FIRST DIVISION

IRENE SANTE AND REYNALDO SANTE,

Petitioners,

G.R. No. 173915

- versus -

Present:

HON. EDILBERTO T. CLARAVALL, in his capacity as

Presiding Judge of Branch 60, Regional Trial Court of Baguio
City, and VITA N. KALASHIAN,

PUNO, C.J., Chairperson,

Respondents.

CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
Promulgated:

February 22, 2010

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
Before this Court is a petition for certiorari [1] under Rule 65 of the 1997 Rules of Civil Procedure,
as amended, filed by petitioners Irene and Reynaldo Sante assailing the Decision [2] dated
January 31, 2006 and the Resolution[3] dated June 23, 2006 of the Seventeenth Division of the
Court of Appeals in CA-G.R. SP No. 87563. The assailed decision affirmed the orders of the
Regional Trial Court (RTC) of Baguio City, Branch 60, denying their motion to dismiss the
complaint for damages filed by respondent Vita Kalashian against them.
The facts, culled from the records, are as follows:
On April 5, 2004, respondent filed before the RTC of Baguio City a complaint for
damages[4] against petitioners. In her complaint, docketed as Civil Case No. 5794-R,
respondent alleged that while she was inside the Police Station of Natividad, Pangasinan, and

in the presence of other persons and police officers, petitioner Irene Sante uttered words,
which when translated in English are as follows, How many rounds of sex did you have last
night with your boss, Bert? You fuckin bitch! Bert refers to Albert Gacusan, respondents friend
and one (1) of her hired personal security guards detained at the said station and who is a
suspect in the killing of petitioners close relative. Petitioners also allegedly went around
Natividad, Pangasinan telling people that she is protecting and cuddling the suspects in the
aforesaid killing. Thus, respondent prayed that petitioners be held liable to pay moral damages
in the amount of P300,000.00; P50,000.00 as exemplary damages; P50,000.00 attorneys
fees; P20,000.00 litigation expenses; and costs of suit.
Petitioners filed a Motion to Dismiss [5] on the ground that it was the Municipal Trial Court in
Cities (MTCC) and not the RTC of Baguio, that had jurisdiction over the case. They argued
that the amount of the claim for moral damages was not more than the jurisdictional amount
of P300,000.00, because the claim for exemplary damages should be excluded in computing
the total claim.
On June 24, 2004,[6] the trial court denied the motion to dismiss citing our ruling in MoversBaseco Integrated Port Services, Inc. v. Cyborg Leasing Corporation.[7] The trial court held
that the total claim of respondent amounted to P420,000.00 which was above the jurisdictional
amount for MTCCs outside Metro Manila. The trial court also later issued Orders on July 7,
2004[8] and July 19, 2004,[9] respectively reiterating its denial of the motion to dismiss and
denying petitioners motion for reconsideration.
Aggrieved, petitioners filed on August 2, 2004, a Petition for Certiorari and Prohibition,
[10]
docketed as CA-G.R. SP No. 85465, before the Court of Appeals. Meanwhile, on July 14,
2004, respondent and her husband filed an Amended Complaint [11] increasing the claim for
moral damages from P300,000.00 toP1,000,000.00. Petitioners filed a Motion to Dismiss with
Answer Ad Cautelam and Counterclaim, but the trial court denied their motion in an
Order[12] dated September 17, 2004.
Hence, petitioners again filed a Petition for Certiorari and Prohibition [13] before the Court of
Appeals, docketed as CA-G.R. SP No. 87563, claiming that the trial court committed grave
abuse of discretion in allowing the amendment of the complaint to increase the amount of
moral damages from P300,000.00 toP1,000,000.00. The case was raffled to the Seventeenth
Division of the Court of Appeals.
On January 23, 2006, the Court of Appeals, Seventh Division, promulgated a decision in CAG.R. SP No. 85465, as follows:
WHEREFORE, finding grave abuse of discretion on the part of [the]
Regional Trial Court of Baguio, Branch 60, in rendering the assailed
Orders dated June 24, 2004 and July [19], 2004 in Civil Case No. 5794-R
the instant petition for certiorari is GRANTED. The assailed Orders are
hereby ANNULLED and SET ASIDE. Civil Case No. 5794-R for damages
is ordered DISMISSED for lack of jurisdiction.

PENDENCY OF A PETITION FOR CERTIORARI FILED AT THE COURT

OF APPEALS, SEVENTH DIVISION, DOCKETED AS CA G.R. NO.
85465.[15]

SO ORDERED.[14]
The Court of Appeals held that the case clearly falls under the jurisdiction of the MTCC as the
allegations show that plaintiff was seeking to recover moral damages in the amount
of P300,000.00, which amount was well within the jurisdictional amount of the MTCC. The Court of
Appeals added that the totality of claim rule used for determining which court had jurisdiction could
not be applied to the instant case because plaintiffs claim for exemplary damages was not a
separate and distinct cause of action from her claim of moral damages, but merely incidental to
it. Thus, the prayer for exemplary damages should be excluded in computing the total amount of
the claim.
On January 31, 2006, the Court of Appeals, this time in CA-G.R. SP No. 87563, rendered a
decision affirming the September 17, 2004 Order of the RTC denying petitioners Motion to
Dismiss Ad Cautelam. In the said decision, the appellate court held that the total or aggregate
amount demanded in the complaint constitutes the basis of jurisdiction. The Court of Appeals
did not find merit in petitioners posture that the claims for exemplary damages and attorneys
fees are merely incidental to the main cause and should not be included in the computation of
the total claim.
The Court of Appeals additionally ruled that respondent can amend her complaint by
increasing the amount of moral damages from P300,000.00 toP1,000,000.00, on the ground
that the trial court has jurisdiction over the original complaint and respondent is entitled to
amend her complaint as a matter of right under the Rules.
Unable to accept the decision, petitioners are now before us raising the following issues:
I.

In essence, the basic issues for our resolution are:

1)
2)

Did the RTC acquire jurisdiction over the case? and

Did the RTC commit grave abuse of discretion in allowing the
amendment of the complaint?

Petitioners insist that the complaint falls under the exclusive jurisdiction of the MTCC. They
maintain that the claim for moral damages, in the amount ofP300,000.00 in the original
complaint, is the main action. The exemplary damages being discretionary should not be
included in the computation of the jurisdictional amount. And having no jurisdiction over the
subject matter of the case, the RTC acted with grave abuse of discretion when it allowed the
amendment of the complaint to increase the claim for moral damages in order to confer
jurisdiction.
In her Comment,[16] respondent averred that the nature of her complaint is for recovery of
damages. As such, the totality of the claim for damages, including the exemplary damages as
well as the other damages alleged and prayed in the complaint, such as attorneys fees and
litigation expenses, should be included in determining jurisdiction. The total claim
being P420,000.00, the RTC has jurisdiction over the complaint.
We deny the petition, which although denominated as a petition for certiorari, we treat as a
petition for review on certiorari under Rule 45 in view of the issues raised.

WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION ON THE
PART OF THE (FORMER) SEVENTEENTH DIVISION OF THE
HONORABLE COURT OF APPEALS WHEN IT RESOLVED THAT THE
REGIONAL TRIAL COURT OF BAGUIO CITY BRANCH 60 HAS
JURISDICTION OVER THE SUBJECT MATTER OF THE CASE FOR
DAMAGES AMOUNTING TO P300,000.00;

Section 19(8) of Batas Pambansa Blg. 129,[17] as amended by Republic Act No. 7691,
[18]
states:

II.

(8) In all other cases in which the demand, exclusive of interest, damages
of whatever kind, attorneys fees, litigation expenses, and costs or the
value of the property in controversy exceeds One hundred thousand
pesos (P100,000.00) or, in such other cases in Metro Manila, where the
demand, exclusive of the abovementioned items exceeds Two hundred
thousand pesos (P200,000.00).

WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION ON

THE PART OF THE HONORABLE RESPONDENT JUDGE OF THE
REGIONAL TRIAL COURT OF BAGUIO BRANCH 60 FOR ALLOWING
THE COMPLAINANT TO AMEND THE COMPLAINT (INCREASING THE
AMOUNT OF DAMAGES TO 1,000,000.00 TO CONFER JURISDICTION
OVER THE SUBJECT MATTER OF THE CASE DESPITE THE

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

Section 5 of Rep. Act No. 7691 further provides:

SEC. 5. After five (5) years from the effectivity of this Act, the jurisdictional
amounts mentioned in Sec. 19(3), (4), and (8); and Sec. 33(1) of Batas
Pambansa Blg. 129 as amended by this Act, shall be adjusted to Two
hundred thousand pesos (P200,000.00). Five (5) years thereafter, such
jurisdictional amounts shall be adjusted further to Three hundred thousand
pesos (P300,000.00): Provided, however, That in the case of
Metro Manila, the abovementioned jurisdictional amounts shall be
adjusted after five (5) years from the effectivity of this Act to Four hundred
thousand pesos (P400,000.00).
Relatedly, Supreme Court Circular No. 21-99 was issued declaring that the first adjustment in
jurisdictional amount of first level courts outside of Metro Manila from P100,000.00
to P200,000.00 took effect on March 20, 1999. Meanwhile, the second adjustment
from P200,000.00 to P300,000.00 became effective on February 22, 2004 in accordance with
OCA Circular No. 65-2004 issued by the Office of the Court Administrator on May 13, 2004.
Based on the foregoing, there is no question that at the time of the filing of the complaint on
April 5, 2004, the MTCCs jurisdictional amount has been adjusted toP300,000.00.

complaintsince the latter comprises a concise statement of the ultimate facts constituting the
plaintiffs causes of action.[20] It is clear, based on the allegations of the complaint, that respondents
main action is for damages. Hence, the other forms of damages being claimed by respondent, e.g.,
exemplary damages, attorneys fees and litigation expenses, are not merely incidental to or
consequences of the main action but constitute the primary relief prayed for in the complaint.
In Mendoza v. Soriano,[21] it was held that in cases where the claim for damages is the main
cause of action, or one of the causes of action, the amount of such claim shall be considered
in determining the jurisdiction of the court. In the said case, the respondents claim
of P929,000.06 in damages and P25,000 attorneys fees plus P500 per court appearance was
held to represent the monetary equivalent for compensation of the alleged injury. The Court
therein held that the total amount of monetary claims including the claims for damages was
the basis to determine the jurisdictional amount.
Also, in Iniego v. Purganan,[22] the Court has held:
The amount of damages claimed is within the jurisdiction of the RTC,
since it is the claim for all kinds of damages that is the basis of
determining the jurisdiction of courts, whether the claims for damages
arise from the same or from different causes of action.
xxxx

But where damages is the main cause of action, should the amount of moral damages prayed
for in the complaint be the sole basis for determining which court has jurisdiction or should the
total amount of all the damages claimed regardless of kind and nature, such as exemplary
damages, nominal damages, and attorneys fees, etc., be used?
In this regard, Administrative Circular No. 09-94[19] is instructive:
xxxx
2. The exclusion of the term damages of whatever kind in determining the
jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg.
129, as amended by R.A. No. 7691, applies to cases where the damages
are merely incidental to or a consequence of the main cause of
action. However, in cases where the claim for damages is the main
cause of action, or one of the causes of action, the amount of such
claim shall be considered in determining the jurisdiction of the
court. (Emphasis ours.)
In the instant case, the complaint filed in Civil Case No. 5794-R is for the recovery of damages for
the alleged malicious acts of petitioners. The complaint principally sought an award of moral and
exemplary damages, as well as attorneys fees and litigation expenses, for the alleged shame and
injury suffered by respondent by reason of petitioners utterance while they were at a police station
in Pangasinan. It is settled that jurisdiction is conferred by law based on the facts alleged in the

Considering that the total amount of damages claimed was P420,000.00, the Court of Appeals
was correct in ruling that the RTC had jurisdiction over the case.
Lastly, we find no error, much less grave abuse of discretion, on the part of the Court of
Appeals in affirming the RTCs order allowing the amendment of the original complaint
from P300,000.00 to P1,000,000.00 despite the pendency of a petition for certiorari filed
before the Court of Appeals. While it is a basic jurisprudential principle that an amendment
cannot be allowed when the court has no jurisdiction over the original complaint and the
purpose of the amendment is to confer jurisdiction on the court, [23] here, the RTC clearly had
jurisdiction over the original complaint and amendment of the complaint was then still a matter
of right.[24]
WHEREFORE, the petition is DENIED, for lack of merit. The Decision and
Resolution of the Court of Appeals dated January 31, 2006 and June 23, 2006, respectively,
are AFFIRMED. The Regional Trial Court of Baguio City, Branch 60 is DIRECTED to continue
with the trial proceedings in Civil Case No. 5794-R with deliberate dispatch.
No costs.
SO ORDERED.

At napagkasunduan ay dalawang hulog ang halagang P250,000.00 na pera ni Ms.Lagmay at

Simula ng pagbibigay ni Mr. Sebastian ay sa buwan ng September 1998.
At upang may katunayan ang lahat ng napag usapan ay lumagda sa ibaba nito at sa harap ng
mga saksi ngayong ika-9 ng Hulyo, 1997

SECOND DIVISION

Mrs. Angelita Lagmay - (Lagda)

Mr. Michael Sebastian - (Lagda)

G.R. No. 164594, April 22, 2015

MICHAEL SEBASTIAN, Petitioner, v. ANNABEL LAGMAY NG, REPRESENTED BY HER
ATTORNEY-IN-FACT, ANGELITA LAGMAY, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari,1 filed by petitioner Michael Sebastian
(Michael), assailing the March 31, 2004 Decision,2 and the July 15, 2004 Resolution3 of the
Court of Appeals (CA) in CA-G.R. SP No. 65450.
The CA decision reversed and set aside the decision of the Regional Trial Court (RTC) of
Palayan City, Branch 40, in SP. Proc. Case No. 0096-P.
Factual Background

Saksi: Kagawad Rolando Mendizabal - (Lagda)

Hepe Quirino Sapon - (Lagda)
Benjamin Sebastian - (Lagda)
Jun Roxas - (Lagda)
Angelita alleged that the kasunduan was not repudiated within a period of ten (10) days from
the settlement, in accordance with the Katarungang Pambarangay Law embodied in the Local
Government Code of 1991 [Republic Act (R.A.) No. 7160], and Section 14 of its Implementing
Rules. When Michael failed to honor the kasunduan, Angelita brought the matter back to
the Barangay, but the BarangayCaptain failed to enforce the kasunduan, and instead, issued
a Certification to File Action.
After about one and a half years from the date of the execution of the kasunduan or on
January 15, 1999, Angelita filed with the Municipal Circuit Trial Court (MCTC) of Laur and
Gabaldon, Nueva Ecija, a Motion for Execution of the kasunduan.

Sometime in 1997, Angelita Lagmay (Angelita), acting as representative and attorney-in-fact

of her daughter Annabel Lagmay Ng (Annabel), filed a complaint before the Barangay Justice
of Siclong, Laur, Nueva Ecija. She sought to collect from Michael the sum of P350,000.00 that
Annabel sent to Michael. She claimed that Annabel and Michael were once sweethearts, and
that they agreed to jointly invest their financial resources to buy a truck. She alleged that while
Annabel was working in Hongkong, Annabel sent Michael the amount of P350,000.00 to
purchase the truck. However, after Annabel and Michael's relationship has ended, Michael
allegedly refused to return the money to Annabel, prompting the latter to bring the matter
before the Barangay Justice.

Michael moved for the dismissal of the Motion for Execution, citing as a ground Angelita's
alleged violation of Section 15, Rule 13 of the 1997 Rules of Civil Procedure.

On July 9, 1997, the parties entered into an amicable settlement, evidenced by a document
denominated as "kasunduan''4 wherein Michael agreed to pay Annabel the amount of
P250,000.00 on specific dates. The kasunduan was signed by Angelita (on behalf of Annabel),
Michael, and the members of the pangkat ng tagapagkasundo. The kasunduan reads:

IN VIEW OF THE FOREGOING, the Motion for Execution filed by the plaintiff is hereby
granted based on Sec. 2, Rule 7 of the Implementing Rules and Regulations of Republic Act
No. 7160, and therefore, defendant is hereby ordered within 15 days upon receipt of this
decision to pay the plaintiff the amount of P250,000.00 as evidenced by the Kasunduan
(Exhibit "C") with legal interests from July 9, 1997 until said obligation is fully paid, and to pay
attorney's fees for the plaintiffs counsel in the amount of P15,000.00 and to pay the cost of the
suit.

KASUNDUAN
Nagkasundo ang dalawang panig na pagkayari ng labing apat na buwan (14 months) Simula
ngayong July 9, 1997 hanggang September 1998 ay kailangan ng maibigay ni Mr. Sebastian
ang pera ni Ms. Anabelle Lagmay.

On January 17, 2000, the MCTC rendered a decision 5 in favor of Annabel, the dispositive
portion of which reads, as follows:
WHEREFORE, the plaintiff through counsel has satisfactorily proven by preponderance of
evidence based on Exhibits "A," "B," "C," "D," and "F," that defendant has obligation to the
plaintiff in the amount ofP250,000.00.

SO ORDERED.

Michael filed an appeal with the RTC arguing that the MCTC committed grave abuse of
discretion in prematurely deciding the case. Michael also pointed out that a hearing was
necessary for the petitioner to establish the genuineness and due execution of
the kasunduan.
The Regional Trial Court's Ruling
In its November 13, 2000 Decision,6 the RTC, Branch 40 of Palayan City upheld the MCTC
decision, finding Michael liable to pay Annabel the sum of P250,000.00. It held that Michael
failed to assail the validity of the kasunduan, or to adduce any evidence to dispute Annabel's
claims or the applicability of the Implementing Rules and Regulations of R.A. No. 7160. The
dispositive portion of the decision reads:
WHEREFORE, the assailed Decision and Order of the lower court is hereby MODIFIED in
that the appellant is ordered to pay the appellee the amount of Two hundred Fifty Thousand
pesos (P250,000.00) plus twelve percent interest(12%) per annum from September, 1998 up
to the time it is actually paid and fifty Thousand Pesos(P50,000.00) representing attorney's
fees.
Michael filed a Motion for Reconsideration arguing that: (i) an amicable settlement or
arbitration award can be enforced by the Lupon within six (6) months from date of settlement
or after the lapse of six (6) months, by ordinary civil action in the appropriate City or Municipal
Trial Court and not by a mere Motion for execution; and (ii) the MCTC does not have
jurisdiction over the case since the amount of P250,000.00 (as the subject matter of
the kasunduan) is in excess of MCTC's jurisdictional amount of P200,000.00. 7
In its March 13, 2001 Order, the RTC granted Michael's Motion for Reconsideration, and ruled
that there is merit in the jurisdictional issue he raised. It dismissed Angelita's Motion for
Execution, and set aside the MCTC Decision. The dispositive portion of the said Order reads:
WHEREFORE, the Motion for Reconsideration is GRANTED. The Decision of the Court dated
November 13, 2000 is hereby SET ASIDE. The Decision of the Municipal Trial Court of Laur,
Nueva Ecija dated January 17, 2000 is likewise SET ASIDE and the Motion for Execution
ofKasunduan is DISMISSED, the said court having had no jurisdiction to hear and decide the
matter.8
Angelita moved for the reconsideration of the March 13, 2001 Order, but the motion was
subsequently denied. Aggrieved, she filed a Petition for Review 9 with the CA.
The Court of Appeal's Ruling
On August 2, 2001, the CA initially dismissed the petition for review on a mere technical
ground of failure to attach the Affidavit of Service. Angelita moved for reconsideration,
attaching in her motion the Affidavit of Service. The CA granted the motion.

On March 31, 2004, the CA rendered its decision granting the petition, and reversing the
RTC's decision. The CA declared that the "appropriate local trial court" stated in Section 2,
Rule VII of the Implementing Rules of R.A. No. 7160 refers to the municipal trial courts. Thus,
contrary to Michael's contention, the MCTC has jurisdiction to enforce any settlement or
arbitration award, regardless of the amount involved.
The CA also ruled that Michael's failure to repudiate the kasunduan in accordance with the
procedure prescribed under the Implementing Rules of R.A. No. 7160, rendered
the kasunduan final. Hence, Michael can no longer assail the kasunduan on the ground of
forgery.
Michael moved to reconsider this decision, but the CA denied his motion in its resolution dated
July 15, 2004. Hence, this petition.
The Petition
In the present petition for review on certiorari, Michael alleges that the kasunduan cannot be
given the force and effect of a final judgment because it did not conform to the provisions of
the Katarungang Pambarangay law embodied in Book III, Title One, Chapter 7 of R.A. No.
7160. He points out the following irregularities in the kasunduan's, execution, and claims that
the agreement forged between him and Angelita was fictitious and simulated:
(1)
(2)
(3)
(4)

there was no record of the complaint in the Barangay;

there was no notice of mediation sent to him;
there was no constitution of the Pangkat Ng Tagapagasundo;
the parties were never called upon to choose the three (3) members from among
the Luponmembers;
(5) he had no participation in the execution of the kasunduan;
(6) his signature in the kasunduan was forged;
(7) he did not personally appear before the Barangay;
(8) there was no attestation clause;
(9) the kasunduan was neither reported nor filed before the MCTC; and
(10) Annabel, the real party in interest, did not personally appear before the Barangay as
required by the law.
Michael additionally claims that the kasunduan is merely in the nature of a private document.
He also reiterates that since the amount of P250,000.00 - the subject matter of the
kasunduan - is in excess of MCTC's jurisdictional amount of P200,000.00, the kasunduan is
beyond the MCTC's jurisdiction to hear and to resolve. Accordingly, the proceedings in the
Barangay are all nullity.
The Issues
The issues to be resolved in the present petition are:

1.

Whether or not the MCTC has the authority and jurisdiction to execute
the kasunduan regardless of the amount involved;

2.

Whether or not the kasunduan could be given the force and effect of a final
judgment; and

3.

Whether or not the kasunduan can be enforced.

The Court's Ruling

of Court.
Indisputably, Angelita chose to enforce the kasunduan under the second mode and filed a
motion for execution, which was docketed as Special Proceedings No. 45-99. The question for
our resolution is:Whether the MCTC, through Angelita's motion for execution, is expressly
authorized to enforce the kasunduan under Section 417 of the Local Government Code?
The Court rules in the affirmative.
It is undisputed that what Angelita filed before the MCTC was captioned "motion for
execution," rather than a petition/complaint for execution.

We deny the petition.

A perusal of the motion for execution, however, shows that it contains the material
requirements of an initiatory action.

A perusal of the body of the motion for

execution shows that it is actually in the
nature of an action for execution; hence,
it was a proper remedy;

First, the motion is sufficient in form12 and substance.13 It is complete with allegations of the
ultimate facts constituting the cause of action; the names and residences of the plaintiff and
the defendant; it contains the prayer for the MCTC to order the execution of the kasunduan;
and there was also a verification and certification against forum shopping.

We note at the outset that Michael raised - in his brief before the C A - the issue of wrong
remedy. He alleged that Angelita's recourse should have been to file a civil action, not a mere
motion for execution, in a regular court. However, the CA failed to address this issue and only
ruled on the issues of thekasunduan's irregularities and the MCTC's jurisdiction.

Furthermore, attached to the motion are: 1) the authenticated special power of attorney of
Annabel, authorizing Angelita to file the present action on her behalf; and 2) the copy of
the kasunduan whose contents were quoted in the body of the motion for execution.

A simple reading of Section 417 of the Local Government Code readily discloses the twotiered mode of enforcement of an amicable settlement. The provision reads:
Section 417. Execution. - The amicable settlement or arbitration award may be enforced by
execution by the lupon within six (6) months from the date of the settlement. After the lapse of
such time, the settlement may be enforced by action in the appropriate city or municipal
court. [Emphasis ours.]
Under this provision, an amicable settlement or arbitration award that is not repudiated within
a period often (10) days from the settlement may be enforced by: first, execution by
the Lupon within six (6) months from the date of the settlement; or second, by an action in the
appropriate city or municipal trial court if more than six (6) months from the date of settlement
has already elapsed.
Under the first mode of enforcement, the execution of an amicable settlement could be done
on mere motion of the party entitled thereto before the Punong Barangay.10 The proceedings
in this case are summary in nature and are governed by the Local Government Code and
the Katarungang PambarangayImplementing Rules and Regulations.
The second mode of enforcement, on the other hand, is judicial in nature and could only be
resorted to through the institution of an action in a regular form before the proper
City/Municipal Trial Court.11The proceedings shall be governed by the provisions of the Rules

It is well-settled that what are controlling in determining the nature of the pleading are the
allegations in the body and not the caption.14
Thus, the motion for execution that Angelita filed was intended to be an initiatory
pleading or an original action that is compliant with the requirement under Section 3,
Rule 6 of the Rules of Court that the complaint should allege the plaintiffs cause of
action and the names and residences of the plaintiff and the defendant.
Angelita's motion could therefore be treated as an original action, and not merely as a
motion/special proceeding. For this reason, Annabel has filed the proper remedy
prescribed under Section 417 of the Local Government Code.
However, Angelita should pay the proper docket fees corresponding to the filing of an action
for execution. The docket fees shall be computed by the Clerk of Court of the MCTC, with due
consideration, of course, of what Angelita had already paid when her motion for execution was
docketed as a special proceeding.
The kasunduan has the force and effect of a final judgment.
Under Section 416 of the Local Government Code, the amicable settlement and arbitration
award shall have the force and effect of a final judgment of a court upon the expiration often
(10) days from the date of its execution, unless the settlement or award has been repudiated

or a petition to nullify the award has been filed before the proper city or municipal court.
Carpio, (Chairperson), Del Castillo, Mendoza, and Leonen, JJ., concur.
Moreover, Section 14, Rule VI of the Katarungang Pambarangay Implementing Rules states
that the party's failure to repudiate the settlement within the period often (10) days shall be
deemed a waiver of the right to challenge the settlement on the ground that his/her consent
was vitiated by fraud, violence or intimidation.

Republic of the Philippines

SUPREME COURT
Manila

In the present case, the records reveal that Michael never repudiated the kasunduan within
the period prescribed by the law. Hence, the CA correctly ruled that the kasunduan has the
force and effect of a final judgment that is ripe for execution.
Furthermore, the irregularities in the kasunduan's execution, and the claim of forgery are
deemed waived since Michael never raised these defenses in accordance with the procedure
prescribed under the Local Government Code. Thus, we see no reason to discuss these
issues in the present case.
The MCTC has the authority and jurisdiction
to enforce the kasunduan regardless of the amount involved.
The Court also finds that the CA correctly upheld the MCTC's jurisdiction to enforce any
settlement or arbitration .award issued by the Lupon.
We again draw attention to the provision of Section 417 of the Local Government Code that
after the lapse of the six (6) month period from the date of the settlement, the agreement may
be enforced by action in the appropriate city or municipal court.
The law, as written, unequivocally speaks of the "appropriate city or municipal court" as the
forum for the execution of the settlement or arbitration award issued by the Lupon. Notably, in
expressly conferring authority over these courts, Section 417 made no distinction with respect
to the amount involved or the nature of the issue involved. Thus, there can be no question that
the law's intendment was to grant jurisdiction over the enforcement of settlement/arbitration
awards to the city or municipal courtsregardless of the amount. A basic principle of
interpretation is that words must be given their literal meaning and applied without attempted
interpretation where the words of a statute are clear,' plain and free from ambiguity. 15
WHEREFORE, premises considered, we hereby DENY the petitioner's petition for review
on certiorari, and AFFIRM the March 31, 2004 Decision of the Court of Appeals in CA-G.R. SP
No. 65450.
Angelita Lagmay is ORDERED to pay the proper docket fees to be computed by the Clerk of
Court of the Municipal Circuit Trial Court of Laur and Gabaldon, Nueva Ecija, with due
consideration of what she had paid when her motion for execution was docketed as a special
proceeding.
SO ORDERED.

THIRD DIVISION
G.R. No. 176492

October 20, 2014

MARIETTA N. BARRIDO, Petitioner,

vs.
LEONARDO V. NONATO, Respondent.
DECISION
PERALTA, J.:
For the Court's resolution is a Petition for Review filed by petitioner Marietta N. Barrido
questioning the Decision1 of the Court of Appeals (CA), dated November 16, 2006, and its
Resolution2 dated January 24, 2007 in CA-G.R. SP No. 00235. The CA affirmed the
Decision3 of the Regional Trial Court (RTC) ofBacolod City, Branch 53, dated July 21, 2004, in
Civil Case No. 03-12123, which ordered the partition of the subject property.
The facts, as culled from the records, are as follows: In the course of the marriage of
respondent Leonardo V. Nonato and petitioner Marietta N. Barrido,they were able to acquire a
property situated in Eroreco, Bacolod City, consisting ofa house and lot, covered by Transfer
Certificate of Title (TCT) No. T-140361. On March 15, 1996, their marriage was declared void
on the ground of psychological incapacity. Since there was no more reason to maintain their
co-ownership over the property, Nonato asked Barrido for partition, but the latter refused.
Thus, on January 29, 2003, Nonato filed a Complaint for partition before the Municipal Trial
Court in Cities (MTCC) of Bacolod City, Branch 3.
Barrido claimed, by way of affirmative defense, that the subject property had already been
sold to their children, Joseph Raymund and Joseph Leo. She likewise moved for the dismissal
of the complaint because the MTCC lacked jurisdiction, the partition case being an action
incapable of pecuniary estimation.
The Bacolod MTCC rendered a Decision dated September 17, 2003, applying Article 129 of
the Family Code. It ruled in this wise:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered, ordering the

conjugal property of the former Spouses Leonardo and Marietta Nonato, a house and lot
covered by TCT No. T-140361 located at Eroreco, Bacolod City, which was their conjugal
dwelling, adjudicated to the defendant Marietta Nonato, the spouse with whom the majority of
the common children choose to remain.
Furthermore, defendants counterclaim is hereby granted, ordering plaintiff to pay
defendant P10,000.00 as moral damages for the mental anguish and unnecessary
inconvenience brought about by this suit; and an additionalP10,000.00 as exemplary
damages to deter others from following suit; and attorneys fees of P2,000.00 and litigation
expenses of P575.00.
SO ORDERED.4
Nonato appealed the MTCC Decision before the RTC. On July 21, 2004, the Bacolod RTC
reversed the ruling of the MTCC. It found that even though the MTCC aptly applied Article 129
of the Family Code, it nevertheless made a reversible error in adjudicating the subject
property to Barrido. Its dispositive portion reads:
WHEREFORE, premises considered, the decision dated September 17, 2003 is hereby
REVERSED and SET ASIDE and a new judgment is hereby rendered ordering the parties:

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE MTCC HAD
JURISDICTION TO TRY THE PRESENT CASE.
II.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE LOT COVERED
BY TCT NO. T-140361 IS CONJUGAL AFTER BEING SOLD TO THE CHILDREN, JOSEPH
LEO NONATO AND JOSEPH RAYMUND NONATO.
III.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT ARTICLE 129 OF
THE FAMILY CODE HAS NO APPLICATION IN THE PRESENT CASE, ON THE
ASSUMPTION
THAT THE TRIAL COURT HAD JURISDICTION OVER THE CASE.6
The petition lacks merit.

(1) to equitably partition the house and lot covered by TCT No. T-140361;

Contrary to Barridos contention, the MTCC has jurisdiction to take cognizance of real actions
or those affecting title to real property, or for the recovery of possession, or for the partition or
condemnation of, or foreclosure of a mortgage on real property. 7 Section 33 of Batas
Pambansa Bilang 1298 provides:

(2) to reimburse Joseph Raymund and Joseph Leo Nonato of the amount advanced
by them in payment of the debts and obligation of TCT No. T-140361 with Philippine
National Bank;

Section 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

(3) to deliver the presumptive legitimes of Joseph Raymund and Joseph Leo Nonato
pursuant to Article 51 of the Family Code.

Trial Courts shall exercise:

xxxx

SO ORDERED.5
Upon appeal, the CA affirmed the RTC Decision on November 16, 2006. It held that since the
propertys assessed value was only P8,080.00, it clearly fell within the MTCCs jurisdiction.
Also, although the RTC erred in relying on Article 129 of the FamilyCode, instead of Article
147, the dispositive portion of its decision still correctly ordered the equitable partition of the
property. Barrido filed a Motion for Reconsideration, which was, however, denied for lack of
merit.
Hence, Barrido brought the case to the Court via a Petition for Review. She assigned the
following errors in the CA Decision:
I.

(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 propertyor interest therein
does not exceed Twenty thousand pesos (P20,000.00)or, in civil actions in Metro Manila,
where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of
interest, damages of whatever kind, attorney's fees, litigation expenses and costs: Provided,
That value of such property shall be determined by the assessed value of the adjacent lots.
(as amended by R.A. No. 7691)9
Here, the subject propertys assessed value was merely P8,080.00, an amount which certainly
does not exceed the required limit of P20,000.00 for civil actions outside Metro Manila tofall
within the jurisdiction of the MTCC. Therefore, the lower court correctly took cognizance of the
instant case.

The records reveal that Nonatoand Barridos marriage had been declared void for
psychological incapacity under Article 3610 of the Family Code. During their marriage,
however, the conjugal partnership regime governed their property relations. Although Article
12911 provides for the
procedure in case of dissolution of the conjugal partnership regime, Article 147 specifically
covers the effects of void marriages on the spouses property relations. Article 147 reads:
Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively
with each other as husband and wife without the benefit of marriage or under a void marriage,
their wages and salaries shall be owned by them in equal shares and the property acquired by
both of them through their work or industry shall be governed by the rules on co-ownership.
In the absence of proof to the contrary, properties acquired while they lived together shall be
presumed tohave been obtained by their joint efforts, work or industry, and shall beowned by
them in equal shares. For purposes of this Article, a party who did not participate in the
acquisition by the other party of any property shall be deemed to have contributed jointly in the
acquisition thereof if the former's efforts consisted in the care and maintenance of the family
and of the household.
Neither party can encumber or dispose by acts inter vivos of his or her share in the property
acquired during cohabitation and owned in common, without the consent of the other, until
after the termination of their cohabitation.
When only one of the parties to a void marriage is in good faith, the share of the party in bad
faith in the co-ownership shall be forfeited in favor of their common children. In case of default
of or waiver by any or all of the common children or their descendants, each vacant share
shall belong to the respective surviving descendants. In the absence of descendants, such
share shall belong to the innocent party.1wphi1 In all cases, the forfeiture shall take place
upon termination of the cohabitation.
This particular kind of co-ownership applies when a man and a woman, suffering no illegal
impedimentto marry each other, exclusively live together as husband and wife under a void
marriage or without the benefit of marriage.12 It is clear, therefore, that for Article 147 to
operate, the man and the woman: (1) must be capacitated to marry each other; (2) live
exclusively with each other as husband and wife; and (3) their union is without the benefit of
marriage or their marriage is void. Here, all these elements are present. 13 The term
"capacitated" inthe first paragraph of the provision pertains to the legal capacity of a party to
contract marriage.14 Any impediment to marry has not been shown to have existed on the part
of either Nonato or Barrido. They lived exclusively with each other as husband and wife.
However, their marriage was found to be void under Article 36 of the Family Code on the
ground of psychological incapacity.15
Under this property regime, property acquired by both spouses through their work and
industry shall be governed by the rules on equal coownership. Any property acquired during

the union is prima faciepresumed to have been obtained through their joint efforts. A party who
did not participate in the acquisition of the property shall be considered as having contributed
to the same jointly if said party's efforts consisted in the care and maintenance of the family
household.16 Efforts in the care and maintenance of the family and household are regarded as
contributions to the acquisition of common property by one who has no salary or income or
work or industry.17
In the analogous case of Valdez,18 it was likewise averred that the trial court failed to apply the
correct law that should govern the disposition of a family dwelling in a situation where a
marriage is declared void ab initiobecause of psychological incapacity on the part of either or
both parties in the contract of marriage.The Court held that the court a quodid not commit a
reversible error in utilizing Article 147 of the Family Code and in ruling that the former spouses
own the family home and all their common property in equal shares, as well as in concluding
that, in the liquidation and partition of the property that they owned in common, the provisions
on coownership under the Civil Code should aptly prevail. 19 The rules which are set up to
govern the liquidation of either the absolute community or the conjugal partnership of gains,
the property regimes recognized for valid and voidable marriages, are irrelevant to the
liquidation of the co-ownership that exists between common-law spousesor spouses of void
marriages.20
Here, the former spouses both agree that they acquired the subject property during the
subsistence of their marriage. Thus, it shall be presumed to have been obtained by their joint
efforts, work or industry, and shall be jointly owned by them in equal shares. Barrido, however,
claims that the ownership over the property in question is already vested on their children, by
virtue of a Deed of Sale. But aside from the title to the property still being registered in the
names of the former spouses, said document of safe does not bear a notarization of a notary
public. It must be noted that without the notarial seal, a document remains to be private and
cannot be converted into a public document,21 making it inadmissible in evidence unless
properly authenticated.22 Unfortunately, Barrido failed to prove its due execution and
authenticity. In fact, she merely annexed said Deed of Sale to her position paper. Therefore,
the subject property remains to be owned in common by Nonato and Barrido, which should be
divided in accordance with the rules on co-ownership.
WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of
Appeals, dated November 16, 2006, as well as its Resolution dated January 24, 2007 in CAG.R. SP No. 00235, are hereby AFFIRMED.
SO ORDERED.

THIRD DIVISION
[G.R. No. 138896. June 20, 2000]

BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner, vs. Heirs of FRANCISCO

PASTOR, namely: EUGENIO SYLIANCO, TEODORO SYLIANCO, ISABEL SYLIANCO,
EUGENIA S. ONG, LAWRENCE SYLIANCO, LAWSON SYLIANCO, LAWINA S. NOTARIO,
LEONARDO SYLIANCO JR. and LAWFORD SYLIANCO, respondents.

The RTC also dismissed the Complaint when filed before it, holding that an action for eminent
domain affected title to real property; hence, the value of the property to be expropriated
would determine whether the case should be filed before the MTC or the RTC. Concluding
that the action should have been filed before the MTC since the value of the subject property
was less than P20,000, the RTC ratiocinated in this wise:

DECISION
PANGANIBAN, J.:
An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the
jurisdiction of the regional trial courts, regardless of the value of the subject property.

The Case
Before us is a Petition for Review on Certiorari assailing the March 29, 1999 Order[1] of the
Regional Trial Court (RTC) of Cebu City (Branch 58) in Civil Case No. CEB-21978, in which it
dismissed a Complaint for eminent domain. It ruled as follows:
"Premises considered, the motion to dismiss is hereby granted on the
ground that this Court has no jurisdiction over the case. Accordingly, the
Orders dated February 19, 1999 and February 26, 1999, as well as the
Writ of Possession issued by virtue of the latter Order are hereby recalled
for being without force and effect."[2]
Petitioner also challenges the May 14, 1999 Order of the RTC denying reconsideration.

The Facts
Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch 1) [3] a
Complaint to expropriate a property of the respondents. In an Order dated April 8, 1997, the
MTC dismissed the Complaint on the ground of lack of jurisdiction. It reasoned that "[e]minent
domain is an exercise of the power to take private property for public use after payment of just
compensation. In an action for eminent domain, therefore, the principal cause of action is the
exercise of such power or right. The fact that the action also involves real property is merely
incidental. An action for eminent domain is therefore within the exclusive original jurisdiction of
the Regional Trial Court and not with this Court."[4]

Assailed RTC Ruling

"The instant action is for eminent domain. It appears from the current Tax
Declaration of the land involved that its assessed value is only One
Thousand Seven Hundred Forty Pesos (P1,740.00). Pursuant to Section
3, paragraph (3), of Republic Act No. 7691, all civil actions involving title
to, or possession of, real property with an assessed value of less
than P20,000.00 are within the exclusive original jurisdiction of the
Municipal Trial Courts. In the case at bar, it is within the exclusive original
jurisdiction of the Municipal Trial Court of Talisay, Cebu, where the
property involved is located.
"The instant action for eminent domain or condemnation of real property is
a real action affecting title to or possession of real property, hence, it is the
assessed value of the property involved which determines the jurisdiction
of the court. That the right of eminent domain or condemnation of real
property is included in a real action affecting title to or possession of real
property, is pronounced by retired Justice Jose Y. Feria, thus, Real actions
are those affecting title to or possession of real property. These include
partition or condemnation of, or foreclosures of mortgage on, real property.
x x x"[5]
Aggrieved, petitioner appealed directly to this Court, raising a pure question of law. [6] In a
Resolution dated July 28, 1999, the Court denied the Petition for Review "for being posted out
of time on July 2, 1999, the due date being June 2, 1999, as the motion for extension of time
to file petition was denied in the resolution of July 14, 1999." [7] In a subsequent Resolution
dated October 6, 1999, the Court reinstated the Petition. [8]
Respondents, on the other hand, contend that the Complaint for Eminent Domain affects the
title to or possession of real property. Thus, they argue that the case should have been
brought before the MTC, pursuant to BP 129 as amended by Section 3 (3) of RA 7691. This
law provides that MTCs shall have exclusive original jurisdiction over all civil actions that
involve title to or possession of real property, the assessed value of which does not exceed
twenty thousand pesos or, in civil actions in Metro Manila, fifty thousand pesos exclusive of
interest, damages of whatever kind, attorneys fees, litigation expenses and costs.
We agree with the petitioner that an expropriation suit is incapable of pecuniary estimation.
The test to determine whether it is so was laid down by the Court in this wise:
"A review of the jurisprudence of this Court indicates 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 courts of first instance would depend on the
amount of the claim. However, where the basic issue is something other
than the right to recover a sum of money, or where the money claim is
purely incidental to, or a consequence of, the principal relief sought, like in
suits to have the defendant perform his part of the contract (specific
performance) and in actions for support, or for annulment of a judgment or
to foreclose a mortgage, this Court has considered such actions as cases
where the subject of the litigation may not be estimated in terms of money,
and are cognizable exclusively by courts of first instance. The rationale of
the rule is plainly that the second class cases, besides the determination
of damages, demand an inquiry into other factors which the law has
deemed to be more within the competence of courts of first instance,
which were the lowest courts of record at the time that the first organic
laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the
Philippine Commission of June 11, 1901)."10
In the present case, an expropriation suit does not involve the recovery of a sum of money.
Rather, it deals with the exercise by the government of its authority and right to take private
property for public use.11 In National Power Corporation v. Jocson,12 the Court ruled that
expropriation proceedings have two phases:
"The first is concerned with the determination of the authority of the
plaintiff to exercise the power of eminent domain and the propriety of its
exercise in the context of the facts involved in the suit. It ends with an
order, if not of dismissal of the action, of condemnation declaring that the
plaintiff has a lawful right to take the property sought to be condemned, for
the public use or purpose described in the complaint, upon the payment of
just compensation to be determined as of the date of the filing of the
complaint. An order of dismissal, if this be ordained, would be a final one,
of course, since it finally disposes of the action and leaves nothing more to
be done by the Court on the merits. So, too, would an order of
condemnation be a final one, for thereafter as the Rules expressly state,
in the proceedings before the Trial Court, no objection to the exercise of
the right of condemnation (or the propriety thereof) shall be filed or heard.

"The second phase of the eminent domain action is concerned with the
determination by the court of the just compensation for the property
sought to be taken. This is done by the Court with the assistance of not
more than three (3) commissioners. The order fixing the just
compensation on the basis of the evidence before, and findings of, the
commissioners would be final, too. It would finally dispose of the second
stage of the suit, and leave nothing more to be done by the Court
regarding the issue. x x x"
It should be stressed that the primary consideration in an expropriation suit is whether the
government or any of its instrumentalities has complied with the requisites for the taking of
private property. Hence, the courts determine the authority of the government entity, the
necessity of the expropriation, and the observance of due process. 13 In the main, the subject
of an expropriation suit is the governments exercise of eminent domain, a matter that is
incapable of pecuniary estimation.
True, the value of the property to be expropriated is estimated in monetary terms, for the court
is duty-bound to determine the just compensation for it. This, however, is merely incidental to
the expropriation suit. Indeed, that amount is determined only after the court is satisfied with
the propriety of the expropriation.
Verily, the Court held in Republic of the Philippines v. Zurbano that "condemnation
proceedings are within the jurisdiction of Courts of First Instance," 14 the forerunners of the
regional trial courts. The said case was decided during the effectivity of the Judiciary Act of
1948 which, like BP 129 in respect to RTCs, provided that courts of first instance had original
jurisdiction over "all civil actions in which the subject of the litigation is not capable of
pecuniary estimation."15 The 1997 amendments to the Rules of Court were not intended to
change these jurisprudential precedents.
We are not persuaded by respondents argument that the present action involves the title to or
possession of a parcel of land. They cite the observation of retired Justice Jose Y. Feria, an
eminent authority in remedial law, that condemnation or expropriation proceedings are
examples of real actions that affect the title to or possession of a parcel of land. 16
Their reliance is misplaced. Justice Feria sought merely to distinguish between real and
personal actions. His discussion on this point pertained to the nature of actions, not to the
jurisdiction of courts. In fact, in his pre-bar lectures, he emphasizes that jurisdiction over
eminent domain cases is still within the RTCs under the 1997 Rules.
To emphasize, the question in the present suit is whether the government may expropriate
private property under the given set of circumstances. The government does not dispute
respondents title to or possession of the same. Indeed, it is not a question of who has a better
title or right, for the government does not even claim that it has a title to the property. It merely
asserts its inherent sovereign power to "appropriate and control individual property for the
public benefit, as the public necessity, convenience or welfare may demand." 17

WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET ASIDE. The
Regional Trial Court is directed to HEAR the case. No costs.

order,9 and later, in an Order10 dated August 24, 2011, granted the application for a writ of
preliminary injunction.

SO ORDERED.

After filing their respective answers11 to the complaint, respondents filed a motion to
dismiss12 on the ground of lack of jurisdiction over the subject matter, pointing out that the
case involves an intra-corporate dispute and should, thus, be heard by the designated Special
Commercial Court of Muntinlupa City.13

Melo, (Chairman), Purisima, and Gonzaga-Reyes, JJ., concur.

Vitug, J., on official business abroad.

The RTC Ruling

In an Order14 dated April 17, 2012, Branch 276 granted the motion to dismiss filed by
respondents. It found that the case involves an intra-corporate dispute that is within the
original and exclusive jurisdiction of the RTCs designated as Special Commercial Courts. It
pointed out that the RTC of Muntinlupa City, Branch 256 (Branch 256) was specifically
designated by the Court as the Special Commercial Court, hence, Branch 276 had no
jurisdiction over the case and cannot lawfully exercise jurisdiction on the matter, including the
issuance of a Writ of Preliminary Injunction.15 Accordingly, it dismissed the case.

EN BANC
G.R. No. 202664, November 20, 2015
MANUEL LUIS C. GONZALES AND FRANCIS MARTIN D. GONZALES, Petitioners, v. GJH
LAND, INC. (FORMERLY KNOWN AS S.J. LAND, INC.), CHANG HWAN JANG A.K.A.
STEVE JANG, SANG RAK KIM, MARIECHU N. YAP, AND ATTY. ROBERTO P. MALLARI
II, Respondent.
DECISION
PERLAS-BERNABE, J.:
This is a direct recourse to the Court, via a petition for review on certiorari,1 from the Orders
dated April 17, 20122 and July 9, 20123 of the Regional Trial Court (RTC) of Muntinlupa City,
Branch 276 (Branch 276) dismissing Civil Case No. 11-077 for lack of jurisdiction.

Dissatisfied, petitioners filed a motion for reconsideration, 16 arguing that they filed the case
with the Office of the Clerk of Court of the RTC of Muntinlupa City which assigned the same to
Branch 276 byraffle.17 As the raffle was beyond their control, they should not be made to suffer
the consequences of the wrong assignment of the case, especially after paying the filing fees
in the amount of P235,825.00 that would be for naught if the dismissal is upheld. 18 They
further maintained that the RTC has jurisdiction over intra-corporate disputes under Republic
Act No. (RA) 8799,19 but since the Court selected specific branches to hear and decide such
suits, the case must, at most, be transferred or raffled off to the proper branch. 20
In an Order21 dated July 9, 2012, Branch 276 denied the motion for reconsideration, holding
that it has no authority or power to order the transfer of the case to the proper Special
Commercial Court, citingCalleja v. Panday22 (Calleja); hence, the present petition.
The Issue Before the Court

The Facts
On August 4, 2011, petitioners Manuel Luis C. Gonzales 4 and Francis Martin D. Gonzales
(petitioners) filed a Complaint5 for "Injunction with prayer for Issuance of Status Quo Order,
Three (3) and Twenty (20)-Day Temporary Restraining Orders, and Writ of Preliminary
Injunction with Damages" against respondents GJH Land, Inc. (formerly known as S.J. Land,
Inc.), Chang Hwan Jang, Sang Rak Kim, Mariechu N. Yap, and Atty. Roberto P. Mallari
II6 (respondents) before the RTC of Muntinlupa City seeking to enjoin the sale of S.J. Land,
Inc.'s shares which they purportedly bought from S.J. Global, Inc. on February 1, 2010.
Essentially, petitioners alleged that the subscriptions for the said shares were already paid by
them in full in the books of S.J. Land, Inc.,7 but were nonetheless offered for sale on July 29,
2011 to the corporation's stockholders,8 hence, their plea for injunction.
The case was docketed as Civil Case No. 11-077 and raffled to Branch 276, which is not a
Special Commercial Court. On August 9, 2011, said branch issued a temporary restraining

The essential issue for the Court's resolution is whether or not Branch 276 of the RTC of
Muntinlupa City erred in dismissing the case for lack of jurisdiction over the subject matter.
The Court's Ruling
The petition is meritorious.
At the outset, the Court finds Branch 276 to have correctly categorized Civil Case No. 11-077
as a commercial case, more particularly, an intra-corporate dispute, 23 considering that it
relates to petitioners' averred rights over the shares of stock offered for sale to other
stockholders, having paid the same in full. Applying the relationship test and the nature of the
controversy test, the suit between the parties is clearly rooted in the existence of an intra-

corporate relationship and pertains to the enforcement of their correlative rights and
obligations under the Corporation Code and the internal and intra-corporate regulatory rules of
the corporation,24 hence, intra-corporate, which should be heard by the designated Special
Commercial Court as provided under A.M. No. 03-03-03-SC25 dated June 17, 2003 in relation
to Item 5.2, Section 5 of RA 8799.
The present controversy lies, however, in the procedure to be followed when a commercial
case - such as the instant intra-corporate dispute -has been properly filed in the official
station of the designated Special Commercial Court but is, however, later wrongly
assigned by raffle to a regular branch of that station.
As a basic premise, let it be emphasized that a court's acquisition of jurisdiction over a
particular case's subject matter is different from incidents pertaining to the exercise of its
jurisdiction. Jurisdiction over the subject matter of a case is conferred by law, whereas a
court's exercise of jurisdiction, unless provided by the law itself, is governed by the Rules of
Court or by the orders issued from time to time by the Court. 26 In Lozada v. Bracewell,27 it was
recently held that the matter of whether the RTC resolves an issue in the exercise of its
general jurisdiction or of its limited jurisdiction as a special court is only a matter of
procedure and has nothing to do with the question of jurisdiction.
Pertinent to this case is RA 8799 which took effect on August 8, 2000. By virtue of said law,
jurisdiction over cases enumerated in Section 528 of Presidential Decree No. 902-A29 was
transferred from the Securities and Exchange Commission (SEC) to the RTCs, being courts
of general jurisdiction. Item 5.2, Section 5 of RA 8799 provides:chanRoblesvirtualLawlibrary
SEC. 5. Powers and Functionsof the Commission. - x x x
xxxx
5.2 The Commission's jurisdiction over all cases enumerated under Section 5 of
Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction
or the appropriate Regional Trial Court: Provided, that the Supreme Court in the
exercise of its authority may designate the Regional Trial Court branches that shall
exercise jurisdiction over the cases. The Commission shall retain jurisdiction over pending
cases involving intra-corporate disputes submitted for final resolution which should be
resolved within one (1) year from the enactment of this Code. The Commission shall retain
jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000
until finally disposed. (Emphasis supplied)cralawlawlibrary
The legal attribution of Regional Trial Courts as courts of general jurisdiction stems from
Section 19 (6), Chapter II of Batas Pambansa Bilang (BP) 129, 30 known as "The Judiciary
Reorganization Act of 1980":chanRoblesvirtualLawlibrary
Section 19. Jurisdiction in civil cases.- Regional Trial Courts shall exercise exclusive original
jurisdiction:chanRoblesvirtualLawlibrary

xxxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body
exercising jurisdiction or any court, tribunal, person or body exercising judicial or quasi-judicial
functions; x x x x
cralawlawlibrary
As enunciated in Durisol Philippines, Inc. v. CA:31chanroblesvirtuallawlibrary
The regional trial court, formerly the court of first instance, is a court of general jurisdiction. All
cases, the jurisdiction over which is not specifically provided for by law to be within the
jurisdiction of any other court, fall under the jurisdiction of the regional trial
court.32ChanRoblesVirtualawlibrary
cralawlawlibrary
To clarify, the word "or" in Item 5.2, Section 5 of RA 8799 was intentionally used by the
legislature to particularize the fact that the phrase "the Courts of general jurisdiction" is
equivalent to the phrase "the appropriate Regional Trial Court." In other words, the jurisdiction
of the SEC over the cases enumerated under Section 5 of PD 902-A was transferred to the
courts of general jurisdiction, that is to say (or, otherwise known as), the proper Regional Trial
Courts. This interpretation is supported by San Miguel Corp. v. Municipal Council,33 wherein
the Court held that:chanRoblesvirtualLawlibrary
[T]he word "or" may be used as the equivalent of "that is to say" and gives that which
precedes it the same significance as that which follows it. It is not always disjunctive and is
sometimes interpretative or expository of the preceding word. 34cralawlawlibrary
Further, as may be gleaned from the following excerpt of the Congressional
deliberations:chanRoblesvirtualLawlibrary
Senator [Raul S.] Roco: x x x.
xxxx
x x x. The first major departure is as regards the Securities and Exchange Commission. The
Securities and Exchange Commission has been authorized under this proposal to reorganize
itself. As an administrative agency, we strengthened it and at the same time we take away the
quasi-judicial functions. The quasi-judicial functions are now given back to the courts of
general jurisdiction - the Regional Trial Court, except for two categories of cases.
In the case of corporate disputes, only those that are now submitted for final determination of
the SEC will remain with the SEC. So, all those cases, both memos of the plaintiff and the
defendant, that have been submitted for resolution will continue. At the same time, cases
involving rehabilitation, bankruptcy, suspension of payments and receiverships that were filed
before June 30, 2000 will continue with the SEC. in other words, we are avoiding the
possibility, upon approval of this bill, of people filing cases with the SEC, in manner of

speaking, to select their court.35

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

x x x x (Emphasis supplied)cralawlawlibrary
Therefore, one must be disabused of the notion that the transfer of jurisdiction was made only
in favor of particular RTC branches, and not the RTCs in general.
Consistent with the foregoing, history depicts that when the transfer of SEC cases to the RTCs
was first implemented, they were transmitted to the Executive Judges of the RTCs for raffle
between or among its different branches, unless a specific branch has been designated as
a Special Commercial Court, in which instance, the cases were transmitted to said
branch.36 It was only on November 21, 2000 that the Court designated certain RTC branches
to try and decide said SEC cases37 without, however, providing for the transfer of the cases
already distributed to or filed with the regular branches thereof. Thus, on January 23, 2001,
the Court issued SC Administrative Circular No. 08-2001 38 directing the transfer of said cases
to the designated courts (commercial SEC courts). Later, or on June 17, 2003, the Court
issued A.M. No. 03-03-03-SC consolidating the commercial SEC courts and the intellectual
property courts39 in one RTC branch in a particular locality, i.e., the Special Commercial
Court, to streamline the court structure and to promote expediency.40 Accordingly, the
RTC branch so designated was mandated to try and decide SEC cases, as well as those
involving violations of intellectual property rights, which were, thereupon, required to be filed in
the Office of the Clerk of Court in theofficial station of the designated Special Commercial
Courts, to wit:chanRoblesvirtualLawlibrary
1. The Regional Courts previously designated as SEC Courts through the: (a) Resolutions of
this Court dated 21 November 2000, 4 July 2001, 12 November 2002, and 9 July 2002 all
issued in A.M. No. 00-11-03-SC; (b) Resolution dated 27 August 2001 in A.M. No. 01-5-298RTC; and (c) Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC are hereby
DESIGNATED and shall be CALLED as Special Commercial Courts to try and decide cases
involving violations of Intellectual Property Rights which fall within their jurisdiction andthose
cases formerly cognizable by the Securities and Exchange
Commission:chanRoblesvirtualLawlibrary
xxxx
4. The Special Commercial Courts shall have jurisdiction over cases arising within their
respective territorial jurisdiction with respect to the National Capital Judicial Region and within
the respective provinces with respect to the First to Twelfth Judicial Regions. Thus,cases shall
be filed in the Office of the Clerk of Court in the official station of the designated Special
Commercial Court;41
x x x x (Underscoring supplied)cralawlawlibrary
It is important to mention that the Court's designation of Special Commercial Courts was made
in line with its constitutional authority to supervise the administration of all courts as provided
under Section 6, Article VIII of the 1987 Constitution:chanRoblesvirtualLawlibrary

The objective behind the designation of such specialized courts is to promote expediency
and efficiency in the exercise of the RTCs' jurisdiction over the cases enumerated under
Section 5 of PD 902-A. Such designation has nothing to do with the statutory conferment of
jurisdiction to all RTCs under RA 8799 since in the first place, the Court cannot enlarge,
diminish, or dictate when jurisdiction shall be removed, given that the power to define,
prescribe, and apportion jurisdiction is, as a general rule, a matter of legislative
prerogative.42 Section 2, Article VIII of the 1987 Constitution
provides:chanRoblesvirtualLawlibrary
Section 2. The Congress shall have the power to define, prescribe, and apportion the
jurisdiction of the various courts but may not deprive the Supreme Court of its jurisdiction over
cases enumerated in Section 5 hereof.
xxxx
cralawlawlibrary
Here, petitioners filed a commercial case, i.e., an intra-corporate dispute, with the Office of the
Clerk of Court in the RTC of Muntinlupa City, which is the official station of the designated
Special Commercial Court, in accordance with A.M. No. 03-03-03-SC. It is, therefore, from
the time of such filing that the RTC of Muntinlupa City acquired jurisdiction over the
subject matter or the nature of the action.43 Unfortunately, the commercial case was
wrongly raffled to a regular branch, e.g., Branch 276, instead of being assigned44to the
sole Special Commercial Court in the RTC of Muntinlupa City, which is Branch 256. This
error may have been caused by a reliance on the complaint's caption, i.e., "Civil Case for
Injunction with prayer for Status Quo Order, TRO and Damages," 45 which, however,
contradicts and more importantly, cannot prevail over its actual allegations that clearly make
out an intra-corporate dispute:chanRoblesvirtualLawlibrary
16. To the surprise of MLCG and FMDG, however, in two identical letters both dated 13 May
2011, under the letterhead of GJH Land, Inc., Yap, now acting as its President, Jang and Kim
demanded payment of supposed unpaid subscriptions of MLCG and FMDG amounting to
P10,899,854.30 and P2,625,249.41, respectively.
16.1 Copies of the letters dated 13 May 2011 are attached hereto and made integral parts
hereof as Annexes "J" and "K", repectively.
17. On 29 July 2011, MLCG and FMDG received an Offer Letter addressed to stockholders of
GJH Land, Inc. from Yap informing all stockholders that GJH Land, Inc. is now offering for sale
the unpaid shares of stock of MLCG and FMDG. The same letter states that the offers to
purchase these shares will be opened on 10 August 2011 with payments to be arranged by
deposit to the depository bank of GJH Land, Inc.
17.1 A copy of the undated Offer Letter is attached hereto and made and made an integral
part hereof as Annex "L".
18. The letter of GJH Land, Inc. through Yap, is totally without legal and factual basis because
as evidenced by the Deeds of Assignment signed and certified by Yap herself, all the S.J.

Land, Inc. shares acquired by MLCG and FMDG have been fully paid in the books of S.J.
Land, Inc.
19. With the impending sale of the alleged unpaid subscriptions on 10 August 2011, there is
now a clear danger that MLCG and FMDG would be deprived of these shares without
legal and factual basis.
20. Furthermore, if they are deprived of these shares through the scheduled sale, both MLCG
and FMDG would suffer grave and irreparable damage incapable of pecuniary estimation.
21. For this reason, plaintiffs now come to the Honorable Court for injunctive relief so that after
trial on the merits, a permanent injunction should be issued against the defendants preventing
them from selling the shares of the plaintiffs, there being no basis for such
sale.46cralawlawlibrary
According to jurisprudence, "it is not the caption but the allegations in the complaint or other
initiatory pleading which give meaning to the pleading and on the basis of which such pleading
may be legally characterized."47 However, so as to avert any future confusion, the Court
requires henceforth, that all initiatory pleadings state the action's nature both in its caption and
the body, which parameters are defined in the dispositive portion of this Decision.
Going back to the case at bar, the Court nonetheless deems that the erroneous raffling to a
regular branch instead of to a Special Commercial Court is only a matter of procedure - that is,
an incident related to the exercise of jurisdiction - and, thus, should not negate the jurisdiction
which the RTC of Muntinlupa City had already acquired. In such a scenario, the proper course
of action was not for the commercial case to be dismissed; instead, Branch 276 should have
first referred the case to the Executive Judge for re-docketing as a commercial case;
thereafter, the Executive Judge should then assign said case to the only designated
Special Commercial Court in the station, i.e.,Branch 256.
Note that the procedure would be different where the RTC acquiring jurisdiction over the case
hasmultiple special commercial court branches; in such a scenario, the Executive Judge,
after re-docketing the same as a commercial case, should proceed to order its re-raffling
among the said special branches.
Meanwhile, if the RTC acquiring jurisdiction has no branch designated as a Special
Commercial Court, then it should refer the case to the nearest RTC with a designated
Special Commercial Court branch within the judicial region. 48 Upon referral, the RTC to which
the case was referred to should re-docket the case as a commercial case, and then: (a) if the
said RTC has only one branch designated as a Special Commercial Court, assign the case to
the sole special branch; or (b) if the said RTC has multiple branches designated as Special
Commercial Courts, raffle off the case among those special branches.
In all the above-mentioned scenarios, any difference regarding the applicable docket fees
should be duly accounted for. On the other hand, all docket fees already paid shall be duly
credited, and any excess, refunded.

At this juncture, the Court finds it fitting to clarify that the RTC mistakenly relied on
the Calleja case to support its ruling. In Calleja, an intra-corporate dispute49 among officers of
a private corporation with principal address at Goa, Camarines Sur, was filed with the RTC of
San Jose, Camarines Sur, Branch 58 instead of the RTC of Naga City, which is the official
station of the designated Special Commercial Court for Camarines Sur. Consequently, the
Court set aside the RTC of San Jose, Camarines Sur's order to transfer the case to the RTC
of Naga City and dismissed the complaint considering that it was filed before a court which,
having no internal branch designated as a Special Commercial Court, had no jurisdiction over
those kinds of actions, i.e., intra-corporate disputes. Calleja involved two different
RTCs, i.e., the RTC of San Jose, Camarines Sur and the RTC of Naga City, whereas
the instant case only involves one RTC, i.e., the RTC of Muntinlupa City, albeit involving
two different branches of the same court, i.e.,Branches 256 and 276. Hence, owing to the
variance in the facts attending, it was then improper for the RTC to rely on the Calleja ruling.
Besides, the Court observes that the fine line that distinguishes subject matter jurisdiction and
exercise of jurisdiction had been clearly blurred in Calleja. Harkening back to the statute that
had conferred subject matter jurisdiction, two things are apparently clear: (a) that the
SEC's subject matter jurisdiction over intra-corporate cases under Section 5 of Presidential
Decree No. 902-A was transferred to the Courts of general jurisdiction, i.e., the appropriate
Regional Trial Courts; and (b) the designated branches of the Regional Trial Court, as per the
rules promulgated by the Supreme Court, shall exercise jurisdiction over such cases. Item
5.2, Section 5 of RA 8799 provides:chanRoblesvirtualLawlibrary
SEC. 5. Powers and Functions of the Commission. - x x x
xxxx
5.2 The Commission's jurisdiction over all cases enumerated under Section 5 of
Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction
or the appropriate Regional Trial Court: Provided, that the Supreme Court in the exercise
of its authority may designate the Regional Trial Court branches that shall exercise
jurisdiction over the cases, x x x.cralawlawlibrary
In contrast, the appropriate jurisprudential reference to this case would be Tan v. Bausch &
Lomb, Inc.,50which involves a criminal complaint for violation of intellectual property rights filed
before the RTC of Cebu City but was raffled to a regular branch thereof (Branch 21), and not
to a Special Commercial Court. As it turned out, the regular branch subsequently denied the
private complainant's motion to transfer the case to the designated special court of the same
RTC, on the ground of lack of jurisdiction. The CA reversed the regular branch and,
consequently, ordered the transfer of the case to the designated special court at that time
(Branch 9). The Court, affirming the CA, declared that the RTC had acquired jurisdiction over
the subject matter. In view, however, of the designation of another court as the Special
Commercial Court in the interim (Branch 11 of the same Cebu City RTC), the Court
accordingly ordered the transfer of the case and the transmittal of the records to said Special
Commercial Court instead.51Similarly, the transfer of the present intra-corporate dispute

from Branch 276 to Branch 256 of the same RTC of Muntinlupa City, subject to the
parameters above-discussed is proper and will further the purposes stated in A.M. No.
03-03-03-SC of attaining a speedy and efficient administration of justice.

1.1 If the RTC has only one branch designated as a Special Commercial Court, then the case
shall be referred to the Executive Judge for re-docketing as a commercial case, and
thereafter, assigned to the sole special branch;

For further guidance, the Court finds it apt to point out that the same principles apply to the
inverse situation of ordinary civil cases filed before the proper RTCs but wrongly
raffled to its branches designated as Special Commercial Courts. In such a scenario,
the ordinary civil case should then be referred to the Executive Judge for re-docketing
as an ordinary civil case; thereafter, the Executive Judge should then order the raffling
of the case to all branches of the same RTC, subject to limitations under existing
internal rules, and the payment of the correct docket fees in case of any
difference. Unlike the limited assignment/raffling of a commercial case only to branches
designated as Special Commercial Courts in the scenarios stated above, the re-raffling of an
ordinary civil case in this instance to all courts is permissible due to the fact that a particular
branch which has been designated as a Special Commercial Court does not shed the RTC's
general jurisdiction over ordinary civil cases under the imprimatur of statutory law, i.e., Batas
Pambansa Bilang (BP) 129.52To restate, the designation of Special Commercial Courts was
merely intended as a procedural tool to expedite the resolution of commercial cases in line
with the court's exercise of jurisdiction. This designation was not made by statute but only
by an internal Supreme Court rule under its authority to promulgate rules governing matters of
procedure and its constitutional mandate to supervise the administration of all courts and the
personnel thereof.53 Certainly, an internal rule promulgated by the Court cannot go beyond the
commanding statute. But as a more fundamental reason, the designation of Special
Commercial Courts is, to stress, merely an incident related to the court's exercise of
jurisdiction, which, as first discussed, is distinct from the concept of jurisdiction over the
subject matter. The RTC's general jurisdiction over ordinary civil cases is therefore not
abdicated by an internal rule streamlining court procedure.

1.2 If the RTC has multiple branches designated as Special Commercial Courts, then the case
shall be referred to the Executive Judge for re-docketing as a commercial case, and
thereafter, raffled off among those special branches; and

In fine, Branch 276's dismissal of Civil Case No. 11-077 is set aside and the transfer of said
case to Branch 256, the designated Special Commercial Court of the same RTC of Muntinlupa
City, under the parameters above-explained, is hereby ordered.

1.3 If the RTC has no internal branch designated as a Special Commercial Court, then the
case shall be referred to the nearest RTC with a designated Special Commercial Court branch
within the judicial region. Upon referral, the RTC to which the case was referred to should redocket the case as a commercial case, and then: (a) if the said RTC has only one branch
designated as a Special Commercial Court, assign the case to the sole special branch; or (b)
if the said RTC has multiple branches designated as Special Commercial Courts, raffle off the
case among those special branches.
2. If an ordinary civil case filed before the proper RTC is wrongly raffled to its branch
designated as a Special Commercial Court, then the case shall be referred to the Executive
Judge for re-docketing as an ordinary civil case. Thereafter, it shall be raffled off to all courts of
the same RTC (including its designated special branches which, by statute, are equally
capable of exercising general jurisdiction same as regular branches), as provided for under
existing rules.
3. All transfer/raffle of cases is subject to the payment of the appropriate docket fees in case of
any difference. On the other hand, all docket fees already paid shall be duly credited, and any
excess, refunded.
4. Finally, to avert any future confusion, the Court requires that all initiatory pleadings state the
action's nature both in its caption and body. Otherwise, the initiatory pleading may, upon
motion or by order of the court motu proprio, be dismissed without prejudice to its re-filing after
due rectification. This last procedural rule is prospective in application.
5. All existing rules inconsistent with the foregoing are deemed superseded.cralawlawlibrary

WHEREFORE, the petition is GRANTED. The Orders dated April 17, 2012 and July 9, 2012 of
the Regional Trial Court (RTC) of Muntinlupa City, Branch 276 in Civil Case No. 11-077 are
herebyREVERSED and SET ASIDE. Civil Case No. 11-077 is REFERRED to the Executive
Judge of the RTC of Muntinlupa City for re-docketing as a commercial case. Thereafter, the
Executive Judge shall ASSIGNsaid case to Branch 256, the sole designated Special
Commercial Court in the RTC of Muntinlupa City, which is ORDERED to resolve the case with
reasonable dispatch. In this regard, the Clerk of Court of said RTC shall DETERMINE the
appropriate amount of docket fees and, in so doing, ORDER the payment of any difference or,
on the other hand, refund any excess.
Furthermore, the Court hereby RESOLVES that henceforth, the following guidelines shall be
observed:
1. If a commercial case filed before the proper RTC is wrongly raffled to its regular branch, the
proper courses of action are as follows:

SO ORDERED.
Sereno, C.J. Carpio, Velasco, Jr., Peralta, Bersamin, Del Castillo, Villarama, Jr.,
Reyes, and Jardeleza, JJ., concur.
Leonardo-De Castro, J., I concur in the result. I subscribe to the ruling in the Calleja case that
the misfiling of a commercial case with a court not duly designated Special Commercial Court
is an error of jurisdiction. However the Supreme Court has constitutional and legal basis [RA
8799] to promulgated the guidelines here for future cases.
Brion, and Mendoza, JJ., on leave.
Perez, J., I submitted a dissenting opinion.
Leonen, J., see concurring opinion.