FAR EAST BANK AND TRUST

COMPANY,
Petitioner,

-versus-

SHEMBERG MARKETING
CORPORATION, MACKIE
INDUSTRIES CORPORATION,
BENSON INDUSTRIES, INC.,
KAMARO ENTERPRISES CORP.,
POLYSACCHARIDE CORP.,
PRIME CRAFTS, INC., CEBU
UNITED POLYMER CORP.,
SHEMBERG NATURES CRAFT
INC., MARY U. DACAY[1], HENRY
U. DACAY, BENSON U. DACAY,
RAMON U. DACAY and
ERNESTO U. DACAY, JR.,
Respondents.

mortgage. However, Shemberg

FACTS:
Far East Bank & Trust Company
(FEBTC) petitioner, is a domestic
banking corporation organized
and existing under Philippine
laws. It is now managed and
operated by the Bank of the
Philippine Islands with main office
in Makati City.
Shemberg and Co. are owners of
parcels of land in Mandue City.
Shemberg obtained loans from
Far East Bank. In order to secure
the loans, Shemberg mortgaged
these lands to Far East Bank.
Unfortunately, Shemberg failed to
pay the loan, thus forcing Far
East Bank to foreclose the
filed a Civil Case in the RTC,
alleging that the employees of
Far East Bank required them to
sign "standard pre-printed forms
in fine print" such as Promissory
Notes, Mortgage Forms, Trust
Receipts, etc.
It turned out that the Bank's
employees filled the blanks with
"false and inaccurate entries." Far
East Bank then filed a Motion to
Dismiss alleging that the docket
fee that Shemberg paid was
deficient. According to the Bank,
In real actions, the assessed
value of the property or if there is
none, the estimated value
thereof, must be alleged in the
complaint and shall serve as the
basis for computing the fees.
 Shemberg's defense is that the
action is incapable of pecuniary
estimation because the suit
primarily involves cancellation of
mortgages. Therefore, there is no
deficiency in the payment of
docket fees.
ISSUE: whether the trial court has
jurisdiction over Civil Case No. MAN-
4045
HELD: The petitioner contends that in
real actions, the assessed value of the
property or if there is none, the
estimated value thereof, must be alleged
in the complaint, and shall serve as the
basis for computing the fees. Nowhere
in the complaint in Civil Case No. MAN-
4045 did respondents allege the
assessed values of their realties. Hence,
there is no adequate basis for
computing the proper filing fees. It
necessarily follows that the fees paid are
deficient. The trial court, therefore, did
not acquire jurisdiction over the case.
Respondents counter that a perusal of
the complaint in Civil Case No. MAN-
4045 shows that the suit primarily
involves cancellation of mortgages, an
action incapable of pecuniary
estimation. Consequently, petitioners
contention that there is a deficiency in
the payment of docket fees is without
merit.
A court acquires jurisdiction over a case
only upon the payment of the prescribed
fees. The importance of filing fees
cannot be gainsaid for these are
intended to take care of court expenses
in the handling of cases in terms of
costs of supplies, use of equipment,
salaries and fringe benefits of personnel,
and others, computed as to man-hours
used in the handling of each case.
Hence, the non-payment or insufficient
payment of docket fees can entail
tremendous losses to the government in
general and to the judiciary in particular.
Under Section 19 (1) of Batas
Pambansa Blg. 180, as amended by
Republic Act No. 7691, Regional Trial
Courts have sole, exclusive, and original
jurisdiction to hear, try, and decide all
civil actions in which the subject of the
litigation is incapable of pecuniary
estimation.
In Singsong v. Isabela Sawmill, this
Court laid the test for determining
whether the subject matter of an action
is incapable of pecuniary estimation:
1. Ascertain the nature of the principal
action or remedy sought.
2. If the action is primarily for recovery of
a sum of money, the claim is
considered capable of pecuniary
estimation. Whether he trial court
has jurisdiction would depend
upon the amount of the claim
3. However, there the basic issue is
something other than the right to recover
a sum of money, where the money claim
is only incidental or a consequence of
the principal relief sought, the action is
incapable of pecuniary estimation.
Here, the primary reliefs prayed for is
the cancellation of the mortgages for
want of consideration. Jurisprudence
provides that where the issue involves
the validity of the mortgage, the action is
one incapable of pecuniary estimation.
WHEREFORE, this Court DENIES the
petition. The assailed Decision and
Resolution of the Court of Appeals in
CA-G.R. SP No. 67270
are AFFIRMED. Costs against
petitioner, now the Bank of the
Philippine Islands.

HERALD BLACK DACASIN, G.R. No.
168785
Petitioner,
Present:
CARPIO, J., Chairperson,
BRION,
- versus - DEL CASTILLO,
ABAD, and
PEREZ, JJ.
SHARON DEL MUNDO
DACASIN, Promulgated:
Respondent. February 5, 2010
FACTS:
For review is a dismissal of a
suit to enforce a post-foreign
divorce child custody agreement
for lack of jurisdiction.
On April 1994, petitioner Herald,
an American and respondent,
Sharon, a Filipino, got married
here in the Philippines. The
following year, Sharon got
pregnant and gave birth to a baby
girl they named Stephanie.
In June of 1999 Sharon sought
and obtained from the Illinois
Court a divorce decree against
petitioner. In its ruling, apart from
dissolving the marriage of
petitioner and respondent, the
Illinois court also awarded to
respondent sole custody of
Stephanie and retained
jurisdiction over the case for
enforcement purposes.
On 28th of January 2002,
petitioner and respondent
executed in Manila a contract
(Agreement) for the joint custody
of Stephanie. Two years after,
Herald sued Sharon in the
Regional Trial Court of Makati
City for exercising sole custody
over Stephanie contrary to their
Agreement. Respondent sought
the dismissal of the complaint
due to lack of jurisdiction, since
Illinois Court hold the jurisdiction
in enforcing the divorce decree.
The trial court held that (1) it is
precluded from taking cognizance
over the suit considering the
Illinois courts retention of
jurisdiction to enforce its divorce
decree, including its order
awarding sole custody of
Stephanie to respondent; (2) the
divorce decree is binding on
petitioner following the
nationality rule prevailing in this
jurisdiction; and (3) the
Agreement is void for
contravening Article 2035,
paragraph 5 of the Civil Code
prohibiting compromise
agreements on jurisdiction.
ISSUE: Whether the Trial Court has
jurisdiction to take cognizance of
petitioners suit and enforce the
agreement on the joint custody of the
parties child.
HELD:
The trial court has jurisdiction but it
cannot enforce a void agreement
The RTC is vested with jurisdiction to
enforce contracts.
Subject matter jurisdiction is conferred
by law. When petitioner filed suit, the
RTC has exclusive original jurisdiction
over civil actions incapable of pecuniary
estimation. An action for specific
performance, such as petitioners suit to
enforce the Agreement on joint child
custody, belongs to this species of
actions. Thus jurisdiction-wise, petitioner
went to the right court.
Also, petitioners suit seeks the
enforcement not of the various
provisions of the divorce decree but of
the post-divorce Agreement on joint
child custody. Thus, the action lies
beyond the zone of the Illinois courts
so-called retained jurisdiction and
making the case within the jurisdiction of
RTC.
Note: Even as the court cannot enforce
a void agreement, it still ruled that
factual and equity considerations militate
against the dismissal of petitioners suit
and called for the case to be remanded
to settle the question of Stephanies
custody.
EDNA G.R. No. 171092
DIAGO
LHUILLIER,
Petitioner,
against respondent British
Airways before the RTC
of Makati City. She alleged
that on February 28, 2005,
she took respondents flight
548 from London, United
Kingdom to Rome, Italy. Onc
e on board, she allegedly
requested Julian Halliday,
one of the respondents flight
attendants, to assist her in
placing her hand-carried
luggage in the overhead
bin. However, Halliday allege
dly refused to help and assist
her, and even sarcastically
remarked that If I were to
help all 300 passengers in
this flight, I would have a
broken back!

Present: Petitioner further alleged that

when the plane was about to
CARPIO, J., Chairperson, land in Rome, Italy, another
- versus - BRION, flight attendant, Nickolas
DEL CASTILLO, Kerrigan, singled her out
ABAD, and from among all the
PEREZ, JJ. passengers in the business
class section to lecture on
Promulgated: plane safety. Allegedly,
Kerrigan made her appear to
the other passengers to be
BRITISH ignorant, uneducated, stupid,
AIRWAYS, and in need of lecturing on
Respondent. March 15, 2010 the safety rules and
regulations of the
FACTS: plane. Affronted, petitioner
Jurisdictio est potestas de publico intro assured Kerrigan that she
ducta cum knew the planes safety
necessitate juris dicendi.Jurisdiction is regulations being a frequent
a power introduced for the public good, traveler. Thereupon,
on account of the necessity of Kerrigan allegedly thrust his
dispensing justice face a mere few centimeters
away from that of the
Edna Diago Lhuillier filed a petitioner and menacingly
Complaintfor damages told her that We dont like
 your attitude. Upon arrival
in Rome, petitioner
complained to respondents
ground manager and
demanded an
apology. However, the latter
declared that the flight
stewards were only doing
their job.
Thus, petitioner filed the
complaint for damages,
praying that respondent be
ordered to pay P5 million as
moral damages, P2 million
as nominal damages, P1
million as exemplary
damages, P300,000.00 as
attorneys fees, P200,000.00
as litigation expenses, and
cost of the suit.
On May 30, 2005,
respondent, by way of
special appearance through
counsel, filed a Motion to
Dismiss on grounds of lack
of jurisdiction over the case
and over the person of the
respondent. Respondent
alleged that only the courts
of London, United
Kingdom or Rome, Italy,
have jurisdiction over the
complaint for damages
pursuant to the Warsaw
Convention, Article 28(1) of
which provides: An action for
damages must be brought at
the option of the plaintiff,
either before the court of
domicile of the carrier or his
principal place of business,
or where he has a place of
business through which the
contract has been made, or
before the court of the place
of destination.
Thus, since a) respondent is
domiciled in London; b)
respondents principal place
of business is in London; c)
petitioner bought her ticket in
Italy (through Jeepney Travel
S.A.S, in Rome) and d)
Rome, Italy is petitioners
place of destination, then it
follows that the complaint
should only be filed in the
proper courts of London,
United Kingdom or Rome,
Italy. Likewise, it was alleged
that the case must be
dismissed for lack of
jurisdiction over the person
of the respondent because
the summons was
erroneously served on Euro-
Philippine Airline Services,
Inc.which is not its resident
agent in the Philippines.
RTC of Makati City, Branch
132, issued an
Order[granting respondents
Motion to Dismiss . Petitioner
filed a Motion for
Reconsideration but the
motion was denied in an
Order[11] dated January 4,
2006.
Issues: WON special appearance of the
counsel of respondent in filing the Motion to
Dismiss and other pleadings before the trial
court can be deemed to be voluntary
submission to the jurisdiction of the said trial
court
HELD: In La Naval Drug Corporation v.
Court of Appeals[48] and elucidated thus:
 rule on voluntary
Special Appearance to appearance the first
Question a Courts sentence of the above-
Jurisdiction Is Not quoted rule means is that
Voluntary Appearance the voluntary appearance
of the defendant in court is
The second sentence of without qualification, in
Sec. 20, Rule 14 of the which case he is deemed
Revised Rules of Civil to have waived his
Procedure clearly provides: defense of lack of
jurisdiction over his person
Sec. due to improper service of
20. Voluntary summons.
appearance. T
he defendants The pleadings filed by
voluntary petitioner in the subject
appearance in forfeiture cases, however, do
the action not show that she voluntarily
shall be appeared without
equivalent to qualification. Petitioner filed
service of the following pleadings in
summons. Forfeiture I: (a) motion to
The inclusion dismiss; (b) motion for
in a motion to reconsideration and/or to
dismiss of admit answer; (c) second
other grounds motion for reconsideration;
aside from (d) motion to consolidate
lack of forfeiture case with plunder
jurisdiction case; and (e) motion to
over the dismiss and/or to quash
person of the Forfeiture I. And in Forfeiture
defendant II: (a) motion to dismiss
shall not be and/or to quash Forfeiture II;
deemed a and (b) motion for partial
voluntary reconsideration.
appearance.
The foregoing pleadings,
Thus, a defendant who particularly the motions to
files a motion to dismiss, dismiss, were filed by
assailing the jurisdiction of petitioner solely for special
the court over his person, appearance with the purpose
together with other of challenging the jurisdiction
grounds raised therein, is of the SB over her person
not deemed to have and that of her three
appeared voluntarily children. Petitioner asserts
before the court. What the therein that SB did not
 acquire jurisdiction over her
person and of her three
children for lack of valid
service of summons through
improvident substituted
service of summons in both
Forfeiture I and Forfeiture II.
This stance the petitioner
never abandoned when she
filed her motions for
reconsideration, even with a
prayer to admit their attached
Answer
Ex Abundante Ad Cautelam
dated January 22,
2005 setting forth affirmative
defenses with a claim for
damages. And the other
subsequent pleadings,
likewise, did not abandon her
stance and defense of lack
of jurisdiction due to
improper substituted
services of summons in the
forfeiture cases. Evidently,
from the foregoing Sec. 20,
Rule 14 of the 1997 Revised
Rules on Civil Procedure,
petitioner and her sons did
not voluntarily appear before
the SB constitutive of or
equivalent to service of
summons.
In this case, the special appearance
of the counsel of respondent in filing the
Motion to Dismiss and other pleadings
before the trial court cannot be deemed to
be voluntary submission to the jurisdiction
of the said trial court. We hence disagree
with the contention of the petitioner and rule
that there was no voluntary appearance
before the trial court that could
constitute estoppel or a waiver of
respondents objection to jurisdiction over its
person.
WHEREFORE, the petition
is DENIED. The October 14, 2005 Order of
the Regional Trial Court of Makati City,
Branch 132, dismissing the complaint for
lack of jurisdiction, is AFFIRMED.
SPOUSES ANTONIO F. ALGURA G.R.
No. 150135
and LORENCITA S.J. ALGURA,
Petitioners,
Present:
- versus - QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES,
THE LOCAL GOVERNMENT TINGA,
and
UNIT OF THE CITY
OF NAGA, VELASCO, JR., JJ.
ATTY. MANUEL TEOXON,
ENGR. LEON PALMIANO,
NATHAN SERGIO and Promulgated:
BENJAMIN NAVARRO, SR.,
Respondents. October 30, 2006
FACTS:
Antonio F. Algura and Lorencita
S.J. Algura filed a Verified
Complaint for damages against
the Naga City Government and
its officers, arising from the
alleged illegal demolition of their
residence and boarding house
and for payment of lost income
derived from fees paid by their
boarders amounting to PhP
7,000.00 monthly.
Simultaneously, petitioners filed
an Ex-Parte Motion to Litigate as
Indigent Litigants, showing a
 gross monthly income PhP
10,474.00 and a net pay of PhP
3,616.99 for [July 1999. Also a
Certification issued by the Office
of the City Assessor of Naga City,
which stated that petitioners had
no property declared in their
name for taxation purposes.
Finding that petitioners motion to
litigate as indigent litigants was
meritorious, Executive Judge
Jose T. Atienza of the Naga City
RTC, in the September 1, 1999
Order, granted petitioners plea for
exemption from filing fees.
Petitioners then filed their Reply
with Ex-Parte Request for a Pre-
Trial Setting, a pre-trial was held
wherein respondents asked for
five (5) days within which to file a
Motion to Disqualify Petitioners
as Indigent Litigants.
On March 13, 2000, respondents
filed a Motion to Disqualify the
Plaintiffs for Non-Payment of
Filing Fees. They asserted that in
addition to the more than PhP
3,000.00 net income of petitioner
Antonio Algura, who is a member
of the Philippine National Police,
spouse Lorencita Algura also had
a mini-store and a computer. In
addition, it was claimed that
petitioners derived additional
income from their computer shop
patronized by students and from
several boarders who paid rentals
to them. Hence, respondents
concluded that petitioners were
not indigent litigants.
Petitioners subsequently
interposed their Opposition to the
Motion to respondents motion to
disqualify them for non-payment
of filing fees. Naga City RTC
issued an Order disqualifying
petitioners as indigent litigants on
the ground that they failed to
substantiate their claim for
exemption from payment of legal
fees and to comply with the third
paragraph of Rule 141, Section
18 of the Revised Rules of Court
directing them to pay the requisite
filing fees.
ISSUE: whether or not petitioners
should be considered as indigent
litigants who qualify for exemption from
paying filing fees.
HELD: YES. When the Rules of Court
took effect on January 1, 1964, the rule
on pauper litigants was found in Rule 3,
Section 22 which provided that:
SECTION 22. Pauper
litigant. Any court
may authorize a
litigant to prosecute
his action or defense
as a pauper upon a
proper showing that
he has no means to
that effect by
affidavits, certificate
of the corresponding
provincial, city or
municipal treasurer,
or otherwise. Such
authority[,] once
given[,] shall include
an exemption from
payment of legal fees
and from filing appeal
bond, printed record
and printed brief. The
legal fees shall be a
 lien to any judgment value of not more
rendered in the case than P24,000.00, or
[favorable] to the not more than
pauper, unless the P18,000.00 as the
court otherwise case may be.
provides. Such exemption shall
include exemption
from payment of fees
From the same Rules of Court, for filing appeal bond,
Rule 141 on Legal Fees, on the other printed record and
hand, did not contain any provision on printed brief.
pauper litigants.
The legal fees shall
On July 19, 1984, the Court, in be a lien on the
Administrative Matter No. 83-6-389-0 monetary or property
(formerly G.R. No. 64274), approved the judgment rendered in
recommendation of the Committee on favor of the pauper-
the Revision of Rates and Charges of litigant.
Court Fees, through its Chairman, then
Justice Felix V. Makasiar, to revise the To be entitled to the
fees in Rule 141 of the Rules of Court to exemption herein
generate funds to effectively cover provided, the pauper-
administrative costs for services litigant shall execute
[20]
rendered by the courts. A provision on an affidavit that he
pauper litigants was inserted which does not earn the
reads: gross income
abovementioned, nor
SECTION own any real property
16. Pauper-litigants with the assessed
exempt from value afore-
payment of court mentioned [sic],
fees.Pauper-litigants supported by a
include wage earners certification to that
whose gross income effect by the
do not exceed provincial, city or
P2,000.00 a month or town assessor or
P24,000.00 a year for treasurer.
those residing in
Metro Manila, and
P1,500.00 a month or When the Rules of Court on Civil
P18,000.00 a year for Procedure were amended by the 1997
those residing Rules of Civil Procedure (inclusive of
outside Metro Manila, Rules 1 to 71) in Supreme Court
or those who do not Resolution in Bar Matter No. 803 dated
own real property April 8, 1997, which became effective on
with an assessed July 1, 1997, Rule 3, Section 22 of the
Revised Rules of Court was superseded Any adverse party
by Rule 3, Section 21 of said 1997 may contest the grant
Rules of Civil Procedure, as follows: of such authority at
any time before
SECTION judgment is rendered
21. Indigent party.A by the trial court. If
party may be the court should
authorized to litigate determine after
his action, claim or hearing that the party
defense as an declared as an
indigent if the court, indigent is in fact a
upon an ex person with sufficient
parte application and income or property,
hearing, is satisfied the proper docket
that the party is one and other lawful fees
who has no money or shall be assessed
property sufficient and collected by the
and available for clerk of court. If
food, shelter and payment is not made
basic necessities for within the time fixed
himself and his by the court,
family. execution shall issue
for the payment
Such authority shall thereof, without
include an exemption prejudice to such
from payment of other sanctions as
docket and other the court may
lawful fees, and of impose.
transcripts of
stenographic notes
which the court may At the time the Rules on Civil Procedure
order to be furnished were amended by the Court in Bar
him. The amount of Matter No. 803, however, there was no
the docket and other amendment made on Rule 141, Section
lawful fees which the 16 on pauper litigants.
indigent was On March 1, 2000, Rule 141 on Legal
exempted from Fees was amended by the Court in A.M.
paying shall be a lien No. 00-2-01-SC, whereby certain fees
on any judgment were increased or adjusted. In this
rendered in the case Resolution, the Court amended Section
favorable to the 16 of Rule 141, making it Section 18,
indigent, unless the which now reads:
court otherwise
provides. SECTION
18. Pauper-litigants
exempt from
payment of legal affidavit of a
fees.Pauper litigants disinterested person
(a) whose gross attesting to the truth
income and that of of the litigants
their immediate affidavit.
family do not exceed
four thousand Any falsity in the
(P4,000.00) pesos a affidavit of a litigant
month if residing in or disinterested
Metro Manila, and person shall be
three thousand sufficient cause to
(P3,000.00) pesos a strike out the
month if residing pleading of that party,
outside Metro Manila, without prejudice to
and (b) who do not whatever criminal
own real property liability may have
with an assessed been incurred.
value of more than
fifty thousand
(P50,000.00) pesos It can be readily seen that the rule on
shall be exempt from pauper litigants was inserted in Rule
the payment of legal 141 without revoking or
fees. amending Section 21 of Rule 3, which
provides for the exemption of pauper
The legal fees shall litigants from payment of filing fees.
be a lien on any Thus, on March 1, 2000, there were
judgment rendered in two existing rules on pauper
the case favorably to litigants; namely, Rule 3, Section
the pauper litigant, 21 andRule 141, Section 18.
unless the court
otherwise provides. On August 16, 2004, Section 18 of Rule
141 was further amended in
To be entitled to the Administrative Matter No. 04-2-04-SC,
exemption herein which became effective on the same
provided, the litigant date. It then became Section 19 of Rule
shall execute an 141, to wit:
affidavit that he and
his immediate family
do not earn the gross
income SEC. 19. Indigent litigants
abovementioned, nor exempt from payment of
do they own any real legal fees.INDIGENT
property with the LITIGANTS (A) WHOSE
assessed value GROSS INCOME AND THAT
aforementioned, OF THEIR IMMEDIATE
supported by an FAMILY DO NOT EXCEED
AN AMOUNT DOUBLE THE
MONTHLY MINIMUM WAGE
OF AN EMPLOYEE AND (B)
WHO DO NOT OWN REAL
PROPERTY WITH A FAIR
MARKET VALUE AS STATED
IN THE CURRENT TAX
DECLARATION OF MORE
THAN THREE HUNDRED
THOUSAND (P300,000.00)
PESOS SHALL BE EXEMPT
FROM PAYMENT OF LEGAL
FEES.
The legal fees shall be a lien
on any judgment rendered in
the case favorable to the
indigent litigant unless the
court otherwise provides.
To be entitled to the
exemption herein provided,
the litigant shall execute an
affidavit that he and his
immediate family do not
earn a gross income
abovementioned, and they
do not own any real property
with the fair value
aforementioned, supported
by an affidavit of a
disinterested person
attesting to the truth of the
litigants affidavit. The current
tax declaration, if any, shall be
attached to the litigants
affidavit.
Any falsity in the
affidavit of litigant or
disinterested person
shall be sufficient
cause to dismiss the
complaint or action or
to strike out the
pleading of that party,
without prejudice to
whatever criminal
liability may have
been
incurred.(Emphasis
supplied.)
Amendments to Rule 141 (including the
amendment to Rule 141, Section 18)
were made to implement RA 9227 which
brought about new increases in filing
fees. Specifically, in the August 16, 2004
amendment, the ceiling for the gross
income of litigants applying for
exemption and that of their immediate
family was increased from PhP 4,000.00
a month in Metro Manila and PhP
3,000.00 a month outside Metro Manila,
to double the monthly minimum wage of
an employee; and the maximum value of
the property owned by the applicant was
increased from an assessed value of
PhP 50,000.00 to a maximum market
value of PhP 300,000.00, to be able to
accommodate more indigent litigants
and promote easier access to justice by
the poor and the marginalized in the
wake of these new increases in filing
fees.
Even if there was an amendment to
Rule 141 on August 16, 2004, there was
still no amendment or recall of Rule 3,
Section 21 on indigent litigants.
Recapitulating the rules on indigent
litigants, therefore, if the applicant for
exemption meets the salary and
property requirements under Section 19
of Rule 141, then the grant of the
application is mandatory. On the other
hand, when the application does not
satisfy one or both requirements, then
the application should not be denied
outright; instead, the court should apply
the indigency test under Section 21 of
Rule 3 and use its sound discretion in Filed by, spouses Ederlinda
determining the merits of the prayer for Gallardo-Manzo and Daniel
exemption. Manzo, against the petitioners,
WHEREFORE, the petition spouses Ramon and Eulogia
is GRANTED and the April 14, 2000 Manila, before the Metropolitan
Order granting the disqualification of Trial Court (MeTC) of Las Pias
petitioners, the July 17, 2000 Order City, Branch 79 (Civil Case No.
denying petitioners Motion for 3537).
Reconsideration, and the September 11, On June 30, 1982, Ederlinda
2001 Order dismissing the case in Civil Gallardo leased two (2) parcels of
Case No. RTC-99-4403 before the Naga land situated along Real St.,
City RTC, Branch 27 Manuyo, Las Pias, Metro Manila,
are ANNULLED and SET to Eulogia Manila for a period of
ASIDE. Furthermore, the Naga City ten (10) years at a monthly
RTC is ordered to set the Ex- rental(s) of P2,000.00 for the first
Parte Motion to Litigate as Indigent two years, and thereafter an
Litigants for hearing and apply Rule 3, increase of ten (10) percent every
Section 21 of the 1997 Rules of Civil after two years. They also agreed
Procedure to determine whether that the lessee shall have the
petitioners can qualify as indigent option to buy the property within
litigants. two (2) years from the date of
execution of the contract of lease
at a fair market value of One
SPOUSES G.R. No. 163602 Hundred and Fifty Thousand
EULOGIA Pesos (P150,000.00)
MANILA and Present: The contract of lease expired on
RAMON July 1, 1992 but the lessee
MANILA, CORONA, C.J., continued in possession of the
Petitioners, Chairperson, property despite a formal demand
LEONARDO-DE letter dated August 8, 1992, to
CASTRO, vacate the same and pay the
BERSAMIN, rental arrearages. In a letter reply
- versus - DEL CASTILLO, dated August 12, 1992, herein
and defendant claimed that no rental
VILLARAMA, fee is due because she allegedly
JR., JJ. became the owner of the property
at the time she communicated to
SPOUSES Promulgated: the plaintiff her desire to exercise
EDERLINDA the option to buy the said
GALLARDO- September 7, 2011 property. Their disagreement was
MANZO and later brought to the Barangay for
DANIEL MANZO, conciliation but the parties failed
Respondents. to reach a compromise, hence
the present action.[
FACTS: MeTC rendered its decision in
favor of the plaintiffs.
 Petitioners appealed to the
Regional Trial Court (RTC) of
Makati City, Branch 63 (Civil Case
No. 93-3733) which reversed the
MeTC. The RTC found that
petitioners have in fact exercised
their option to buy the leased
property but the respondents
refused to honor the same.
Respondents filed a motion for
reconsideration on December 23,
1994. In its Order dated March 24,
1995, the RTC denied the motion
for having been filed beyond the
fifteen (15)-day period considering
that respondents received a copy
of the decision on December 7,
1994. Consequently, the
November 18, 1994 decision of
the RTC became final and
executory.[9]
CA granted the petition, annulled
the November 18, 1994 RTC
decision and reinstated the July
14, 1993 MeTC decision. With
the denial of their motion for
reconsideration, petitioners filed
the present petition
issues:
WON Petition is meritorius.
HELD: Yes. A petition for annulment of
judgments or final orders of a Regional
Trial Court in civil actions can only be
availed of where the ordinary remedies
of new trial, appeal, petition for relief or
other appropriate remedies are no
longer available through no fault of the
petitioner.[12] It is a remedy granted only
under exceptional circumstances and
such action is never resorted to as a
substitute for a partys own neglect in not
promptly availing of the ordinary or other
appropriate remedies.[13]The only
grounds provided in Sec. 2, Rule 47 are
extrinsic fraud and lack of jurisdiction.
In any event, the petition for
annulment was based not on fraudulent
assurances or negligent acts of their
counsel, but on lack of jurisdiction.
Petitioners assail the CA in
holding that the RTC decision is void
because it granted a relief inconsistent
with the nature of an ejectment suit and
not even prayed for by the respondents
in their answer. They contend that
whatever maybe questionable in the
decision is a ground for assignment of
errors on appeal or in certain cases, as
ground for a special civil action for
certiorari under Rule 65 and not as
ground for its annulment. On the other
hand, respondents assert that the CA,
being a higher court, has the power to
adopt, reverse or modify the findings of
the RTC in this case. They point out that
the CA in the exercise of its sound
discretion found the RTCs findings
unsupported by the evidence on record
which also indicated that the loss of
ordinary remedies of appeal, new trial
and petition for review was not due to
the fault of the respondents.
Lack of jurisdiction as a ground
for annulment of judgment refers to
either lack of jurisdiction over the person
of the defending party or over the
subject matter of the claim.[16] In a
petition for annulment of judgment
based on lack of jurisdiction, petitioner
must show not merely an abuse of
jurisdictional discretion but an
absolute lack of jurisdiction. Lack of
jurisdiction means absence of or no
jurisdiction, that is, the court should not
have taken cognizance of the petition
because the law does not vest it with
jurisdiction over the subject
matter. Jurisdiction over the nature of
the action or subject matter is conferred option to buy the leased premises within
by law.[17] a certain period (two years from date of
There is no dispute that the RTC execution) and for a fixed price
is vested with appellate jurisdiction over (P150,000.00).[23] This cannot be done
ejectment cases decided by the MeTC, in an ejectment case where the only
MTC or MCTC. We note that petitioners issue for resolution is who between the
attack on the validity of the RTC parties is entitled to the physical
decision pertains to a relief erroneously possession of the property.
granted on appeal, and beyond the Such erroneous grant of relief to
scope of judgment provided in Section 6 the defendants on appeal, however, is
(now Section 17) of Rule 70.[18] While but an exercise of jurisdiction by the
the court in an ejectment case may RTC. Jurisdiction is not the same as the
delve on the issue of ownership or exercise of jurisdiction. As distinguished
possession de jure solely for the from the exercise of jurisdiction,
purpose of resolving the issue of jurisdiction is the authority to decide a
possession de facto, it has no cause, and not the decision rendered
jurisdiction to settle with finality the issue therein.[24] The ground for annulment of
of ownership[19] and any pronouncement the decision is absence of, or no,
made by it on the question of ownership jurisdiction; that is, the court should not
is provisional in nature.[20] A judgment in have taken cognizance of the petition
a forcible entry or detainer case because the law does not vest it with
disposes of no other issue than jurisdiction over the subject matter.[25]
possession and establishes only who
has the right of possession, but by no MEMORACI G.R. No. 173292
means constitutes a bar to an action for ON Z.
determination of who has the right or CRUZ,
title of ownership.[21] We have held represented
that although it was proper for the RTC, by
on appeal in the ejectment suit, to delve EDGARDO
on the issue of ownership and receive Z. CRUZ,
evidence on possession de jure, it Petitioner, Present:
cannot adjudicate with semblance of
finality the ownership of the property to CARPIO, J.,
either party by ordering the cancellation Chairperson,NACH
of the TCT.[22] URA,
In this case, the RTC acted in - versus - BERSAMIN,*
excess of its jurisdiction in deciding the ABAD,
appeal of respondents when, instead of and MENDOZA, JJ.
simply dismissing the complaint and
awarding any counterclaim for costs due OSWALDO Promulgated:
to the defendants (petitioners), it Z. CRUZ,
ordered the respondents-lessors to Respondent. September 1, 2010
execute a deed of absolute sale in favor
of the petitioners-lessees, on the basis FACTS:
of its own interpretation of the Contract On October 18, 1993,
of Lease which granted petitioners the Memoracion Z. Cruz filed
 with the Regional Trial
Court in Manila a x issued x x x a
Complaint against her son,
defendant-appellee
Oswaldo Z. Cruz, for
Annulment of Sale,
Reconveyance and
Damages.
Memoracion claimed that
during her union with her
common-law husband
(deceased) Architect
Guido M. Cruz, she
acquired a parcel of land
located at Tabora corner
Limay Streets, Bo. Obrero,
Tondo Manila; that
sometime in July 1992,
she discovered that the
title to the said property
was transferred by
appellee and the latters
wife in their names in
August 1991 under TCT
No. 0-199377 by virtue of
a Deed of Sale dated
February 12, 1973; that
the said deed was
executed through fraud,
forgery, misrepresentation
and simulation, hence, null
and void; that she, with the
help of her husbands
relatives, asked appellee
to settle the problem; that
despite repeated pleas
and demands, appellee
refused to reconvey to her
the said property; that she
filed a complaint against
appellee before the office
of the Barangay having
jurisdiction over the
subject property; and that
since the matter was
unsettled, the barangay x x
certification to file [an]
action in court, now the
subject of controversy.
After Memoracion x x x
finished presenting her
evidence in chief, she died
on October 30,
1996. Through a
Manifestation,
Memoracions counsel,
Atty. Roberto T. Neri,
notified the trial court on
January 13, 1997 of the
fact of such death,
evidenced by a certificate
thereof.
For his part, appellee filed
a Motion to Dismiss on the
grounds that (1) the
plaintiffs reconveyance
action is a personal action
which does not survive a
partys death, pursuant to
Section 21, Rule 3 of the
Revised Rules of Court,
and (2) to allow the case to
continue would result in
legal absurdity whereby
one heir is representing
the defendant [and is a]
co-plaintiff in this case.
On June 2, 1997, the trial
court issued the appealed
Order in a disposition that
reads: Wherefore, in view
of the foregoing, this case
is ordered dismissed
without prejudice to the
prosecution thereof in the
proper estate proceedings.
 On October 17, 1997,
Memoracions son-heir,
Edgardo Z. Cruz,
manifested to the trial
court that he is retaining
the services of Atty. Neri
for the
plaintiff.Simultaneously,
Atty. Neri filed a Motion for
Reconsideration of the
June 2, 1997
Order. However, the said
motion was subsequently
denied by Acting Presiding
Judge Cielito N. Mindaro-
Grulla [on October 31,
2000].
Thereafter, Edgardo Cruz,
as an heir of Memoracion
Cruz, filed a notice of
appeal in behalf of the
deceased plaintiff, signed
by Atty. Neri, but the
appeal was dismissed by
Judge Mindaro-Grulla,
[stating that] the proper
remedy being certiorari
under Rule 65 of the Rules
of Court. On appellants
motion for reconsideration,
Judge Lucia Pena
Purugganan granted the
same, stating that the
remedy under the
circumstances is ordinary
appeal.[4]
The Court of Appeals Ruling -
the CA rendered judgment
affirming with modification the
RTC decision.
Petitioners Motion for
Reconsideration was denied by
the CA in its Resolution of 21
June 2006. Hence, this appeal.
ISSUE: Whether or not the Court of
Appeals erred in affirming with
modification the RTC Order dismissing
the Petition for Annulment of Deed of
Sale, Reconveyance and Damages.
HELD: The CA erred in affirming
RTCs dismissal of thePetition for
Annulment of Deed of Sale,
Reconveyance and Damages
When a party dies during the pendency
of a case, Section 16, Rule 3 of the
1997 Revised Rules of Civil Procedure
necessarily applies, viz:
Sec. 16. 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. Failure of
counsel to comply with
this duty shall be a
ground for disciplinary
action.
The heirs of the deceased
 may be allowed to be
substituted for the
deceased, without
requiring the appointment
of an executor or
administrator and the
court may appoint a
guardian ad litem for the
minor heirs.
The court shall forthwith
order said legal
representative or
representatives to appear
and be substituted within
a period of thirty (30) days
from notice.
If no legal representative
is named by the counsel
for the deceased party, or
if the one so named shall
fail to appear within the
specified period, the court
may order the opposing
party, within a specified
time, to procure the
appointment of an
executor or administrator
for the estate of the
deceased and the latter
shall immediately appear
for and on behalf of the
deceased. The court
charges in procuring such
appointment, if defrayed
by the opposing party,
may be recovered as
costs.
The foregoing section is a revision of
Section 17, Rule 3 of the old Rules of
Court:
SEC. 17. Death of party. -
After a party dies and the
claim is not thereby
extinguished, the court shall
order, upon proper notice, the
legal representative of the
deceased to appear and to be
substituted for the deceased,
within a period of thirty (30)
days, or within such time as
may be granted. If the legal
representative fails to appear
within said time, the court
may order the opposing party
to procure the appointment of
a legal representative of the
deceased within a time to be
specified by the court, and
the representative shall
immediately appear for and
on behalf of the interest of the
deceased. The court charges
involved in procuring such
appointment, if defrayed by
the opposing party, may be
recovered as costs. The heirs
of the deceased may be
allowed to be substituted for
the deceased, without
requiring the appointment of
an executor or administrator
and the court may appoint
guardian ad litem for the
minor heirs.
If the action survives despite death of a
party, it is the duty of the deceaseds
counsel to inform the court of such
death, and to give the names and
addresses of the deceaseds legal
representatives. The deceased may be
substituted by his heirs in the pending
action. As explained in Bonilla:
x x x Article 777 of the Civil
Code provides that the rights
 to the succession are
transmitted from the moment
of the death of the decedent.
From the moment of the
death of the decedent, the
heirs become the absolute
owners of his property,
subject to the rights and
obligations of the decedent,
and they cannot be deprived
of their rights thereto except
by the methods provided for
by law. The moment of death
is the determining factor
when the heirs acquire a
definite right to the
inheritance whether such
right be pure or contingent.
The right of the heirs to the
property of the deceased
vests in them even before
judicial declaration of their
being heirs in the testate or
intestate proceedings. When
[plaintiff], therefore, died[,] her
claim or right to the parcels of
land x x x was not
extinguished by her death but
was transmitted to her heirs
upon her death. Her heirs
have thus acquired interest in
the properties in litigation and
became parties in interest in
the case. There is, therefore,
no reason for the respondent
Court not to allow their
substitution as parties in
interest for the deceased
plaintiff.[10]
If no legal representative is named by
the counsel of the deceased, or the legal
representative fails to appear within a
specified period, it is the duty of the
court where the case is pending to order
the opposing party to procure the
appointment of an executor or
administrator for the estate of the
deceased. The reason for this rule is to
protect all concerned who may be
affected by the intervening death,
particularly the deceased and his
estate.[11]
In the instant case, petitioner (plaintiff)
Memoracion Z. Cruz died on 30 October
1996. Her counsel, Atty. Roberto T.
Neri, notified the trial court of such death
on 13 January 1997
On 24 January 1997, respondent
(defendant) Oswaldo Z. Cruz
moved to dismiss the case
alleging that it did not survive
Memoracions death. The RTC
granted the motion to dismiss in
the assailed Order dated 2 June
1997.
We rule that it was error for the RTC to
dismiss the case. As mentioned earlier,
the petition for annulment of deed of
sale involves property and property
rights, and hence, survives the death of
petitioner Memoracion. The RTC was
informed, albeit belatedly,[13] of the
death of Memoracion, and was supplied
with the name and address of her legal
representative, Edgardo Cruz. What the
RTC could have done was to require
Edgardo Cruz to appear in court and
substitute Memoracion as party to the
pending case, pursuant to Section 16,
Rule 3 of the 1997 Revised Rules of
Civil Procedure, and established
jurisprudence.
We note that on 17 October 1997,
Edgardo Cruz filed with the RTC a
Manifestation, stating that he is retaining
the services of Atty. Roberto T. Neri. We
quote:[14]
 UNDERSIGNED HEIR of THE LOCAL GOVERNMENT TINGA,
the late Memoracion Z. and
Cruz respectfully manifests UNIT OF THE CITY
that he is retaining the OF NAGA, VELASCO, JR., JJ.
services ATTY. MANUEL TEOXON,
of ATTY. ROBERTO T. ENGR. LEON PALMIANO,
NERI as counsel for the NATHAN SERGIO and Promulgated:
plaintiff. BENJAMIN NAVARRO, SR.,
Respondents. October 30, 2006
(Sgd.) EDGARDO Z.
CRUZ
Plaintiff Souses Antonio F. Algura and
Lorencita S.J. Algura filed a
Consistent with our ruling in Heirs of Verified Complaint for damages
Haberer v. Court of Appeals,[15] we against the Naga City
consider such Manifestation, signed by Government and its officers,
Memoracions heir, Edgardo Cruz, and arising from the alleged illegal
retaining Atty. Neris services as demolition of their residence and
counsel, a formal boarding house and for payment
substitution of deceased Memoracion by of lost income derived from fees
her heir, Edgardo Cruz. It also needs paid by their boarders amounting
mention that Oswaldo Cruz, although to PhP 7,000.00 monthly.
also an heir of Memoracion, should be Simultaneously, petitioners filed
excluded as a legal representative in the an Ex-Parte Motion to Litigate as
case for being an adverse party Indigent Litigants, to which
therein.[16] petitioner Antonio Algura's Pay
Slip) was appended, showing a
WHEREFORE, we GRANT the gross monthly income of Ten
petition. We REVERSE the Court of Thousand Four Hundred Seventy
Appeals Decision dated 20 December Four Pesos (PhP 10,474.00) and
2005 and Resolution dated 21 June a net pay of Three Thousand Six
2006 in CA-G.R. CV No. Hundred Sixteen Pesos and
80355. We REMAND this case to the Ninety Nine Centavos (PhP
Regional Trial Court of the National 3,616.99) for [the month of] July
Capital Judicial Region, Branch 30, 1999. Also attached as Annex "B"
Manila, for further proceedings. to the motion was a July 1999
Certification issued by the Office
SPOUSES ANTONIO F. ALGURA G.R. of the City Assessor of Naga City,
No. 150135 which stated that petitioners had
and LORENCITA S.J. ALGURA, no property declared in their
Petitioners, name for taxation purposes.
Present: Finding that petitioners' motion to
- versus - QUISUMBING, J., litigate as indigent litigants was
Chairperson, meritorious, Executive Judge
CARPIO, Jose T. Atienza of the Naga City
CARPIO MORALES, RTC, in the September 1, 1999
 Order, granted petitioners' plea
for exemption from filing fees.
Meanwhile, as a result of
respondent Naga City
Government's demolition of a
portion of petitioners' house, the
Alguras allegedly lost a monthly
income of PhP 7,000.00 from
their boarders' rentals. With the
loss of the rentals, the meager
income from Lorencita
Algura's sari-sari store and
Antonio Algura's small take home
pay became insufficient for the
expenses of the Algura spouses
and their six (6) children for their
basic needs including food, bills,
clothes, and schooling, among
others.
On October 1999, respondents
filed an Answer with
Counterclaim dated October 10,
1999, arguing that the defenses
of the petitioners in the complaint
had no cause of action, the
spouses' boarding house blocked
the road right of way, and said
structure was a nuisance per se.
Praying that the counterclaim of
defendants (respondents) be
dismissed, petitioners then filed
their Reply with Ex-Parte Request
for a Pre-Trial Setting before the
Naga City RTC on October 19,
1999. On February 3, 2000, a
pre-trial was held wherein
respondents asked for five (5)
days within which to file a Motion
to Disqualify Petitioners as
Indigent Litigants.
On March 2000, respondents
filed a Motion to Disqualify the
Plaintiffs for Non-Payment of
Filing Fees dated March 10,
2000. They asserted that in
addition to the more than PhP
3,000.00 net income of petitioner
Antonio Algura, who is a member
of the Philippine National Police,
spouse Lorencita Algura also had
a mini-store and a computer shop
on the ground floor of their
residence along Bayawas St.,
Sta. Cruz, Naga City. Also,
respondents claimed that
petitioners' second floor was
used as their residence and as a
boarding house, from which they
earned more than PhP 3,000.00
a month. In addition, it was
claimed that petitioners derived
additional income from their
computer shop patronized by
students and from several
boarders who paid rentals to
them. Hence, respondents
concluded that petitioners were
not indigent litigants.
On March 2000, petitioners
subsequently interposed their
Opposition to the Motion to
respondents' motion to disqualify
them for non-payment of filing
fees.
On April 2000, the Naga City
RTC issued an Order
disqualifying petitioners as
indigent litigants on the ground
that they failed to substantiate
their claim for exemption from
payment of legal fees and to
comply with the third paragraph
of Rule 141, Section 18 of the
Revised Rules of Court
directing them to pay the requisite
filing fees.
On April 2000, petitioners filed a
Motion for Reconsideration of the
April 2000 Order. On May 2000,
respondents then filed their
Comment/Objections to
 petitioner's Motion for
Reconsideration.
On May 2000, the trial court
issued an Order giving petitioners
the opportunity to comply with the
requisites laid down in Section
18, Rule 141, for them to qualify
as indigent litigants.
On May 2000, petitioners
submitted their
15
Compliance attaching the
affidavits of petitioner Lorencita
Algura16 and Erlinda
Bangate,17 to comply with the
requirements of then Rule 141,
Section 18 of the Rules of Court
and in support of their claim to be
declared as indigent litigants.
In her May 2000 Affidavit,
petitioner Lorencita Algura
claimed that the demolition of
their small dwelling deprived her
of a monthly income amounting to
PhP 7,000.00. She, her husband,
and their six (6) minor children
had to rely mainly on her
husband's salary as a policeman
which provided them a monthly
amount of PhP 3,500.00, more or
less. Also, they did not own any
real property as certified by the
assessor's office of Naga City.
More so, according to her, the
meager net income from her
small sari-sari store and the
rentals of some boarders, plus
the salary of her husband, were
not enough to pay the family's
basic necessities.
To buttress their position as
qualified indigent litigants,
petitioners also submitted the
affidavit of Erlinda Bangate, who
attested under oath, that she
personally knew spouses Antonio
Algura and Lorencita Algura, who
were her neighbors; that they
derived substantial income from
their boarders; that they lost said
income from their boarders'
rentals when the Local
Government Unit of the City of
Naga, through its officers,
demolished part of their house
because from that time, only a
few boarders could be
accommodated; that the income
from the small store, the
boarders, and the meager salary
of Antonio Algura were
insufficient for their basic
necessities like food and clothing,
considering that the Algura
spouses had six (6) children; and
that she knew that petitioners did
not own any real property.
Thereafter, Naga City RTC Acting
Presiding Judge Andres B.
Barsaga, Jr. issued his July 17,
200018 Order denying the
petitioners' Motion for
Reconsideration.
Issue: WON petitioners Algura should
be considered as indigent litigants who
qualify for exemption from paying filing
fees.
Held:
Yes. Applying Rule 3, Section 21 of the
1997 Rules of Civil Procedure, The
petitioner Algura should be declared and
considered as indigent litigants who
qualify for exemption from paying filing
fees. The court rule that if the applicant
for exemption meets the salary and
property requirements under Section 19
of Rule 141, then the grant of the
application is mandatory. On the other
hand, when the application does not
satisfy one or both requirements, then
the application should not be denied
outright; instead, the court should apply
the "indigency test" under Section 21 of
Rule 3 and use its sound discretion in
determining the merits of the prayer for
exemption.
In the Case at bar,the trial court should
have applied Rule 3, Section 21 to the
application of the Alguras after their
affidavits and supporting documents
showed that petitioners did not satisfy
the twin requirements on gross monthly
income and ownership of real property
under Rule 141. Instead of disqualifying
the Alguras as indigent litigants, the trial
court should have called a hearing as
required by Rule 3, Section 21 to enable
the petitioners to adduce evidence to
show that they didn't have property and
money sufficient and available for food,
shelter, and basic necessities for them
and their family. In that hearing, the
respondents would have had the right to
also present evidence to refute the
allegations and evidence in support of
the application of the petitioners to
litigate as indigent litigants. Since this
Court is not a trier of facts, it will have to
remand the case to the trial court to
determine whether petitioners can be
considered as indigent litigants using the
standards set in Rule 3, Section 21.