning the RTCs jurisdiction
over the BOCs "additional counterclaims." The PDB argues that its petitions pray for the
BSP (not the RTC) to determine who among the conflicting claimants to the CB bills
stands in the position of the bona fide holder for value. The RTC cannot entertain the
BOCs counterclaim, regardless of its nature, because it is the BSP which has
jurisdiction to determine who is entitled to receive the proceeds of the CB bills.

The BOC opposed62 the PDBs Omnibus Motion. The PDB filed its Reply.63

In a January 10, 2002 Order, the RTC dismissed the PDBs petition, the BOCs
counterclaim and the BSPs counter-complaint/cross-claim for interpleader, holding that
under CB Circular No. 28, it has no jurisdiction (i) over the BOCs "counterclaims" and
(ii) to resolve the issue of ownership of the CB bills.64 With the denial of their separate
motions for Reconsideration,65 the BOC and the BSP separately filed the present
petitions for review on certiorari.66

THE BOCS and THE BSPS PETITIONS

The BOC argues that the present cases do not fall within the limited provision of Section
10 (d) 4 of CB Circular No. 28, which contemplates only of three situations: first, where
the fraudulent assignment is not coupled with a notice to the BSP, it can grant no relief;
second, where the fraudulent assignment is coupled with a notice of fraud to the BSP, it
will make a notation against the assignment and require the owner and the holder to
substantiate their claims; and third, where the case does not fall on either of the first two
situations, the BSP will have to await action on the assignment pending settlement of
the case, whether by agreement or by court order.

The PDBs case cannot fall under the first two situations. With particular regard to the
second situation, CB Circular No. 28 requires that the conflict must be between an
"owner" and a "holder," for the BSP to exercise its limited jurisdiction to resolve
conflicting claims; and the word "owner" here refers to the registered owner giving
notice of the fraud to the BSP. The PDB, however, is not the registered owner nor is it in
possession (holder) of the CB bills.67 Consequently, the PDBs case can only falls
under the third situation which leaves the RTC, as a court of general jurisdiction, with
the authority to resolve the issue of ownership of a registered bond (the CB bills) not
falling in either of the first two situations.

The BOC asserts that the policy consideration supportive of its interpretation of CB
Circular No. 28 is to have a reliable system to protect the registered owner; should he
file a notice with the BSP about a fraudulent assignment of certain CB bills, the BSP
simply has to look at its books to determine who is the owner of the CB bills fraudulently
assigned. Since it is only the registered owner who complied with the BSPs
requirement of recording an assignment in the BSPs books, then "the protective mantle
of administrative proceedings" should necessarily benefit him only, without extending
the same benefit to those who chose to ignore the Circulars requirement, like the
PDB.68

Assuming arguendo that the PDBs case falls under the second situation i.e., the BSP
has jurisdiction to resolve the issue of ownership of the CB bills the more recent CB
Circular No. 769-80 (Rules and Regulations Governing Central Bank Certificates of
Indebtedness) already superseded CB Circular No. 28, and, in particular, effectively
amended Section 10 (d) 4 of CB Circular No. 28. The pertinent provisions of CB Circular
No. 769-80 read:

Assignment Affected by Fraud. Any assignment for transfer of ownership of registered

certificate obtained through fraudulent representation if honored by the Central Bank or
any of its authorized service agencies shall not make the Central Bank or agency liable
therefore unless it has previous formal notice of the fraud. The Central Bank, upon
notice under oath that the assignment was secured through fraudulent means, shall
immediately issue and circularize a "stop order" against the transfer, exchange,
redemption of the Certificate including the payment of interest coupons. The Central
Bank or service agency concerned shall continue to withhold action on the certificate

until such time that the conflicting claims have been finally settled either by amicable
settlement between the parties or by order of the Court.

Unlike CB Circular No. 28, CB Circular No. 769-80 limited the BSPs authority to the
mere issuance and circularization of a "stop order" against the transfer, exchange and
redemption upon sworn notice of a fraudulent assignment. Under this Circular, the BSP
shall only continue to withhold action until the dispute is ended by an amicable
settlement or by judicial determination. Given the more passive stance of the BSP the
very agency tasked to enforce the circulars involved - under CB Circular No. 769-80, the
RTCs dismissal of the BOCs counterclaims is palpably erroneous.

Lastly, since Nuquis office (Government Securities Department) had already been
abolished,69 it can no longer adjudicate the dispute under the second situation covered
by CB Circular No. 28. The abolition of Nuquis office is not only consistent with the
BSPs Charter but, more importantly, with CB Circular No. 769-80, which removed the
BSPs adjudicative authority over fraudulent assignments.

THE PDBS COMMENT

The PDB claims that jurisdiction is determined by the allegations in the

complaint/petition and not by the defenses set up in the answer.70 In filing the petition
with the RTC, the PDB merely seeks to compel the BSP to determine, pursuant to CB
Circular No. 28, the party legally entitled to the proceeds of the subject CB bills, which,
as the PDB alleged, have been transferred through fraudulent representations an
allegation which properly recognized the BSPs jurisdiction to resolve conflicting claims
of ownership over the CB bills.

The PDB adds that under the doctrine of primary jurisdiction, courts should refrain from
determining a controversy involving a question whose resolution demands the exercise
of sound administrative discretion. In the present case, the BSPs special knowledge
and experience in resolving disputes on securities, whose assignment and trading are
governed by the BSPs rules, should be upheld.

The PDB counters that the BOCs tri-fold interpretation of Section 10 (d) 4 of CB
Circular No. 28 sanctions split jurisdiction which is not favored;but even this tri-fold
interpretation which, in the second situation, limits the meaning of the "owner" to the
registered owner is flawed. Section 10 (d) 4 aims to protect not just the registered owner
but anyone who has been deprived of his bond by fraudulent representation in order to
deter fraud in the secondary trading of government securities.

The PDB asserts that the existence of CB Circular No. 769-80 or the abolition of Nuquis
office does not result in depriving the BSP of its jurisdiction: first, CB Circular No. 769-80
expressly provides that CB Circular No. 28 shall have suppletory application to CB
Circular No. 769-80; and second, the BSP can always designate an office to resolve the
PDBs claim over the CB bills.

Lastly, the PDB argues that even assuming that the RTC has jurisdiction to resolve the
issue of ownership of the CB bills, the RTC has not acquired jurisdiction over the BOCs
so-called "compulsory" counterclaims (which in truth is merely "permissive") because of
the BOCs failure to pay the appropriate docket fees. These counterclaims should,
therefore, be dismissed and expunged from the record.

THE COURTS RULING

We grant the petitions.

At the outset, we note that the parties have not raised the validity of either CB Circular
No. 28 or CB Circular No. 769-80 as an issue. What the parties largely contest is the
applicable circular in case of an allegedly fraudulently assigned CB bill. The applicable
circular, in turn, is determinative of the proper remedy available to the PDB and/or the
BOC as claimants to the proceeds of the subject CB bills.

Indisputably, at the time the PDB supposedly invoked the jurisdiction of the BSP in 1994
(by requesting for the annotation of its claim over the subject CB bills in the BSPs
books), CB Circular No. 769-80 has long been in effect. Therefore, the parties
respective interpretations of the provision of Section 10 (d) 4 of CB Circular No. 28 do

not have any significance unless it is first established that that Circular governs the
resolution of their conflicting claims of ownership. This conclusion is important, given the
supposed repeal or modification of Section 10 (d) 4 of CB Circular No. 28 by the
following provisions of CB Circular No. 769-80:

ARTICLE XI
SUPPLEMENTAL RULES

Section 1. Central Bank Circular No. 28 The provisions of Central Bank Circular No.
28 shall have suppletory application to matters not specially covered by these Rules.

ARTICLE XII
EFFECTIVITY

Effectivity The rules and regulations herein prescribed shall take effect upon approval
by the Monetary Board, Central Bank of the Philippines, and all circulars, memoranda,
or office orders inconsistent herewith are revoked or modified accordingly. (Emphases
added)

We agree with the PDB that in view of CB Circular No. 28s suppletory application, an
attempt to harmonize the apparently conflicting provisions is a prerequisite before one
may possibly conclude that an amendment or a repeal exists.71 Interestingly, however,
even the PDB itself failed to submit an interpretation based on its own position of
harmonization.

The repealing clause of CB Circular No. 769-80 obviously did not expressly repeal CB
Circular No. 28; in fact, it even provided for the suppletory application of CB Circular No.
28 on "matters not specially covered by" CB Circular No. 769-80. While no express
repeal exists, the intent of CB Circular No. 769-80 to operate as an implied repeal,72 or
at least to amend earlier CB circulars, is supported by its text "revoking" or "modif[ying"
"all circulars" which are inconsistent with its terms.

At the outset, we stress that none of the parties disputes that the subject CB bills fall
within the category of a certificate or evidence of indebtedness and that these were
issued by the Central Bank, now the BSP. Thus, even without resorting to statutory
construction aids, matters involving the subject CB bills should necessarily be governed
by CB Circular No. 769-80. Even granting, however, that reliance on CB Circular No.
769-80 alone is not enough, we find that CB Circular No. 769-80 impliedly repeals CB
Circular No. 28.

An implied repeal transpires when a substantial conflict exists between the new and the
prior laws. In the absence of an express repeal, a subsequent law cannot be construed
as repealing a prior law unless an irreconcilable inconsistency and repugnancy exist in
the terms of the new and the old laws.73 Repeal by implication is not favored, unless
manifestly intended by the legislature, or unless it is convincingly and unambiguously
demonstrated, that the laws or orders are clearly repugnant and patently inconsistent
with one another so that they cannot co-exist; the legislature is presumed to know the
existing law and would express a repeal if one is intended.74

There are two instances of implied repeal. One takes place when the provisions in the
two acts on the same subject matter are irreconcilably contradictory, in which case, the
later act, to the extent of the conflict, constitutes an implied repeal of the earlier one.
The other occurs when the later act covers the whole subject of the earlier one and is
clearly intended as a substitute; thus, it will operate to repeal the earlier law.75

A general reading of the two circulars shows that the second instance of implied repeal
is present in this case. CB Circular No. 28, entitled "Regulations Governing Open
Market Operations, Stabilization of Securities Market, Issue, Servicing and Redemption
of Public Debt," is a regulation governing the servicing and redemption of public debt,
including the issue, inscription, registration, transfer, payment and replacement of bonds
and securities representing the public debt.76 On the other hand, CB Circular No. 76980, entitled "Rules and Regulations Governing Central Bank Certificate of
Indebtedness," is the governing regulation on matters77 (i) involving certificate of
indebtedness78 issued by the Central Bank itself and (ii) which are similarly covered by
CB Circular No. 28.

The CB Monetary Board issued CB Circular No. 28 to regulate the servicing and
redemption of public debt, pursuant to Section 124 (now Section 119 of Republic Act
R.A. No. 7653) of the old Central Bank law79 which provides that "the servicing and
redemption of the public debt shall also be effected through the Bangko Sentral."
However, even as R.A. No. 7653 continued to recognize this role by the BSP, the law
required a phase-out of all fiscal agency functions by the BSP, including Section 119 of
R.A. No. 7653.

In other words, even if CB Circular No. 28 applies broadly to both government-issued

bonds and securities and Central Bank-issued evidence of indebtedness, given the
present state of law, CB Circular No. 28 and CB Circular No. 769-80 now operate on the
same subject Central Bank-issued evidence of indebtedness. Under Section 1, Article
XI of CB Circular No. 769-80, the continued relevance and application of CB Circular
No. 28 would depend on the need to supplement any deficiency or silence in CB
Circular No. 769-80 on a particular matter.

In the present case, both CB Circular No. 28 and CB Circular No. 769-80 provide the
BSP with a course of action in case of an allegedly fraudulently assigned certificate of
indebtedness. Under CB Circular No. 28, in case of fraudulent assignments, the BSP
would have to "call upon the owner and the person presenting the bond to substantiate
their respective claims" and, from there, determine who has a better right over the
registered bond. On the other hand, under CB Circular No. 769-80, the BSP shall
merely "issue and circularize a stop order against the transfer, exchange, redemption
of the [registered] certificate" without any adjudicative function (which is the precise root
of the present controversy). As the two circulars stand, the patent irreconcilability of
these two provisions does not require elaboration. Section 5, Article V of CB Circular
No. 769-80 inescapably repealed Section 10 (d) 4 of CB Circular No. 28.

The issue of BSPs jurisdiction, lay hidden

On that note, the Court could have written finis to the present controversy by simply
sustaining the BSPs hands-off approach to the PDBs problem under CB Circular No.
769-80. However, the jurisdictional provision of CB Circular No. 769-80 itself, in relation
to CB Circular No. 28, on the matter of fraudulent assignment, has given rise to a

question of jurisdiction - the core question of law involved in these petitions - which the
Court cannot just treat sub-silencio.

Broadly speaking, jurisdiction is the legal power or authority to hear and determine a
cause.80 In the exercise of judicial or quasi-judicial power, it refers to the authority of a
court to hear and decide a case.81 In the context of these petitions, we hark back to the
basic principles governing the question of jurisdiction over the subject matter.

First, jurisdiction over the subject matter is determined only by the Constitution and by
law.82 As a matter of substantive law, procedural rules alone can confer no jurisdiction
to courts or administrative agencies.83 In fact, an administrative agency, acting in its
quasi-judicial capacity, is a tribunal of limited jurisdiction and, as such, could wield only
such powers that are specifically granted to it by the enabling statutes. In contrast, an
RTC is a court of general jurisdiction, i.e., it has jurisdiction over cases whose subject
matter does not fall within the exclusive original jurisdiction of any court, tribunal or body
exercising judicial or quasi-judicial functions.84

Second, jurisdiction over the subject matter is determined not by the pleas set up by the
defendant in his answer85 but by the allegations in the complaint,86 irrespective of
whether the plaintiff is entitled to favorable judgment on the basis of his assertions.87
The reason is that the complaint is supposed to contain a concise statement of the
ultimate facts constituting the plaintiff's causes of action.88

Third, jurisdiction is determined by the law in force at the time of the filing of the
complaint.89

Parenthetically, the Court observes that none of the parties ever raised the issue of
whether the BSP can simply disown its jurisdiction, assuming it has, by the simple
expedient of promulgating a new circular (specially applicable to a certificate of
indebtedness issued by the BSP itself), inconsistent with an old circular, assertive of its
limited jurisdiction over ownership issues arising from fraudulent assignments of a
certificate of indebtedness. The PDB, in particular, relied solely and heavily on CB
Circular No. 28.

In light of the above principles pointing to jurisdiction as a matter of substantive law, the
provisions of the law itself that gave CB Circular 769-80 its life and jurisdiction must be
examined.

The Philippine Central Bank

On January 3, 1949, Congress created the Central Bank of the Philippines (Central
Bank) as a corporate body with the primary objective of (i) maintaining the internal and
external monetary stability in the Philippines; and (ii) preserving the international value
and the convertibility of the peso.90 In line with these broad objectives, the Central
Bank was empowered to issue rules and regulations "necessary for the effective
discharge of the responsibilities and exercise of the powers assigned to the Monetary
Board and to the Central Bank."91 Specifically, the Central Bank is authorized to
organize (other) departments for the efficient conduct of its business and whose powers
and duties "shall be determined by the Monetary Board, within the authority granted to
the Board and the Central Bank"92 under its original charter.

With the 1973 Constitution, the then Central Bank was constitutionally made as the
countrys central monetary authority until such time that Congress93 shall have
established a central bank. The 1987 Constitution continued to recognize this function
of the then Central Bank until Congress, pursuant to the Constitution, created a new
central monetary authority which later came to be known as the Bangko Sentral ng
Pilipinas.

Under the New Central Bank Act (R.A. No. 7653),94 the BSP is given the responsibility
of providing policy directions in the areas of money, banking and credit; it is given, too,
the primary objective of maintaining price stability, conducive to a balanced and
sustainable growth of the economy, and of promoting and maintaining monetary stability
and convertibility of the peso.95

The Constitution expressly grants the BSP, as the countrys central monetary authority,
the power of supervision over the operation of banks, while leaving with Congress the
authority to define the BSPs regulatory powers over the operations of finance
companies and other institutions performing similar functions. Under R.A. No. 7653, the

BSPs powers and functions include (i) supervision over the operation of banks; (ii)
regulation of operations of finance companies and non-bank financial institutions
performing quasi banking functions; (iii) sole power and authority to issue currency
within the Philippine territory; (iv) engaging in foreign exchange transactions; (v) making
rediscounts, discounts, loans and advances to banking and other financial institutions to
influence the volume of credit consistent with the objective of achieving price stability;
(vi) engaging in open market operations; and (vii) acting as banker and financial advisor
of the government.1wphi1

On the BSPs power of supervision over the operation of banks, Section 4 of R.A. No.
8791 (The General Banking Law of 2000) elaborates as follows:

CHAPTER II
AUTHORITY OF THE BANGKO SENTRAL

SECTION 4. Supervisory Powers. The operations and activities of banks shall be

subject to supervision of the Bangko Sentral. "Supervision" shall include the following:

4.1. The issuance of rules of conduct or the establishment of standards of operation for
uniform application to all institutions or functions covered, taking into consideration the
distinctive character of the operations of institutions and the substantive similarities of
specific functions to which such rules, modes or standards are to be applied;

4.2. The conduct of examination to determine compliance with laws and regulations if
the circumstances so warrant as determined by the Monetary Board;

4.3. Overseeing to ascertain that laws and regulations are complied with;

4.4. Regular investigation which shall not be oftener than once a year from the last date
of examination to determine whether an institution is conducting its business on a safe

or sound basis: Provided, That the deficiencies/irregularities found by or discovered by

an audit shall be immediately addressed;

4.5. Inquiring into the solvency and liquidity of the institution (2-D); or

4.6. Enforcing prompt corrective action. (n)

The Bangko Sentral shall also have supervision over the operations of and exercise
regulatory powers over quasi-banks, trust entities and other financial institutions which
under special laws are subject to Bangko Sentral supervision. (2-Ca)

For the purposes of this Act, "quasi-banks" shall refer to entities engaged in the
borrowing of funds through the issuance, endorsement or assignment with recourse or
acceptance of deposit substitutes as defined in Section 95 of Republic Act No. 7653
(hereafter the "New Central Bank Act") for purposes of relending or purchasing of
receivables and other obligations. [emphasis ours]

While this provision empowers the BSP to oversee the operations and activities of
banks to "ascertain that laws and regulations are complied with," the existence of the
BSPs jurisdiction in the present dispute cannot rely on this provision. The fact remains
that the BSP already made known to the PDB its unfavorable position on the latters
claim of fraudulent assignment due to the latters own failure to comply96 with existing
regulations:

In this connection, Section 10 (b) 2 also requires that a "Detached assignment will be
recognized or accepted only upon previous notice to the Central Bank x x x." In fact, in a
memo dated September 23, 1991 xxx then CB Governor Jose L. Cuisia advised all
banks (including PDB) xxx as follows:

In view recurring incidents ostensibly disregarding certain provisions of CB circular No.

28 (as amended) covering assignments of registered bonds, all banks and all

concerned are enjoined to observe strictly the pertinent provisions of said CB Circular
as hereunder quoted:

xxxx

Under Section 10.b. (2)

x x x Detached assignment will be recognized or accepted only upon previous notice to

the Central Bank and its use is authorized only under the following circumstances:

(a) x x x

(b) x x x

(c) assignments of treasury notes and certificates of indebtedness in registered form

which are not provided at the back thereof with assignment form.

(d) Assignment of securities which have changed ownership several times.

(e) x x x

Non-compliance herewith will constitute a basis for non-action or withholding of action

on redemption/payment of interest coupons/transfer transactions or denominational
exchange that may be directly affected thereby. [Boldfacing supplied]

Again, the books of the BSP do not show that the supposed assignment of subject CB
Bills was ever recorded in the BSPs books. [Boldfacing supplied]

However, the PDB faults the BSP for not recording the assignment of the CB bills in the
PDBs favor despite the fact that the PDB already requested the BSP to record its
assignment in the BSPs books as early as June 30, 1994.97

The PDBs claim is not accurate. What the PDB requested the BSP on that date was not
the recording of the assignment of the CB bills in its favor but the annotation of its claim
over the CB bills at the time when (i) it was no longer in possession of the CB bills,
having been transferred from one entity to another and (ii) all it has are the detached
assignments, which the PDB has not shown to be compliant with Section 10 (b) 2
above-quoted. Obviously, the PDB cannot insist that the BSP take cognizance of its
plaint when the basis of the BSPs refusal under existing regulation, which the PDB is
bound to observe, is the PDBs own failure to comply therewith.

True, the BSP exercises supervisory powers (and regulatory powers) over banks (and
quasi banks). The issue presented before the Court, however, does not concern the
BSPs supervisory power over banks as this power is understood under the General
Banking Law. In fact, there is nothing in the PDBs petition (even including the letters it
sent to the BSP) that would support the BSPs jurisdiction outside of CB Circular No. 28,
under its power of supervision, over conflicting claims to the proceeds of the CB bills.

BSP has quasi-judicial powers over a

class of cases which does not include
the adjudication of ownership of the
CB bills in question

In United Coconut Planters Bank v. E. Ganzon, Inc.,98 the Court considered the BSP as
an administrative agency,99 exercising quasi-judicial functions through its Monetary
Board. It held:

A quasi-judicial agency or body is an organ of government other than a court and other
than a legislature, which affects the rights of private parties through either adjudication

or rule-making. The very definition of an administrative agency includes its being vested
with quasi-judicial powers. The ever increasing variety of powers and functions given to
administrative agencies recognizes the need for the active intervention of administrative
agencies in matters calling for technical knowledge and speed in countless
controversies which cannot possibly be handled by regular courts. A "quasi-judicial
function" is a term which applies to the action, discretion, etc., of public administrative
officers or bodies, who are required to investigate facts, or ascertain the existence of
facts, hold hearings, and draw conclusions from them, as a basis for their official action
and to exercise discretion of a judicial nature.

Undoubtedly, the BSP Monetary Board is a quasi-judicial agency exercising quasijudicial powers or functions. As aptly observed by the Court of Appeals, the BSP
Monetary Board is an independent central monetary authority and a body corporate with
fiscal and administrative autonomy, mandated to provide policy directions in the areas of
money, banking and credit. It has power to issue subpoena, to sue for contempt those
refusing to obey the subpoena without justifiable reason, to administer oaths and
compel presentation of books, records and others, needed in its examination, to impose
fines and other sanctions and to issue cease and desist order. Section 37 of Republic
Act No. 7653, in particular, explicitly provides that the BSP Monetary Board shall
exercise its discretion in determining whether administrative sanctions should be
imposed on banks and quasi-banks, which necessarily implies that the BSP Monetary
Board must conduct some form of investigation or hearing regarding the same.
[citations omitted]

The BSP is not simply a corporate entity but qualifies as an administrative agency
created, pursuant to constitutional mandate,100 to carry out a particular governmental
function.101 To be able to perform its role as central monetary authority, the Constitution
granted it fiscal and administrative autonomy. In general, administrative agencies
exercise powers and/or functions which may be characterized as administrative,
investigatory, regulatory, quasi-legislative, or quasi-judicial, or a mix of these five, as
may be conferred by the Constitution or by statute.102

While the very nature of an administrative agency and the raison d'tre for its
creation103 and proliferation dictate a grant of quasi-judicial power to it, the matters
over which it may exercise this power must find sufficient anchorage on its enabling law,
either by express provision or by necessary implication. Once found, the quasi-judicial
power partakes of the nature of a limited and special jurisdiction, that is, to hear and

determine a class of cases within its peculiar competence and expertise. In other words,
the provisions of the enabling statute are the yardsticks by which the Court would
measure the quantum of quasi-judicial powers an administrative agency may exercise,
as defined in the enabling act of such agency.104

Scattered provisions in R.A. No. 7653 and R.A. No. 8791, inter alia, exist, conferring
jurisdiction on the BSP on certain matters.105 For instance, under the situations
contemplated under Section 36, par. 2106 (where a bank or quasi bank persists in
carrying on its business in an unlawful or unsafe manner) and Section 37107 (where the
bank or its officers willfully violate the banks charter or by-laws, or the rules and
regulations issued by the Monetary Board) of R.A. No. 7653, the BSP may place an
entity under receivership and/or liquidation or impose administrative sanctions upon the
entity or its officers or directors.

Among its several functions under R.A. No. 7653, the BSP is authorized to engage in
open market operations and thereby "issue, place, buy and sell freely negotiable
evidences of indebtedness of the Bangko Sentral" in the following manner.

SEC. 90. Principles of Open Market Operations. The open market purchases and
sales of securities by the Bangko Sentral shall be made exclusively in accordance with
its primary objective of achieving price stability.

xxxx

SEC. 92. Issue and Negotiation of Bangko Sentral Obligations. In order to provide the
Bangko Sentral with effective instruments for open market operations, the Bangko
Sentral may, subject to such rules and regulations as the Monetary Board may
prescribe and in accordance with the principles stated in Section 90 of this Act, issue,
place, buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral:
Provided, That issuance of such certificates of indebtedness shall be made only in
cases of extraordinary movement in price levels. Said evidences of indebtedness may
be issued directly against the international reserve of the Bangko Sentral or against the
securities which it has acquired under the provisions of Section 91 of this Act, or may be
issued without relation to specific types of assets of the Bangko Sentral.

The Monetary Board shall determine the interest rates, maturities and other
characteristics of said obligations of the Bangko Sentral, and may, if it deems it
advisable, denominate the obligations in gold or foreign currencies.

Subject to the principles stated in Section 90 of this Act, the evidences of indebtedness
of the Bangko Sentral to which this section refers may be acquired by the Bangko
Sentral before their maturity, either through purchases in the open market or through
redemptions at par and by lot if the Bangko Sentral has reserved the right to make such
redemptions. The evidences of indebtedness acquired or redeemed by the Bangko
Sentral shall not be included among its assets, and shall be immediately retired and
cancelled.108 (italics supplied; emphases ours)

The primary objective of the BSP is to maintain price stability.109 The BSP has a
number of monetary policy instruments at its disposal to promote price stability. To
increase or reduce liquidity in the financial system, the BSP uses open market
operations, among others.110 Open market operation is a monetary tool where the BSP
publicly buys or sells government securities111 from (or to) banks and financial
institutions in order to expand or contract the supply of money. By controlling the money
supply, the BSP is able to exert some influence on the prices of goods and services and
achieve its inflation objectives.112

Once the issue and/or sale of a security is made, the BSP would necessarily make a
determination, in accordance with its own rules, of the entity entitled to receive the
proceeds of the security upon its maturity. This determination by the BSP is an exercise
of its administrative powers113 under the law as an incident to its power to prescribe
rules and regulations governing open market operations to achieve the "primary
objective of achieving price stability."114 As a matter of necessity, too, the same rules
and regulations facilitate transaction with the BSP by providing for an orderly manner of,
among others, issuing, transferring, exchanging and paying securities representing
public debt.

Significantly, when competing claims of ownership over the proceeds of the securities it
has issued are brought before it, the law has not given the BSP the quasi-judicial power
to resolve these competing claims as part of its power to engage in open market

operations. Nothing in the BSPs charter confers on the BSP the jurisdiction or authority
to determine this kind of claims, arising out of a subsequent transfer or assignment of
evidence of indebtedness a matter that appropriately falls within the competence of
courts of general jurisdiction. That the statute withholds this power from the BSP is only
consistent with the fundamental reasons for the creation of a Philippine central bank,
that is, to lay down stable monetary policy and exercise bank supervisory functions.
Thus, the BSPs assumption of jurisdiction over competing claims cannot find even a
stretched-out justification under its corporate powers "to do and perform any and all
things that may be necessary or proper to carry out the purposes" of R.A. No. 7653. 115

To reiterate, open market operation is a monetary policy instrument that the BSP
employs, among others, to regulate the supply of money in the economy to influence
the timing, cost and availability of money and credit, as well as other financial factors,
for the purpose of stabilizing the price level.116 What the law grants the BSP is a
continuing role to shape and carry out the countrys monetary policy not the authority
to adjudicate competing claims of ownership over the securities it has issued since
this authority would not fall under the BSPs purposes under its charter.

While R.A. No. 7653117 empowers the BSP to conduct administrative hearings and
render judgment for or against an entity under its supervisory and regulatory powers
and even authorizes the BSP Governor to "render decisions, or rulings x x x on matters
regarding application or enforcement of laws pertaining to institutions supervised by the
BSP and laws pertaining to quasi-banks, as well as regulations, policies or instructions
issued by the Monetary Board," it is precisely the text of the BSPs own regulation
(whose validity is not here raised as an issue) that points to the BSPs limited role in
case of an allegedly fraudulent assignment to simply (i) issuing and circularizing a "stop
order" against the transfer, exchange, redemption of the certificate of indebtedness,
including the payment of interest coupons, and (ii) withholding action on the certificate.

A similar conclusion can be drawn from the BSPs administrative adjudicatory power in
cases of "willful failure or refusal to comply with, or violation of, any banking law or any
order, instruction or regulation issued by the Monetary Board, or any order, instruction or
ruling by the Governor."118 The non-compliance with the pertinent requirements under
CB Circular No. 28, as amended, deprives a party from any right to demand payment
from the BSP.

In other words, the grant of quasi-judicial authority to the BSP cannot possibly extend to
situations which do not call for the exercise by the BSP of its supervisory or regulatory
functions over entities within its jurisdiction.119

The fact alone that the parties involved are banking institutions does not necessarily call
for the exercise by the BSP of its quasi-judicial powers under the law.120

The doctrine of primary jurisdiction

argues against BSPs purported
authority to adjudicate ownership
issues over the disputed CB bills

Given the preceding discussions, even the PDBs invocation of the doctrine of primary
jurisdiction is misplaced.

In the exercise of its plenary legislative power, Congress may create administrative
agencies endowed with quasi-legislative and quasi-judicial powers. Necessarily,
Congress likewise defines the limits of an agencys jurisdiction in the same manner as it
defines the jurisdiction of courts.121 As a result, it may happen that either a court or an
administrative agency has exclusive jurisdiction over a specific matter or both have
concurrent jurisdiction on the same. It may happen, too, that courts and agencies may
willingly relinquish adjudicatory power that is rightfully theirs in favor of the other. One of
the instances when a court may properly defer to the adjudicatory authority of an
agency is the applicability of the doctrine of primary jurisdiction.122

As early as 1954, the Court applied the doctrine of primary jurisdiction under the
following terms:

6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in
administrative commissions and boards the power to resolve specialized disputes xxx
ruled that Congress in requiring the Industrial Court's intervention in the resolution of

labor-management controversies xxx meant such jurisdiction to be exclusive, although it

did not so expressly state in the law. The Court held that under the "sense-making and
expeditious doctrine of primary jurisdiction ... the courts cannot or will not determine a
controversy involving a question which is within the jurisdiction of an administrative
tribunal, where the question demands the exercise of sound administrative discretion
requiring the special knowledge, experience, and services of the administrative tribunal
to determine technical and intricate matters of fact, and a uniformity of ruling is essential
to comply with the purposes of the regulatory statute administered."123 (emphasis ours)

In Industrial Enterprises, Inc. v. Court of Appeals,124 the Court ruled that while an
action for rescission of a contract between coal developers appears to be an action
cognizable by regular courts, the trial court remains to be without jurisdiction to entertain
the suit since the contract sought to be rescinded is "inextricably tied up with the right to
develop coal-bearing lands and the determination of whether or not the reversion of the
coal operating contract over the subject coal blocks to [the plaintiff] would be in line with
the countrys national program and objective on coal-development and over-all coalsupply-demand balance." It then applied the doctrine of primary jurisdiction

In recent years, it has been the jurisprudential trend to apply the doctrine of primary
jurisdiction in many cases involving matters that demand the special competence of
administrative agencies. It may occur that the Court has jurisdiction to take cognizance
of a particular case, which means that the matter involved is also judicial in character.
However, if the case is such that its determination requires the expertise, specialized
skills and knowledge of the proper administrative bodies because technical matters or
intricate questions of facts are involved, then relief must first be obtained in an
administrative proceeding before a remedy will be supplied by the courts even though
the matter is within the proper jurisdiction of a court. This is the doctrine of primary
jurisdiction. 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 body."

Clearly, the doctrine of primary jurisdiction finds application in this case since the
question of what coal areas should be exploited and developed and which entity should
be granted coal operating contracts over said areas involves a technical determination
by the Bureau of Energy Development as the administrative agency in possession of
the specialized expertise to act on the matter. The Trial Court does not have the

competence to decide matters concerning activities relative to the exploration,

exploitation, development and extraction of mineral resources like coal. These issues
preclude an initial judicial determination. [emphases ours]

The absence of any express or implied statutory power to adjudicate conflicting claims
of ownership or entitlement to the proceeds of its certificates of indebtedness finds
complement in the similar absence of any technical matter that would call for the BSPs
special expertise or competence.125 In fact, what the PDBs petitions bear out is
essentially the nature of the transaction it had with the subsequent transferees of the
subject CB bills (BOC and Bancap) and not any matter more appropriate for special
determination by the BSP or any administrative agency.

In a similar vein, it is well-settled that the interpretation given to a rule or regulation by

those charged with its execution is entitled to the greatest weight by the courts
construing such rule or regulation.126 While there are exceptions127 to this rule, the
PDB has not convinced us that a departure is warranted in this case. Given the nonapplicability of the doctrine of primary jurisdiction, the BSPs own position, in light of
Circular No. 769-80, deserves respect from the Court.

Ordinarily, cases involving the application of doctrine of primary jurisdiction are initiated
by an action invoking the jurisdiction of a court or administrative agency to resolve the
substantive legal conflict between the parties. In this sense, the present case is quite
unique since the courts jurisdiction was, originally, invoked to compel an administrative
agency (the BSP) to resolve the legal conflict of ownership over the CB bills - instead of
obtaining a judicial determination of the same dispute.

The remedy of interpleader

Based on the unique factual premise of the present case, the RTC acted correctly in
initially assuming jurisdiction over the PDBs petition for mandamus, prohibition and
injunction.128 While the RTC agreed (albeit erroneously) with the PDBs view (that the
BSP has jurisdiction), it, however, dismissed not only the BOCs/the BSPs
counterclaims but the PDBs petition itself as well, on the ground that it lacks
jurisdiction.

This is plain error.

Not only the parties themselves, but more so the courts, are bound by the rule on nonwaiver of jurisdiction.129 believes that jurisdiction over the BOCs counterclaims and the
BSPs counterclaim/crossclaim for interpleader calls for the application of the doctrine of
primary jurisdiction, the allowance of the PDBs petition even becomes imperative
because courts may raise the issue of primary jurisdiction sua sponte.130

Of the three possible options available to the RTC, the adoption of either of these two
would lead the trial court into serious legal error: first, if it granted the PDBs petition, its
decision would have to be set aside on appeal because the BSP has no jurisdiction as
previously discussed; and second when it dismissed the PDBs petitions and the BOCs
counterclaims on the ground that it lacks jurisdiction, the trial court seriously erred
because precisely, the resolution of the conflicting claims over the CB bills falls within its
general jurisdiction.

Without emasculating its jurisdiction, the RTC could have properly dismissed the PDBs
petition but on the ground that mandamus does not lie against the BSP; but even this
correct alternative is no longer plausible since the BSP, as a respondent below, already
properly brought before the RTC the remaining conflicting claims over the subject CB
bills by way of a counterclaim/crossclaim for interpleader. Section 1, Rule 62 of the
Rules of Court provides when an interpleader is proper:

SECTION 1. When interpleader proper. Whenever conflicting claims upon the same
subject matter are or may be made against a person who claims no interest whatever in
the subject matter, or an interest which in whole or in part is not disputed by the
claimants, he may bring an action against the conflicting claimants to compel them to
interplead and litigate their several claims among themselves.

The remedy of an action of interpleader131 is designed to protect a person against

double vexation in respect of a single liability.7 It requires, as an indispensable requisite,
that conflicting claims upon the same subject matter are or may be made against the
stakeholder (the possessor of the subject matter) who claims no interest whatever in the

subject matter or an interest which in whole or in part is not disputed by the

claimants.132

Through this remedy, the stakeholder can join all competing claimants in a single
proceeding to determine conflicting claims without exposing the stakeholder to the
possibility of having to pay more than once on a single liability.133

When the court orders that the claimants litigate among themselves, in reality a new
action arises,134 where the claims of the interpleaders themselves are brought to the
fore, the stakeholder as plaintiff is relegated merely to the role of initiating the suit. In
short, the remedy of interpleader, when proper, merely provides an avenue for the
conflicting claims on the same subject matter to be threshed out in an action. Section 2
of Rule 62 provides:

SEC. 2. Order. Upon the filing of the complaint, the court shall issue an order requiring
the conflicting claimants to interplead with one another. If the interests of justice so
require, the court may direct in such order that the subject matter be paid or delivered to
the court.

This is precisely what the RTC did by granting the BSPs motion to interplead. The PDB
itself "agreed that the various claimants should now interplead." Thus, the PDB and the
BOC subsequently entered into two separate escrow agreements, covering the CB bills,
and submitted them to the RTC for approval.

In granting the BSPs motion, the RTC acted on the correct premise that it has
jurisdiction to resolve the parties conflicting claims over the CB bills - consistent with the
rules and the parties conduct - and accordingly required the BOC to amend its answer
and for the PDB to comment thereon. Suddenly, however, the PDB made an about-face
and questioned the jurisdiction of the RTC. Swayed by the PDBs argument, the RTC
dismissed even the PDBs petition - which means that it did not actually compel the BSP
to resolve the BOCs and the PDBs claims.

Without the motion to interplead and the order granting it, the RTC could only dismiss
the PDBs petition since it is the RTC which has jurisdiction to resolve the parties
conflicting claims not the BSP. Given that the motion to interplead has been actually
filed, the RTC could not have really granted the relief originally sought in the PDBs
petition since the RTCs order granting the BSPs motion to interplead - to which the
PDB in fact acquiesced into - effectively resulted in the dismissal of the PDBs petition.
This is not altered by the fact that the PDB additionally prayed in its petition for
damages, attorneys fees and costs of suit "against the public respondents" because the
grant of the order to interplead effectively sustained the propriety of the BSPs resort to
this procedural device.

Interpleader

1. as a special civil action

What is quite unique in this case is that the BSP did not initiate the interpleader suit
through an original complaint but through its Answer. This circumstance becomes
understandable if it is considered that insofar as the BSP is concerned, the PDB does
not possess any right to have its claim recorded in the BSPs books; consequently, the
PDB cannot properly be considered even as a potential claimant to the proceeds of the
CB bills upon maturity. Thus, the interpleader was only an alternative position, made
only in the BSPs Answer.135

The remedy of interpleader, as a special civil action, is primarily governed by the

specific provisions in Rule 62 of the Rules of Court and secondarily by the provisions
applicable to ordinary civil actions.136 Indeed, Rule 62 does not expressly authorize the
filing of a complaint-in-interpleader as part of, although separate and independent from,
the answer. Similarly, Section 5, Rule 6, in relation to Section 1, Rule 9 of the Rules of
Court137 does not include a complaint-in-interpleader as a claim,138 a form of
defense,139 or as an objection that a defendant may be allowed to put up in his answer
or in a motion to dismiss. This does not mean, however, that the BSPs "countercomplaint/cross-claim for interpleader" runs counter to general procedures.

Apart from a pleading,140 the rules141 allow a party to seek an affirmative relief from
the court through the procedural device of a motion. While captioned "Answer with
counter complaint/cross-claim for interpleader," the RTC understood this as in the
nature of a motion,142 seeking relief which essentially consists in an order for the
conflicting claimants to litigate with each other so that "payment is made to the rightful
or legitimate owner"143 of the subject CB bills.

The rules define a "civil action" as "one by which a party sues another for the
enforcement or protection of a right, or the prevention or redress of a wrong."
Interpleader may be considered as a stakeholders remedy to prevent a wrong, that is,
from making payment to one not entitled to it, thereby rendering itself vulnerable to
lawsuit/s from those legally entitled to payment.

Interpleader is a civil action made special by the existence of particular rules to govern
the uniqueness of its application and operation. Under Section 2, Rule 6 of the Rules of
Court, governing ordinary civil actions, a partys claim is asserted "in a complaint,
counterclaim, cross-claim, third (fourth, etc.)-party complaint, or complaint-inintervention." In an interpleader suit, however, a claim is not required to be contained in
any of these pleadings but in the answer-(of the conflicting claimants)-in-interpleader.
This claim is different from the counter-claim (or cross-claim, third party-complaint)
which is separately allowed under Section 5, par. 2 of Rule 62.

2. the payment of docket fees covering BOCs counterclaim

The PDB argues that, even assuming that the RTC has jurisdiction over the issue of
ownership of the CB bills, the BOCs failure to pay the appropriate docket fees prevents
the RTC from acquiring jurisdiction over the BOCs "counterclaims."

We disagree with the PDB.

To reiterate and recall, the order granting the "PDBs motion to interplead," already
resulted in the dismissal of the PDBs petition. The same order required the BOC to
amend its answer and for the conflicting claimants to comment, presumably to conform

to the nature of an answer-in interpleader. Perhaps, by reason of the BOCs

denomination of its claim as a "compulsory counterclaim" and the PDBs failure to fully
appreciate the RTCs order granting the "BSPs motion for interpleader" (with the PDBs
conformity), the PDB mistakenly treated the BOCs claim as a "permissive counterclaim"
which necessitates the payment of docket fees.

As the preceding discussions would show, however, the BOCs "claim" - i.e., its
assertion of ownership over the CB bills is in reality just that, a "claim" against the
stakeholder and not as a "counterclaim,"144 whether compulsory145 or permissive. It is
only the BOCs alternative prayer (for the PDB to deliver to the BOC, as the buyer in the
April 15 transaction and the ultimate successor-in-interest of the buyer in the April 19
transaction, either the original subjects of the sales or the value thereof plus whatever
income that may have been earned pendente lite) and its prayer for damages that are
obviously compulsory counterclaims against the PDB and, therefore, does not require
payment of docket fees.146

The PDB takes a contrary position through its insistence that a compulsory counterclaim
should be one where the presence of third parties, of whom the court cannot acquire
jurisdiction, is not required. It reasons out that since the RCBC and All Asia (the
intervening holders of the CB bills) have already been dropped from the case, then the
BOCs counterclaim must only be permissive in nature and the BOC should have paid
the correct docket fees.

We see no reason to belabor this claim. Even if we gloss over the PDBs own conformity
to the dropping of these entities as parties, the BOC correctly argues that a remedy is
provided under the Rules. Section 12, Rule 6 of the Rules of Court reads:

SEC. 12. Bringing new parties. When the presence of parties other than those to the
original action is required for the granting of complete relief in the determination of a
counterclaim or cross-claim, the court shall order them to be brought in as defendants, if
jurisdiction over them can be obtained.

Even then, the strict characterization of the BOCs counterclaim is no longer material in
disposing of the PDBs argument based on non-payment of docket fees.

When an action is filed in court, the complaint must be accompanied by the payment of
the requisite docket and filing fees by the party seeking affirmative relief from the court.
It is the filing of the complaint or appropriate initiatory pleading, accompanied by the
payment of the prescribed docket fee, that vests a trial court with jurisdiction over the
claim or the nature of the action.147 However, the non-payment of the docket fee at the
time of filing does not automatically cause the dismissal of the case, so long as the fee
is paid within the applicable prescriptive or reglementary period, especially when the
claimant demonstrates a willingness to abide by the rules prescribing such payment.148

In the present case, considering the lack of a clear guideline on the payment of docket
fee by the claimants in an interpleader suit, compounded by the unusual manner in
which the interpleader suit was initiated and the circumstances surrounding it, we surely
cannot deduce from the BOCs mere failure to specify in its prayer the total amount of
the CB bills it lays claim to (or the value of the subjects of the sales in the April 15 and
April 19 transactions, in its alternative prayer) an intention to defraud the government
that would warrant the dismissal of its claim.149

At any rate, regardless of the nature of the BOCs "counterclaims," for purposes of
payment of filing fees, both the BOC and the PDB, properly as defendants-ininterpleader, must be assessed the payment of the correct docket fee arising from their
respective claims. The seminal case of Sun Insurance Office, Ltd. v. Judge Asuncion150
provides us guidance in the payment of docket fees, to wit:

1. x x x Where the filing of the initiatory pleading is not accompanied by payment of the
docket fee, the court may allow payment of the fee within a reasonable time but in no
case beyond the applicable prescriptive or reglementary period.

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

This must be the rule considering that Section 7, Rule 62 of which reads:

SEC. 7. Docket and other lawful fees, costs and litigation expenses as liens. The
docket and other lawful fees paid by the party who filed a complaint under this Rule, as
well as the costs and litigation expenses, shall constitute a lien or charge upon the
subject matter of the action, unless the court shall order otherwise.

only pertain to the docket and lawful fees to be paid by the one who initiated the
interpleader suit, and who, under the Rules, actually "claims no interest whatever in the
subject matter." By constituting a lien on the subject matter of the action, Section 7 in
effect only aims to actually compensate the complainant-in-interpleader, who happens
to be the stakeholder unfortunate enough to get caught in a legal crossfire between two
or more conflicting claimants, for the faultless trouble it found itself into. Since the
defendants-in-interpleader are actually the ones who make a claim - only that it was
extraordinarily done through the procedural device of interpleader - then to them
devolves the duty to pay the docket fees prescribed under Rule 141 of the Rules of
Court, as amended.151

The importance of paying the correct amount of docket fee cannot be overemphasized:

The matter of payment of docket fees is not a mere triviality. These fees are necessary
to defray court expenses in the handling of cases. Consequently, in order to avoid
tremendous losses to the judiciary, and to the government as well, the payment of
docket fees cannot be made dependent on the outcome of the case, except when the
claimant is a pauper-litigant.152

WHEREFORE, premises considered the consolidated PETITIONS are GRANTED. The

Planters Development Bank is hereby REQUIRED to file with the Regional Trial Court
its comment or answer-in-interpleader to Bank of Commerces Amended Consolidated
Answer with Compulsory Counterclaim, as previously ordered by the Regional Trial
Court. The Regional Trial Court of Makati City, Branch 143, is hereby ORDERED to
assess the docket fees due from Planters Development Bank and Bank of Commerce
and order their payment, and to resolve with DELIBERATE DISPATCH the parties
conflicting claims of ownership over the proceeds of the Central Bank bills.

The Clerk of Court of the Regional Trial Court of Makati City, Branch 143, or his duly
authorized representative is hereby ORDERED to assess and collect the appropriate
amount of docket fees separately due the Bank of Commerce and Planters
Development Bank as conflicting claimants in Bangko Sentral ng Pilipinas interpleader
suit, in accordance with this decision.

SO ORDERED.

796, February 04, 2015

REICON REALTY BUILDERS CORPORATION, Petitioner, v. DIAMOND DRAGON

REALTY AND MANAGEMENT, INC., Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Resolutions dated May 21,
20122 and November 21, 20123 rendered by the Court of Appeals (CA) in CA-G.R. SP
No. 116845 which dismissed outright petitioner Reicon Realty Builders Corporations
(Reicon) certiorari petition on procedural grounds.

The Facts

Reicon is the owner of a parcel of land and the one-storey building erected thereon
located at the corner of Aurora Boulevard and Araneta Avenue, Sta. Mesa, Quezon
City,4 covered by Transfer Certificate of Title No. 330668 (subject property).5 On
January 9, 1991, Reicon and respondent Diamond Dragon Realty and Management,
Inc. (Diamond) entered into a Contract of Lease6 (January 9, 1991 Contract), whereby

Reicon leased the subject property to Diamond for a period of twenty (20) years, from
January 15, 1991 to January 15, 2011, for a monthly rental of P75,000.00, subject to
periodical increments.7 In turn, Diamond sublet portions of the subject property to
Jollibee Foods Corporation8 (Jollibee) and Maybunga U.K. Enterprises (Maybunga),
represented by its proprietor, Andrew D. Palangdao (Andrew).9cralawlawlibrary

Beginning June 2006, Diamond failed to pay the monthly rentals due, and the checks it
had issued by way of payments from June 2006 to December 2006 were all dishonored
upon presentment.10 This prompted Reicon to send, through counsel, a letter11 dated
July 23, 2007 demanding the payment of the accrued rentals and terminating the
January 9, 1991 Contract.12 Thereafter, it entered into separate contracts with
Jollibee13 and Maybunga14 over the portions of the subject property they respectively
occupy.

On December 14, 2009, Diamond filed a complaint15 for breach of contract with
damages against Reicon, Jollibee, Maybunga, Andrew, and a certain Mary Palangdao
(Mary) (defendants) before the Regional Trial Court of Pasig City, Branch 166 (RTC),
docketed as Civil Case No. 72319, alleging that the January 9, 1991 Contract did not
provide for its unilateral termination by either of the parties.16 It also alleged that the act
of defendants in entering into separate contracts, despite the existence of the January
9, 1991 Contract, constitutes unlawful interference,17 for which they must be held
solidarily liable for damages. As such, Diamond prayed that the unilateral termination of
the January 9, 1991 Contract effected by Reicon, as well as the separate contracts of
lease it entered into with Jollibee and Maybunga, be declared invalid and illegal.18
Further, it sought the award of unpaid rentals from Jollibee and Maybunga starting July
23, 2007 up to the present, moral and exemplary damages, and attorneys
fees.19cralawlawlibrary

By way of special appearance, Reicon filed a motion to dismiss20 the complaint on the
following grounds: (a) lack of jurisdiction over its person, considering that the summons
was not served upon its president, managing partner, general manager, corporate
secretary, treasurer, or in-house counsel, as required by the Rules of Court (Rules),21
but upon a certain Fernando Noyvo, a houseboy/gardener, at a residence located at
1217 Acacia St., Dasmarias Village, Makati City, which is not the principal office of
Reicon;22 (b) lack of legal capacity to sue as a juridical person on the part of Diamond,
its certificate of registration having already been revoked by the Securities and
Exchange Commission (SEC) as early as September 29, 2003, per certifications23

issued by the latter;24 and (c) lack of cause of action, in the absence of the requisite
allegations of the ultimate facts constituting bad faith and malice on the part of the
defendants
as
would
support
the
cause
of
action
of
unlawful
interference.25cralawlawlibrary

Opposing Reicons motion to dismiss, Diamond argued26 that, even assuming that
summons was not properly served upon Reicon, improper service is not a ground to
dismiss its complaint.27 It also insisted that it has legal capacity to sue,28 as the
corporation whose certificate of registration was revoked was Diamond Dragon Realty
and Mgt. Inc., while its name, per its General Information Sheet29 for 2009, was
Diamond Dragon Realty & Management, Inc. Moreover, it claimed that its legal
existence cannot be attacked except in a quo warranto petition.30cralawlawlibrary

In its reply,31 Reicon pointed out, inter alia, that the corporation whose certificate of
registration was revoked by the SEC on September 29, 200332 was registered under
SEC No. 144830.33 Per the SECs Certificate of Corporate Filing/Information34 dated
February 1, 2010 which referred to Diamond Dragon Realty & Mgt. Inc. as well as
Certificate of Corporate Filing/Information35 dated March 2, 2010 which referred to
Diamond Dragon Realty and Management, Inc., both corporations were registered
under SEC No. 144830, which can only mean that it is one and the same corporation.
Reicon also reiterated its previous arguments in its motion to dismiss.

For its part, Jollibee filed a separate motion to dismiss36 the complaint on the ground of
lack of jurisdiction over its person, the summons having been improperly served; lack of
jurisdiction over the subject matter, as Diamond failed to allege the value of the subject
property, which is required in an action involving title to, or possession of, real property,
as in this case; and improper venue.37 As for Maybunga, records do not show that they
filed a similar motion for the dismissal of the complaint.

The RTC Ruling

In an Order38 dated June 9, 2010, the RTC denied Reicons (and Jollibees) motion to
dismiss, ratiocinating that improper service of summons is not among the grounds
enumerated under Section 1,39 Rule 16 of the Rules allowing for the dismissal of a

complaint. With regard to the legal capacity of Diamond to sue as a juridical person, the
RTC cited Section 2040 of the Corporation Code,41 in relation to Sections 142 and 543
of Rule 66 of the Rules, in ruling that Diamonds legal existence can only be impugned
in a quo warranto proceeding.

Reicon moved for reconsideration44 thereof which was, however, denied in an Order45
dated September 16, 2010.

The Proceedings Before the CA

Aggrieved, Reicon elevated the matter to the CA via petition for certiorari46 taken
under Rule 65 of the Rules, ascribing grave abuse of discretion upon Presiding Judge
Rowena De Juan Quinagoran (Judge Quinagoran) of the RTC in not dismissing
Diamonds complaint on the grounds discussed in Reicons motion to dismiss,
particularly the issue respecting Diamonds lack of legal capacity to sue.47 Reicon filed
its certiorari petition on November 18, 2010, entitled Reicon Realty Builders
Corporation v. Hon. Rowena De Juan-Quinagoran and Diamond Dragon Realty and
Management, Inc., docketed as CA-G.R. SP No. 116845.

In a Resolution48 dated March 28, 2011, however, the CA required Reicon to show
cause as to why its petition for certiorari should not be dismissed for its failure to acquire
jurisdiction over the person of Diamond, as private respondent, as required under
Section 4,49 Rule 46 of the Rules. It appears that the CAs earlier Resolution dated
January 5, 2011 addressed to Diamond, with address at Suite 305, AIC Burgundy
Empire Tower, ADB Ave., cor[.] Garnet50 Road, Ortigas Center 1605 Pasig City was
returned to it, with the notation RTS-Moved Out.51cralawlawlibrary

In its Compliance,52 Reicon stated that the address Suite 305, AIC Burgundy Empire
Tower, ADB Avenue corner Garnet Road, Ortigas Center, Pasig City was Diamonds
address on record in Civil Case No. 72319, the civil case from which the certiorari
petition originated. From the institution thereof up to the filing of Reicons petition before
the CA, Diamond has not submitted any paper or pleading notifying the RTC of any
change in its address. As such, Reicon maintained that the service of its petition to
Diamonds address as above-indicated should be deemed effective. In the alternative, it

proffered that Diamond may be served through its counsel of record in Civil Case No.
72319, Atty. Anselmo A. Marqueda (Atty. Marqueda) of A.A. MARQUEDA LAW
OFFICES, at the latters office address.53cralawlawlibrary

Alleging that it received a copy of Reicons Compliance, Diamond, through its counsel,
Atty. Marqueda, filed a manifestation,54 under a special appearance, averring that
Reicons petition for certiorari must be dismissed outright for its failure to serve a copy
thereof on its counsel of record (i.e., Atty. Marqueda).55 It cited the rule that when a
party is represented by counsel, notice of proceedings must be served upon said
counsel to constitute valid service.56cralawlawlibrary

In a Resolution57 dated May 21, 2012, the CA dismissed Reicons certiorari petition
without passing upon its merits based on the following grounds: (a) non-compliance with
the requirements of proof of service of the petition on Diamond pursuant to Section 3,58
Rule 46 of the Rules, and (b) non-compliance with the rule on service upon a party
through counsel under Section 2, Rule 13 of the Rules.

Reicons motion for reconsideration59 was denied in a Resolution60 dated November

21, 2012, hence, this petition.

The Issues Before the Court

The sole issue to resolve is whether or not Reicons certiorari petition before the CA was
properly served upon the person of Diamond.

The Courts Ruling

The petition is meritorious.

I.

Sections 3 and 4, Rule 46 of the Rules, which covers cases originally filed61 before the
CA, provide as follows:chanRoblesvirtualLawlibrary

SEC. 3. Contents and filing of petition; effect of non-compliance with requirements.

The petition shall contain the full names and actual addresses of all the petitioners and
respondents, a concise statement of the matters involved, the factual background of the
case, and the grounds relied upon for the relief prayed for.

In actions filed under Rule 65, the petition shall further indicate the material dates
showing when notice of the judgment or final order or resolution subject thereof was
received, when a motion for new trial or reconsideration, if any, was filed and when
notice of the denial thereof was received.

It shall be filed in seven (7) clearly legible copies together with proof of service thereof
on the respondent with the original copy intended for the court indicated as such by the
petitioner, and shall be accompanied by a clearly legible duplicate original or certified
true copy of the judgment, order, resolution, or ruling subject thereof, such material
portions of the record as are referred to therein, and other documents relevant or
pertinent thereto. x x x.cralawred

xxxx

The failure of the petitioner to comply with any of the foregoing requirements shall be
sufficient ground for the dismissal of the petition.

SEC. 4. Jurisdiction over the person of respondent, how acquired. The court shall
acquire jurisdiction over the person of the respondent by the service on him of its order
or resolution indicating its initial action on the petition or by his voluntary submission to
such jurisdiction. (Emphases and underscoring supplied)

A punctilious review of the records, particularly of the certiorari petition filed by Reicon
before the CA, shows that it contains the registry numbers corresponding to the registry
receipts62 as well as the affidavit of service and/or filing63 of the person who filed and
served the petition via registered mail on behalf of Reicon. These imply that a copy of
Reicons certiorari petition had been served to the RTC as well as to Diamond through
its address at Suite 305 AIC Burgundy Empire Tower, ADB Avenue corner Garnet
Road, Ortigas Center, Pasig City,64 in compliance with Section 13,65 Rule 13 of the
Rules on proof of service as well as with Sections 3 and 4 of Rule 46 abovequoted.66cralawlawlibrary

On this score, the Court notes that Diamond declared the aforesaid address as its
business address67 in its complaint before the RTC, and that there is dearth of
evidence to show that it had since changed its address or had moved out. Hence,
Reicon cannot be faulted for adopting the said address in serving a copy of its certiorari
petition to Diamond in light of the requirement under Sections 3 and 4, Rule 46 of the
Rules as above-cited, which merely entails service of the petition upon the respondent
itself, not upon his counsel.

The underlying rationale behind this rule is that a certiorari proceeding is, by nature, an
original and independent action, and, therefore not considered as part of the trial that
had resulted in the rendition of the judgment or order complained of.68 Hence, at the
preliminary point of serving the certiorari petition, as in other initiatory pleadings, it
cannot be said that an appearance for respondent has been made by his counsel.
Consequently, the requirement under Section 2,69 Rule 13 of the Rules, which provides
that if any party has appeared by counsel, service upon him shall be made upon his
counsel, should not apply.

Thus, the CA erred when it dismissed Reicons certiorari petition outright for noncompliance with Section 3, Rule 46 of the Rules as well as the rule on service upon a
party through counsel under Section 2, Rule 13 of the Rules. The service of said
pleading upon the person of the respondent, and not upon his counsel, is what the rule
properly requires, as in this case.

II.

On a related note, the Court further observes that jurisdiction over the person of
Diamond had already been acquired by the CA through its voluntary appearance by
virtue of the Manifestation dated May 5, 2011, filed by its counsel, Atty. Marqueda, who,
as the records would show, had consistently represented Diamond before the
proceedings in the court a quo and even before this Court. To restate, Section 4, Rule
46 of the Rules provides:chanRoblesvirtualLawlibrary

SEC. 4. Jurisdiction over person of respondent, how acquired. The court shall
acquire jurisdiction over the person of the respondent by the service on him of its order
or resolution indicating its initial action on the petition or by his voluntary submission to
such jurisdiction. (Emphasis and underscoring supplied)

Hence, while the CAs resolution indicating its initial action on the petition, i.e., the
Resolution dated January 5, 2011 requiring Diamond to comment, was returned with the
notation RTS-Moved Out, the alternative mode of Diamonds voluntary appearance
was enough for the CA to acquire jurisdiction over its person. Diamond cannot escape
this conclusion by invoking the convenient excuse of limiting its manifestation as a mere
special appearance, considering that it affirmatively sought therein the dismissal of the
certiorari petition. Seeking an affirmative relief is inconsistent with the position that no
voluntary appearance had been made, and to ask for such relief, without the proper
objection, necessitates submission to the Courts jurisdiction. Here, Diamonds special
appearance cannot be treated as a specific objection to the CAs jurisdiction over its
person for the reason that the argument it pressed on was about the alleged error in the
service of Reicons certiorari petition, and not the CAs service of its resolution indicating
its initial action on the said pleading. Properly speaking, this argument does not have
anything to do with the CAs acquisition of jurisdiction over Diamond for it is the service
of the appellate courts resolution indicating its initial action, and not of the certiorari
petition itself, which is material to this analysis.

Note that the conclusion would be different if Diamond had actually objected to the CAs
service of its resolution indicating its initial action; if such were the case, then its special
appearance could then be treated as a proper conditional appearance challenging the
CAs jurisdiction over its person. To parallel, in ordinary civil cases, a conditional
appearance to object to a trial courts jurisdiction over the person of the defendant may
be made when said party specifically objects to the service of summons, which is an
issuance directed by the court, not the complainant. If the defendant, however, enters a
special appearance but grounds the same on the service of the complainants initiatory

pleading to him, then that would not be considered as an objection to the courts
jurisdiction over his person. It must be underscored that the service of the initiatory
pleading has nothing to do with how courts acquire jurisdiction over the person of the
defendant in an ordinary civil action. Rather, it is the propriety of the trial courts service
of summons same as the CAs service of its resolution indicating its initial action on
the certiorari petition which remains material to the matter of the courts acquisition
jurisdiction over the defendants/respondents person.

In Philippine Commercial International Bank v. Spouses Dy,70 it was ruled that [a]s a
general proposition, one who seeks an affirmative relief is deemed to have submitted to
the jurisdiction of the court. It is by reason of this rule that we have had occasion to
declare that the filing of motions to admit answer, for additional time to file answer, for
reconsideration of a default judgment, and to lift order of default with motion for
reconsideration, is considered voluntary submission to the courts jurisdiction. This,
however, is tempered by the concept of conditional appearance, such that a party who
makes a special appearance to challenge, among others, the courts jurisdiction over
his person cannot be considered to have submitted to its authority.

Prescinding from the foregoing, it is thus clear that:

(1)
Special appearance operates as an exception to the general rule on voluntary
appearance;
(2)
Accordingly, objections to the jurisdiction of the court over the person of the defendant
must be explicitly made, i.e., set forth in an unequivocal manner; and
(3)
Failure to do so constitutes voluntary submission to the jurisdiction of the court,
especially in instances where a pleading or motion seeking affirmative relief is filed and
submitted to the court for resolution.71

Considering that the tenor of Diamonds objection in its special appearance had actually
no legal bearing on the CAs jurisdiction over its person (that is, since it objected to the
propriety of Reicons service of its petition, and not the CAs service of its order
indicating its initial action), it cannot be said that the proper objection to the appellate
courts jurisdiction, as above-discussed, had been made by Diamond. Thus, by asking
for an affirmative relief, i.e., the dismissal of Reicons certiorari petition, bereft of the
proper jurisdictional objection, the Court therefore concludes that Diamond had
submitted itself to the jurisdiction of the appellate court.

In fine, the proper course of action would be for the CA to reinstate Reicons certiorari
petition, docketed as CA-G.R. SP No. 116845, given that it had already acquired
jurisdiction over Diamonds person. In order to ensure that Diamonds due process
rights are protected, Reicon should, however, be directed to submit proof that the
service of its petition had actually been completed in accordance with Rule 1372 of the
Rules.73 Diamond, in the meantime, should be ordered to furnish the CA the details of
its current address and confirm whether or not Atty. Marqueda would be representing it
as its counsel of record in the main (and not only through special appearance); if
Diamond will be represented by a different counsel, it must so notify the appellate court.
Henceforth, all pleadings and papers should be addressed to such counsel and would
equally bind Diamond as client. Throughout the proceedings, the CA is exhorted to bear
in mind the judicial policy to resolve the present controversy with utmost dispatch in
order to avoid further delay.

WHEREFORE, the petition is GRANTED. The Resolutions dated May 21, 2012 and
November 21, 2012 of the Court of Appeals (CA) are REVERSED and SET ASIDE.
Accordingly, the CA is DIRECTED to REINSTATE the petition for certiorari, docketed as
CA-G.R. SP No. 116845 under the parameters discussed in this Decision.

SO ORDERED.