1. GENEROSA ALMEDA LATORRE V.

LUIS ESTEBAN LATORRE

G.R. No. 183926, March 29, 2010

2. POLYTRADE CORPORATION, plaintiff-appellee, vs. VICTORIANO BLANCO

G.R. No. L-27033 October 31, 1969

3. UNIMASTERS CONGLOMERATION, INC., petitioner, vs. COURT OF APPEALS and KUBOTA AGRIMACHINERY
PHILIPPINES, INC., respondents.
G.R. No. 119657. February 7, 1997

4. VIRGINIA GOCHAN, LOUISE GOCHAN, LAPU-LAPU REAL ESTATE CORPORATION, FELIX GOCHAN AND SONS REALTY
CORPORATION, MACTAN REALTY DEVELOPMENT CORPORATION, petitioners, vs. MERCEDES GOCHAN, ALFREDO
GOCHAN, ANGELINA GOCHAN-HERNAEZ, MA. MERCED GOCHAN GOROSPE, CRISPO GOCHAN, JR., and MARLON
GOCHAN, respondents. G.R. No. 146089. December 13, 2001

5. PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS PETER HENRICHSEN, Petitioners, vs.
KLAUS K. SCHONFELD, Respondent.
G.R. No. 166920 February 19, 2007

6. MARIO SIASOCO, ANGELITA E. SIASOCO, MA. BELLA SIASOCO, ESTER SIASOCO-LAMUG, MA. LOURDES SIASOCO
LAMUG-BARRIOS, MA. RAMONA SIASOCO LAMUG, MA. VICTORIA SIASOCO
LAMUG-DOMINGUEZ, BELEN SIASOCO-JOSE, RAFAEL SIASOCO JOSE, CYNTHIA SIASOCO JOSE,
CRISTINA SIASOCO JOSE, ROBERTO SIASOCO JOSE, CARIDAD SIASOCO JOSE, RAMON SIASOCO JOSE, OSCAR SIASOCO,
RUBEN SIASOCO, SALOME SIASOCO-PAZ, MEDARDO PAZ SIASOCO, ROLANDO PAZ SIASOCO, JESUS PAZ SIASOCO,
NELLY STO. DOMINGO NARIO, MARY GRACE, STO.
DOMINGO NARIO and MARY ANNE STO. DOMINGO NARIO, petitioners, vs. COURT OF APPEALS;
HON. MARCELINO F. BAUTISTA, JR., Presiding Judge, Branch 215, Regional Trial Court, Quezon City; and the IGLESIA NI
CRISTO, respondents.
G.R. No. 132753. February 15, 1999

7. HEIRS OF MAGDALENO YPON, NAMELY, ALVARO YPON, ERUDITA Y. BARON, CICERO YPON, WILSON YPON, VICTOR
YPON, AND HINIDINO Y. PEÑALOSA, PETITIONERS, vs. GAUDIOSO PONTERAS RICAFORTE A.K.A. "GAUDIOSO E.
YPON," AND THE REGISTER OF DEEDS OF TOLEDO CITY, RESPONDENTS.
G.R. No. 198680 July 8, 2013

8. SECRETARY LEILA M. DE LIMA, DIRECTOR NONNATUS R. ROJAS and DEPUTY DIRECTOR REYNALDO 0. ESMERALDA,
Petitioners, vs. MAGTANGGOL B. GATDULA, Respondent.
G.R. No. 204528 February 19, 2013

9. SPOUSES TEODORO and ROSARIO SARAZA and FERNANDO SARAZA, Petitioners, vs. WILLIAM FRANCISCO, Respondent.
G.R. No. 198718 November 27, 2013

10. EMERGENCY LOAN PAWNSHOP INCORPORATED and DANILO R. NAPALA, petitioners, vs. THE COURT OF APPEALS
(Tenth Division) and TRADERS ROYAL BANK, respondents. G.R. No. 129184. February 28, 2001

11. EMERITA MUOZ, V. ATTY. VICTORIANO R. YABUT, JR. and SAMUEL GO CHAN, G.R. No. 146718;
EMERITA MUOZ, v. SPOUSES SAMUEL GO CHAN and AIDA C. CHAN, and THE BANK OF THE PHILIPPINE ISLANDS, G.R.
No. 146718
June 6, 2011

12. FILOMENA DOMAGAS, petitioner, vs. VIVIAN LAYNO JENSEN, respondent. G.R. No. 158407. January 17, 2005

1
13. ADEZ REALTY, INCORPORATED, petitioner, vs.HONORABLE COURT OF APPEALS, THE PRESIDING JUDGE, REGIONAL
TRIAL COURT, Br. 79, Morong Rizal, THE REGISTER OF DEEDS FOR QUEZON CITY, and AGUEDO EUGENIO, respondents.
G.R. No. 100643 December 12, 1995

14. MA. TERESA CHAVES BIACO, Petitioner, vs. PHILIPPINE COUNTRYSIDE RURAL BANK, Respondent.
G.R. No. 161417 February 8, 2007

15. VIRRA MALL TENANTS ASSOCIATION, INC., V. VIRRA MALL GREENHILLS ASSOCIATION, INC., LOLITA C. REGALADO,
ANNIE L. TRIAS, WILSON GO, PABLO OCHOA, JR., BILL OBAG and GEORGE V.
WINTERNITZ,
G.R. No. 182902 October 5, 2011

16. ANCHOR SAVINGS BANK (FORMERLY ANCHOR FINANCE AND INVESTMENT

CORPORATION), Petitioner, vs.HENRY H. FURIGAY, GELINDA C. FURIGAY, HERRIETTE C. FURIGAY and HEGEM C.
FURIGAY, Respondents.
G.R. No. 191178 March 13, 2013

17. LOURDES DELA CRUZ V. HON. COURT OF APPEALS, and MELBA TAN TE, G.R. No. 139442 December 6, 2006

18. STRONGHOLD INSURANCE COMPANY, INC., Petitioner, vs. TOMAS CUENCA, MARCELINA CUENCA, MILAGROS
CUENCA, BRAMIE T. TAYACTAC, and MANUEL D. MARANON, JR., Respondents.
G.R. No. 173297 March 6, 2013

19. EDUARDO L. RAYO V. METROPOLITAN BANK AND TRUST COMPANY AND BRANCH 223 OF THE
REGIONAL TRIAL COURT OF QUEZON CITY,
G.R. No. 165142 December 10, 2007

20. G.R. No. 208566 November 19, 2013

GRECO ANTONIOUS BEDA B. BELGICA JOSE M. VILLEGAS JR. JOSE L. GONZALEZ REUBEN M.
ABANTE and QUINTIN PAREDES SAN DIEGO, Petitioners, vs. HONORABLE EXECUTIVE SECRETARY
PAQUITO N. OCHOA JR. SECRETARY OF BUDGET AND MANAGEMENT FLORENCIO B. ABAD,
NATIONAL TREASURER ROSALIA V. DE LEON SENATE OF THE PHILIPPINES represented by FRANKLIN M. DRILON m
his capacity as SENATE PRESIDENT and HOUSE OF REPRESENTATIVES represented by FELICIANO S. BELMONTE, JR. in
his capacity as SPEAKER OF THE HOUSE, Respondents. x - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 208493
SOCIAL JUSTICE SOCIETY (SJS) PRESIDENT SAMSON S. ALCANTARA, Petitioner, vs. HONORABLE FRANKLIN M.
DRILON in his capacity as SENATE PRESIDENT and HONORABLE FELICIANO S. BELMONTE, JR., in his capacity as
SPEAKER OF THE HOUSE OF REPRESENTATIVES, Respondents. x - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 209251
PEDRITO M. NEPOMUCENO, Former Mayor-Boac, Marinduque Former Provincial Board Member -Province
of Marinduque, Petitioner, vs. PRESIDENT BENIGNO SIMEON C. AQUINO III* and SECRETARY FLORENCIO BUTCH ABAD,
DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.

21. ANTONIO B. BALTAZAR, V. HONORABLE OMBUDSMAN, EULOGIO M. MARIANO, JOSE D. JIMENEZ, JR., TORIBIO E.
ILAO, JR. and ERNESTO R. SALENGA,
G.R. No. 136433 December 6, 2006

22. PHILIP L. GO, PACIFICO Q. LIM and ANDREW Q. LIM V. DISTINCTION PROPERTIES DEVELOPMENT AND
CONSTRUCTION, INC.
G.R. No. 194024 April 25, 2012

2
GENEROSA ALMEDA LATORRE V. LUIS ESTEBAN LATORRE
G.R. No. 183926, March 29, 2010

RESOLUTION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45, in relation to Rule 41, of the Rules of Civil Procedure, assailing the
decision[2] of the Regional Trial Court (RTC) of Muntinlupa City, Branch 256, dated April 29, 2008.

The facts of the case are as follows:

In October 2000, petitioner Generosa Almeda Latorre (petitioner) filed before the RTC of Muntinlupa City a
Complaint[3] for Collection and Declaration of Nullity of Deed of Absolute Sale with application for Injunction against her own son, herein
respondent Luis Esteban Latorre (respondent), and one Ifzal Ali (Ifzal).

Petitioner averred that, on September 28, 1999, respondent and Ifzal entered into a Contract of Lease [4] over a 1,244square meter real property,
situated at No. 1366 Caballero St., Dasmarias Village, MakatiCity (subject property). Under the said contract, respondent, as lessor, declared
that he was the absolute and registered owner of the subject property. Petitioner alleged that respondent's declaration therein was erroneous
because she and respondent were co-owners of the subject property in equal shares.

Petitioner narrated that, on March 14, 1989, she and respondent executed their respective Deeds of Donation, conveying the subject property
in favor of The Porfirio D. Latorre Memorial & Fr. Luis Esteban Latorre Foundation,
Inc. (the Foundation). Thus, Transfer Certificate of Title (TCT) No. 161963 [5] was issued in the name of the Foundation. Subsequently, on
September 2, 1994, petitioner and respondent executed separate Deeds of Revocation of Donation and Reconveyance of the subject property,
consented to by the Foundation, through the issuance of appropriate corporate resolutions. However, the Deeds of Revocation were not
registered; hence, the subject property remained in the name of the Foundation. Petitioner insisted, however, that respondent was fully aware
that the subject property was owned in common by both of them. To protect her rights as co-owner, petitioner formally demanded from Ifzal
the payment of her share of the rentals, which the latter, however, refused to heed.

Moreover, petitioner averred that, on or about August 16, 2000, she discovered that respondent caused the annotation of an adverse claim
on the TCT of the subject property, claiming full ownership over the same by virtue of a Deed of Absolute Sale [6] dated March 21, 2000,
allegedly executed by petitioner in favor of respondent. Petitioner claimed that the deed was a falsified document; that her signature thereon
was forged by respondent; and that she never received P21 Million or any other amount as consideration for her share of the subject
property. Thus, petitioner prayed that Ifzal be enjoined from paying the rentals to respondent, and the latter from receiving said rentals;
that both Ifzal and respondent be ordered to pay petitioner her share of the rentals; and that respondent be enjoined from asserting full
ownership over the subject property and from committing any other act in derogation of petitioner's interests therein. Petitioner also prayed
for the payment of moral and exemplary damages, litigation expenses, and costs of the suit.

Respondent immediately filed a Motion to Dismiss[7] on the sole ground that the venue of the case was improperly laid. He stressed that while
the complaint was denominated as one for Collection and Declaration of Nullity of Deed of Absolute Sale with application for Injunction, in
truth the case was a real action affecting title to and interest over the subject property. Respondent insisted that all of petitioner's claims were
anchored on her claim of ownership over onehalf () portion of the subject property. Since the subject property is located in Makati City,
respondent argued that petitioner should have filed the case before the RTC of Makati City and not of MuntinlupaCity.

Ifzal also filed his motion to dismiss on the ground of want of jurisdiction, asserting that he was immune from suit because he was an officer
of the Asian Development Bank, an international organization.

The RTC issued a Temporary Restraining Order dated November 6, 2000, restraining Ifzal from paying his rentals to respondent and enjoining
the latter from receiving from the former the aforesaid rentals. The RTC also directed both Ifzal and respondent to pay petitioner her share
of the rentals, with the corresponding order against respondent not to commit any act in derogation of petitioner's interest over the subject
property.

In its Order dated January 2, 2001, the RTC denied respondent's motion to dismiss. The RTC ruled that the nature of an action whether real
or personal was determined by the allegations in the complaint, irrespective of whether or not the plaintiff was entitled to recover upon the
claims asserted - a matter resolved only after, and as a result of, a trial. Thus, trial on the merits ensued.

3
Undaunted, respondent filed an Answer Ad Cautelam [8] dated March 19, 2001, insisting, among others, that the case was a real action and
that the venue was improperly laid.[9] Respondent narrated that he was a former Opus Dei priest but he left the congregation in 1987 after he
was maltreated by his Spanish superiors. Respondent alleged that petitioner lived with him and his family from 1988 to 2000, and that he
provided for petitioner's needs. Respondent also alleged that, for almost 20 years, the Opus Dei divested the Latorre family of several real
properties. Thus, in order to spare the subject property from the Opus Dei, both petitioner and respondent agreed to donate it to the
Foundation. In 1994, when respondent got married and sired a son, both petitioner and respondent decided to revoke the said donation. The
Foundation consented to the revocation. However, due to lack of funds, the title was never transferred but remained in the name of the
Foundation.

Respondent asseverated that he and his wife took good care of petitioner and that they provided for her needs, spending a substantial amount
of money for these needs; that because of this, and the fact that the rentals paid for the use of the subject property went to petitioner, both
parties agreed that petitioner would convey her share over the subject property to respondent; and that, on March 21, 2000, petitioner
executed a Deed of Absolute Sale in favor of respondent.

Respondent further alleged that sometime in March to May 2000, the relationship of the parties, as mother and son, deteriorated. Petitioner
left respondent's house because he and his wife allegedly ignored, disrespected, and insulted her. [10] Respondent claimed, however, that
petitioner left because she detested his act of firing their driver.[11] It was then that this case was filed against him by petitioner.

In the meantime, in its Order dated May 15, 2003, the RTC dismissed petitioner's claim against Ifzal because the dispute was clearly between
petitioner and respondent.

On April 29, 2008, the RTC ruled in favor of respondent, disposing of the case in this wise:

While the case herein filed by the plaintiff involves recovery of possession of a real property situated at 1366 Caballero St., Dasmarias Village,
Makati City, the same should have been filed and tried in the Regional Trial Court of Makati City who, undoubtedly, has jurisdiction to hear
the matter as aforementioned the same being clearly a real action.

WHEREFORE, in view of the foregoing, the above-entitled case is hereby DISMISSED for want of jurisdiction, all in pursuance to the above-
cited jurisprudence and Rule 4 of the Rules of Court.

SO ORDERED.[12]

Aggrieved, petitioner filed her Motion for Reconsideration, [13] which the RTC denied in its Order[14] dated July 24, 2008 for lack of merit.

Hence, this Petition, claiming that the RTC erred in treating the venue as jurisdiction and in treating petitioner's complaint as a real action.

While the instant case was pending resolution before this Court, petitioner passed away on November 14, 2009. Thus, petitioner's counsel
prayed that, pending the appointment of a representative of petitioner's estate, notices of the proceedings herein be sent to petitioners other
son, Father Roberto A. Latorre.[15]

As early as the filing of the complaint, this case had been marred by numerous procedural infractions committed by petitioner, by respondent,
and even by the RTC, all of which cannot be disregarded by this Court.

First. Petitioner filed her complaint with the RTC of Muntinlupa City instead of the RTC of Makati City, the latter being the proper venue in
this case.

Sections 1 and 2, Rule 4 of the 1997 Rules of Civil Procedure provide an answer to the issue of venue.[16] Actions affecting title to or possession
of real property or an interest therein (real actions) shall be commenced and tried in the proper court that has territorial jurisdiction over the
area where the real property is situated. On the other hand, all other actions (personal actions) shall be commenced and tried in the proper
courts where the plaintiff or any of the principal plaintiffs resides or where the defendant or any of the principal defendants resides.[17] The
action in the RTC, other than for Collection, was for the Declaration of Nullity of the Deed of Absolute Sale involving the subject property,
which is located at No. 1366 Caballero St., DasmariasVillage, Makati City. The venue for such action is unquestionably the proper court of
Makati City, where the real property or part thereof lies, not the RTC of
Muntinlupa City.[18]

In this jurisdiction, we adhere to the principle that the nature of an action is determined by the allegations in the Complaint itself, rather
than by its title or heading.[19] It is also a settled rule that what determines the venue of a case is the primary objective for the filing of the

4
case.[20] In her Complaint, petitioner sought the nullification of the Deed of Absolute Sale on the strength of two basic claims that (1) she did
not execute the deed in favor of respondent; and (2) thus, she still owned one half () of the subject property. Indubitably, petitioner's complaint
is a real action involving the recovery of the subject property on the basis of her co-ownership thereof.
Second. The RTC also committed a procedural blunder when it denied respondent's motion to dismiss on the ground of improper venue.

The RTC insisted that trial on the merits be conducted even when it was awfully glaring that the venue was improperly laid, as pointed out
by respondent in his motion to dismiss. After trial, the RTC eventually dismissed the case on the ground of lack of jurisdiction, even as it
invoked, as justification, the rules and jurisprudence on venue. Despite the conduct of trial, the RTC failed to adjudicate this case on the
merits.

Third. Respondent also did not do very well, procedurally. When the RTC denied his Motion to Dismiss, respondent could have filed a
petition for certiorari and/or prohibition inasmuch as the denial of the motion was done without jurisdiction or in excess of jurisdiction or
with grave abuse of discretion amounting to lack of jurisdiction. [21]However, despite this lapse, it is clear that respondent did not waive his
objections to the fact of improper venue, contrary to petitioner's assertion. Notably, after his motion to dismiss was denied, respondent filed
a Motion for Reconsideration to contest such denial. Even in his Answer Ad Cautelam, respondent stood his ground that the case ought to be
dismissed on the basis of improper venue.

Finally, petitioner came directly to this Court on a Petition for Review on Certiorari under Rule 45, in relation to Rule 41, of the Rules of
Civil Procedure on alleged pure questions of law. In Murillo v. Consul,[22] we laid down a doctrine that was later adopted by the 1997 Revised
Rules of Civil Procedure. In that case, this Court had the occasion to clarify the three (3) modes of appeal from decisions of the RTC, namely:
(1) ordinary appeal or appeal by writ of error, where judgment was rendered in a civil or criminal action by the RTC in the exercise of its
original jurisdiction; (2) petition for review, where judgment was rendered by the RTC in the exercise of its appellate jurisdiction; and (3)
petition for review to the Supreme Court.

The first mode of appeal, governed by Rule 41, is brought to the Court of Appeals (CA) on questions of fact or mixed questions of fact and
law. The second mode of appeal, covered by Rule 42, is brought to the CA on questions of fact, of law, or mixed questions of fact and law.
The third mode of appeal, provided in Rule 45, is filed with the Supreme Court only on questions of law.

A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt
arises as to the truth or falsity of the alleged facts. [23] Our ruling in Velayo-Fong v. Velayo[24] is instructive:

A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt
arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative
value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the
given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. Thus,
the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is
whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of
law; otherwise it is a question of fact.[25]

In her Reply to respondents Comment,[26] petitioner prayed that this Court decide the case on the merits. To do so, however, would require
the examination by this Court of the probative value of the evidence presented, taking into account the fact that the RTC failed to adjudicate
this controversy on the merits. This, unfortunately, we cannot do. It thus becomes exceedingly clear that the filing of the case directly with
this Court ran afoul of the doctrine of hierarchy of courts. Pursuant to this doctrine, direct resort from the lower courts to the Supreme Court
will not be entertained unless the appropriate remedy sought cannot be obtained in the lower tribunals. This Court is a court of last resort,
and must so remain if it is to satisfactorily perform the functions assigned to it by the Constitution and by immemorial tradition. [27]

Accordingly, we find no merit in the instant petition. Neither do we find any reversible error in the trial courts dismissal of the case ostensibly
for want of jurisdiction, although the trial court obviously meant to dismiss the case on the ground of improper venue.

WHEREFORE, the instant Petition is DENIED. No costs.

G.R. No. L-27033 October 31, 1969

POLYTRADE CORPORATION, plaintiff-appellee, vs.
VICTORIANO BLANCO, defendant-appellant.
Paredes, Poblador, Cruz and Nazareno for plaintiff-appellee.
Isidro T. Almeda and Mario T. Banzuela for defendant-appellant.
SANCHEZ, J.:
Suit before the Court of First Instance of Bulacan on four causes of action to recover the purchase price of rawhide delivered by
plaintiff to defendant.1 Plaintiff corporation has its principal office and place of business in Makati, Rizal. Defendant is a resident of
Meycauayan, Bulacan. Defendant moved to dismiss upon the ground of improper venue. He claims that by contract suit may only be

5
lodged in the courts of Manila. The Bulacan court overruled him. He did not answer the complaint. In consequence, a default judgment
was rendered against him on September 21, 1966, thus:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant ordering defendant to pay plaintiff the
following amounts:
First Cause of Action — P60,845.67, with interest thereon at 1% a month from May 9, 1965 until th

Second Cause of Action — P51,952.55, with interest thereon at 1% a month from March 30, 1965 unt

Third Cause of Action — P53,973.07, with interest thereon at 1% a month from July 3, 1965 until th

Fourth Cause of Action — P41,075.22, with interest thereon at 1% a month 2 until the full amount is p
In addition, defendant shall pay plaintiff attorney's fees amounting to 25% of the principal amount due in each cause of action,
and the costs of the suit. The amount of P400.00 shall be deducted from the total amount due plaintiff in accordance with
this judgment.
Defendant appealed.
1. The forefront question is whether or not venue was properly laid in the province of Bulacan where defendant is a resident.
Section 2 (b), Rule 4 of the Rules of Court on venue of personal actions triable by courts of first instance — and this is one — provides
that such "actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the
plaintiff or any of the plaintiffs resides, at the election of the plaintiff." Qualifying this provision in Section 3 of the same Rule which
states that venue may be stipulated by written agreement — "By written agreement of the parties the venue of an action may be
changed or transferred from one province to another."
Defendant places his case upon Section 3 of Rule 4 just quoted. According to defendant, plaintiff and defendant, by written contracts
covering the four causes of action, stipulated that: "The parties agree to sue and be sued in the Courts of Manila." This agreement is
valid.3 Defendant says that because of such covenant he can only be sued in the courts of Manila. We are thus called upon to shake
meaning from the terms of the agreement just quoted.
But first to the facts. No such stipulation appears in the contracts covering the first two causes of action. The general rule set forth in
Section 2 (b), Rule 4, governs, and as to said two causes of action, venue was properly laid in Bulacan, the province of defendant's
residence.
The stipulation adverted to is only found in the agreements covering the third and fourth causes of action. An accurate reading,
however, of the stipulation, "The parties agree to sue and be sued in the Courts of Manila," does not preclude the filing of suits in the
residence of plaintiff or defendant. The plain meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive
words which would indicate that Manila and Manila alone is the venue are totally absent therefrom. We cannot read into that clause
that plaintiff and defendant bound themselves to file suits with respect to the last two transactions in question only or exclusively in
Manila. For, that agreement did not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of
Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in
Section 2(b) of Rule 4. Renuntiatio non praesumitur.
Illuminating on this point is Engel vs. Shubert Theatrical Co., 151 N.Y.S. 593, 594. And this, became there the stipulation as to venue
is along lines similar to the present. Said stipulation reads: "In case of dispute, both contracting parties agree to submit to the
jurisdiction of the Vienna courts." And the ruling is: "By the clause in question the parties do not agree to submit their disputes to the
jurisdiction of the Viennese court, and to those courts only. There is nothing exclusive in the language used. They do agree to submit
to the Viennese jurisdiction, but they say not a word in restriction of the jurisdiction of courts elsewhere; and whatever may be said on
the subject of the legality of contracts to submit controversies to courts of certain jurisdictions exclusively, it is entirely plain that such
agreements should be strictly construed, and should not be extended by implication."
Venue here was properly laid.
2. Defendant next challenges the lower court's grant to plaintiff of interest at the rate of one per centum per month. Defendant
says that no such stipulation as to right of interest appears in the sales confirmation orders which provided: "TERMS — 60 days after
delivery with interest accruing on postdated cheques beyond 30 days." The flaw in this argument lies in that the interest and the rate
thereof are expressly covenanted in the covering trust receipts executed by defendant in favor of plaintiff, as follows: "All obligations
of the undersigned under this agreement of trust shall bear interest at the rate of one per centum (1%) per month from the date due
until paid."
On this score, we find no error.
3. Defendant protests the award of attorneys' fees which totals P51,961.63, i.e., 25% of the total principal indebtedness of
P207,846.51 (exclusive of interest). Defendant's thesis is that the foregoing sum is "exorbitant and unconscionable."
To be borne in mind is that the attorneys' fees here provided is not, strictly speaking, the attorneys' fees recoverable as between
attorney and client spoken of and regulated by the Rules of Court. Rather, the attorneys' fees here are in the nature of liquidated
damages and the stipulation therefor is aptly called a penal clause. 4 It has been said that so long as such stipulation does not
contravene law, morals, or public order, it is strictly binding upon defendant.5 The attorneys' fees so provided are awarded in favor of
the litigant, not his counsel. It is the litigant, not counsel, who is the judgment creditor entitled to enforce the judgment by execution.6
The governing law then is Article 2227 of the Civil Code, viz.: "Liquidated damages, whether intended as an indemnity or a penalty,
shall be equitably reduced if they are iniquitous or unconscionable." For this reason, we do not really have to strictly view the
reasonableness of the attorneys' fees in the light of such factors as the amount and character of the services rendered, the nature
and importance of the litigation, and the professional character and the social standing of the attorney. We do concede, however, that
these factors may be an aid in the determination of the iniquity or unconscionableness of attorneys' fees as liquidated damages.
May the attorneys' fees (P51,961.63) here granted be tagged as iniquitous or unconscionable? Upon the circumstances, our answer
is in the negative. Plaintiff's lawyers concededly are of high standing. More important is that this case should not have gone to court.
It could have been easily avoided had defendant been faithful in complying with his obligations. It is not denied that the rawhide was
converted into leather and sold by defendant. He raises no defense. In fact, he did not even answer the complaint in the lower court,
and was thus declared in default. Nor does he deny the principal liability. Add to all these the fact that the writ of attachment issued
below upon defendant's properties yielded no more than P400 and the picture is complete. The continued maintenance by defendant
of the suit is plainly intended for delay. The attorneys' fees awarded cannot be called iniquitous or unconscionable.
In the very recent case of Universal Motors Corporation vs. Dy Hian Tat (1969), 28 SCRA 161, 170, we allowed attorneys' fees in the
form of liquidated damages at the rate of 25% of the total amount of the indebtedness. Here, the trial court has already reduced the

6
attorneys' fees from the stipulated 25% "of the total amount involved, principal and interest, then unpaid" to only 25% of the principal
amount due. There is no reason why such judgment should be disturbed.
FOR THE REASON GIVEN, the appealed judgment is hereby affirmed, except that interest granted, in reference to the fourth cause
of action, should start from March 24, 1965.
Costs against defendant-appellant. So ordered.
[G.R. No. 119657. February 7, 1997]
UNIMASTERS CONGLOMERATION, INC., petitioner, vs. COURT OF APPEALS and KUBOTA AGRIMACHINERY PHILIPPINES,
INC., respondents.
D E C I S I O N NARVASA, C.J.:
The appellate proceeding at bar turns upon the interpretation of a stipulation in a contract governing venue of actions thereunder
arising.
On October 28, 1988 Kubota Agri-Machinery Philippines, Inc. (hereafter, simply KUBOTA) and Unimasters Conglomeration, Inc.
(hereafter, simply UNIMASTERS) entered into a "Dealership Agreement for Sales and Services" of the former's products in Samar
and Leyte Provinces.[1] The contract contained, among others:
1) a stipulation reading: "** All suits arising out of this Agreement shall be filed with / in the proper Courts of Quezon
City," and
2) a provision binding UNIMASTERS to obtain (as it did in fact obtain) a credit line with Metropolitan Bank and Trust Co.Tacloban Branch in the
amount of P2,000,000.00 to answer for its obligations to KUBOTA.
Some five years later, or more precisely on December 24, 1993, UNIMASTERS filed an action in the Regional Trial Court of
Tacloban City against KUBOTA, a certain Reynaldo Go, and Metropolitan Bank and Trust CompanyTacloban Branch (hereafter,
simply METROBANK) for damages for breach of contract, and injunction with prayer for temporary restraining order.The action was
docketed as Civil Case No. 93-12-241 and assigned to Branch 6.
On the same day the Trial Court issued a restraining order enjoining METROBANK from "authorizing or effecting payment of any
alleged obligation of ** (UNIMASTERS) to defendant ** KUBOTA arising out of or in connection with purchases made by defendant
Go against the credit line caused to be established by ** (UNIMASTERS) for and in the amount of P2 million covered by defendant
METROBANK ** or by way of charging
** (UNIMASTERS) for any amount paid and released to defendant ** (KUBOTA) by the Head Office of METROBANK in Makati, Metro-
Manila **." The Court also set the application for preliminary injunction for hearing on January 10, 1994 at 8:30 o'clock in the morning.
On January 4, 1994 KUBOTA filed two motions. One prayed for dismissal of the case on the ground of improper venue (said
motion being set for hearing on January 11, 1994). The other prayed for the transfer of the injunction hearing to January 11, 1994
because its counsel was not available on January 10 due to a prior commitment before another court.
KUBOTA claims that notwithstanding that its motion to transfer hearing had been granted, the Trial Court went ahead with the
hearing on the injunction incident on January 10, 1994 during which it received the direct testimony of UNIMASTERS' general
manager, Wilford Chan; that KUBOTA's counsel was "shocked" when he learned of this on the morning of the 11th, but was
nonetheless instructed to proceed to cross-examine the witness; that when said counsel remonstrated that this was unfair, the Court
reset the hearing to the afternoon of that same day, at which time Wilford Chan was recalled to the stand to repeat his direct testimony.
It appears that crossexamination of Chan was then undertaken by KUBOTA's lawyer with the "express reservation that ** (KUBOTA
was) not (thereby) waiving and/or abandoning its motion to dismiss;" and that in the course of the crossexamination, exhibits
(numbered from 1 to 20) were presented by said attorney who afterwards submitted a memorandum in lieu of testimonial evidence. [2]
On January 13, 1994, the Trial Court handed down an Order authorizing the issuance of the preliminary injunction prayed for,
upon a bond of P2,000,000.00.[3] And on February 3, 1994, the same Court promulgated an Order denying KUBOTA's motion to
dismiss. Said the Court:
"The plaintiff UNIMASTERS Conglomeration is holding its principal place of business in the City of Tacloban while the defendant
** (KUBOTA) is holding its principal place of business in Quezon City. The proper venue therefore pursuant to Rules of Court would
either be Quezon City or Tacloban City at the election of the plaintiff. Quezon City and Manila (sic), as agreed upon by the parties in
the Dealership Agreement, are additional places other than the place stated in the Rules of Court. The filing, therefore, of this complaint
in the Regional Trial Court in Tacloban City is proper."
Both orders were challenged as having been issued with grave abuse of discretion by KUBOTA in a special civil action of certiorari
and prohibition filed with the Court of Appeals, docketed as CA-G.R. SP No. 33234. It contended, more particularly, that (1) the RTC
had "no jurisdiction to take cognizance of ** (UNIMASTERS') action considering that venue was improperly laid," (2) UNIMASTERS
had in truth "failed to prove that it is entitled to the
** writ of preliminary injunction;" and (3) the RTC gravely erred "in denying the motion to dismiss." [4]
The Appellate Court agreed with KUBOTA that -- in line with the Rules of Court[5] and this Court's relevant rulings[6] -- the
stipulation respecting venue in its Dealership Agreement with UNIMASTERS did in truth limit the venue of all suits arising thereunder
only and exclusively to "the proper courts of Quezon City." [7] The Court also held that the participation of KUBOTA's counsel at the
hearing on the injunction incident did not in the premises operate as a waiver or abandonment of its objection to venue; that assuming
that KUBOTA's standard printed invoices provided that the venue of actions thereunder should be laid at the Court of the City of
Manila, this was inconsequential since such provision would govern "suits or legal actions between petitioner and its buyers" but not
actions under the Dealership Agreement between KUBOTA and UNIMASTERS, the venue of which was controlled by paragraph No.
7 thereof; and that no impediment precludes issuance of a TRO or injunctive writ by the Quezon City RTC against METROBANK-
Tacloban since the same "may be served on the principal office of METROBANK in Makati and would be binding on and enforceable
against, METROBANK branch in Tacloban."
After its motion for reconsideration of that decision was turned down by the Court of Appeals, UNIMASTERS appealed to this
Court. Here, it ascribes to the Court of Appeals several errors which it believes warrant reversal of the verdict, namely:[8]
1) "in concluding, contrary to decisions of this ** Court, that the agreement on venue between petitioner (UNIMASTERS) and private
respondent (KUBOTA) limited to the proper courts of Quezon City the venue of any complaint filed arising from the dealership agreement between
** (them);"
2) "in ignoring the rule settled in Philippine Banking Corporation vs. Tensuan,[9] that 'in the absence of qualifying or restrictive words, venue
stipulations in a contract should be considered merely as agreement on additional forum, not as limiting venue to the specified place;" and in
concluding, contrariwise, that the agreement in the case at bar "was the same as the agreement on venue in the Gesmundo case," and therefore, the
Gesmundo case was controlling; and
3) "in concluding, based solely on the self-serving narration of ** (KUBOTA that its) participation in the hearing for the issuance of a **
preliminary injunction did not constitute waiver of its objection to venue."
The issue last mentioned, of whether or not the participation by the lawyer of KUBOTA at the injunction hearing operated as a
waiver of its objection to venue, need not occupy the Court too long. The record shows that when KUBOTA's counsel appeared before
the Trial Court in the morning of January 11, 1994 and was then informed that he should cross-examine UNIMASTERS' witness, who

7
had testified the day before, said counsel drew attention to the motion to dismiss on the ground of improper venue and insistently
attempted to argue the matter and have it ruled upon at the time; and when the Court made known its intention (a) "to (resolve first
the) issue (of) the injunction then rule on the motion to dismiss," and (b) consequently its desire to forthwith conclude the examination
of the witness on the injunction incident, and for that purpose reset the hearing in the afternoon of that day, the 11th, so that the matter
might be resolved before the lapse of the temporary restraining order on the 13th, KUBOTA's lawyer told the Court: "Your Honor, we
are not waiving our right to submit the Motion to Dismiss."[10]It is plain that under these circumstances, no waiver or abandonment can
be imputed to KUBOTA.
The essential question really is that posed in the first and second assigned errors, i.e., what construction should be placed on
the stipulation in the Dealership Agreement that "(a)ll suits arising out of this Agreement shall be filed with/in the proper Courts of
Quezon City."
Rule 4 of the Rules of Court sets forth the principles generally governing the venue of actions, whether real or personal, or
involving persons who neither reside nor are found in the Philippines or otherwise. Agreements on venue are explicitly allowed. "By
written agreement of the parties the venue of an action may be changed or transferred from one province to another." [11]Parties may
by stipulation waive the legal venue and such waiver is valid and effective being merely a personal privilege, which is not c ontrary to
public policy or prejudicial to third persons. It is a general principle that a person may renounce any right which the law gives unless
such renunciation would be against public policy. [12]
Written stipulations as to venue may be restrictive in the sense that the suit may be filed only in the place agreed upon, or merely
permissive in that the parties may file their suit not only in the place agreed upon but also in the places fixed by law (Rule 4, specifically).
As in any other agreement, what is essential is the ascertainment of the intention of the parties respecting the matter.
Since convenience is the raison d'etre of the rules of venue,[13] it is easy to accept the proposition that normally, venue stipulations
should be deemed permissive merely, and that interpretation should be adopted which most serves the parties' convenience. In other
words, stipulations designating venues other than those assigned by Rule 4 should be interpreted as designed to make it more
convenient for the parties to institute actions arising from or in relation to their agreements; that is to say, as simply adding to or
expanding the venues indicated in said Rule 4.
On the other hand, because restrictive stipulations are in derogation of this general policy, the language of the parties must be
so clear and categorical as to leave no doubt of their intention to limit the place or places, or to fix places other than those indicated in
Rule 4, for their actions. This is easier said than done, however, as an examination of precedents involving venue covenants will
immediately disclose.
In at least thirteen (13) cases, this Court construed the venue stipulations involved as merely permissive. These are:
1. Polytrade Corporation v. Blanco, decided in 1969.[14] In this case, the venue stipulation was as follows:
"The parties agree to sue and be sued in the Courts of Manila."
This Court ruled that such a provision "does not preclude the filing of suits in the residence of the plaintiff or the defendant. The plain meaning
is that the parties merely consented to be sued in Manila. Qualifying or restrictive words which would indicate that Manila and Manila alone is
the venue are totally absent therefrom. It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals to which they
may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of Rule 4."
The Polytrade doctrine was reiterated expressly or implicitly in subsequent cases, numbering at least ten (10).
2. Nicolas v. Reparations Commission, decided in 1975.[15] In this case, the stipulation on venue read:
"** (A)ll legal actions arising out of this contract ** may be brought in and submitted to the jurisdiction of the proper courts in the City of Manila."
This Court declared that the stipulation does not clearly show the intention of the parties to limit the venue of the action to the City of Manila only.
"It must be noted that the venue in personal actions is fixed for the convenience of the plaintiff and his witnesses and to promote the ends of justice.
We cannot conceive how the interest of justice may be served by confining the situs of the action to Manila, considering that the residences or
offices of all the parties, including the situs of the acts sought to be restrained or required to be done, are all within the territorial jurisdiction of
Rizal. ** Such agreements should be construed reasonably and should not be applied in such a manner that it would work more to the inconvenience
of the parties without promoting the ends of justice."
3. Lamis Ents. v. Lagamon, decided in 1981.[16] Here, the stipulation in the promissory note and the chattel mortgage specifed Davao City as the
venue.
The Court, again citing Polytrade, stated that the provision "does not preclude the filing of suits in the residence of plaintiff or defendant under
Section 2(b), Rule 4, Rules of Court, in the absence of qualifying or restrictive words in the agreement which would indicate that the place named
is the only venue agreed upon by the parties. The stipulation did not deprive ** (the affected party) of his right to pursue remedy in the court
specifically mentioned in Section 2(b) of Rule 4, Rules of Court.Renuntiato non praesumitur."
4. Capati v. Ocampo, decided in 1982.[17] In this case, the provision of the contract relative to venue was as follows:
" ** (A)ll actions arising out, or relating to this contract may be instituted in the Court of First Instance of the City of Naga."
The Court ruled that the parties "did not agree to file their suits solely and exclusively with the Court of First Instance of Naga;" they "merely
agreed to submit their disputes to the said court without waiving their right to seek recourse in the court specifically indicated in Section 2 (b),
Rule 4 of the Rules of Court."
5. Western Minolco v. Court of Appeals, decided in 1988.[18] Here, the provision governing venue read:
"The parties stipulate that the venue of the actions referred to in Section 12.01 shall be in the City of Manila."
The court restated the doctrine that a stipulation in a contract fixing a definite place for the institution of an action arising in connection therewith,
does not ordinarily supersede the general rules set out in Rule 4, and should be construed merely as an agreement on an additional forum, not as
limiting venue to the specified place.
6. Moles v. Intermediate Appellate Court, decided in 1989.[19] In this proceeding, the Sales Invoice of a linotype machine stated that the proper
venue should be Iloilo.
This Court held that such an invoice was not the contract of sale of the linotype machine in question; consequently the printed provisions of the
invoice could not have been intended by the parties to govern the sale of the machine, especially since said invoice was used for other types of
transactions. This Court said: "It is obvious that a venue stipulation, in order to bind the parties, must have been intelligently and deliberately
intended by them to exclude their case from the reglementary rules on venue. Yet, even such intended variance may not necessarily be given judicial
approval, as, for instance, where there are no restrictive or qualifying words in the agreement indicating that venue cannot be laid in any place other
than that agreed upon by the parties, and in contracts of adhesion."
7. Hongkong and Shanghai Banking Corp. v. Sherman, decided in 1989.[20] Here the stipulation on venue read:
" ** (T)his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in
Singapore shall have jurisdiction over all disputes arising under this guarantee **."
This Court held that due process dictates that the stipulation be liberally construed.The parties did not thereby stipulate that only the courts of
Singapore, to the exclusion of all the others, had jurisdiction. The clause in question did not operate to divest Philippine courts of jurisdiction.

8
8. Nasser v. Court of Appeals, decided in 1990,[21] in which the venue stipulation in the promissory notes in question read: " ** (A)ny action
involving the enforcement of this contract shall be brought within the City of Manila, Philippines." The Court's verdict was that such a provision
does not as a rule supersede the general rule set out in Rule 4 of the Rules of Court, and should be construed merely as an agreement on an
additional forum, not as limiting venue to the specified place. 9. Surigao Century Sawmill Co., Inc. v. Court of Appeals, decided in 1993:[22] In
this case, the provision concerning venue was contained in a contract of lease of a barge, and read as follows:
" ** (A)ny disagreement or dispute arising out of the lease shall be settled by the parties in the proper court in the province of Surigao del Norte."
The venue provision was invoked in an action filed in the Regional Trial Court of Manila to recover damages arising out of marine subrogation
based on a bill of lading. This Court declared that since the action did not refer to any disagreement or dispute arising out of the contract of lease
of the barge, the venue stipulation in the latter did not apply; but that even assuming the contract of lease to be applicable, a statement in a contract
as to venue does not preclude the filing of suits at the election of the plaintiff where no qualifying or restrictive words indicate that the agreed place
alone was the chosen venue.
10. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Circle Financial Corporation, et al., decided in 1993.[23] Here, the
stipulation on venue was contained in promissory notes and read as follows:
"I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action which may arise out of this promissory note."
This Court held the stipulation to be merely permissive since it did not lay the venue in Valenzuela exclusively or mandatorily. The plain or ordinary
import of the stipulation is the grant of authority or permission to bring suit in
Valenzuela; but there is not the slightest indication of an intent to bar suit in other competent courts. The Court stated that there is no necessary or
customary connection between the words "any legal action" and an intent strictly to limit permissible venue to the Valenzuela courts. Moreover,
since the venue stipulations include no qualifying or exclusionary terms, express reservation of the right to elect venue under the ordinary rules was
unnecessary in the case at bar. The Court made clear that "to the extent Bautista andHoechst Philippines are inconsistent with Polytrade (an en
banc decision later in time than Bautista) and subsequent cases reiterating Polytrade, Bautista and Hoechst Philippines have been rendered obsolete
by the Polytrade line of cases."
11. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Brinell Metal Works Corp., et al., decided in 1994:[24] In this case the
subject promissory notes commonly contained a stipulation reading:
"I/we expressly submit to the jurisdiction of the courts of Manila, any legal action which may arise out of this promissory note." the Court restated
the rule in Polytrade that venue stipulations in a contract, absent any qualifying or restrictive words, should be considered merely as an agreement
on additional forum, not limiting venue to the specified place. They are not exclusive, but rather, permissive. For to restrict venue only to that
place stipulated in the agreement is a construction purely based on technicality; on the contrary, the stipulation should be liberally construed. The
Court stated: "The later cases of Lamis Ents v. Lagamon [108 SCRA 1981], Capati v. Ocampo [113 SCRA 794 [1982], Western Minolco v. Court
of Appeals [167 SCRA 592 [1988], Moles v. Intermediate Appellate Court [169 SCRA 777 [1989], Hongkong and Shanghai
Banking Corporation v. Sherman [176 SCRA 331], Nasser v. Court of Appeals [191 SCRA 783 [1990] and just recently, Surigao Century
Sawmill Co. v. Court of Appeals [218 SCRA 619 [1993], all treaded the path blazed by Polytrade. The conclusion to be drawn from all these
is that the more recent jurisprudence shall properly be deemed modificatory of the old ones."
The lone dissent observed: "There is hardly any question that a stipulation of contracts of adhesion, fixing venue to a specified place only, is void
for, in such cases, there would appear to be no valid and free waiver of the venue fixed by the Rules of Courts. However, in cases where both parties
freely and voluntarily agree on a specified place to be the venue of actions, if any, between them, then the only considerations should be whether
the waiver (of the venue fixed by the Rules of Court) is against public policy and whether the parties would suffer, by reason of such waiver, undue
hardship and inconvenience; otherwise, such waiver of venue should be upheld as binding on the parties. The waiver of venue in such cases is
sanctioned by the rules on jurisdiction." Still other precedents adhered to the same principle.
12. Tantoco v. Court of Appeals, decided in 1977.[25] Here, the parties agreed in theirsales contracts that the courts of Manila shall have
jurisdiction over any legal action arising out of their transaction. This Court held that the parties agreed merely to add the courts of Manila as
tribunals to which they may resort in the event of suit, to those indicated by the law: the courts either of Rizal, of which private respondent was a
resident, or of Bulacan, where petitioner resided.
13. Sweet Lines, Inc. v. Teves, promulgated in 1987.[26] In this case, a similar stipulation on venue, contained in the shipping ticket issued by
Sweet Lines, Inc. (as Condition 14) --
" ** that any and all actions arising out or the condition and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent
courts in the City of Cebu"
-- was declared unenforceable, being subversive of public policy. The Court explained that the philosophy on transfer of venue of actions is the
convenience of the plaintiffs as well as his witnesses and to promote the ends of justice; and considering the expense and trouble a passenger
residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all.
On the other hand, in the cases hereunder mentioned, stipulations on venue were held to be restrictive, or mandatory.
1. Bautista vs. De Borja, decided in 1966.[27] In this case, the contract provided that in case of any litigation arising therefrom or in connection
therewith, the venue of the action shall be in the City of Manila. This Court held that without either party reserving the right to choose the venue
of action as fixed by law, it can reasonably be inferred that the parties intended to definitely fix the venue of the action, in connection with the
contract sued upon in the proper courts of the City of Manila only, notwithstanding that neither party is a resident of Manila.
2. Gesmundo v. JRB Realty Corporation, decided in 1994.[28] Here the lease contract declared that
" ** (V)enue for all suits, whether for breach hereof or damages or any cause between the LESSOR and LESSEE, and persons claiming under each,
** (shall be) the courts of appropriate jurisdiction in Pasay City. . ."
This Court held that: "(t)he language used leaves no room for interpretation. It clearly evinces the parties' intent to limit to the 'courts of appropriate
jurisdiction of Pasay City' the venue for all suits between the lessor and the lessee and those between parties claiming under them. This means a
waiver of their right to institute action in the courts provided for in Rule
4, sec. 2(b)."
3. Hoechst Philippines, Inc. v. Torres,[29] decided much earlier, in 1978, involved a strikingly similar stipulation, which read:
" ** (I)n case of any litigation arising out of this agreement, the venue of any action shall be in the competent courts of the
Province of Rizal."
This Court held: "No further stipulations are necessary to elicit the thought that both parties agreed that any action by either of them would be filed
only in the competent courts of Rizal province exclusively."
4. Villanueva v. Mosqueda, decided in 1982.[30] In this case, it was stipulated that if the lessor violated the contract of lease he could be sued in
Manila, while if it was the lessee who violated the contract, the lessee could be sued in Masantol, Pampanga.This Court held that there was an
agreement concerning venue of action and the parties were bound by their agreement. "The agreement as to venue was not permissive but
mandatory."
5. Arquero v. Flojo, decided in 1988.[31] The condition respecting venue -- that any action against RCPI relative to the transmittal of a telegram
must be brought in the courts of Quezon City alone -- was printed clearly in the upper front portion of the form to be filled in by the sender. This
Court held that since neither party reserved the right to choose the venue of action as fixed by Section 2 [b], Rule 4, as is usually done if the

9
 parties mean to retain the right of election so granted by Rule 4, it can reasonably be inferred that the parties intended to definitely fix the venue
of action, in connection with the written contract sued upon, in the courts of Quezon City only.
An analysis of these precedents reaffirms and emphasizes the soundness of the Polytrade principle. Of the essence is the ascertainment of the
parties' intention in their agreement governing the venue of actions between them. That ascertainment must be done keeping in mind that
convenience is the foundation of venue regulations, and that that construction should be adopted which most conduces thereto. Hence, the invariable
construction placed on venue stipulations is that they do not negate but merely complement or add to the codal standards of Rule 4 of the Rules of
Court. In other words, unless the parties make very clear, by employing categorical and suitably limiting language, that they wish the venue of
actions between them to be laid only and exclusively at a definite place, and to disregard the prescriptions of Rule 4, agreements on venue are not
to be regarded as mandatory or restrictive, but merely permissive, or complementary of said rule. The fact that in their agreement the parties specify
only one of the venues mentioned in Rule 4, or fix a place for their actions different from those specified by said rule, does not, without more,
suffice to characterize the agreement as a restrictive one. There must, to repeat, be accompanying language clearly and categorically expressing
their purpose and design that actions between them be litigated only at the place named by them,[32]regardless of the general precepts of Rule 4;
and any doubt or uncertainty as to the parties' intentions must be resolved against giving their agreement a restrictive or mandatory aspect. Any
other rule would permit of individual, subjective judicial interpretations without stable standards, which could well result in precedents in hopeless
inconsistency.
The record of the case at bar discloses that UNIMASTERS has its principal place of business in Tacloban City, and KUBOTA, in Quezon City.
Under Rule 4, the venue of any personal action between them is "where the defendant or any of the defendants resides or may be found, or where
the plaintiff or any of the plaintiffs resides, at the election of the plaintiff."[33] In other words, Rule 4 gives UNIMASTERS the option to sue
KUBOTA for breach of contract in the Regional Trial Court of either Tacloban City or Quezon City.
But the contract between them provides that " ** All suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon City,"
without mention of Tacloban City. The question is whether this stipulation had the effect of effectively eliminating the latter as an optional
venue and limiting litigation between UNIMASTERS and KUBOTA only and exclusively to Quezon City.
In light of all the cases above surveyed, and the general postulates distilled therefrom, the question should receive a negative answer. Absent
additional words and expressions definitely and unmistakably denoting the parties' desire and intention that actions between them should be
ventilated only at the place selected by them, Quezon City -- or other contractual provisions clearly evincing the same desire and intention -- the
stipulation should be construed, not as confining suits between the parties only to that one place, Quezon City, but as allowing suits either in
Quezon City or Tacloban City, at the option of the plaintiff (UNIMASTERS in this case).
One last word, respecting KUBOTA's theory that the Regional Trial Court had "no jurisdiction to take cognizance of ** (UNIMASTERS') action
considering that venue was improperly laid." This is not an accurate statement of legal principle. It equates venue with jurisdiction; but venue has
nothing to do with jurisdiction, except in criminal actions. This is fundamental. [34] The action at bar, for the recovery of damages in an amount
considerably in excess of P20,000.00, is assuredly within the jurisdiction of a Regional Trial Court.[35] Assuming that venue were improperly laid
in the Court where the action was instituted, the Tacloban City RTC, that would be a procedural, not a jurisdictional impediment -- precluding
ventilation of the case before that Court of wrong venue notwithstanding that the subject matter is within its jurisdiction. However, if the objection
to venue is waived by the failure to set it up in a motion to dismiss, [36] the RTC would proceed in perfectly regular fashion if it then tried and
decided the action.
This is true also of real actions. Thus, even if a case "affecting title to, or for recovery of possession, or for partition or condemnation of, or
foreclosure of mortgage on, real property"[37] were commenced in a province or city other than that "where the property or any part thereof
lies,"[38] if no objection is seasonably made in a motion to dismiss, the objection is deemed waived, and the Regional Trial Court would be acting
entirely within its competence and authority in proceeding to try and decide the suit.[39]
WHEREFORE, the appealed judgment of the Court of Appeals is REVERSED, the Order of the Regional Trial Court of Tacloban
City, Branch 6, dated February 3, 1994, is REINSTATED and AFFIRMED, and said Court is DIRECTED to forthwith proceed with Civil
Case No. 93-12-241 in due course. SO ORDERED.

FIRST DIVISION
[G.R. No. 146089. December 13, 2001]
VIRGINIA GOCHAN, LOUISE GOCHAN, LAPU-LAPU REAL ESTATE CORPORATION, FELIX GOCHAN
AND SONS REALTY CORPORATION, MACTAN REALTY DEVELOPMENT
CORPORATION, petitioners, vs. MERCEDES GOCHAN, ALFREDO GOCHAN, ANGELINA GOCHANHERNAEZ, MA.
MERCED GOCHAN GOROSPE, CRISPO GOCHAN, JR., and MARLON
GOCHAN, respondents.
D E C I S I O N YNARES-SANTIAGO, J.:
This is a petition for review seeking to set aside the decision of the Court of Appeals dated September 10, 1999 in CAG.R. SP No. 49084,[1]
as well as its Resolution[2] dated November 22, 2000, denying the Motion for Reconsideration. Respondents were stockholders of the Felix Gochan
and Sons Realty Corporation and the Mactan Realty Development Corporation. Sometime in 1996, respondents offered to sell their shares in the
two corporations to the individual petitioners, the heirs of the late Ambassador Esteban Gochan, for and in consideration of the sum of
P200,000,000.00. Petitioners accepted and paid the said amount to respondents. Accordingly, respondents issued to petitioners the necessary
Receipts.[3]In addition, respondents executed their respective Release, Waiver and Quitclaim,[4]wherein they undertook that they would not initiate
any suit, action or complaint against petitioners for whatever reason or purpose.
In turn, respondents, through Crispo Gochan, Jr., required individual petitioners to execute a promissory note, [5] undertaking not to divulge
the actual consideration they paid for the shares of stock. For this purpose, Crispo Gochan, Jr. drafted a document entitled promissory note in his
own handwriting and had the same signed by Felix Gochan, III, Louise Gochan and Esteban Gochan, Jr.
Unbeknown to petitioners, Crispo Gochan, Jr. inserted in the promissory note a phrase that says, Said amount is in partial consideration of
the sale.[6]
On April 3, 1998, respondents filed a complaint against petitioners for specific performance and damages with the Regional Trial Court of
Cebu City, Branch 11, docketed as Civil Case No. CEB-21854. Respondents alleged that sometime in November 1996, petitioner Louise Gochan,
on behalf of all the petitioners, offered to buy their shares of stock, consisting of 254 shares in the Felix Gochan and Sons Realty Corporation and
1,624 shares of stock in the Mactan Realty Development Corporation; and that they executed a Provisional Memorandum of Agreement, wherein
they enumerated the following as consideration for the sale:
1. Pesos: Two Hundred Million Pesos (P200M)
2. Two (2) hectares more or less of the fishpond in Gochan compound, Mabolo, Lot 4F-2-B
3. Lot 2, Block 9 with an area of 999 square meters in Gochan Compound, Mabolo, Cebu
4. Three Thousand (3,000) square meters of Villas Magallanes in Mactan, Cebu
5. Lot 423 New Gem Building with an area of 605 square meters.[7]

10
 Accordingly, respondents claimed that they are entitled to the conveyance of the aforementioned properties, in addition to the amount of
P200,000,000.00, which they acknowledge to have received from petitioners. Further, respondents prayed for moral damages of P15,000,000.00,
exemplary damages of P2,000,000.00, attorneys fees of P14,000,000.00, and litigation expenses of P2,000,000.00.
Petitioners filed their answer, raising the following affirmative defenses: (a) lack of jurisdiction by the trial court for non-payment of the
correct docket fees; (b) unenforceability of the obligation to convey real properties due to lack of a written memorandum thereof, pursuant to the
Statute of Frauds; (c) extinguishment of the obligation by payment; (d) waiver, abandonment and renunciation by respondent of all their claims
against petitioners; and (e) non-joinder of indispensable parties.
On August 7, 1998, petitioners filed with the trial court a motion for a preliminary hearing on the affirmative defenses. In an Order dated
August 11, 1998, the trial court denied the motion, ruling as follows:
As the grant of said motion lies in the discretion of the court under Section 6 of Rule 16 of the 1997 Rules of Civil Procedure, this Court in the
exercise of its discretion, hereby denies the said motion because the matters sought to be preliminarily heard do not appear to be tenable. For one,
the statute of frauds does not apply in this case because the contract which is the subject matter of this case is already an executed contract. The
statute of frauds applies only to executory contracts. According to Dr. Arturo M. Tolentino, a leading authority in civil law, since the statute of
frauds was enacted for the purpose of preventing frauds, it should not be made the instrument to further them. Thus, where one party has performed
his obligation under a contract, equity would agree that all evidence should be admitted to prove the alleged agreement (PNB vs. Philippine
Vegetable Oil Company, 49 Phil. 897). For another, the contention of the defendants that the claims of the plaintiffs are already extinguished by
full payment thereof does not appear to be indubitable because the plaintiffs denied under oath the due execution and genuineness of the receipts
which are attached as Annexes 1-A, 1-B and
1-C of defendants answer. This issue therefore has to be determined on the basis of preponderance of evidence to be
adduced by both parties. Then, still for another, the contention that the complaint is defective because it allegedly has failed to implead indispensable
parties appears to be wanting in merit because the parties to the memorandum of agreement adverted to in the complaint are all parties in this case.
Then the matter of payment of docketing and filing fees is not a fatal issue in this case because the record shows that the plaintiffs had paid at least
P165,000.00 plus in the form of filing and docketing fees. Finally, regarding exerting earnest efforts toward a compromise by the plaintiffs, the
defendants cannot say that there is an absence of an allegation to this effect in the complaint because paragraph 11 of the complaint precisely states
that before filing this case, earnest efforts toward a compromise have been made.
Petitioners motion for reconsideration of the above Order was denied by the trial court on September 11, 1998.
Petitioners thus filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 49084. On September 10, 1999, the
Court of Appeals rendered the appealed decision dismissing the petition on the ground that respondent court did not commit grave abuse of
discretion, tantamount to lack or in excess of jurisdiction in denying the motion to hear the affirmative defenses. [8]
Again, petitioners filed a motion for reconsideration, but the same was denied by the Court of Appeals in its assailed
Resolution of November 22, 2000.[9]
Petitioners, thus, brought the present petition for review anchored on the following grounds:
I.
THE COURT OF APPEALS COMMITTED GRAVE AND PALPABLE ERROR IN FINDING THAT THE CORRECT DOCKET FEES HAVE
BEEN PAID.
II.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN RULING THAT THE PMOA WAS A PARTIALLY EXECUTED
CONTRACT AND HENCE NOT COVERED BY THE STATUTE OF FRAUDS.
III.
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN DECIDING THAT THE CLAIMS OF PRIVATE RESPONDENTS
HAVE NOT BEEN EXTINGUISHED BY PAYMENT OR FULL SETTLEMENT DESPITE THE PRESENCE OF RECEIPTS SIGNED
BY THE PRIVATE RESPONDENTS SHOWING THE CONTRARY.
IV.
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN RESOLVING THAT FELIX GOCHAN III AND
ESTEBAN GOCHAN, JR. ARE NOT INDISPENSABLE PARTIES AND THEREFORE NEED NOT BE IMPLEADED
AS PARTIES.[10]
Respondents filed their Comment,[11] arguing, in fine, that petitioners are guilty of forum-shopping when they filed two petitions for certiorari
with the Court of Appeals; and that the Court of Appeals did not err in dismissing the petition for certiorari.
The instant petition has merit.
The rule is well-settled that the court acquires jurisdiction over any case only upon the payment of the prescribed docket fees. In the case of
Sun Insurance Office, Ltd. (SIOL) v. Asuncion,[12] this Court held that it is not simply the filing of the complaint or appropriate initiatory pleading,
but the payment of the prescribed docket fee that vests a trial court with jurisdiction over the subject matter or nature of the action.
Respondents maintain that they paid the correct docket fees in the amount of P165,000.00 when they filed the complaint with the trial court.
Petitioners, on the other hand, contend that the complaint is in the nature of a real action which affects title to real properties; hence, respondents
should have alleged therein the value of the real properties which shall be the basis for the assessment of the correct docket fees.
The Court of Appeals found that the complaint was one for specific performance and incapable of pecuniary estimation. We do not agree.
It is necessary to determine the true nature of the complaint in order to resolve the issue of whether or not respondents paid the correct amount
of docket fees therefor. In this jurisdiction, the dictum adhered to is that the nature of an action is determined by the allegations in the body of the
pleading or complaint itself, rather than by its title or heading.[13] The caption of the complaint below was denominated as one for specific
performance and damages. The relief sought, however, is the conveyance or transfer of real property, or ultimately, the execution of deeds of
conveyance in their favor of the real properties enumerated in the provisional memorandum of agreement. Under these circumstances, the case
below was actually a real action, affecting as it does title to or possession of real property.
In the case of Hernandez v. Rural Bank of Lucena,[14] this Court held that a real action is one where the plaintiff seeks the recovery of real
property or, as indicated in section 2(a) of Rule 4 (now Section 1, Rule 4 of the 1997 Rules of Civil Procedure), a real action is an action affecting
title to or recovery of possession of real property.
It has also been held that where a complaint is entitled as one for specific performance but nonetheless prays for the issuance of a deed of sale
for a parcel of land, its primary objective and nature is one to recover the parcel of land itself and, thus, is deemed a real action. In such a case, the
action must be filed in the proper court where the property is located: In this Court, the appellant insists that her action is one for specific
performance, and, therefore, personal and transitory in nature.
This very issue was considered and decided by this Court in the case of Manuel B. Ruiz vs. J.M. Tuason & Co., Inc. et al., L-18692, promulgated
31 January 1963.There the Court, by unanimous vote of all the Justices, held as follows: This contention has no merit. Although appellants complaint
is entitled to be one for specific performance, yet the fact that he asked that a deed of sale of a parcel of land situated in Quezon City be issued in
his favor and that a transfer certificate of title covering said parcel of land be issued to him shows that the primary objective and nature of the action
is to recover the parcel of land itself because to execute in favor of appellant the conveyance requested there is need to make a finding that he is the
owner of the land which in the last analysis resolves itself into an issue of ownership.Hence, the action must be commenced in the province where

11
the property is situated pursuant to Section 3, Rule 5, of the Rules of Court, which provides that actions affecting title to or recovery of possession
of real property shall be commenced and tried in the province where the property or any part thereof lies.[15]
In the case at bar, therefore, the complaint filed with the trial court was in the nature of a real action, although ostensibly denominated as one
for specific performance. Consequently, the basis for determining the correct docket fees shall be the assessed value of the property, or the estimated
value thereof as alleged by the claimant. Rule 141, Section 7, of the Rules of Court, as amended by A.M. No. 00-2-01-SC, provides:
Section 7. Clerks of Regional Trial Courts. - x x x
(b) xxx
In a real action, the assessed value of the property, or if there is none, the estimated value thereof shall be alleged by the claimant and shall be the
basis in computing the fees.
We are not unmindful of our pronouncement in the case of Sun Insurance,[16] to the effect that in case the filing of the initiatory pleading is
not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable
prescriptive period. However, the liberal interpretation of the rules relating to the payment of docket fees as applied in the case of Sun Insurance
cannot apply to the instant case as respondents have never demonstrated any willingness to abide by the rules and to pay the correct docket fees.
Instead, respondents have stubbornly insisted that the case they filed was one for specific performance and damages and that they actually paid the
correct docket fees therefor at the time of the filing of the complaint. Thus, it was stated in the case of Sun Insurance:[17] The principle in Manchester
could very well be applied in the present case. The pattern and the intent to defraud the government of the docket fee due it is obvious not only in
the filing of the original complaint but also in the filing of the second amended complaint.
However, in Manchester, petitioner did not pay any additional docket fee until the case was decided by this Court on May 7, 1987. Thus, in
Manchester, due to the fraud committed on the government, this Court held that the court a quo did not acquire jurisdiction over the case and that
the amended complaint could not have been admitted inasmuch as the original complaint was null and void.
In the present case, a more liberal interpretation of the rules is called for considering that, unlike Manchester, private respondent demonstrated his
willingness to abide by the rules by paying the additional docket fees as required. The promulgation of the decision in Manchester must have had
that sobering influence on private respondent who thus paid the additional docket fee as ordered by the respondent court. It triggered his change of
stance by manifesting his willingness to pay such additional docket fee as may be ordered.
Respondents accuse petitioners of forum-shopping when they filed two petitions before the Court of Appeals. Petitioners, on the other hand,
contend that there was no forum-shopping as there was no identity of issues or identity of reliefs sought in the two petitions.
We agree with petitioners that they are not guilty of forum-shopping. The deplorable practice of forum-shopping is resorted to by litigants
who, for the purpose of obtaining the same relief, resort to two different fora to increase his or her chances of obtaining a favorable judgment in
either one. In the case of Golangco v. Court of Appeals,[18] we laid down the following test to determine whether there is forum-shopping:
Ultimately, what is truly important to consider in determining whether forum-shopping exists or not is the vexation caused the courts and the parties-
litigant by a person who asks different courts and/or administrative agencies to rule on the same or related causes and/or grant the same or
substantially the same reliefs, in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same
issues.
In sum, two different orders were questioned, two distinct causes of action and issues were raised, and two objectives were sought; thus, forum
shopping cannot be said to exist in the case at bar.
Likewise, we do not find that there is forum-shopping in the case at bar. The first petition, docketed as CA-G.R. SP. No. 49084, which is now
the subject of the instant petition, involved the propriety of the affirmative defenses relied upon by petitioners in Civil Case No. CEB-21854. The
second petition, docketed as CA-G.R. SP No. 54985, raised the issue of whether or not public respondent Judge Dicdican was guilty of manifest
partiality warranting his inhibition from further hearing Civil Case No. CEB-21854.
More importantly, the two petitions did not seek the same relief from the Court of Appeals. In CA-G.R. SP. No. 49084, petitioners prayed,
among others, for the annulment of the orders of the trial court denying their motion for preliminary hearing on the affirmative defenses in Civil
Case No. CEB-21854. No such reliefs are involved in the second petition, where petitioners merely prayed for the issuance of an order enjoining
public respondent Judge Dicdican from further trying the case and to assign a new judge in his stead.
True, the trial court has the discretion to conduct a preliminary hearing on affirmative defenses. In the case at bar, however, the trial court
committed a grave abuse of its discretion when it denied the motion for preliminary hearing. As we have discussed above, some of these defenses,
which petitioners invoked as grounds for the dismissal of the action, appeared to be indubitable, contrary to the pronouncement of the trial court.
Indeed, the abuse of discretion it committed amounted to an evasion of positive duty or virtual refusal to perform a duty enjoined by law, or to act
at all in contemplation of law,[19] which would have warranted the extraordinary writ of certiorari. Hence, the Court of Appeals erred when it
dismissed the petition for certiorari filed by petitioners.
WHEREFORE, in view of the foregoing, the instant petition is GRANTED.This case is REMANDED to the Regional Trial Court of Cebu
City, Branch 11, which is directed to forthwith conduct the preliminary hearing on the affirmative defenses in Civil Case No. CEB-21854.
SO ORDERED.

G.R. No. 166920 February 19, 2007

PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS PETER HENRICHSEN, Petitioners, vs.
KLAUS K. SCHONFELD, Respondent.
D E C I S I O N CALLEJO, SR.,
J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court of the Decision 1 of the Court of Appeals
(CA) in CA-G.R. SP No. 76563. The CA decision reversed the Resolution of the National Labor Relations Commission (NLRC) in
NLRC NCR CA No. 029319-01, which, in turn, affirmed the Decision of the Labor Arbiter in NLRC NCR Case No. 30-12-04787-00
dismissing the complaint of respondent Klaus K. Schonfeld.
The antecedent facts are as follows:
Respondent is a Canadian citizen and was a resident of New Westminster, British Columbia, Canada. He had been a consultant in
the field of environmental engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a corporation duly established
and incorporated in accordance with the laws of the Philippines. The primary purpose of PPI was to engage in the business of providing
specialty and technical services both in and out of the Philippines. 2 It is a subsidiary of Pacific Consultants International of Japan
(PCIJ). The president of PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan. Henrichsen
commuted from Japan to Manila and vice versa, as well as in other countries where PCIJ had business. In 1997, PCIJ decided to
engage in consultancy services for water and sanitation in the Philippines. In October
1997, respondent was employed by PCIJ, through Henrichsen, as Sector Manager of PPI in its Water and Sanitation Department.
However, PCIJ assigned him as PPI sector manager in the Philippines. His salary was to be paid partly by PPI and PCIJ.
On January 7, 1998, Henrichsen transmitted a letter of employment to respondent in Canada, requesting him to accept the same
and affix his conformity thereto. Respondent made some revisions in the letter of employment and signed the contract. 3 He then
sent a copy to Henrichsen. The letter of employment reads: Mr. Klaus K. Schonfeld II-365 Ginger Drive
New Westminster, B.C.

12
Canada V3L 5L5
Tokyo 7
January 1998
Dear Mr. Schonfeld,
Letter of Employment
This Letter of Employment with the attached General Conditions of Employment constitutes the agreement under which you will be
engaged by our Company on the terms and conditions defined hereunder. In case of any discrepancies or contradictions between
this Letter of Employment and the General Conditions of Employment, this Letter of Employment will prevail.
You will, from the date of commencement, be ["seconded"] to our subsidiary Pacicon Philippines, Inc. in Manila, hereinafter referred
as Pacicon. Pacicon will provide you with a separate contract, which will define that part of the present terms and conditions for which
Pacicon is responsible. In case of any discrepancies or contradictions between the present Letter of Employment and the contract
with Pacicon Philippines, Inc. or in the case that Pacicon should not live up to its obligations, this Letter of Employment will prevail.
1. Project Country: The Philippines with possible short-term assignments in other countries.
2. Duty Station: Manila, the Philippines.
3. Family Status: Married.
4. Position: Sector Manager, Water and Sanitation.
5. Commencement: 1st October 1997.
6. Remuneration: US$7,000.00 per month. The amount will be paid partly as a local salary (US$2,100.00 per
month) by Pacicon and partly as an offshore salary (US$4,900.00) by PCI to bank accounts to be nominated by
you.
A performance related component corresponding to 17.6% of the total annual remuneration, subject to satisfactory
performance against agreed tasks and targets, paid offshore.
7. Accommodation: The company will provide partly furnished accommodation to a rent including association fees,
taxes and VAT not exceeding the Pesos equivalent of US$2,900.00 per month.
8. Transportation: Included for in the remuneration.
9. Leave Travels: You are entitled to two leave travels per year.
10. Shipment of Personal
Effects: The maximum allowance is US$4,000.00.
11. Mobilization
Travel: Mobilization travel will be from New Westminster, B.C., Canada.
This letter is send (sic) to you in duplicate; we kindly request you to sign and return one copy to us. Yours sincerely,
Pacific Consultants International
Jens Peter Henrichsen
Above terms and conditions accepted
Date: 2 March 1998
(Sgd.)
Klaus Schonfeld as annotated
and initialed4
Section 21 of the General Conditions of Employment appended to the letter of employment reads:
21 Arbitration
Any question of interpretation, understanding or fulfillment of the conditions of employment, as well as any question arising between
the Employee and the Company which is in consequence of or connected with his employment with the Company and which can not
be settled amicably, is to be finally settled, binding to both parties through written submissions, by the Court of Arbitration in London. 5
Respondent arrived in the Philippines and assumed his position as PPI Sector Manager. He was accorded the status of a resident
alien.
As required by Rule XIV (Employment of Aliens) of the Omnibus Rules Implementing the Labor Code, PPI applied for an Alien
Employment Permit (Permit) for respondent before the Department of Labor and Employment (DOLE). It appended
respondent’s contract of employment to the application.1awphi1.net On February 26, 1999, the DOLE granted the application
and issued the Permit to respondent. It reads: Republic of the Philippines
Department of Labor & Employment
National Capital Region
ALIEN EMPLOYMENT PERMIT
ISSUED TO: SCHONFELD, KLAUS KURT
DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian POSITION: VP –
WATER & SANITATION
EMPLOYER: PACICON PHILIPPINES, INC.
ADDRESS: 27/F Rufino Pacific Towers Bldg., Ayala Ave., Makati City P E R M I T
ISSUED ON: February 26, 1999 SIGNATURE OF BEARER:
VALID UNTIL: January 7, 2000 (Sgd.)
APPROVED: BIENVENIDO S. LAGUESMA
By: MAXIMO B. ANITO
REGIONAL DIRECTOR
(Emphasis supplied)6
Respondent received his compensation from PPI for the following periods: February to June 1998, November to December 1998, and
January to August 1999. He was also reimbursed by PPI for the expenses he incurred in connection with his work as sector manager.
He reported for work in Manila except for occasional assignments abroad, and received instructions from Henrichsen. 7
On May 5, 1999, respondent received a letter from Henrichsen informing him that his employment had been terminated effective
August 4, 1999 for the reason that PCIJ and PPI had not been successful in the water and sanitation sector in the Philippines.8
However, on July 24, 1999, Henrichsen, by electronic mail, 9 requested respondent to stay put in his job after August 5, 1999, until
such time that he would be able to report on certain projects and discuss all the opportunities he had developed. 10 Respondent
continued his work with PPI until the end of business hours on October 1, 1999.

13
Respondent filed with PPI several money claims, including unpaid salary, leave pay, air fare from Manila to Canada, and cost of
shipment of goods to Canada. PPI partially settled some of his claims (US$5,635.99), but refused to pay the rest.
On December 5, 2000, respondent filed a Complaint 11 for Illegal Dismissal against petitioners PPI and Henrichsen with the Labor
Arbiter. It was docketed as NLRC-NCR Case No. 30-12-04787-00.
In his Complaint, respondent alleged that he was illegally dismissed; PPI had not notified the DOLE of its decision to close one of its
departments, which resulted in his dismissal; and they failed to notify him that his employment was terminated after August 4, 1999.
Respondent also claimed for separation pay and other unpaid benefits. He alleged that the company acted in bad faith and disregarded
his rights. He prayed for the following reliefs:
1. Judgment be rendered in his favor ordering the respondents to reinstate complainant to his former position without
loss of seniority and other privileges and benefits, and to pay his full backwages from the time compensation was with held
(sic) from him up to the time of his actual reinstatement. In the alternative, if reinstatement is no longer feasible, respondents
must pay the complainant full backwages,
and separation pay equivalent to one month pay for every year of service, or in the amount of
US$16,400.00 as separation pay;
2. Judgment be rendered ordering the respondents to pay the outstanding monetary obligation to complainant in the
amount of US$10,131.76 representing the balance of unpaid salaries, leave pay, cost of his air travel and shipment of goods
from Manila to Canada; and
3. Judgment be rendered ordering the respondent company to pay the complainant damages in the amount of no less
than US $10,000.00 and to pay 10% of the total monetary award as attorney’s fees, and costs.
Other reliefs just and equitable under the premises are, likewise, prayed for. 12 1awphi1.net
Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the Labor Arbiter had no jurisdiction over the subject
matter; and (2) venue was improperly laid. It averred that respondent was a
Canadian citizen, a transient expatriate who had left the Philippines. He was employed and dismissed by PCIJ, a foreign corporation
with principal office in Tokyo, Japan. Since respondent’s cause of action was based on his letter of employment executed in Tokyo,
Japan dated January 7, 1998, under the principle of lex loci contractus, the complaint should have been filed in Tokyo, Japan.
Petitioners claimed that respondent did not offer any justification for filing his complaint against PPI before the NLRC in the Philippines.
Moreover, under Section 12 of the General Conditions of Employment appended to the letter of employment dated January 7, 1998,
complainant and PCIJ had agreed that any employment-related dispute should be brought before the London Court of Arbitration.
Since even the Supreme Court had already ruled that such an agreement on venue is valid, Philippine courts have no jurisdiction.13
Respondent opposed the Motion, contending that he was employed by PPI to work in the Philippines under contract separate from
his January 7, 1998 contract of employment with PCIJ. He insisted that his employer was PPI, a Philippine-registered corporation; it
is inconsequential that PPI is a wholly-owned subsidiary of PCIJ because the two corporations have separate and distinct
personalities; and he received orders and instructions from Henrichsen who was the president of PPI. He further insisted that the
principles of forum non conveniens and lex loci contractus do not apply, and that although he is a Canadian citizen, Philippine Labor
Laws apply in this case.
Respondent adduced in evidence the following contract of employment dated January 9, 1998 which he had entered into with
Henrichsen:
Mr. Klaus K. Schonfeld II-
365 Ginger Drive New
Westminster, B.C.
Canada V3L 5L5
Manila 9 January, 1998
Dear Mr. Schonfeld,
Letter of Employment
This Letter of Employment with the attached General Conditions of Employment constitutes the agreement, under which you will be
engaged by Pacicon Philippines, Inc. on the terms and conditions defined hereunder.
1. Project Country: The Philippines with possible assignments in other countries.
2. Duty Station: Manila, the Philippines.
3. Family Status: Married.
4. Position: Sector Manager – Water and Sanitation Sector.
5. Commencement: 1 January, 1998.
6. Remuneration: US$3,100.00 per month payable to a bank account to be nominated by you.
7. Accommodation: The company will provide partly furnished accommodation to a rent including association fees,
taxes and VAT not exceeding the Pesos equivalent of US$2300.00 per month.
8. Transportation: Included for in the remuneration.
9. Shipment of Personal The maximum allowance is US$2500.00 in Effects: connection with initial shipment of
personal effects from Canada.
10. Mobilization Travel: Mobilization travel will be from New Westminster, B.C., Canada. This letter is send
(sic) to you in duplicate; we kindly request you to sign and return one copy to us. Yours sincerely,
Pacicon Philippines, Inc.
Jens Peter Henrichsen President14 According to respondent, the material allegations of the complaint, not petitioners’ defenses,
determine which quasi-judicial body has jurisdiction. Section 21 of the Arbitration Clause in the General Conditions of Employment
does not provide for an exclusive venue where the complaint against PPI for violation of the Philippine Labor Laws may be filed.
Respondent pointed out that PPI had adopted two inconsistent positions: it was first alleged that he should have filed his complaint
in Tokyo, Japan; and it later insisted that the complaint should have been filed in the London Court of Arbitration. 15
In their reply, petitioners claimed that respondent’s employer was PCIJ, which had exercised supervision and control over him, and
not PPI. Respondent was dismissed by PPI via a letter of Henrichsen under the letterhead of PCIJ in Japan.16 The letter of employment
dated January 9, 1998 which respondent relies upon did not bear his (respondent’s) signature nor that of Henrichsen.
On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners’ Motion to Dismiss. The dispositive portion reads:
WHEREFORE, finding merit in respondents’ Motion to Dismiss, the same is hereby granted. The instant complaint filed by the
complainant is dismissed for lack of merit.
SO ORDERED.17

14
The Labor Arbiter found, among others, that the January 7, 1998 contract of employment between respondent and PCIJ was
controlling; the Philippines was only the "duty station" where Schonfeld was required to work under the General Conditions of
Employment. PCIJ remained respondent’s employer despite his having been sent to the Philippines. Since the parties had agreed
that any differences regarding employer-employee relationship should be submitted to the jurisdiction of the court of arbitration in
London, this agreement is controlling.
On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed the latter’s decision in toto.18
Respondent then filed a petition for certiorari under Rule 65 with the CA where he raised the following arguments:
I
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED
THE LABOR ARBITER’S DECISION CONSIDERING THAT:
A. PETITIONER’S TRUE EMPLOYER IS NOT PACIFIC CONSULTANTS INTERNATIONAL OF JAPAN BUT RESPONDENT
COMPANY, AND THEREFORE, THE LABOR ARBITER HAS JURISDICTION OVER THE INSTANT CASE; AND
B. THE PROPER VENUE FOR THE PRESENT COMPLAINT IS THE ARBITRATION BRANCH OF THE NLRC AND NOT THE
COURT OF ARBITRATION IN LONDON.
II
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY
ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DISMISSAL OF
THE COMPLAINT CONSIDERING THAT PETITIONER’S TERMINATION FROM EMPLOYMENT IS ILLEGAL:
A. THE CLOSURE OF RESPONDENT COMPANY’S WATER AND SANITATION SECTOR WAS NOT BONA
FIDE.
B. ASSUMING ARGUENDO THAT THE CLOSURE OF RESPONDENT COMPANY’S WATER
AND SANITATION SECTOR WAS JUSTIFIABLE, PETITIONER’S DISMISSAL WAS
INEFFECTUAL AS THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) AND
PETITIONER WAS NOT NOTIFIED THIRTY (30) DAYS BEFORE THE ALLEGED CLOSURE.19
Respondent averred that the absence or existence of a written contract of employment is not decisive of whether he is an employee
of PPI. He maintained that PPI, through its president Henrichsen, directed his work/duties as Sector Manager of PPI; proof of this was
his letter-proposal to the Development Bank of the Philippines for PPI to provide consultancy services for the Construction Supervision
of the Water Supply and Sanitation component of the World Bank-Assisted LGU Urban Water and Sanitation Project.20 He emphasized
that as gleaned from Alien Employment Permit (AEP) No. M-029908-5017 issued to him by DOLE on February 26, 1999, he is an
employee of PPI. It was PPI president Henrichsen who terminated his employment; PPI also paid his salary and reimbursed his
expenses related to transactions abroad. That PPI is a wholly-owned subsidiary of PCIJ is of no moment because the two corporations
have separate and distinct personalities.
The CA found the petition meritorious. Applying the four-fold test21 of determining an employer-employee relationship, the CA
declared that respondent was an employee of PPI. On the issue of venue, the appellate court declared that, even under the January
7, 1998 contract of employment, the parties were not precluded from bringing a case related thereto in other venues. While there
was, indeed, an agreement that issues between the parties were to be resolved in the London Court of Arbitration, the venue is not
exclusive, since there is no stipulation that the complaint cannot be filed in any other forum other than in the Philippines. On
November 25, 2004, the CA rendered its decision granting the petition, the decretal portion of which reads: WHEREFORE, the
petition is GRANTED in that the assailed Resolutions of the NLRC are hereby REVERSED and SET ASIDE. Let this case be
REMANDED to the Labor Arbiter a quo for disposition of the case on the merits.
SO ORDERED.22
A motion for the reconsideration of the above decision was filed by PPI and Henrichsen, which the appellate court denied for lack of
merit.23
In the present recourse, PPI and Henrichsen, as petitioners, raise the following issues:
I
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT AN EMPLOYMENT RELATIONSHIP
EXISTED BETWEEN PETITIONERS AND RESPONDENT DESPITE THE UNDISPUTED FACT THAT
RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT
CONTRACT ABROAD, AND WAS MERELY "SECONDED" TO PETITIONERS SINCE HIS WORK ASSIGNMENT WAS IN MANILA.
II
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE LABOR ARBITER A QUO HAS JURISDICTION OVER
RESPONDENT’S CLAIM DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED
ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS
EMPLOYMENT CONTRACT ABROAD, AND HAD AGREED THAT ANY DISPUTE BETWEEN THEM "SHALL
BE FINALLY SETTLED BY THE COURT OF ARBITRATION IN LONDON."24
Petitioners fault the CA for reversing the findings of the Labor Arbiter and the NLRC. Petitioners aver that the findings of the Labor
Arbiter, as affirmed by the NLRC, are conclusive on the CA. They maintain that it is not within the province of the appellate court in a
petition for certiorari to review the facts and evidence on record since there was no conflict in the factual findings and conclusions of
the lower tribunals. Petitioners assert that such findings and conclusions, having been made by agencies with expertise on the subject
matter, should be deemed binding and conclusive. They contend that it was the PCIJ which employed respondent as an employee; it
merely seconded him to petitioner PPI in the Philippines, and assigned him to work in Manila as Sector Manager. Petitioner PPI, being
a wholly-owned subsidiary of PCIJ, was never the employer of respondent.
Petitioners assert that the January 9, 1998 letter of employment which respondent presented to prove his employment with petitioner
PPI is of doubtful authenticity since it was unsigned by the purported parties. They insist that PCIJ paid respondent’s salaries and only
coursed the same through petitioner PPI. PPI, being its subsidiary, had supervision and control over respondent’s work, and had the
responsibilities of monitoring the "daily administration" of respondent. Respondent cannot rely on the pay slips, expenses claim forms,
and reimbursement memoranda to prove that he was an employee of petitioner PPI because these documents are of doubtful
authenticity.
Petitioners further contend that, although Henrichsen was both a director of PCIJ and president of PPI, it was he who signed the
termination letter of respondent upon instructions of PCIJ. This is buttressed by the fact that PCIJ’s letterhead was used to inform him
that his employment was terminated. Petitioners further assert that all work instructions came from PCIJ and that petitioner PPI only
served as a "conduit." Respondent’s Alien Employment Permit stating that petitioner PPI was his employer is but a necessary
consequence of his being "seconded" thereto. It is not sufficient proof that petitioner PPI is respondent’s employer. The entry was only
made to comply with the DOLE requirements.

15
There being no evidence that petitioner PPI is the employer of respondent, the Labor Arbiter has no jurisdiction over respondent’s
complaint.
Petitioners aver that since respondent is a Canadian citizen, the CA erred in ignoring their claim that the principlesof forum non
conveniens and lex loci contractus are applicable. They also point out that the principal office, officers and staff of PCIJ are stationed
in Tokyo, Japan; and the contract of employment of respondent was executed in Tokyo, Japan.
Moreover, under Section 21 of the General Conditions for Employment incorporated in respondent’s January 7, 1998 letter of
employment, the dispute between respondent and PCIJ should be settled by the court of arbitration of London. Petitioners claim that
the words used therein are sufficient to show the exclusive and restrictive nature of the stipulation on venue.
Petitioners insist that the U.S. Labor-Management Act applies only to U.S. workers and employers, while the Labor Code of the
Philippines applies only to Filipino employers and Philippine-based employers and their employees, not to PCIJ. In fine, the
jurisdictions of the NLRC and Labor Arbiter do not extend to foreign workers who executed employment agreements with foreign
employers abroad, although "seconded" to the Philippines. 25 In his Comment,26 respondent maintains that petitioners raised factual
issues in their petition which are proscribed under Section 1, Rule 45 of the Rules of Court. The finding of the CA that he had been
an employee of petitioner PPI and not of PCIJ is buttressed by his documentary evidence which both the Labor Arbiter and the NLRC
ignored; they erroneously opted to dismiss his complaint on the basis of the letter of employment and Section 21 of the General
Conditions of Employment. In contrast, the CA took into account the evidence on record and applied case law correctly. The petition
is denied for lack of merit.
It must be stressed that in resolving a petition for certiorari, the CA is not proscribed from reviewing the evidence on record. Under
Section 9 of Batas Pambansa Blg. 129, as amended by R.A. No. 7902, the CA is empowered to pass upon the evidence, if and when
necessary, to resolve factual issues.27 If it appears that the Labor Arbiter and the NLRC misappreciated the evidence to such an extent
as to compel a contrary conclusion if such evidence had been properly appreciated, the factual findings of such tribunals cannot be
given great respect and finality.28
Inexplicably, the Labor Arbiter and the NLRC ignored the documentary evidence which respondent appended to his pleadings showing
that he was an employee of petitioner PPI; they merely focused on the January 7, 1998 letter of employment and Section 21 of the
General Conditions of Employment.
Petitioner PPI applied for the issuance of an AEP to respondent before the DOLE. In said application, PPI averred that respondent is
its employee. To show that this was the case, PPI appended a copy of respondent’s employment contract. The DOLE then granted
the application of PPI and issued the permit.
It bears stressing that under the Omnibus Rules Implementing the Labor Code, one of the requirements for the issuance of an
employment permit is the employment contract. Section 5, Rule XIV (Employment of Aliens) of the Omnibus Rules provides:
SECTION 1. Coverage. – This rule shall apply to all aliens employed or seeking employment in the Philippines and the present or
prospective employers.
SECTION 2. Submission of list. – All employers employing foreign nationals, whether resident or non-resident, shall submit a list of
nationals to the Bureau indicating their names, citizenship, foreign and local address, nature of employment and status of stay in the
Philippines.
SECTION 3. Registration of resident aliens. – All employed resident aliens shall register with the Bureau under such guidelines as
may be issued by it.
SECTION 4. Employment permit required for entry. – No alien seeking employment, whether as a resident or non-resident, may enter
the Philippines without first securing an employment permit from the Ministry. If an alien enters the country under a non-working visa
and wishes to be employed thereafter, he may only be allowed to be employed upon presentation of a duly approved employme nt
permit.
SECTION 5. Requirements for employment permit applicants. – The application for an employment permit shall be accompanied by
the following:
(a) Curriculum vitae duly signed by the applicant indicating his educational background, his work experience and other
data showing that he possesses technical skills in his trade or profession. (b) Contract of employment between the
employer and the principal which shall embody the following, among others:
1. That the non-resident alien worker shall comply with all applicable laws and rules and regulations of the
Philippines;
2. That the non-resident alien worker and the employer shall bind themselves to train at least two
(2) Filipino understudies for a period to be determined by the Minister; and
3. That he shall not engage in any gainful employment other than that for which he was issued a permit.
(c) A designation by the employer of at least two (2) understudies for every alien worker. Such understudies must be the
most ranking regular employees in the section or department for which the expatriates are being hired to insure the actual
transfer of technology.
Under Section 6 of the Rule, the DOLE may issue an alien employment permit based only on the following:
(a) Compliance by the applicant and his employer with the requirements of Section 2 hereof;
(b) Report of the Bureau Director as to the availability or non-availability of any person in the Philippines who is competent
and willing to do the job for which the services of the applicant are desired; (c) His assessment as to whether or not the
employment of the applicant will redound to the national interest;
(d) Admissibility of the alien as certified by the Commission on Immigration and Deportation;
(e) The recommendation of the Board of Investments or other appropriate government agencies if the applicant will be
employed in preferred areas of investments or in accordance with the imperative of economic development.
Thus, as claimed by respondent, he had an employment contract with petitioner PPI; otherwise, petitioner PPI would not have filed an
application for a Permit with the DOLE. Petitioners are thus estopped from alleging that the PCIJ, not petitioner PPI, had been the
employer of respondent all along.
We agree with the conclusion of the CA that there was an employer-employee relationship between petitioner PPI and respondent
using the four-fold test. Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four
elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employer’s power to control the employee’s conduct. It is the so-called "control test" which constitutes the
most important index of the existence of the employer-employee relationship–that is, whether the employer controls or has reserved
the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the
same is to be accomplished. Stated otherwise, an employer-employee relationship exists where the person for whom the services are
performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end. 29 We
quote with approval the following ruling of the CA:

16
[T]here is, indeed, substantial evidence on record which would erase any doubt that the respondent company is the true employer of
petitioner. In the case at bar, the power to control and supervise petitioner’s work performance devolved upon the respondent
company. Likewise, the power to terminate the employment relationship was exercised by the President of the respondent company.
It is not the letterhead used by the company in the termination letter which controls, but the person who exercised the power to
terminate the employee. It is also inconsequential if the second letter of employment executed in the Philippines was not signed by
the petitioner. An employer-employee relationship may indeed exist even in the absence of a written contract, so long as the four
elements mentioned in the Mafinco case are all present. 30
The settled rule on stipulations regarding venue, as held by this Court in the vintage case of Philippine Banking Corporation v.
Tensuan,31 is that while they are considered valid and enforceable, venue stipulations in a contract do not, as a rule, supersede the
general rule set forth in Rule 4 of the Revised Rules of Court in the absence of qualifying or restrictive words. They should be
considered merely as an agreement or additional forum, not as limiting venue to the specified place. They are not exclusive but, rather
permissive. If the intention of the parties were to restrict venue, there must be accompanying language clearly and categorically
expressing their purpose and design that actions between them be litigated only at the place named by them. 32
In the instant case, no restrictive words like "only," "solely," "exclusively in this court," "in no other court save —," "particularly,"
"nowhere else but/except —," or words of equal import were stated in the contract. 33 It cannot be said that the court of arbitration in
London is an exclusive venue to bring forth any complaint arising out of the employment contract.
Petitioners contend that respondent should have filed his Complaint in his place of permanent residence, or where the PCIJ holds its
principal office, at the place where the contract of employment was signed, in London as stated in their contract. By enumerating
possible venues where respondent could have filed his complaint, however, petitioners themselves admitted that the provision on
venue in the employment contract is indeed merely permissive.
Petitioners’ insistence on the application of the principle of forum non conveniens must be rejected. The bare fact that respondent
is a Canadian citizen and was a repatriate does not warrant the application of the principle for the following reasons:
First. The Labor Code of the Philippines does not include forum non conveniens as a ground for the dismissal of the
complaint.34
Second. The propriety of dismissing a case based on this principle requires a factual determination; hence, it is properly
considered as defense.35
Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals,36 this Court held that: x x x [a]
Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1) that
the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have power to enforce its decision.
x x x Admittedly, all the foregoing requisites are present in this case.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 76563 is
AFFIRMED. This case is REMANDED to the Labor Arbiter for disposition of the case on the merits. Cost against petitioners.
SO ORDERED.
THIRD DIVISION
[G.R. No. 132753. February 15, 1999]
MARIO SIASOCO, ANGELITA E. SIASOCO, MA. BELLA SIASOCO, ESTER SIASOCO-LAMUG, MA. LOURDES SIASOCO
LAMUG-BARRIOS, MA. RAMONA SIASOCO LAMUG, MA. VICTORIA SIASOCO LAMUG-DOMINGUEZ, BELEN
SIASOCO-JOSE, RAFAEL SIASOCO JOSE, CYNTHIA SIASOCO JOSE, CRISTINA SIASOCO JOSE, ROBERTO
SIASOCO JOSE, CARIDAD SIASOCO JOSE,
RAMON SIASOCO JOSE, OSCAR SIASOCO, RUBEN SIASOCO, SALOME SIASOCO-PAZ, MEDARDO
PAZ SIASOCO, ROLANDO PAZ SIASOCO, JESUS PAZ SIASOCO, NELLY STO. DOMINGO NARIO, MARY GRACE,
STO. DOMINGO NARIO and MARY ANNE STO. DOMINGO NARIO, petitioners, vs. COURT OF APPEALS; HON.
MARCELINO F. BAUTISTA, JR., Presiding Judge, Branch 215, Regional Trial Court, Quezon City; and the IGLESIA NI
CRISTO, respondents.
SYNOPSIS
On January 14, 1997, private respondent Iglesia ni Cristo filed civil suit for specific performance and damages against petitioners Mario
Siasoco, et al. and Carissa Homes and Development Properties, Inc. Petitioners filed a Motion to Dismiss on the ground of improper venue and
lack of capacity to sue. On the other hand, Carissa Homes filed its answer. Pending resolution of petitioners Motion to Dismiss, private respondent
negotiated with Carissa Homes which culminated in the purchase of the subject properties of Carissa Homes by private respondent. On April 24,
1997, private respondent filed an Amended Complaint, dropping Carissa Homes as one of the defendants and changing their cause of action to
damages only. Petitioners filed a Motion to Strike Out Amended Complaint, contending that the complaint cannot be amended without leave of
court, since a responsive pleading had been filed. On August 11, 1997, the trial court denied the said motion. On August 31, 1997, petitioners filed
a Motion for Suspension of Proceeding pending the resolution of the Motion to Dismiss earlier filed. Again, the trial court denied the second motion
and it ordered the petitioners to file their respective answers within fifteen days from receipt of the order. Thus, the petitioners questioned the
orders of denial of their two motions before the Court of Appeals. The appellate court affirmed the two aforementioned orders of the trial court.
Hence, this petition.
The Court ruled that indeed, where some but not all the defendants have answered, plaintiff may amend their Complaint once, as a matter of
right, in respect to claims asserted solely against the non-answering defendants, but not as to claims asserted the other defendants.
Further, the RTC had jurisdiction over the original Complaint because the said original Complaint involved specific performance with
damages. In La Tondea Distillers v. Ponferrada, this Court ruled that a complaint for specific performance with damages is a personal action and
may be filed in the proper court where any of the parties reside.
The petition is DENIED.
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; NOT BE USED AS A SUBSTITUTE FOR
APPEAL. -- For the writ of certiorari under Rule 65 to issue, the petitioner must show not only that the lower court acted with grave abuse
of discretion, but also that there is no appeal, or any other plain, speedy, and adequate remedy in the ordinary course of law. Since the
questioned CA Decision was a disposition on the merits, and since said Court has no remaining issue to resolve, the proper remedy available
to petitioners was a petition for review under Rule 45, not Rule 65. Furthermore, as a general rule, certiorari under Rule 65 cannot issue
unless the lower court, through a motion for reconsideration, has been given an opportunity to correct the imputed error. Although there are
recognized exceptions to this rule, petitioners do not claim that this case is one of them. For this procedural lapse, the instant petition should
be dismissed outright.
2. ID.; CIVIL PROCEDURE; COMPLAINT; AMENDMENT; AS A MATTER OF RIGHT TO NON-ANSWERING
DEFENDANTS. -- Indeed, where some but not all the defendants have answered, plaintiffs may amend their Complaint once, as a matter of
right, in respect to claims asserted solely against the non-answering defendants, but not as to claims asserted against the other defendants.

17
3. ID.; ID.; ID.; ID.; ID.; RATIONALE. -- The rationale for the aforementioned rule is in Section 3, Rule 10 of the Rules of Court, which
provides that after responsive pleading has been filed, an amendment may be rejected when the defense is substantially altered. Such amendment
does not only prejudice the rights of the defendant; it also delays the action. In the first place, where a party has not yet filed a responsive
pleadings, there are no defenses that can be altered. Furthermore, the Court has held that [a]mendments to pleadings are generally favored and
should be liberally allowed in furtherance of justice in order that every case may so far as possible be determined on its real facts and in order
to speed the trial of cases or prevent the circuity of action and unnecessary expense, unless there are circumstances such as inexcusable delay
or the taking of the adverse party by surprise or the like, which might justify a refusal of permission to amend.
4. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. -- In the present case, petitioners failed to prove that they were prejudiced by private respondent's
Amended Complaint. True, Carissa had already filed its own Answer. Petitioners, however, have not yet filed any. Moreover, they do not
allege that their defense is similar to that of Carissa. On the contrary, private respondent's claims against the latter and against petitioners are
different. Against petitioners, whose offer to sell the subject parcels of land had allegedly been accepted by private respondent, the latter is
suing for specific performance and damages for breach of contract. Although private respondent could no longer amend, as a matter of right,
its Complaint against Carissa, it could do so against petitioners who, at the time, had not yet filed an answer.
5. ID.; ID.; ID.; ID.; APPLICABLE IN CASES WHERE THE COURT HAS JURISDICTION OVER THE
ORIGINAL CASE; CASE AT BAR. -- True, 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. In the present case, however, the RTC had jurisdiction
because the original Complaint involved specific performance with damages. In La Tondena Distillers v. Ponferrada, this Court ruled that a
complaint for specific performance with damages is a personal action and may be filed in the proper court where any of the parties reside.
APPEARANCES OF COUNSEL
Clara Dumandan-Singh for petitioners.
Cuevas Associates for private respondents.
D E C I S I O N PANGANIBAN, J.:
Notwithstanding the filing of a responsive pleading by one defendant, the complaint may still be amended once, as a matter of right, by the
plaintiff in respect to claims against the non-answering defendant(s). The Court also reiterates that certiorari is not the proper remedy to contest a
lower courts final adjudication, since appeal is available as a recourse.
Statement of the Case
Petitioners assail the February 25, 1998 Decision[1] of the Court of Appeals[2] in CA-GR SP No. 45451, the dispositive portion of which reads:
WHEREFORE, [the] foregoing considered, the present petition for certiorari is hereby DENIED for lack of merit. The Temporary Restraining
Order issued by this Court on December 17, 1997 is hereby lifted. Petitioners are given six (6) days from receipt of this decision within which to
file their answer. The motion for oral argument filed by respondent is rendered moot. Respondent court is ordered to proceed and resolve the case
with deliberate speed.[3]
The foregoing disposition affirmed two Orders of the Regional Trial Court (RTC) of Quezon City, Branch 215, dated August 11, 1997 and
September 11, 1997 in Civil Case No. Q-97-29960.[4] The first Order (1) admitted the Amended Complaint; (2) dropped Defendant Carissa Homes
Development and Properties, Inc. (hereafter referred to as Carissa) from the Complaint; and (3) denied the Motion to Declare Defendants Siasoco
et al. (herein petitioners) in Default. The second Order denied the Motion for Suspension filed by defendants and directed them to file their answer
to plaintiffs Amended Complaint.
Undaunted, petitioners seek recourse in this Court.[5]
The Facts
Petitioners were the registered owners of nine parcels of land located in Montalban, Rizal. In December 1994, they began to offer the subject
properties for sale. Subsequently, Iglesia ni Cristo (INC) negotiated with the petitioners, but the parties failed to agree on the terms of the purchase.
More than a year later, both parties revived their discussions. In a letter dated December 16, 1996, petitioners made a final offer to the INC. The
latters counsel sent a reply received by Petitioner Mario Siasoco on December 24, 1996, stating that the offer was accepted, but that the INC was
not amenable to your proposal to an undervaluation of the total consideration. In their letter dated January 8, 1997, petitioners claimed that the INC
had not really accepted the offer, adding that, prior to their receipt of the aforementioned reply on December 24, 1996, they had already contracted
with Carissa for the sale of the said properties due to the absence of any response to their offer from INC.
Maintaining that a sale had been consummated, INC demanded that the corresponding deed be executed in its favor. Petitioners refused. The
ensuing events were narrated by the Court of Appeals, as follows:
On January 14, 1997, private respondent filed a civil suit for [s]pecific [p]erformance and [d]amages against petitioners and Carissa Homes and
Development & Properties, Inc. docketed as Civil Case No. Q-97-29960.
Petitioners filed therein a Motion to Dismiss on the ground of improper venue and lack of capacity to sue.
Carissa Homes filed its answer to the complaint on February 24, 1997.
Pending resolution of petitioners Motion to Dismiss, private respondent negotiated with Carissa Homes which culminated in the purchase of the
subject properties of Carissa Homes by private respondent.
On April 24, 1997, private respondent filed an [A]mended [C]omplaint, dropping Carissa Homes as one of the defendants and changing the nature
of the case to a mere case for damages.
Petitioners filed a Motion to Strike Out Amended Complaint, contending that the complaint cannot be amended without leave of court, since a
responsive pleading has been filed.
On August 11, 1997, the first assailed order denying petitioners Motion to Strike Out Amended Complaint was rendered. On August 31, 1997,
petitioners filed a Motion for Suspension of Proceeding pending the resolution [by] the respondent court of the Motion to Dismiss earlier filed.
On September 11, 1997, the second assailed order denying petitioners Motion to Suspend Proceeding was rendered[;] the Order reads:
Filed also last September 1, 1997 [was] a Motion for Suspension by the defendant Siasoco thru their counsel Atty. Clara Dumandang-Singh.
Although the court could not consider the motion filed because it violates the new rules on personal service, in the interest of justice, the court will
resolve the motion. In the resolution of this court dated August 11, 1997, it state[d] that defendants [were being] given a period of five (5) days
within which to file [an] answer to the Amended Complaint. The defendants here obviously refer to the defendants Mario Siasoco, et. al. In the
Motion for Suspension filed by the defendants Siasoco, et al., the latter insist on the court resolving the motion to dismiss. As stated in the resolution,
the motion to dismiss is now moot and academic because of the Amended Complaint from Specific Performance with Damages to just Damages.
For this court to resolve the Motion to Dismiss xxx the first complaint, would be an exercise in futility. The main complaint now is damages and
no longer Specific Performance with damages which [was] actually what the Resolution dated August 11, 1997 [was] all about. Be that as it may,
the court gives defendants Siasoco, et al. fifteen (15) days from receipt of this Order to file their respective Answers to the Amended Complaint,
not from the receipt of the resolution of the Motion to Dismiss which will not be forthcoming.
Ruling of the Court of Appeals
The Court of Appeals (CA) ruled that although private respondent could no longer amend its original Complaint as a matter of right, it was
not precluded from doing so with leave of court. Thus, the CA concluded that the RTC had not acted with grave abuse of discretion in admitting
private respondents Amended Complaint.

18
 Petitioners argued that the trial court where the original Complaint for specific performance had been filed was not the proper venue.
Debunking petitioners argument, the CA explained that the RTC nevertheless had jurisdiction over the said Complaint. The CA also held that the
Amended Complaint did not substantially alter private respondents cause of action, since petitioners were not being asked to answer a legal
obligation different from that stated in the original Complaint.
Assignment of Errors
In their Memorandum, petitioners submit, for the consideration of this Court, the following issues: [6] A.
Whether or not the respondent Court of Appeals gravely erred in holding that the respondent Judges admission of INCs Amended Complaint
was proper.
B.
Whether or not the respondent Court of Appeals gravely erred in affirming respondent Judges denial of petitioners Motion for Suspension.
C.
Whether or not the respondent Court of Appeals gravely erred in refusing to hear petitioners application for a temporary restraining order and
writ of preliminary injunction.
Simply stated, the question is: did the CA err in affirming the two Orders of the RTC which had allowed the Amended Complaint?
The Courts Ruling
The petition is devoid of merit. We sustain the Court of Appeals, but for reasons different from those given in the assailed Decision.
Preliminary Issue: Propriety of Certiorari
In their Petition and Memorandum, Mario Siasoco et al. emphasize that the instant suit was commenced pursuant to Rule 65 of the 1997
Rules of Procedure and allege that Respondent Court of Appeals committed grave abuse of discretion in issuing the challenged Decision dated
February 25, 1998 xxx. This is a procedural error. For the writ of certiorari under Rule 65 to issue, the petitioner must show not only that the lower
court acted with grave abuse of discretion, but also that there is no appeal, or any other plain, speedy, and adequate remedy in the ordinary course
of law.[7] Since the questioned CA Decision was a disposition on the merits, and since said Court has no remaining issue to resolve, the proper
remedy available to petitioners was a petition for review under Rule 45, not Rule 65. Furthermore, as a general rule, certiorari under Rule 65 cannot
issue unless the lower court, through a motion for reconsideration, has been given an opportunity to correct the imputed error.[8]Although there are
recognized exceptions to this rule, petitioners do not claim that this case is one of them. For this procedural lapse, the instant petition should be
dismissed outright.
Nonetheless, inasmuch as the Petition was filed within the 15-day period provided under Rule 45, and considering the importance of the issue
raised and the fact that private respondent did not question the propriety of the instant Petition, the Court treated the action as a petition for review
(not certiorari) under Rule 45 in order to accord substantial justice to the parties. We will thus proceed to discuss the substantive issue.
Main Issue: Admission of Amended Complaint
Petitioners argue that the lower courts erred in admitting the Amended Complaint. Under the Rules, a party may amend his pleading once as
a matter of right at any time before a responsive pleading is served xxx.[9] When private respondent filed its Amended Complaint, Carissa, the other
party-defendant in the original Complaint, had already filed its Answer. Because a responsive pleading had been submitted, petitioners contend that
private respondent should have first obtained leave of court before filing its Amended Complaint. This it failed to do. In any event, such leave could
not have been granted, allegedly because the amendment had substantially altered the cause of action.
This argument is not persuasive. It is clear that plaintiff (herein privaterespondent) can amend its complaint once, as a matter of right, before
a responsive pleading is filed.[10] Contrary to the petitioners contention, the fact that Carissa had already filed its Answer did not bar private
respondent from amending its original Complaint once, as a matter of right, against herein petitioners. Indeed, where some but not all the defendants
have answered, plaintiffs may amend their Complaint once, as a matter of right, in respect to claims asserted solely against the non-answering
defendants, but not as to claims asserted against the other defendants.[11]
The rationale for the aforementioned rule is in Section 3, Rule 10 of the Rules of Court, which provides that after a responsive pleading has
been filed, an amendment may be rejected when the defense is substantially altered. [12] Such amendment does not only prejudice the rights of the
defendant; it also delays the action. In the first place, where a party has not yet filed a responsive pleading, there are no defenses that can be altered.
Furthermore, the Court has held that [a]mendments to pleadings are generally favored and should be liberally allowed in furtherance of justice in
order that every case may so far as possible be determined on its real facts and in order to speed the trial of cases or prevent the circuity of action
and unnecessary expense, unless there are circumstances such as inexcusable delay or the taking of the adverse party by surprise or the like, which
might justify a refusal of permission to amend.[13]
In the present case, petitioners failed to prove that they were prejudiced by private respondents Amended Complaint. True, Carissa had already
filed its own Answer. Petitioners, however, have not yet filed any. Moreover, they do not allege that their defense is similar to that of Carissa. On
the contrary, private respondents claims against the latter and against petitioners are different. Against petitioners, whose offer to sell the subject
parcels of land had allegedly been accepted by private respondent, the latter is suing for specific performance and damages for breach of contract.
Although private respondent could no longer amend, as a matter of right, its Complaint against Carissa, it could do so against petitioners who, at
the time, had not yet filed an answer.
The amendment did not prejudice the petitioners or delay the action. Aucontraire, it simplified the case and tended to expedite its disposition.
The Amended Complaint became simply an action for damages, since the claims for specific performance and declaration of nullity of the sale
have been deleted.
RTC Had Jurisdiction
Petitioners also insist that the RTC of Quezon City did not have jurisdiction over the original Complaint; hence, it did not have any authority
to allow the amendment.They maintain that the original action for specific performance involving parcels of land in Montalban, Rizal should have
been filed in the RTC of that area. Thus, they chide the CA for allegedly misunderstanding the distinction between territorialjurisdiction and venue,
thereby erroneously holding that the RTC had jurisdiction over the original Complaint, although the venue was improperly laid.
We disagree. True, 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.[14] In the present case, however, the RTC had jurisdiction because the original Complaint involved
specific performance with damages. In La Tondea Distillers v. Ponferrada,[15] this Court ruled that a complaint for specific performance with
damages is a personal action and may be filed in the proper court where any of the parties reside, viz.:
Finally, [w]e are not also persuaded by petitioners argument that venue should be lodged in Bago City where the lot is situated. The complaint is
one for specific performance with damages. Private respondents do not claim ownership of the lot but in fact [recognize the] title of defendants by
annotating a notice of lis pendens. In one case, a similar complaint for specific performance with damages involving real property, was held to be
a personal action, which may be filed in the proper court where the party resides. Not being an action involving title to or ownership of real property,
venue, in this case, was not improperly laid before the RTC of Bacolod City.[16]
WHEREFORE, the Petition is hereby DENIED. Costs against petitioners.
SO ORDERED.
SECOND DIVISION

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G.R. No. 198680 July 8, 2013
HEIRS OF MAGDALENO YPON, NAMELY, ALVARO YPON, ERUDITA Y. BARON, CICERO YPON, WILSON YPON, VICTOR
YPON, AND HINIDINO Y. PEÑALOSA, PETITIONERS, vs.
GAUDIOSO PONTERAS RICAFORTE A.K.A. "GAUDIOSO E. YPON," AND THE REGISTER OF DEEDS OF TOLEDO CITY,
RESPONDENTS.
R E S O L U T I O N PERLAS-BERNABE, J.:
This is a direct recourse to the Court from the Regional Trial Court of Toledo City, Branch 59 (RTC), through a petition for review on
certiorari1 under Rule 45 of the Rules of Court, raising a pure question of law. In particular, petitioners assail the July 27, 2011 2 and
August 31, 20113 Orders of the RTC, dismissing Civil Case No. T-2246 for lack of cause of action.
The Facts
On July 29, 2010, petitioners, together with some of their cousins, 4 filed a complaint for Cancellation of Title and Reconveyance with
Damages (subject complaint) against respondent Gaudioso Ponteras Ricaforte a.k.a.
"Gaudioso E. Ypon" (Gaudioso), docketed as Civil Case No. T-2246.5 In their complaint, they alleged that
Magdaleno Ypon (Magdaleno) died intestate and childless on June 28, 1968, leaving behind Lot Nos. 2-AA, 2-C, 2-F, and 2-J which
were then covered by Transfer Certificates of Title (TCT) Nos. T-44 and T-77-A.6 Claiming to be the sole heir of Magdaleno, Gaudioso
executed an Affidavit of Self-Adjudication and caused the cancellation of the aforementioned certificates of title, leading to their
subsequent transfer in his name under TCT Nos. T2637 and T-2638,7 to the prejudice of petitioners who are Magdaleno’s collateral
relatives and successors-ininterest.8
In his Answer, Gaudioso alleged that he is the lawful son of Magdaleno as evidenced by: (a) his certificate of Live Birth; (b) two (2)
letters from Polytechnic School; and (c) a certified true copy of his passport. 9 Further, by way of affirmative defense, he claimed
that: (a) petitioners have no cause of action against him; (b) the complaint fails to state a cause of action; and (c) the case is not
prosecuted by the real parties-in-interest, as there is no showing that the petitioners have been judicially declared as Magdaleno’s
lawful heirs.10 The RTC Ruling
On July 27, 2011, the RTC issued the assailed July 27, 2011 Order, 11 finding that the subject complaint failed to state a cause of
action against Gaudioso. It observed that while the plaintiffs therein had established their relationship with Magdaleno in a previous
special proceeding for the issuance of letters of administration, 12 this did not mean that they could already be considered as the
decedent’s compulsory heirs. Quite the contrary, Gaudioso satisfactorily established the fact that he is Magdaleno’s son – and hence,
his compulsory heir – through the documentary evidence he submitted which consisted of: (a) a marriage contract between Magdaleno
and Epegenia Evangelista; (b) a Certificate of Live Birth; (c) a Letter dated February 19, 1960; and (d) a passport.13
The plaintiffs therein filed a motion for reconsideration which was, however, denied on August 31, 2011 due to the counsel’s failure to
state the date on which his Mandatory Continuing Legal Education Certificate of
Compliance was issued.14
Aggrieved, petitioners, who were among the plaintiffs in Civil Case No. T-2246,15 sought direct recourse to the Court through the
instant petition.
The Issue Before the Court
The core of the present controversy revolves around the issue of whether or not the RTC’s dismissal of the case on the ground that
the subject complaint failed to state a cause of action was proper.
The Court’s Ruling The
petition has no merit.
Cause of action is defined as the act or omission by which a party violates a right of another. 16 It is well-settled that the existence of a
cause of action is determined by the allegations in the complaint. 17 In this relation, a complaint is said to assert a sufficient cause of
action if, admitting what appears solely on its face to be correct, the plaintiff would be entitled to the relief prayed for.18Accordingly, if
the allegations furnish sufficient basis by which the complaint can be maintained, the same should not be dismissed, regardle ss of
the defenses that may be averred by the defendants. 19
As stated in the subject complaint, petitioners, who were among the plaintiffs therein, alleged that they are the lawful heirs of
Magdaleno and based on the same, prayed that the Affidavit of Self-Adjudication executed by Gaudioso be declared null and void
and that the transfer certificates of title issued in the latter’s favor be cancelled. While the foregoing allegations, if admitted to be true,
would consequently warrant the reliefs sought for in the said complaint, the rule that the determination of a decedent’s lawful heirs
should be made in the corresponding special proceeding 20 precludes the RTC, in an ordinary action for cancellation of title and
reconveyance, from granting the same. In the case of Heirs of Teofilo Gabatan v. CA, 21 the Court, citing several other precedents,
held that the determination of who are the decedent’s lawful heirs must be made in the proper special proceeding for such purpose,
and not in an ordinary suit for recovery of ownership and/or possession, as in this case:
Jurisprudence dictates that the determination of who are the legal heirs of the deceased must be made in the proper special
proceedings in court, and not in an ordinary suit for recovery of ownership and possession of property.1âwphi1 This must take
precedence over the action for recovery of possession and ownership. The Court has consistently ruled that the trial court cannot
make a declaration of heirship in the civil action for the reason that such a declaration can only be made in a special proceeding.
Under Section 3, Rule 1 of the 1997 Revised Rules of Court, a civil action is defined as one by which a party sues another for the
enforcement or protection of a right, or the prevention or redress of a wrong while a special proceeding is a remedy by which a party
seeks to establish a status, a right, or a particular fact. It is then decisively clear that the declaration of heirship can be made only in a
special proceeding inasmuch as the petitioners here are seeking the establishment of a status or right.
In the early case of Litam, et al. v. Rivera, this Court ruled that the declaration of heirship must be made in a special proceeding, and
not in an independent civil action. This doctrine was reiterated in Solivio v. Court of Appeals x x x:
In the more recent case of Milagros Joaquino v. Lourdes Reyes, the Court reiterated its ruling that matters relating to the rights of
filiation and heirship must be ventilated in the proper probate court in a special proceeding instituted precisely for the purpose of
determining such rights. Citing the case of Agapay v. Palang, this Court held that the status of an illegitimate child who claimed to be
an heir to a decedent's estate could not be adjudicated in an ordinary civil action which, as in this case, was for the recovery of
property.22 (Emphasis and underscoring supplied; citations omitted)
By way of exception, the need to institute a separate special proceeding for the determination of heirship may be dispensed with for
the sake of practicality, as when the parties in the civil case had voluntarily submitted the issue to the trial court and already presented
their evidence regarding the issue of heirship, and the RTC had consequently rendered judgment thereon, 23 or when a special
proceeding had been instituted but had been finally closed and terminated, and hence, cannot be re-opened.24
In this case, none of the foregoing exceptions, or those of similar nature, appear to exist. Hence, there lies the need to institute the
proper special proceeding in order to determine the heirship of the parties involved, ultimately resulting to the dismissal of Civil Case
No. T-2246.
Verily, while a court usually focuses on the complaint in determining whether the same fails to state a cause of action, a court cannot
disregard decisions material to the proper appreciation of the questions before it. 25 Thus, concordant with applicable jurisprudence,

20
since a determination of heirship cannot be made in an ordinary action for recovery of ownership and/or possession, the dismissal of
Civil Case No. T-2246 was altogether proper. In this light, it must be pointed out that the RTC erred in ruling on Gaudioso’s heirship
which should, as herein discussed, be threshed out and determined in the proper special proceeding. As such, the foregoing
pronouncement should therefore be devoid of any legal effect.
WHEREFORE, the petition is DENIED. The dismissal of Civil Case No. T-2246 is hereby AFFIRMED, without prejudice to any
subsequent proceeding to determine the lawful heirs of the late Magdaleno Ypon and the rights concomitant therewith.
SO ORDERED.

G.R. No. 204528 February 19, 2013

SECRETARY LEILA M. DE LIMA, DIRECTOR NONNATUS R. ROJAS and DEPUTY DIRECTOR REYNALDO
0. ESMERALDA, Petitioners, vs.
MAGTANGGOL B. GATDULA, Respondent.
R E S O L U T I O N LEONEN, J.:
Submitted for our resolution is a prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction to enjoin
"the Regional Trial Court, Branch 26, in Manila from implementing its Decision x x x in Civil Case No. 12-127405 granting respondent's
application for the issuance of inspection and production orders x x x." 1 This is raised through a Petition for Review on Certiorari under
Rule 45 from the "Decision" rendered by the Regional Trial Court dated 20 March 2012.
From the records, it appears that on 27 February 2012, respondent Magtanggol B. Gatdula filed a Petition for the Issuance of a Writ
of Amparo in the Regional Trial Court of Manila.2 This case was docketed as In the Matter of the Petition for Issuance of Writ of
Amparo of Atty. Magtanggol B. Gatdula, SP No. 12-127405. It was raffled to the sala of Judge Silvino T. Pampilo, Jr. on the same
day.
The Amparo was directed against petitioners Justice Secretary Leila M. De Lima, Director Nonnatus R. Rojas and Deputy Director
Reynaldo O. Esmeralda of the National Bureau of Investigation (DE LIMA, ET AL. for brevity). Gatdula wanted De Lima, et al. "to
cease and desist from framing up Petitioner [Gatdula] for the fake ambush incident by filing bogus charges of Frustrated Murder
against Petitioner [Gatdula] in relation to the alleged ambush incident." 3
Instead of deciding on whether to issue a Writ of Amparo, the judge issued summons and ordered De Lima, et al. to file an Answer. 4
He also set the case for hearing on 1 March 2012. The hearing was held allegedly for determining whether a temporary protecti on
order may be issued. During that hearing, counsel for De Lima, et al. manifested that a Return, not an Answer, is appropriate for
Amparo cases.5
In an Order dated 2 March 2012,6 Judge Pampilo insisted that "[s]ince no writ has been issued, return is not the required pleading but
answer".7 The judge noted that the Rules of Court apply suppletorily in Amparo cases.8 He opined that the Revised Rules of Summary
Procedure applied and thus required an Answer.9
Judge Pampilo proceeded to conduct a hearing on the main case on 7 March 2012. 10 Even without a Return nor an Answer, he
ordered the parties to file their respective memoranda within five (5) working days after that hearing. Since the period to file an Answer
had not yet lapsed by then, the judge also decided that the memorandum of De Lima, et al. would be filed in lieu of their Answer.11
On 20 March 2012, the RTC rendered a "Decision" granting the issuance of the Writ of Amparo. The RTC also granted the interim
reliefs prayed for, namely: temporary protection, production and inspection orders. The production and inspection orders were in
relation to the evidence and reports involving an on-going investigation of the attempted assassination of Deputy Director Esmeralda.
It is not clear from the records how these pieces of evidence may be related to the alleged threat to the life, liberty or security of the
respondent Gatdula.
In an Order dated 8 October 2012, the RTC denied the Motion for Reconsideration dated 23 March 2012 filed by De Lima, et al.
Petitioners Sec. De Lima, et al. thus came to this Court assailing the RTC "Decision" dated 20 March 2012 through a Petition for
Review on Certiorari (With Very Urgent Application for the Issuance of a Temporary Restraining Order/Writ of Preliminary Injunction)
via Rule 45, as enunciated in Section 19 of the Rule on the Writ of Amparo (A.M. No. 07-9- 12-SC, 25 September 2007), viz:
SEC. 19. Appeal. – Any party may appeal from the final judgment or order to the Supreme Court under Rule 45. The appeal may
raise questions of fact or law or both. x x x (Emphasis supplied).
It is the Court’s view that the "Decision" dated 20 March 2012 granting the writ of Amparo is not the judgment or final order
contemplated under this rule. Hence, a Petition for Review under Rule 45 may not yet be the proper remedy at this time.
The RTC and the Parties must understand the nature of the remedy of Amparo to put its procedures in the proper context.
The remedy of the Writ of Amparo is an equitable and extraordinary remedy to safeguard the right of the people to life, liberty 12 and
security13 as enshrined in the 1987 Constitution.14 The Rule on the Writ of Amparo was issued as an exercise of the Supreme Court's
power to promulgate rules concerning the protection and enforcement of constitutional rights. 15 It aims to address concerns such as,
among others, extrajudicial killings and enforced disappearances.16
Due to the delicate and urgent nature of these controversies, the procedure was devised to afford swift but decisive relief. 17 It is
initiated through a petition18 to be filed in a Regional Trial Court, Sandiganbayan, the Court of Appeals, or the Supreme Court. 19 The
judge or justice then makes an "immediate" evaluation20 of the facts as alleged in the petition and the affidavits submitted "with the
attendant circumstances detailed".21 After evaluation, the judge has the option to issue the Writ of Amparo22 or immediately dismiss
the case. Dismissal is proper if the petition and the supporting affidavits do not show that the petitioner's right to life, liberty or security
is under threat or the acts complained of are not unlawful. On the other hand, the issuance of the writ itself sets in motion presumptive
judicial protection for the petitioner. The court compels the respondents to appear before a court of law to show whether the grounds
for more permanent protection and interim reliefs are necessary.
The respondents are required to file a Return23 after the issuance of the writ through the clerk of court. The Return serves as the
responsive pleading to the petition.24 Unlike an Answer, the Return has other purposes aside from identifying the issues in the case.
Respondents are also required to detail the actions they had taken to determine the fate or whereabouts of the aggrieved party.
If the respondents are public officials or employees, they are also required to state the actions they had taken to:
(i) verify the identity of the aggrieved party; (ii) recover and preserve evidence related to the death or disappearance of the person
identified in the petition; (iii) identify witnesses and obtain statements concerning the death or disappearance; (iv) determine the cause,
manner, location, and time of death or disappearance as well as any pattern or practice that may have brought about the death or
disappearance; and (vi) bring the suspected offenders before a competent court.25 Clearly these matters are important to the judge
so that s/he can calibrate the means and methods that will be required to further the protections, if any, that will be due to the petitioner.
There will be a summary hearing26 only after the Return is filed to determine the merits of the petition and whether interim reliefs are
warranted. If the Return is not filed, the hearing will be done ex parte.27 After the hearing, the court will render the judgment within
ten (10) days from the time the petition is submitted for decision. 28
If the allegations are proven with substantial evidence, the court shall grant the privilege of the writ and such reliefs as may be proper
and appropriate.29 The judgment should contain measures which the judge views as essential for the continued protection of the
petitioner in the Amparo case. These measures must be detailed enough so that the judge may be able to verify and monitor the

21
actions taken by the respondents. It is this judgment that could be subject to appeal to the Supreme Court via Rule 45.30 After the
measures have served their purpose, the judgment will be satisfied. In Amparo cases, this is when the threats to the petitioner’s life,
liberty and security cease to exist as evaluated by the court that renders the judgment. Parenthetically, the case may also be
terminated through consolidation should a subsequent case be filed – either criminal or civil.31 Until the full satisfaction of the judgment,
the extraordinary remedy of Amparo allows vigilant judicial monitoring to ensure the protection of constitutional rights.
The "Decision" dated 20 March 2012 assailed by the petitioners could not be the judgment or final order that is appealable under
Section 19 of the Rule on the Writ of Amparo. This is clear from the tenor of the dispositive portion of the "Decision", to wit:
The Branch Clerk of Court of Court [sic] is hereby DIRECTED to issue the Writ of Amparo.
Likewise, the Branch Clerk of Court is hereby DIRECTED to effect the service of the Writ of Amparo in an expeditious manner upon
all concerned, and for this purpose may call upon the assistance of any military or civilian agency of the government.
This "Decision" pertained to the issuance of the writ under Section 6 of the Rule on the Writ of Amparo, not the judgment under
Section 18. The "Decision" is thus an interlocutory order, as suggested by the fact that temporary protection, production and
inspection orders were given together with the decision. The temporary protection, production and inspection orders are interim
reliefs that may be granted by the court upon filing of the petition but before final judgment is rendered.32
The confusion of the parties arose due to the procedural irregularities in the RTC.
First, the insistence on filing of an Answer was inappropriate. It is the Return that serves as the responsive pleading for petitions for
the issuance of Writs of Amparo. The requirement to file an Answer is contrary to the intention of the Court to provide a speedy remedy
to those whose right to life, liberty and security are violated or are threatened to be violated. In utter disregard of the Rule on the Writ
of Amparo, Judge Pampilo insisted on issuing summons and requiring an Answer.
Judge Pampilo’s basis for requiring an Answer was mentioned in his Order dated 2 March 2012:
Under Section 25 of the same rule [on the Writ of Amparo], the Rules of Court shall apply suppletorily insofar as it is not inconsistent
with the said rule.
Considering the summary nature of the petition, Section 5 of the Revised Rules of Summary Procedure shall apply.
Section 5. Answer – Within ten (10) days from service of summons, the defendant shall file his Answer to the complaint and serve a
copy thereof on the plaintiff. x x x
WHEREFORE, based on the foregoing, the respondents are required to file their Answer ten (days) from receipt of this Order.33
The 1991 Revised Rules of Summary Procedure is a special rule that the Court has devised for the following circumstances:
SECTION 1. Scope. – This rule shall govern the summary procedure in the Metropolitan Trial Courts, the Municipal Trial Courts in
Cities, the Municipal Trial Courts, and the Municipal Circuit Trial Courts in the following cases falling within their jurisdiction: A. Civil
Cases:
(1) All cases of forcible entry and unlawful detainer, x x x.
(2) All other cases, except probate proceedings, where the total amount of the plaintiff’s claim
does not exceed x x x. B. Criminal Cases:
(1) Violations of traffic laws, rules and regulations;
(2) Violations of the rental law;
(3) Violations of municipal or city ordinances;
(4) All other criminal cases where the penalty prescribed by law for the offense charged is imprisonment not
exceeding six months, or a fine not exceeding one thousand pesos (P1,000.00), or both, x x x. x x x x
It is clear from this rule that this type of summary procedure only applies to MTC/MTCC/MCTCs. It is mindboggling how this rule could
possibly apply to proceedings in an RTC. Aside from that, this Court limited the application of summary procedure to certain civil and
criminal cases. A writ of Amparo is a special proceeding. It is a remedy by which a party seeks to establish a status, a right or
particular fact.34 It is not a civil nor a criminal action, hence, the application of the Revised Rule on Summary Procedure is seriously
misplaced. The second irregularity was the holding of a hearing on the main case prior to the issuance of the writ and the filing of a
Return. Without a Return, the issues could not have been properly joined.
Worse, is the trial court’s third irregularity: it required a memorandum in lieu of a responsive pleading (Answer) of De Lima, et al.
The Return in Amparo cases allows the respondents to frame the issues subject to a hearing. Hence, it should be done prior to the
hearing, not after. A memorandum, on the other hand, is a synthesis of the claims of the party litigants and is a final pleading usually
required before the case is submitted for decision. One cannot substitute for the other since these submissions have different functions
in facilitating the suit. More importantly, a memorandum is a prohibited pleading under the Rule on the Writ of Amparo.35
The fourth irregularity was in the "Decision" dated 20 March 2012 itself. In the body of its decision, the RTC stated:
"Accordingly this court GRANTS the privilege of the writ and the interim reliefs prayed for by the petitioner." (Emphasis supplied).
This gives the impression that the decision was the judgment since the phraseology is similar to Section 18 of the Rule on the Writ
of Amparo:
"SEC. 18. Judgment. — The court shall render judgment within ten (10) days from the time the petition is submitted for decision. If the
allegations in the petition are proven by substantial evidence, the court shall grant the privilege of the writ and such reliefs as may
be proper and appropriate; otherwise, the privilege shall be denied." (Emphasis supplied).
The privilege of the Writ of Amparo should be distinguished from the actual order called the Writ of Amparo. The privilege includes
availment of the entire procedure outlined in A.M. No. 07-9-12-SC, the Rule on the Writ of Amparo. After examining the petition and
its attached affidavits, the Return and the evidence presented in the summary hearing, the judgment should detail the required acts
from the respondents that will mitigate, if not totally eradicate, the violation of or the threat to the petitioner's life, liberty or security.
A judgment which simply grants "the privilege of the writ" cannot be executed.1âwphi1 It is tantamount to a failure of the judge to
intervene and grant judicial succor to the petitioner. Petitions filed to avail of the privilege of the Writ of Amparo arise out of very real
and concrete circumstances. Judicial responses cannot be as tragically symbolic or ritualistic as "granting the privilege of the Writ of
Amparo."
The procedural irregularities in the RTC affected the mode of appeal that petitioners used in elevating the matter to this Court.
It is the responsibility of counsels for the parties to raise issues using the proper procedure at the right time. Procedural rules are
meant to assist the parties and courts efficiently deal with the substantive issues pertaining to a case. When it is the judge himself
who disregards the rules of procedure, delay and confusion result. The Petition for Review is not the proper remedy to assail the
interlocutory order denominated as "Decision" dated 20 March 2012. A Petition for Certiorari, on the other hand, is prohibited. 36
Simply dismissing the present petition, however, will cause grave injustice to the parties involved. It undermines the salutary purposes
for which the Rule on the Writ of Amparo were promulgated.
In many instances, the Court adopted a policy of liberally construing its rules in order to promote a just, speedy and inexpensive
disposition of every action and proceeding. 37 The rules can be suspended on the following grounds: (1) matters of life, liberty, honor
or property, (2) the existence of special or compelling circumstances, (3) the merits of the case, (4) a cause not entirely attributable to

22
the fault or negligence of the party favored by the suspension of the rules, (5) a lack of any showing that the review sought is merely
frivolous and dilatory, and
(6) the other party will not be unjustly prejudiced thereby. 38
WHEREFORE, in the interest of justice, as a prophylactic to the irregularities committed by the trial court judge, and by virtue of its
powers under Article VIII, Section 5 (5) of the Constitution, the Court RESOLVES to:
(1) NULLIFY all orders that are subject of this Resolution issued by Judge Silvino T. Pampilo, Jr. after respondent
Gatdula filed the Petition for the Issuance of a Writ of Amparo;
(2) DIRECT Judge Pampilo to determine within forty-eight (48) hours from his receipt of this Resolution whether the
issuance of the Writ of Amparo is proper on the basis of the petition and its attached affidavits.
The Clerk of Court is DIRECTED to cause the personal service of this Resolution on Judge Silvino T. Pampilo, Jr. of Branch 26 of the
Regional Trial Court of Manila for his proper guidance together with a WARNING that further deviation or improvisation from the
procedure set in A.M. No. 07-9-12-SC shall be meted with severe consequences.
SO ORDERED.
G.R. No. 198718 November 27, 2013
SPOUSES TEODORO and ROSARIO SARAZA and FERNANDO SARAZA, Petitioners, vs.
WILLIAM FRANCISCO, Respondent.
D E C I S I O N REYES, J.:
This is a petition for review on Certiorari 1 under Rule 45 of the Rules of Court, which assails the Decision2 dated June 28, 2011 and
Resolution3 dated September 30, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 93961. The assailed decision and resolution
of the CA affirmed the Decision4 dated June 5, 2009 of the Regional Trial Court (RTC) of Imus, Cavite, Branch 20, in Civil Case No.
0319-04, an action for specific performance/sum of money and damages.
The Facts
The case stems from an amended complaint filed by William Francisco (respondent) against Fernando Saraza
(Fernando) and Spouses Teodoro and Rosario (Rosario) Saraza (Spouses Saraza) (petitioners). The
respondent alleged in his complaint that on September 1, 1999, he and Fernando executed an Agreement 5 that provided for the latter’s
sale of his 100-square meter share in a lot situated in Bangkal, Makati City, which at that time was still registered in the name of one
Emilia Serafico and covered by Transfer Certificate of Title (TCT) No.
40376 (later covered by TCT No. 220530), for a total consideration of ₱3,200,000.00. The amount of
₱1,200,000.00 was paid upon the Agreement’s execution, while the balance of ₱2,000,000.00 was to be paid on installments to the
Philippine National Bank (PNB), to cover a loan of Spouses Saraza, Fernando’s parents, with the bank. A final deed of sale conveying
the property was to be executed by Fernando upon full payment of the PNB loan.6
It was also agreed upon that should the parties fail for any reason to transfer the subject property to the respondent’s name, Rosario
and Fernando’s 136-sq m property covered by TCT No. 156126 and encumbered to PNB to secure the loan that was to be paid by
the respondent shall be considered a collateral in favor of the respondent.7 Spouses Saraza signified their conformity to the
Agreement. The respondent was also allowed to take immediate possession of the property covered by TCT No. 156126 through a
contract of lease8. The petitioners likewise furnished PNB with an Authority 9, allowing the respondent to pay their obligations to the
PNB, to negotiate for a loan restructuring, to receive the owner’s duplicate copy of TCT No. 156126 upon full payment of the loan
secured by its mortgage, and to perform such other acts as may be necessary in connection with the settlement of the loan. 10
When the remaining balance of the PNB loan reached ₱226,582.13, the respondent asked for the petitioners’ issuance of a Special
Power of Attorney (SPA) that would authorize him to receive from PNB the owner’s duplicate copy of TCT No. 156126 upon full
payment of the loan. The petitioners denied the request. Upon inquiry from PNB, the respondent found out that the petitioners had
instead executed an Amended Authority, which provided that the owner’s copy of TCT No. 156126 should be returned to the
mortgagors upon full payment of the loan. 11 Spouses Saraza also caused the eviction of the respondent from the property covered by
TCT No. 156126.12 These prompted the respondent to institute the civil case for specific performance, sum of money and damages
with the RTC of Imus, Cavite on December 7, 2004.13
The petitioners admitted the existence of the Agreement and the Authority which was addressed to PNB. They, nonetheless, opposed
the respondent’s complaint on the ground that the amount of ₱1,200,000.00 which was supposed to be paid by the respondent upon
the Agreement’s execution remained unpaid. The respondent allegedly took advantage of the trust that was reposed upon him by the
petitioners, who nonetheless did not
formally demand payment from him but merely waited for him to pay the amount. 14 The Ruling of the
RTC
On June 5, 2009, the RTC rendered a Decision in favor of the respondent. The RTC considered the contents of the Agreement
executed by the parties, taking into account that it was a notarized document. It held: In another case, the High Court held that: "The
recitals in a public instrument executed with all the legal formalities are evidence against the parties thereto and their successors in
interest, and a high degree of proof is necessary to overcome the presumption that such recitals are true." (Naval, et. al., v Enriquez,
3 Phil 669).15 (Italics supplied) The RTC held that contrary to the petitioners’ claim, the respondent’s full payment of the ₱3,200,000.00
consideration provided in the Agreement was supported by: (1) the petitioners’ acknowledgment in the Agreement that they received
the amount of ₱1,200,000.00 upon its execution; and (2) the Certification from PNB that the full amount of Spouses Saraza’s loan
with the bank had been fully paid.
The RTC, however, declared that only Fernando should be held liable for the respondent’s claims, since the main action was for
specific performance, specifically to compel him to execute a Deed of Absolute Sale over the subject property already covered by
TCT No. 220530 under Fernando’s name. Hence, the decretal portion of the RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering [petitioner] Fernando M. Saraza as follows, viz:
1. to EXECUTE a Deed of Absolute Sale covering the 100-square meter parcel of land located in Barangay Bangkal, City
of Makati and covered by Transfer Certificate of Title No. 220530 of the Registry of Deeds of Makati in favor of [respondent]
William Francisco pursuant to their Agreement dated 01 September 1999; 2. to DELIVER to [respondent] William Francisco
the Owner’s Copy of Transfer Certificate of Title No. 220530 covering the 100-square meter parcel of land located in
Barangay Bangkal, City of Makati which is subject of the Deed of Absolute Sale; and
3. to PAY all taxes imposable by law for the transfer of the title in the name of [respondent], pursuant to the parties’
AGREEMENT dated 1 September 1999;
4. to PAY [respondent] William Francisco the following:
4.1 One Hundred Thousand Pesos (Php 100,000.00) as and by way of damages;
4.2 One Hundred Seventy-Seven Thousand Pesos (Php 177,000.00) as and by way of attorney’s fees; and
4.3 the costs of suit.

23
SO ORDERED.16
Dissatisfied, Fernando questioned the RTC Decision before the CA. In addition to the defenses which he raised during the
proceedings before the RTC, he argued that the RTC of Imus lacked jurisdiction over the case as it involved an adjudication of
ownership of a property situated in Makati City.17 The Ruling of the CA
The CA affirmed the RTC rulings via the Decision dated June 28, 2011. The CA rejected the petitioners’ allegation that the amount of
₱1,200,000.00 remained unpaid by the respondent, citing the stipulation in their
Agreement which provided that the said amount was paid upon the contract’s execution.
On the issue of jurisdiction, the CA cited Fernando’s failure to seasonably file before the lower court a motion to dismiss stating that
the action should have been filed in Makati City. More importantly, the Court explained that the case was a personal action since it
did not involve a claim of ownership of the subject property, but only sought Fernando’s execution of a deed of sale in the respondent’s
favor. Thus, the venue for the action was the residence of the plaintiff or the defendant, at the plaintiff’s option. 18
Petitioner Fernando’s Motion for Reconsideration 19 was denied by the CA in the Resolution dated September 30, 2011. 20 Hence, this
petition for review on certiorari.
The Issue
The main issue for the Court’s resolution is: Whether or not the petitioners are bound to comply with their obligations to the respondent
as embodied in their Agreement dated September 1, 1999.
This Court’s Ruling
The respondent’s satisfaction of his obligation under
the Agreement
It is imperative to look into the respondent’s compliance with his covenants under the subject Agreement in order to ascertain whether
or not he can compel the petitioners to satisfy their respective undertakings.
At the outset, the Court underscores the limited scope of a petition for review on certiorari under Rule 45 of the Rules of Court.
Section 1 of Rule 45 provides that the petition shall raise only questions of law, which must be distinctly set forth. Questions of fact
are not entertained, for the Court is not duty-bound to analyze again and weigh the evidence introduced in and already considered
by the tribunals below.21 When supported by substantial evidence, the findings of fact of the CA are conclusive and binding on the
parties and are not reviewable by the Court, save in some recognized exceptions such as: (1) when the conclusion is a finding
grounded entirely on speculation, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd or
impossible; (3) where there is a grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when
the findings of fact are conflicting; (6) when the CA, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the
findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the
petition as well as in the petitioners’ main and reply briefs are not disputed by the respondents; and (10) when the findings of fact
of the CA are premised on the supposed absence of evidence and contradicted by the evidence on record. 22 The respondent’s
obligation under the Agreement pertains to the payment of the ₱3,200,000.00 consideration for Fernando’s corresponding duty of
executing a Deed of Sale over the property formerly covered by TCT No. 40376. To dispute the respondent’s claim that he has
satisfied said obligation, the petitioners now raise factual issues which the Court however emphasizes are not for the Court to
reassess. For one, the issue of whether or not the respondent’s obligation to pay has already been satisfied is a factual question.
We consider the fact that both the RTC and the CA have determined that there has been a full payment by the respondent of his
₱3,200,000.00 obligation under the Agreement. Upon review, the Court finds no reason to deviate from this finding of the courts,
especially as it is supported by substantial evidence. To begin with, the petitioners do not deny the authenticity and their execution of
the subject Agreement, a matter that is also sufficiently established by the fact that the document was acknowledged before a notary
public. As both the RTC and CA correctly held, such Agreement sufficiently proves the fact of the respondent’s payment to the
petitioners of the agreed initial payment of ₱1,200,000.00, as it states:
That, for and in consideration of the agreed purchase price of THREE MILLION TWO HUNDRED THOUSAND
PESOS ([P]3,200,000.00), Philippine currency, of which the sum of ONE MILLION TWO HUNDRED THOUSAND PESOS
([P]1,200,000.00), has been paid by the buyer upon execution of this instrument x x x. 23 (Emphasis ours)
Given this categorical statement, the petitioners’ denial that they have received the amount necessitated concrete and substantial
proof. A perusal of the case records shows that the petitioners failed in this regard. Even their unsubstantiated claim that the
document’s notarization was irregularly made cannot prevail over the presumption that the notary public’s duty has been regularly
performed.24 The CA also correctly held that the parol evidence rule applies to this case. Unsubstantiated testimony, offered as proof
of verbal agreements which tend to vary the terms of the written agreement, is inadmissible under the rule. 25
In addition to the foregoing, the petitioners’ plain denial of the respondent’s claim of full payment is self-serving,
belied by their admission that they had not at anytime demanded from the respondent the payment of ₱1,200,000.00. The
petitioners are presumed under the law to have taken ordinary care of their concerns; 26 thus, they would have exerted efforts
to demand payment of the amount due them if in fact, no payment had been made. Moreover, given this presumption, the
petitioners were supposed to be wary of the import of affixing their signature on the Agreement, and would not have voluntarily
signed the subject Agreement if they did not intend to give full effect thereto.
The petitioners also raise in their Supplemental Petition27 some defenses which were not introduced during the proceedings before
the lower courts. These pertain to the alleged failure of Spouses Saraza to fully understand the contents of the Agreement as these
were written in English, and their claim that the Agreement was a contract of adhesion for having been prepared solely by the
respondent. Basic is the rule, however, that no issue may be raised on appeal unless it has been brought before the lower tribunals
for consideration.28 To consider such issues and arguments that are belatedly raised by a party would be tantamount to a blatant
disregard of the basic principles of fair play, justice and due process. 29 In any case, the new defenses that are raised by the petitioners
deserve scant consideration. There is no claim that the cited language limitation equally applied to the respondent, the principal party
in the Agreement. Contrary to the petitioners’ stance, the Agreement also does not appear to be a contract where the petitioners had
no opportunity to question its terms, negotiate or decline its execution. The bare allegations of the petitioners fail to suffice.
Based on available evidence, it is then clear that the respondent had fully satisfied his obligation under the subject Agreement given
the stipulation in the document on his initial payment of ₱1,200,000.00, and considering PNB’s Certification 30 that the ₱2,000,000.00
loan of Spouses Saraza with the bank had been fully settled on April 22, 2005. Fernando, being equally bound by the terms of the
document, was correctly ordered by the RTC and the CA to duly comply with his own obligation under the contract, particularly the
obligation to execute a deed of sale over his 100-sq m property in Bangkal, Makati City. The respondent’s satisfaction of his obligation
under the Agreement also rendered unmeritorious the petitioners’ counterclaim for damages. Venue of an Action for Specific
Performance As to the issue of venue, the petitioners’ argument that the action should have been instituted with the RTC of Makati
City, and not the RTC of Imus, Cavite, is misplaced. Although the end result of the respondent’s claim was the transfer of the
subject property to his name, the suit was still essentially for specific performance, a personal action, because it sought Fernando’s
execution of a deed of absolute sale based on a contract which he had previously made.

24
Our ruling in Cabutihan v. Landcenter Construction & Development Corporation 31 is instructive. In the said case, a complaint for
specific performance that involved property situated in Parañaque City was instituted before the RTC of Pasig City. When the case’s
venue was raised as an issue, the Court sided with therein petitioner who argued that "the fact that ‘she ultimately sought the
conveyance of real property’ not located in the territorial jurisdiction of the RTC of Pasig is x x x an anticipated consequence and
beyond the cause for which the action [for specific performance with damages] was instituted." 32 The Court explained:
[I]n La Tondeña Distillers, Inc. v. Ponferrada, private respondents filed an action for specific performance with damages before the
RTC of Bacolod City. The defendants allegedly reneged on their contract to sell to them a parcel of land located in Bago City – a piece
of property which the latter sold to petitioner while the case was pending before the said RTC. Private respondent did not claim
ownership but, by annotating a notice of lis pendens on the title, recognized defendants’ ownership thereof. This Court ruled that the
venue had properly been laid in the RTC of Bacolod, even if the property was situated in Bago.
In Siasoco v. Court of Appeals, private respondent filed a case for specific performance with damages before the RTC of Quezon City.
It alleged that after it accepted the offer of petitioners, they sold to a third person several parcels of land located in Montalban, Rizal.
The Supreme Court sustained the trial court’s order allowing an amendment of the original Complaint for specific performance with
damages. Contrary to petitioners’ position that the RTC of Quezon City had no jurisdiction over the case, as the subject lots were
located in Montalban, Rizal, the said RTC had jurisdiction over the original Complaint. The Court reiterated the rule that a case for
specific performance with damages is a personal action which may be filed in a court where any of the parties reside. 33(Citations
omitted and emphasis supplied)
The Court compared these two cases with the case of National Steel Corporation v. Court of Appeals 34 where the Court held that an
action that seeks the execution of a deed of sale over a parcel of land is for recovery of real property, and not for specific performance,
because the primary objective is to regain ownership and possession of the property. 35 It was explained that the prayer in National
Steel was not in any way connected to a contract that was previously executed by the party against whom the complaint was filed,
unlike in Cabutihan where the parties had earlier executed an Undertaking for the property’s transfer, correctly giving rise to a cause
of action either for specific performance or for rescission, as in this case.
Section 2, Rule 4 of the Rules of Court then governs the venue for the respondent’s action. It provides that personal actions "may be
commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal
defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff." Considering
the respondent’s statement in his complaint that he resides in Imus, Cavite, 36 the filing of his case with the RTC of Imus was proper.
Award of Damages
The Court, however, modifies the lower courts’ award of damages in favor of the respondent.1âwphi1 In the assailed decision, the CA
affirmed the RTC’s award of the following amounts: (1) ₱100,000.00 as damages; (2)
₱177,000.00 as attorney’s fees; and (3) costs of suit.
Upon review, the Court finds no justification for the order to pay damages in the amount Pl00,000.00. Both the RTC and the CA failed
to indicate the award's classification and the factual and legal bases therefor, save for a general statement by the R TC that it was
deemed a "reasonable amount of damages arising from the failure of the [petitioners] to fulfill [their] obligation under their
Agreement."37
The claim in the complaint was for moral and compensatory damages, yet the RTC failed to indicate whether the Pl00,000.00 was for
the moral damages for the "undue anxiety, mental anguish and wounded feelings"38, or compensatory damages for the "actual
business losses due to disruption of his business" 39 as alleged by the respondent in his Amended Complaint. More importantly, there
is no showing that such allegations were sufficiently substantiated by the respondent, rendering the deletion of the award warranted.
WHEREFORE, the Decision dated June 28, 2011 and Resolution dated September 30, 2011 of the Court of Appeals in CA-G.R. CV
No. 93961 are AFFIRMED with MODIFICATION in that the award of Pl00,000.00 as damages in favor of respondent William Francisco
is deleted.
SO ORDERED.

FIRST DIVISION
[G.R. No. 129184. February 28, 2001]
EMERGENCY LOAN PAWNSHOP INCORPORATED and DANILO R. NAPALA, petitioners, vs. THE COURT OF APPEALS (Tenth
Division) and TRADERS ROYAL BANK, respondents. D E C I S I O N PARDO, J.:
May an appeal be taken from a decision of the Regional Trial Court denying a motion to dismiss the complaint on the ground of improper
venue? If not, will certiorari lie?
The case before the Court is a petition for review on certiorari assailing thedecision of the Court of Appeals,[1] granting respondents petition
for certiorari and dismissing the complaint below on the ground of improper venue.
On January 18, 1996, Traders Royal Bank (TRB for brevity) sold in favor of petitioner Emergency Loan Pawnshop
Incorporated (ELPI for brevity) a parcel of land located at Km. 3 Asin, Baguio City for Five Hundred Thousand Pesos
(P500,000.00).[2]
At the time of the sale, TRB misrepresented to ELPI that the subject property was a vacant residential lot valued at P600.00 to P800.00 per
square meters, with a usable land area of 1,143.75 square meters (approximately 75% of the land area of 1,525 sq.m.) without any illegal occupants
or squatters, when it truth the subject property was dominantly a public road with only 140 square meters usable area.
ELPI, after having spent to fully ascertain the actual condition of the property, demanded from TRB the rescission and cancellation of the
sale of the property. TRB refused, hence, on April 16, 1996, ELPI filed with the Regional Trial Court,
Davao, Branch 17, a complaint for annulment of sale and damages against TRB. [3]
On August 27, 1996, TRB filed a Motion to Dismiss[4] the complaint on the ground of improper venue. On September 18, 1996 the trial court
denied the motion to dismiss.[5] On October 21, 1996, TRB filed a motion for reconsideration. [6] On November 14, 1996, the trial court denied the
motion.[7]
On January 15, 1997, TRB elevated the case to the Court of Appeals by petition for certiorari and prohibition with preliminary injunction or
temporary restraining order, contending that the trial court committed a grave abuse of discretion in denying its motion to dismiss the complaint on
the ground of improper venue.[8]
After due proceedings, on March 11, 1997, the Court of Appeals promulgated its decision, the dispositive portion of which reads:
WHEREFORE, finding merit in the petition, the Orders dated September 18,1996 and November 14, 1996 are hereby ANNULED and
SET ASIDE and Civil Case No. 24,317-96 is hereby DISMISSED on ground of improper venue.[9]
Hence, this petition.[10]
Petitioners seek to set aside the decision of the Court of Appeals alleging that:
1. The Court of Appeals erred in entertaining the petition for certiorari and prohibition, for lack of jurisdiction;
2. The Court of Appeals erred in ruling that the Regional Trial Court erred in not dismissing the complaint for improper venue.[11]

25
 According to petitioners, the determination of whether the venue of an action was improperly laid was a question of law, thus, the Court of
Appeals had no jurisdiction to entertain the petition for certiorari and prohibition, which involves pure questions of law.
Petitioners further alleged that an order denying a motion to dismiss is interlocutory in nature that can not be the subject of an appeal and can
not be even reviewed by a special civil action for certiorari.
We find the petition not meritorious.
The general rule is that the denial of a motion to dismiss a complaint is an interlocutory order and, hence, cannot be appealed or questioned
via a special civil action of certiorari until a final judgment on the merits of the case is rendered.[12]
The remedy of the aggrieved party is to file an answer to the complaint and to interpose as defenses the objections raised in his motion to
dismiss, proceed to trial, and in case of an adverse decision, to elevate the entire case by appeal in due course.However, the rule is not ironclad.
Under certain situations, recourse to certiorari ormandamus is considered appropriate, that is, (a) when the trial court issued the order without or
in excess of jurisdiction; (b) where there is patent grave abuse of discretion by the trial court; or, (c) appeal would not prove to be a speedy and
adequate remedy as when an appeal would not promptly relieve a defendant from the injurious effects of the patently mistaken order maintaining
the plaintiffs baseless action and compelling the defendant needlessly to go through a protracted trial and clogging the court dockets by another
futile case."[13]
In the case at bar, we agree with the Court of Appeals that the trial court erred grievously amounting to ousting itself of jurisdiction. The
motion of respondent TRB was well founded because venue was clearly improperly laid. The action in the Regional Trial Court was for annulment
of sale involving a parcel of land located at Km. 3 Asin Road, Baguio City. The venue of such action is unquestionably within the territorial
jurisdiction of the proper court where the real property or part thereof lies.[14] An action affecting title to real property, or for recovery of, or
foreclosure of mortgage on real property, shall be commenced and tried in the proper court having jurisdiction over the area where the real property
or any part thereof lies.[15]
Hence, the case at bar clearly falls within the exceptions to the rule. The Regional Trial Court has committed a palpable and grievous error
amounting to lack or excess of jurisdiction in denying the motion to dismiss the complaint on the ground of improper venue.
WHEREFORE, the Court denies the petition and affirms the decision of the Court of Appeals in CA-G. R. SP No. 43095, in toto.
No costs.
SO ORDERED.

FIRST DIVISION

EMERITA MUOZ, G.R. No. 142676

Petitioner,

- versus -

ATTY. VICTORIANO R. YABUT, JR. and

SAMUEL GO CHAN,
Respondents.
x------------------------x
EMERITA MUOZ, G.R. No. 146718
Petitioner,
Present:

CORONA, C.J., Chairperson,

- versus - VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and PEREZ,
JJ.
SPOUSES SAMUEL GO CHAN and AIDA C.
CHAN, and THE BANK OF THE Promulgated:
PHILIPPINE ISLANDS,
Respondents.

June 6, 2011

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

DECISION

26
LEONARDO-DE CASTRO, J.:

Before Us are the following consolidated petitions for review on certiorari under Rule 45 of the Rules of Court.

In G.R. No. 142676, Emerita Muoz (Muoz) is seeking the reversal, annulment, and setting aside of the Decision[1] dated July 21, 1995
and Resolution[2] dated March 9, 2000 of the Court of Appeals in CA-G.R. SP No. 35322, which affirmed the Orders[3] dated June 10, 1994 and
August 5, 1994 of the Regional Trial Court, Branch 88 (RTC-Branch 88) of Quezon City in Civil Case No. Q-94-20632. The RTC dismissed Civil
Case No. 8286, the forcible entry case instituted by Muoz against Atty. Victoriano R. Yabut, Jr. (Atty. Yabut) and Samuel Go Chan before the
Metropolitan Trial Court (MeTC), Branch 33 of Quezon City; and nullified the MeTC Order [4] dated May 16, 1994, granting Muozs prayer for the
issuance of a writ of preliminary mandatory injunction which restored possession of the subject property to Muoz.

In G.R. No. 146718, Muoz is praying for the reversal, setting aside, and nullification of the Decision[5] dated September 29, 2000 and
Resolution[6] dated January 5, 2001 of the Court of Appeals in CA-G.R. SP No. 40019, which affirmed the Orders[7] dated August 21, 1995 and
October 3, 1995 of the Quezon City RTC, Branch 95 (RTC-Branch 95) in Civil Case No. Q-28580 denying Muozs Motion for an Alias Writ of
Execution and Application for Surrender of the Owners Duplicate Copy of TCT No. 53297 [8] against respondents Bank of the Philippine Islands
(BPI) and the spouses Samuel Go Chan and Aida C. Chan (spouses Chan).

I
FACTS

The subject property is a house and lot at No. 48 Scout Madrian St., Diliman, Quezon City, formerly owned by Yee L. Ching. Yee L.
Ching is married to Emilia M. Ching (spouses Ching), Muozs sister.Muoz lived at the subject property with the spouses Ching. As consideration
for the valuable services rendered by Muoz to the spouses Chings family, Yee L. Ching agreed to have the subject property transferred to Muoz.
By virtue of a Deed of Absolute Sale, seemingly executed by Yee L. Ching in favor of Muoz, [9] the latter acquired a Transfer Certificate of Title
(TCT) No. 186306 covering the subject property in her name on December 22, 1972. [10] However, in a Deed of Absolute Sale dated December 28,
1972, Muoz purportedly sold the subject property to her sister, Emilia M. Ching. As a result, TCT No. 186306 was cancelled and TCT No. 186366
was issued in Emilia M. Chings name. Emilia M. Ching, in a Deed of Absolute Sale dated July 16, 1979, sold the subject property to spouses Go
Song and Tan Sio Kien (spouses Go), hence, TCT No. 186366 was cancelled and replaced by TCT No. 258977 in the spouses Gos names.
On October 15, 1979, Muoz registered her adverse claim to the subject property on TCT No. 258977 of the spouses Go. The next day, on
October 16, 1979, Muoz filed a complaint for the annulment of the deeds of absolute sale dated December 28, 1972 and July 16, 1979, the
cancellation of TCT No. 258977 in the spouses Gos names, and the restoration and revival of TCT No. 186306 in Muozs name. The complaint was
docketed as Civil Case No. Q-28580 and raffled to RTCBranch 95. On October 17, 1979, Muoz caused the annotation of a notice of lis pendens on
TCT No. 258977 of the spouses Go. In an Order dated December 17, 1979, the RTC-Branch 95 granted the spouses Gos motion for the issuance of
a writ of preliminary mandatory injunction and ordered the sheriff to put the spouses Go in possession of the subject property. The writ was
implemented by the sheriff on March 26, 1980, driving Muoz and her housemates away from the subject property.

Muoz filed a petition for certiorari and prohibition before the Court of Appeals, assailing the issuance of the writ of preliminary mandatory
injunction, which was docketed as CA-G.R. SP No. 10148.The appellate court dismissed Muozs petition on January 4, 1980. Yee L. Ching and his
son Frederick M. Ching filed an urgent motion for leave to intervene in CA-G.R. SP No. 10148 and for the issuance of a temporary restraining
order (TRO). The Court of Appeals issued a TRO. However, in a Resolution dated March 18, 1980, the appellate court denied the motion to
intervene of Yee L. Ching and Frederick M. Ching, and cancelled the TRO previously issued. Yee L. Ching and Frederick M. Ching challenged
before this Court, in G.R. No. 53463, the Resolution dated March 18, 1980 of the Court of Appeals.Eventually, in a Resolution dated June 3, 1981,
the Court dismissed the petition in G.R. No. 53463, for lack of merit and failure of Yee L. Ching and Frederick M. Ching to substantially show that
the RTC-Branch 95 and the Court of Appeals gravely abused their discretion. In a subsequent Resolution dated June 21, 1982, the Court clarified
that its Resolution of June 3, 1981 was without prejudice to the continuation of the litigation in Civil Case No. Q-28580 still pending before the
trial court, in order that proper and final adjudication may be made of whether or not the deed of sale by Emerita L. Muoz in favor of Emilia M.
Ching is a real, genuine and authentic transaction, thereby to settle once and for all the issue of ownership of the property herein in question.[11]

Trial in Civil Case No. Q-28580 proceeded before RTC-Branch 95.

In the meantime, Muozs adverse claim and notice of lis pendenson TCT No. 258977 was cancelled on October 28, 1982 on the basis of
an alleged final judgment in favor of the spouses Go.[12] The spouses Go obtained a loan of P500,000.00 from BPI Family Savings Bank (BPI
Family) and to secure the same, they constituted a mortgage on the subject property on November 23, 1982. [13] When the spouses Go defaulted on
the payment of their loan, BPI Family foreclosed the mortgage. BPI Family was the highest bidder at the auction sale of the subject property. The
spouses Go failed to exercise their right of redemption within the prescribed period, thus, BPI Family was finally able to register the subject property
in its name on October 23, 1987 under TCT No. 370364.[14] Apparently, the original copy of TCT No. 370364 was among those razed in the fire at
the Quezon City Register of Deeds on June 11, 1988. As a result of the administrative reconstitution of the lost title, TCT No. RT-54376 (370364)
was issued to BPI Family. On December 3, 1990, BPI Family executed in favor of the spouses Samuel Go Chan and Aida C. Chan (spouses Chan)
a Deed of Absolute Sale[15] covering the subject property for and in consideration of P3,350,000.00. Consequently, TCT No. RT-54376 (370364)
in the name of BPI Family was cancelled and TCT No. 53297 was issued in the spouses Chans names on January 28, 1991. [16] The spouses Chan
obtained a loan from BPI Family on October 2, 1992 for the construction of a building on the subject property, and to secure the same, constituted
a mortgage on the subject property in favor of BPI Family. [17]

On July 19, 1991, RTC-Branch 95 rendered its Decision[18] in Civil Case No. Q-28580, against Emilia M. Ching, Yee L. Ching, and the
spouses Go (Emilia M. Ching, et al.). It found that Muozs signature on the Deed of Absolute Sale dated December 28, 1972 was forged; that Muoz
never sold the subject property to her sister, Emilia M. Ching; and that the spouses Go were not innocent purchasers for value of the subject property.
The fallo of the said decision reads:

WHEREFORE, judgment is hereby rendered dismissing for lack of merit [Emilia M. Ching, et al.s] respective
counterclaims, cross-claims, and counter-cross-claim, declaring as null and void ab initio the following documents, to wit: (a)
Deed of Absolute Sale dated December 28, 1972, copy of which is marked in evidence as Exh. M; (b) TCT No. 186366 of the
Registry of Deeds for Quezon City, copy of which is marked in evidence as Exh. N; (c) Deed of Absolute Sale dated July 16,
1979, copy of which is marked in evidence as Exh. 3; and, (d) TCT No. 258977 of the Registry of Deeds for Metro Manila
District III, copy of which is marked in evidence as Exh. 4, and directing defendant Register of Deeds of Quezon City to cancel

27
 from the records of the subject property the registrations of all the said documents and to restore and revive, free from all liens
and encumbrances, TCT No. 186306 of the Registry of Deeds for Quezon City, copy of which is marked in evidence as Exh.
L, as well as ordering defendants Emilia M. Ching, Go Song and Tan Sio Kien jointly and severally to pay [Muoz] the sum of
P50,000.00 as and for attorneys fees and to pay the costs of suit. The court also hereby dismisses the rest of the claims in
[Muozs] complaint, there being no satisfactory warrant therefor.[19]

Emilia M. Ching, et al.s, appeal of the foregoing judgment of the RTC-Branch 95 was docketed as CA-G.R. CV No. 33811 before the
Court of Appeals. In its Decision[20] dated March 4, 1993, the appellate court not only affirmed the appealed judgment, but also ordered the spouses
Go and their successors-in-interest and assigns and those acting on their behalf to vacate the subject property, to wit:

WHEREFORE, premises considered, the decision appealed from is AFFIRMED, with costs against [Emilia M.
Ching, et al.]. The writ of preliminary mandatory injunction issued on December 17, 1979 is hereby set aside and declared
dissolved. Defendants-appellants Go and Tan, their successors-in-interest and assigns and those acting on their behalf, are
ordered to vacate the disputed premises and to deliver the same to [Muoz] immediately upon receipt of this decision. [21]

Emilia L. Ching, et al., filed before this Court a motion for extension of time to file their petition for review, which was assigned the
docket number G.R. No. 109260. However, they failed to file their intended petition within the extended period which expired on April 23, 1993.
In a Resolution[22] dated July 12, 1993, the Court declared G.R. No. 109260 terminated. The Resolution dated July 12, 1993 of the Court in G.R.
No. 109260 became final and executory on July 15, 1993 and was entered in the Book of Entries of Judgments on even date. [23]

More than two months later, on September 20, 1993, the RTC-Branch 95 issued a writ of execution to implement the
judgment in Civil Case No. Q-28580.

The spouses Chan, who bought the subject property from BPI Family, then came forward and filed before the RTC-Branch 95 on October 22, 1993
an Urgent Motion to Stop Execution as Against Spouses Samuel Go Chan and Aida Chan, [24] opposing the writ of execution issued in Civil Case
No. Q-28580. The spouses Chan asserted ownership and possession of the subject property on the basis of a clean title registered in their names
under TCT No. 53297. The spouses Chan further contended that the final judgment in Civil Case No. Q-28580 could not be executed against them
since they were not parties to the said case; they were not successors-in-interest, assigns, or acting on behalf of the spouses Go; and they purchased
the subject property from BPI Family without any notice of defect in the latters title.

It was only at this point that Muoz, upon her own inquiry, discovered the cancellation on October 28, 1982 of her adverse claim and
notice of lis pendens annotated on the spouses Gos TCT No. 258977, and the subsequent events that led to the transfer and registration of the title
to the subject property from the spouses Go, to BPI Family, and finally, to the spouses Chan.

In its Order[25] dated December 28, 1993, the RTC-Branch 95 denied the spouses Chans urgent motion to stop the execution.According
to the RTC-Branch 95, the photocopy of TCT No. 370364 in the name of BPI Family, submitted by the spouses Chan with their motion, could
hardly be regarded as satisfactory proof that Muozs adverse claim and notice of lis pendens annotated therein were also missing from the original
copy of said certificate of title. Muozs adverse claim and notice of lis pendens were annotated on TCT No. 258977 in the spouses Gos names as
P.E.-8078 and P.E.-8178, respectively. So when TCT No. 258977 of the spouses Go was cancelled and TCT No. 370364 was issued to BPI Family,
it could be presumed that the Register of Deeds regularly performed his official duty by carrying over Muozs adverse claim and notice of lis pendens
to TCT No. 370364. In addition, the RTC-Branch 95 pointed out that in this jurisdiction, the entry of the notice of lis pendens in the day book of
the Register of Deeds was already sufficient notice to the whole world of the dispute over the subject property, and there was no more need to
annotate the same on the owners duplicate of the certificate of title. Finally, the RTC-Branch 95 held that TCT No. RT-54376 (370364) of BPI
Family and TCT No. 53297 of the spouses Chan shall be subject to the reservation under Section 7 of Republic Act No. 26 [26] [t]hat certificates of
title reconstituted extrajudicially, in the manner stated in sections five and six hereof, shall be without prejudice to any party whose right or interest
in the property was duly noted in the original, at the time it was lost or destroyed, but entry or notation of which has not been made on the
reconstituted certificate of title. Thus, the spouses Chan were deemed to have taken the disputed property subject to the final outcome of Civil Case
No. Q-28580.

On January 3, 1994, the RTC-Branch 95 issued an Alias Writ of Execution.[27] On January 10, 1994, the writ was enforced, and possession
of the subject property was taken from the spouses Chan and returned to Muoz.[28] In its Orders dated April 8, 1994 and June 17, 1994, the RTC-
Branch 95 denied the spouses Chans motion for reconsideration and notice of appeal, respectively. [29]

G.R. No. 142676

Pending resolution by the RTC-Branch 95 of the spouses Chans motion for reconsideration and notice of appeal in Civil Case No. Q-
28580, Muoz instituted before the MeTC on February 4, 1994 a Complaint for Forcible Entry with Prayer for Preliminary Mandatory Injunction[30]
against Samuel Go Chan and Atty. Yabut, docketed as Civil Case No. 8286. Muoz alleged in her complaint that she had been in actual and physical
possession of the subject property since January 10, 1994. She hired a caretaker and two security guards for the said property. On February 2, 1994,
Samuel Go Chan and Atty. Yabut, along with 20 other men, some of whom were armed, ousted Muoz of possession of the subject property by
stealth, threat, force, and intimidation. Muoz prayed for the issuance of a writ of preliminary mandatory injunction directing Samuel Go Chan and
Atty. Yabut and all persons claiming right under them to vacate the subject property. Muoz additionally prayed for judgment making the mandatory
injunction permanent and directing Samuel Go Chan and Atty. Yabut to pay Muoz: (1) compensation for the unlawful occupation of the subject
property in the amount of P50,000.00 per month, beginning February 2, 1994 until the said property is fully and completely turned over to Muoz;
(2) attorneys fees in the amount of P50,000.00, plus P1,500.00 per court appearance of Muozs counsel; and (3) costs of suit.

Samuel Go Chan and Atty. Yabut denied Muozs allegations, insisting that Samuel Go Chan is the valid, lawful, and true legal owner and
possessor of the subject property. Samuel Go Chan and Atty. Yabut averred that the Turn-Over of Possession and Receipt of Possession dated
January 10, 1994 attached to Muozs complaint as proof that the subject property had been placed in her possession is a falsified document. The
Writ of Execution issued on September 20, 1993 in Civil Case No. Q-28580 had already expired and the Sheriffs Return on the Writ another
document purporting to show that possession of the subject property was turned-over to Muoz on January 10, 1994 was then being challenged in a
complaint before the Office of Deputy Court Administrator Reynaldo L. Suarez of the Supreme Court. Samuel Go Chans possession of the subject
property has never been interrupted.His sister, Cely Chan, resided at the subject property and was never removed therefrom. On February 2, 1994,
Atty. Yabut was at the subject property only to protect the rights and interest of his client, Samuel Go Chan, and since the latters possession of the

28
subject property had never been interrupted, Atty. Yabut entered the same peacefully, without intimidation, force, or stealth. The other people at
the subject property on February 2, 1994 were there to attend the services at the BuddhistTemple which occupied the fourth floor of the building
erected by the spouses Chan on the subject property. Samuel Go Chan and Atty. Yabut, thus, asked the MeTC to dismiss Muozs complaint for lack
of merit and legal basis.[31]

The MeTC received evidence from the parties on whether a writ of preliminary injunction should be issued, as prayed for by Muoz. In
its Order dated May 16, 1994, the MeTC adjudged that the final judgment in Civil Case No. Q-28580 was already executed against the spouses
Chan and there was, indeed, a turn-over of possession of the subject property to Muoz. Accordingly, the MeTC granted Muozs prayer for the
issuance of a writ of preliminary mandatory injunction, restoring possession of the subject property to Muoz.

Samuel Go Chan and Atty. Yabut questioned the foregoing MeTC order through a Petition for Certiorari with Prayer for Temporary
Restraining Order and Writ of Preliminary Injunction [32] before the RTC-Branch 88, which was docketed as
Civil Case No. Q-94-20632.They asserted that they were not bound by the execution of the final judgment of RTC-Branch 95 in Civil Case No. Q-
28580 as they were not parties to the said case. Muoz, on the other hand, argued that the MeTC Order of May 16, 1994 was an interlocutory order,
and under Section 19 of the Rules of Summary Procedure, a petition for certiorariagainst an interlocutory order issued by the court is one of the
prohibited pleadings and motions in summary proceedings.

In its Order dated June 10, 1994, the RTC-Branch 88 issued a writ of preliminary injunction to enjoin the
implementation of the MeTC Order dated May 16, 1994.

On August 5, 1994, the RTC-Branch 88 issued another Order resolving Muozs motion to dismiss the petition for certiorari in Civil Case
No. Q-94-20632, motion for reconsideration of the Order dated June 10, 1994 of RTC-Branch 88 granting the issuance of a writ of preliminary
injunction, and motion to resolve with additional grounds for dismissal. According to the RTC-Branch 88, the MeTC failed to distinguish the issue
of finality of the judgment of the RTCBranch 95 in Civil Case No. Q-28580 from the assertions of Samuel Go Chan and Atty. Yabut that the
spouses Chan are not covered by said final judgment because they are not successors-in-interest, assigns, or privies of the spouses Go and they are
purchasers of the subject property in good faith. The issue of whether the final judgment in Civil Case No. Q-28580 extended to the spouses Chan
was then still being litigated in the same case before RTC-Branch 95, where the spouses Chans motion for reconsideration of the denial of their
notice of appeal was pending.The RTC-Branch 88 further found that the MeTC committed grave abuse of discretion in not dismissing Muozs
complaint for forcible entry on the ground of lis pendens, as the issue as to who between Muoz and the spouses Chan had the better right to
possession of the subject property was the subject of the pending proceeding in Civil Case No. Q-28580 before the RTC-Branch 95. In the end, the
RTC-Branch 88 decreed:

WHEREFORE, premises considered, the Court renders judgment

(a) Denying the motion to dismiss of respondent Muoz for lack of merit;

(b) Denying the motion for reconsideration of respondent Muoz for the recall and/or setting aside
of the writ of preliminary injunction granted to petitioners;

(c) Declaring the Order dated May 16, 1994 of Public respondent Hon. Elsa de Guzman in Civil
Case No. 8286 illegal and therefore null and void; and

(d) Dismissing the ejectment suit in Civil Case No. 8286 on ground of lis pendens.
Without pronouncement as to costs.[33]

Muoz appealed the Orders dated June 10, 1994 and August 5, 1994 of RTC-Branch 88 before the Court of Appeals. Her appeal was
docketed as CA-G.R. SP No. 35322. Aside from the nullification of the two orders, Muoz additionally prayed for the dismissal from the service of
the RTC-Branch 88 presiding judge and the disbarment of Atty.
Yabut.

The Court of Appeals, in its Decision dated July 21, 1995, sustained the appealed orders of RTC-Branch 88. The Court of Appeals held
that the MeTC should have dismissed the forcible entry case on the ground of lis pendens; that the spouses Chan were not parties in Civil Case No.
Q-28580, and impleading them only in the execution stage of said case vitiated their right to due process; that the order of the RTC-Branch 95
involving the spouses Chan in Civil Case No. Q-28580 was null and void, considering that they are strangers to the case, and they are innocent
purchasers for value of the subject property; that the notice of lis pendens was already cancelled from the spouses Gos certificate of title at the time
they mortgaged the subject property to BPI Family; and that the title to the subject property was already free of any and all liens and encumbrances
when the spouses Chan purchased the said property from BPI Family. The Court of Appeals, in its Resolution dated March 9, 2000, denied Muozs
motion for reconsideration.

G.R. No. 146718

Meanwhile, Muoz filed before the RTC-Branch 95 in Civil Case No. Q-28580 a Motion to Cite the Register of Deeds in Contempt of Court for the
failure of the Register of Deeds to restore Muozs TCT No. 186306 despite having been served with a copy of the writ of execution on October 11,
1993. In its Judgment (on the Contempt Proceedings against the Register of Deeds of Quezon City Samuel C. Cleofe) [34]dated March 18, 1994, the
RTC-Branch 95 denied Muozs motion, convinced that the Register of Deeds had a valid excuse for his inability to implement the served writ. The
Register of Deeds could not cancel the spouses Chans TCT No. 53297, the subsisting certificate of title over the subject property, absent any
authority or directive for him to do so. The directive in the final judgment in Civil Case No. Q-28580 and the writ of execution for the same only
pertained to the cancellation of the spouses Gos TCT No. 258977.

Thereafter, Muoz filed a Motion for Contempt against the spouses Chan and a Second Motion for Contempt against Samuel Go Chan and
Atty. Yabut. Muoz also filed a Motion for an Alias Writ of Execution and Application for Surrender of the Owners Duplicate Copy of TCT No.
53297,[35] in which she prayed for the issuance of an alias writ of execution directing the Register of Deeds not only to cancel TCT No. 258977 and
all documents declared null and void ab initio in the dispositive portion of the Decision[36] dated July 19, 1991 of RTC-Branch 95 in Civil Case No.

29
Q-28580, and to restore and revive, free from all liens and encumbrances Muozs TCT No. 186306, but likewise to cancel the present certificate of
title covering the subject property, TCT No. 53297.

In its Order dated August 21, 1995, the RTC-Branch 95 denied all of Muozs aforementioned motions. The RTCBranch 95 was of the
view that Samuel Go Chans title should be litigated in another forum, not in Civil Case No. Q-28580 where the judgment had already become final
and executory. The RTC-Branch 95 also stressed that since the judgment in Civil Case No. Q-28580 had long become final and executory, it could
no longer be changed or amended except for clerical error or mistake. Accordingly, the RTC-Branch 95 resolved as follows:

1. Ordering, as it hereby orders, the denial of [Muozs] first and second motions for contempt and hereby
absolves respondents Samuel Go Chan, Celia Chan, Atty. Victoriano R. Yabut, Jr., and several John Does of the Contempt
Charges against them.

2. Ordering, as it hereby orders, the issuance of an alias writ of execution directing the Courts Deputy Sheriff:

(a) Defendants Go Song and Tan Sio Kien, their successors-in-interest and assigns and those acting on their
behalf to vacate the disputed premises and deliver the same to [Muoz];

(b) Defendant Register of Deeds of Quezon City to cancel from the records of the subject property the
registration of all the following documents, to wit: (1) Deed of Absolute Sale dated December 28, 1972; (2)
Transfer Certificate of Title (TCT) No. 186366 of the Register of Deeds of Quezon City; (3) Deed of
Absolute Sale dated July 16, 1979; and (4) TCT No. 258977 of the Registry of Deeds for Metro Manila II,
and to restore and revive, free from all liens and encumbrances TCT No. 186306 of the Registry of Deeds
for Quezon City; and

(c) Defendants Emilia M. Ching, Go Song and Tan Sio Kien jointly and severally to pay
[Muoz] the sum of P50,000.00 as and for attorneys fees and to pay the cost of suit.[37]

Unrelenting, Muoz filed a Motion for Clarificatory Order, pointing out that the spouses Chan are the present occupants of the subject
property. The Order dated August 21, 1995 of the RTC-Branch 95 directed the deputy sheriff to deliver the subject property to Muoz, and this could
not be done unless the spouses Chan are evicted therefrom. Resultantly, Muoz prayed that a clarificatory order be made categorically stating that
the spouses Samuel Go Chan and Aida C. Chan, and all persons claiming right under them, are likewise evicted from the subject premises pursuant
to the Order of 21 August 1995.[38]

Once more, the RTC-Branch 95 denied Muozs motion in its Order dated October 3, 1995. The RTC-Branch 95
reiterated the rule that after the judgment had become final, only clerical errors, as distinguished from substantial errors, can be amended by the
court.Furthermore, when the decision or judgment sought to be amended is promulgated by an appellate court, it is beyond the power of the trial
court to change, amplify, enlarge, alter, or modify. Ultimately, the RTC-Branch 95 pronounced that it was restrained x x x to consider as mere
clerical error the exclusion of spouses Samuel Go Chan and Aida C. Chan in the Decision of the Court dated July 19, 1991, a final judgment, which
judgment cannot now be made to speak a different language. [39]
Attributing grave abuse of discretion on the part of the RTC-Branch 95 in issuing its Orders dated August 21, 1995 and October 3, 1995,
Muoz filed before this Court a Petition for Certiorari and Mandamus, which was remanded to the Court of Appeals in observance of the hierarchy
of courts, where it was docketed as CA-G.R. SP No. 40019. The Court of Appeals promulgated its Decision on September 29, 2000 dismissing
Muozs petition. The Court of Appeals agreed with the RTCBranch 95 that the spouses Chan could not be covered by the alias writ of execution
considering that they were not impleaded in Civil Case No. Q-28580. The cancellation of TCT No. 53297 in the spouses Chans names could not
be done apart from a separate action exclusively for that matter. The spouses Chan are deemed buyers in good faith and for value as the certificate
of title delivered to them by BPI Family was free from any liens or encumbrances or any mark that would have raised the spouses Chans suspicions.
Every person dealing with registered lands may safely rely on the correctness of the certificate of title of the vendor/transferor, and he is not required
to go beyond the certificate and inquire into the circumstances culminating in the vendors acquisition of the property. The Court of Appeals denied
Muozs motion for reconsideration in a Resolution dated January 5, 2001.

Muoz comes before this Court via the present consolidated petitions.

Muoz posits that the final judgment and writ of execution of RTC-Branch 95 in Civil Case No. Q-28580 bind not
only Emilia M. Ching and the spouses Go, but also their successors-in-interest, assigns, or persons acting on their behalf, namely, BPI Family and
spouses Chan. The spouses Chan cannot be deemed innocent purchasers for value of the property since the cancellation of the adverse claim and
notice of lis pendens on the spouses Gos TCT No. 258977 is completely null and void.

Muoz further argues that the MeTC Order dated May 16, 1994 in Civil Case No. 8286 correctly ordered the issuance
of a writ of preliminary mandatory injunction restoring possession of the subject property to her, as she had already acquired prior possession of
the said property upon the execution of the final judgment in Civil Case No. Q-28580. Also, the spouses Chans petition for certiorari before the
RTC-Branch 88, docketed as Civil Case No. Q-94-20632, challenging the Order dated
May 16, 1994 of the MeTC in Civil Case No. 8286, is a prohibited pleading under the Rules of Summary Procedure; and the RTC-Branch 88 and
the Court of Appeals should be faulted for giving due course to the said petition even in the absence of jurisdiction.

On the other hand, in their comments to the two petitions at bar, the spouses Chan, Atty. Yabut, and BPI Family
assert that given the peculiar factual circumstances of the case, RTC-Branch 88 was justified in taking cognizance of Samuel Go Chan and Atty.
Yabuts petition for certiorari in Civil Case No. Q-94-20632; that Muoz is estopped from questioning the jurisdiction of RTC-Branch 88 after
participating in the proceedings in Civil Case No. Q-94-20632; that the spouses Chans title to the subject property is not affected by the final
judgment of RTC-Branch 95 in Civil Case No. Q-28580, and the said judgment cannot be executed against the spouses Chan since they are neither
parties to the case, nor are they the successorsin-interest, assigns, or persons acting on behalf of Emilia M. Ching or the spouses Go; that BPI Family
and consequently, the spouses Chan, obtained title to the subject property as innocent purchasers for value, there being no notice of any infirmity
in said title; and that Muoz is guilty of forum shopping for filing her petition in G.R. No. 146718 even while her petition in G.R. No. 142676 is still
pending.

30
II
RULING

For the sake of expediency, we will be discussing first the merits of the petition in G.R. No. 146718.

G.R. No. 146718

Civil Case No. Q-28580 involved Muozs complaint for the annulment of the deeds of absolute sale dated December 28, 1972[40]and July
16, 1979,[41] the cancellation of the spouses Gos TCT No. 258977, and the restoration and revival of
Muozs TCT No. 186306. The final judgment of RTC-Branch 95 in Civil Case No. Q-28580 was in favor of Muoz and against Emilia M. Ching and
the spouses Go. The problem arose when during the pendency of the said case, title and possession of the subject property were transferred from
the spouses Go, to BPI Family, and finally, to the spouses Chan. BPI Family and the spouses Chan were never impleaded as parties and were not
referred to in the dispositive portion of the final judgment in Civil Case No. Q-28580.

Muoz questions in G.R. No. 146718: (1) the Order dated August 21, 1995 denying her Motion for Contempt against the spouses Chan, Second
Motion for Contempt against Samuel Go Chan and Atty. Yabut, and Motion for an Alias Writ of Execution and Application for Surrender of the
Owners Duplicate Copy of TCT No. 53297; and (2) the Order dated October 3, 1995 denying her Motion for Clarificatory Order, both issued by
the RTC-Branch 95 in Civil Case No. Q-28580, and upheld by the Court of Appeals in CA-G.R. SP No. 40019. In sum, Muoz was seeking in her
aforementioned motions: (1) a categorical order from the RTC-Branch 95 that the final judgment in Civil Case No. Q-28580 be executed against
the spouses Chan; and (2) the surrender and cancellation of the spouses Chans TCT No. 53297 and restoration of Muozs TCT No. 186306.

There is no merit in Muozs petition in G.R. No. 146718.

Civil Case No. Q-28580 is an action for reconveyance of real property. In Heirs of Eugenio Lopez, Sr. v. Enriquez,[42] we described an
action for reconveyance as follows:

An action for reconveyance is an action in personamavailable to a person whose property has been wrongfully
registered under the Torrens system in anothers name. Although the decree is recognized as incontrovertible and no longer
open to review, the registered owner is not necessarily held free from liens. As a remedy, an action for reconveyance is filed
as an ordinary action in the ordinary courts of justice and not with the land registration court. Reconveyance is always
available as long as the property has not passed to an innocent third person for value. A notice of lis pendens may thus
be annotated on the certificate of title immediately upon the institution of the action in court. The notice of lis pendenswill
avoid transfer to an innocent third person for value and preserve the claim of the real owner. [43] (Emphases ours.)

The rule is that: (1) a judgment in rem is binding upon the whole world, such as a judgment in a land registration
case or probate of a will; and (2) a judgment in personam is binding upon the parties and their successors-in-interest but not upon strangers. A
judgment directing a party to deliver possession of a property to another is in personam; it is binding only against the parties and their successors-
in-interest by title subsequent to the commencement of the action. An action for declaration of nullity of title and recovery of ownership of real
property, or re-conveyance, is a real action but it is an action in personam, for it binds a particular individual only although it concerns the right to
a tangible thing. Any judgment therein is binding only upon the parties properly impleaded. [44]

Since they were not impleaded as parties and given the opportunity to participate in Civil Case No. Q-28580, the
final judgment in said case cannot bind BPI Family and the spouses Chan. The effect of the said judgment cannot be extended to BPI Family and
the spouses Chan by simply issuing an alias writ of execution against them. No man shall be affected by any proceeding to which he is a stranger,
and strangers to a case are not bound by any judgment rendered by the court. In the same manner, a writ of execution can be issued only against a
party and not against one who did not have his day in court.Only real parties in interest in an action are bound by the judgment therein and by writs
of execution issued pursuant thereto.[45]

A similar situation existed in Dino v. Court of Appeals,[46] where we resolved that:

As the registered owner of the subject property, petitioners are not bound by decision in Civil Case
No. R-18073 for they were never summoned in said case and the notice of lis pendens annotated on TCT No. 73069 was already
cancelled at the time petitioners purchased the subject property. While it is true that petitioners are indispensable parties in
Civil Case No. R-18073, without whom no complete relief could be accorded to the private respondents, the fact still remains
that petitioners were never actually joined as defendants in said case.Impleading petitioners as additional defendants only in
the execution stage of said case violated petitioners right to due process as no notice of lis pendens was annotated on the
existing certificate of title of said property nor were petitioners given notice of the pending case, therefore petitioners remain
strangers in said case and the Order of the trial court involving them is null and void, considering that petitioners are innocent
purchasers of the subject property for value.[47]

We further stress that Section 48 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, clearly provides
that [a] certificate of title shall not be subject to collateral attack. It cannot be altered, modified or cancelled except in a direct proceeding in
accordance with law. Herein, several Torrens titles were already issued after the cancellation of Muozs. Certificates of title had been successively
issued to Emilia M. Ching, spouses Go, BPI Family, and spouses Chan. Civil Case No. Q-28580, in which a final judgment had already been
rendered, specifically challenged the validity of the certificates of title of Emilia M. Ching and the spouses Go only. To have the present certificate
of title of the spouses Chan cancelled, Muoz must institute another case directly attacking the validity of the same.

The fact that the titles to the subject property of Emilia M. Ching and the spouses Go were already declared null and
void ab initio by final judgment in Civil Case No. Q-28580 is not enough, for it does not automatically make the subsequent titles of BPI Family
and the spouses Chan correspondingly null and void ab initio.

31
 It has long been ingrained in our jurisprudence that a void title may become the root of a valid title if the derivative
title was obtained in good faith and for value. Following the principle of indefeasibility of a Torrens title, every person dealing with registered lands
may safely rely on the correctness of the certificate of title of the vendor/transferor, and he is not required to go beyond the certificate and inquire
into the circumstances culminating in the vendors acquisition of the property.The rights of innocent third persons who relied on the correctness of
the certificate of title and acquired rights over the property covered thereby cannot be disregarded and the courts cannot order the cancellation of
such certificate for that would impair or erode public confidence in the Torrens system of land registration. [48]

Hence, we pronounced in Republic v. Agunoy, Sr.[49]:

Here, it bears stressing that, by petitioner's own judicial admission, the lots in dispute are no longer
part of the public domain, and there are numerous third, fourth, fifth and more parties holding Torrens titles in their favor and
enjoying the presumption of good faith. This brings to mind what we have reechoed in Pino v. Court of Appeals and the
cases therein cited:

[E]ven on the supposition that the sale was void, the general rule that the direct result of a previous illegal
contract cannot be valid (on the theory that the spring cannot rise higher than its source) cannot apply here
for We are confronted with the functionings of the Torrens System of Registration. The doctrine to follow
is simple enough: a fraudulent or forged document of sale may become the ROOT of a valid title if
the certificate of title has already been transferred from the name of the true owner to the name of
the forger or the name indicated by the forger.[50] (Emphases ours.)

Although the RTC-Branch 95 had declared with finality in Civil Case No. Q-28580 that the titles of Emilia M. Ching and the spouses Go
were null and void, there is yet no similar determination on the titles of BPI Family and the spouses Chan. The question of whether or not the titles
to the subject property of BPI Family and the spouses Chan are null and void, since they are merely the successors-in-interest, assigns, or privies
of Emilia M. Ching and the spouses Go, ultimately depends on the issue of whether or not BPI Family and the spouses Chan obtained their titles to
the subject property in bad faith, i.e., with notice of Muozs adverse claim and knowledge of the pendency of Civil Case No. Q-28580. The latter is
a factual issue on which we cannot rule in the present petition, not only because we are not a trier of facts, but more importantly, because it was not
among the issues raised and tried in Civil Case No. Q-28580.

In support of her prayer for an alias writ of execution against BPI Family and the spouses Go, Muoz cites our ruling
in Calalang v. Register of Deeds of Quezon City,[51] in relation to De la Cruz v. De la Cruz.[52]

De la Cruz is an action for reconveyance of Lot 671 founded on breach of trust filed by Augustina de la Cruz, et al.,
against Lucia dela Cruz (Lucia) and Iglesia Ni Kristo (INK). We upheld the validity of the sale of Lot 671 by Lucia to INK, and thereby validated
the title of INK to the said property.

Calalang actually involved two petitions: (1) a special civil action for certiorari and prohibition originally filed by Virginia Calalang
(Calalang) before this Court, and (2) a petition for injunction with damages originally filed by Augusto M. de Leon (De Leon), et al., before the
RTC and docketed as Civil Case No. Q-45767. Calalang and De Leon, et al., assert titles that were adverse to that of INK. De Leon, et al., in
particular, claim that their titles to Lot 671 were derived from Amando Clemente. Calalang and De Leon, et al., sought from the court orders
enjoining INK from building a fence to enclose Lot 671; requiring the Administrator of the National Land Titles and Deeds Registration
Administration (NLTDRA) to conduct an investigation of the anomaly regarding Lucias reconstituted title to Lot 671; and dismissing the
proceedings instituted by the Register of Deeds for the cancellation of their titles. We dismissed the petitions of Calalang and De Leon, et al., on
the ground of res judicata, the legality or validity of the title of INK over Lot 671 had been settled with finality in De la Cruz. De la Cruz was
applied to Calalang and De Leon, et al., since the facts on which such decision was predicated continued to be the facts on which the petitions of
Calalang and De Leon, et al., were based.

Muozs reliance on Calalang is misplaced. There are substantial differences in the facts and issues involved
in Calalang and the present case.

In Calalang, there is duplication or overlapping of certificates of title issued to different persons over the same property. We already
upheld in De la Cruz the validity of the certificate of title of INK over Lot 671, which effectively prevents us from recognizing the validity of any
other certificate of title over the same property. In addition, Lucia, the predecessor-in-interest of INK, had her certificate of title judicially
reconstituted. The judicial reconstitution of title is a proceeding in rem, constituting constructive notice to the whole world. Hence, we rejected the
petitions of Calalang and De Leon, et al., to enjoin INK from building a fence enclosing Lot 671, and the concerned public authorities from
instituting appropriate proceedings to have all other certificates of title over Lot 671 annulled and cancelled.

In the instant case, there has been no duplication or overlapping of certificates of title. The subject property has
always been covered by only one certificate of title at a time, and at present, such certificate is in the spouses Chans names. As we have previously
discussed herein, Muoz cannot have the spouses Chans TCT No. 53297 cancelled by a mere motion for the issuance of an alias writ of execution
in Civil Case No. Q-28580, when the spouses Chan were not parties to the case. Civil Case No. Q-28580 was a proceeding in personam, and the
final judgment rendered therein declaring null and void the titles to the subject property of Emilia M. Ching and the spouses Go should bind only
the parties thereto. Furthermore, despite the void titles of Emilia M. Ching and the spouses Go, the derivative titles of BPI Family and the spouses
Chan may still be valid provided that they had acquired the same in good faith and for value.

More in point with the instant petition is Pineda v. Santiago.[53]Pineda still involved Lot 671. INK sought from the RTC a second alias
writ of execution to implement the judgment in Calalang against Conrado Pineda (Pineda), et. al. In opposing the issuance of such writ, Pineda, et
al., asserted that they held titles to Lot 671 adverse to those of Lucia and INK and that they were not parties in De la Cruz or in Calalang. In its
assailed order, the RTC granted the second alias writ of execution on the basis that the issue of ownership of Lot 671 was already determined with
finality in favor of Lucia and
INK. The writ ordered the deputy sheriff to eject Pineda, et al., from Lot 671. When the matter was brought before us, we annulled the assailed
order as the writ of execution issued was against Pineda, et al., who were not parties to Civil Case No. Q-45767, the ejectment suit instituted by De
Leon, et al. We elaborated in Pineda that:

32
 Being a suit for injunction, Civil Case No. Q-45767 partakes of an action in personam. In Domagas v. Jensen, we
have explained the nature of an action in personam and enumerated some actions and proceedings which are in personam, viz:

The settled rule is that the aim and object of an action determine its character. Whether a
proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and
purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and
obligations brought against the person and is based on the jurisdiction of the person, although it may involve
his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose
of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose,
through the judgment of a court, some responsibility or liability directly upon the person of the
defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to
fasten a pecuniary liability on him. An action in personam is said to be one which has for its object a
judgment against the person, as distinguished from a judgment against the propriety to determine
its state. It has been held that an action in personam is a proceeding to enforce personal rights or
obligations; such action is brought against the person. As far as suits for injunctive relief are concerned,
it is well-settled that it is an injunctive act in personam. In Combs v. Combs, the appellate court held that
proceedings to enforce personal rights and obligations and in which personal judgments are rendered
adjusting the rights and obligations between the affected parties is in personam. Actions for recovery of
real property are in personam.

The respondent judge's jurisdiction is, therefore, limited to the parties in the injunction suit. To
stress, the petition for injunction, docketed as Civil Case No. Q-45767, was filed only by therein petitioners Augusto M. de
Leon, Jose de Castro, Jose A. Panlilio, Felicidad Vergara Vda. De Pineda, Fernando L. Vitug I, Fernando M. Vitug II, Fernando
M. Vitug III, and Faustino Tobia, and later amended to include Elena Ostrea and Feliza C. Cristobal-Generoso as additional
petitioners therein, against Bishop Erao Manalo, in his capacity as titular and spiritual head of I.N.K. Herein petitioners
Conrado Pineda, et al. never became parties thereto. Any and all orders and writs of execution, which the respondent judge
may issue in that case can, therefore, be enforced only against those parties and not against the herein petitioners Conrado
Pineda, et al. In issuing the assailed Order dated 22 April 1998, which directed the issuance of the 2nd Alias Writ of Execution
to eject non-parties (herein petitioners), the respondent judge clearly went out of bounds and committed grave abuse of
discretion.

The nature of the injunction suit Civil Case No. Q-45767 as an action in personam in the RTC remains to be the
same whether it is elevated to the CA or to this Court for review. An action in personamdoes not become an action in rem just
because a pronouncement confirming I.N.K.'s title to Lot 671 was made by this Court in the Calalang decision. Final rulings
may be made by this Court, as the Highest Court of the Land, in actions in personam but such rulings are binding only
as against the parties therein and not against the whole world. Here lies another grave abuse of discretion on the part of the
respondent judge when he relied on the Calalang decision in his assailed Order dated 07 May 1998 as if it were binding against
the whole world, saying:

After evaluating the arguments of both parties, decisive on the incident is the
decision of the Supreme Court in favor of the respondent I.N.K., represented by its titular and spiritual head
Bishop Erao G. Manalo, sustaining its ownership over the subject Lot 671. This Court could do no less but
to follow and give substantial meaning to its ownership which shall include all dominical rights by way of
a Writ of Execution. To delay the issuance of such writ is a denial of justice due the I.N.K.

As a final word, this decision shall not be misinterpreted as disturbing or modifying our ruling in Calalang.
The final ruling on I.N.K.'s ownership and title is not at all affected. Private respondent I.N.K., as the true and lawful
owner of Lot 671 as ruled by the Court in Calalang, simply has to file the proper action against the herein petitioners
to enforce its property rights within the bounds of the law and our rules. I.N.K.'s recourse of asking for the issuance of an
alias writ of execution against the petitioners in Civil Case No. Q-45767 and the respondent judge's orders in said case, granting
I.N.K.'s prayer and enforcing the alias writ of execution against the present petitioners, constitutes blatant disregard of very
fundamental rules and must therefore be stricken down.[54](Emphases ours.)

Consistent with Pineda, and as appositely recommended by the RTC-Branch 95 and the Court of Appeals in the
present case, Muozs legal remedy is to directly assail in a separate action the validity of the certificates of title of BPI Family and the spouses Chan.

G.R. No. 142676

G.R. No. 142676 is Muozs appeal of the dismissal of Civil Case No. 8286, the forcible entry case she instituted
against Samuel Go Chan and Atty. Yabut before the MeTC.

There is forcible entry or desahucio when one is deprived of physical possession of land or building by means of
force, intimidation, threat, strategy or stealth. In such cases, the possession is illegal from the beginning and the basic inquiry centers on who has
the prior possession de facto. In filing forcible entry cases, the law tells us that two allegations are mandatory for the municipal court to acquire
jurisdiction: first, the plaintiff must allege prior physical possession of the property, and second, he must also allege that he was deprived of his
possession by any of the means provided for in Section 1, Rule 70 of the Rules of Court, i.e., by force, intimidation, threat, strategy, or stealth. It
is also settled that in the resolution thereof, what is important is determining who is entitled to the physical possession of the property. Indeed, any
of the parties who can prove prior possession de facto may recover such possession even from the owner himself since such cases proceed
independently of any claim of ownershipand the plaintiff needs merely to prove prior possession de facto and undue deprivation thereof.[55]

Title is never in issue in a forcible entry case, the court should base its decision on who had prior physical
possession. The main thing to be proven in an action for forcible entry is prior possession and that same was lost through force, intimidation, threat,
strategy, and stealth, so that it behooves the court to restore possession regardless of title or ownership. [56]

33
 We more extensively discussed in Pajuyo v. Court of Appeals[57]that:

Ownership or the right to possess arising from ownership is not at issue in an action for
recovery of possession. The parties cannot present evidence to prove ownership or right to legal possession except to prove
the nature of the possession when necessary to resolve the issue of physical possession. The same is true when the defendant
asserts the absence of title over the property. The absence of title over the contested lot is not a ground for the courts to
withhold relief from the parties in an ejectment case.

The only question that the courts must resolve in ejectment proceedings is - who is entitled to the
physical possession of the premises, that is, to the possession de facto and not to the possession de jure. It does not even matter
if a partys title to the property is questionable, or when both parties intruded into public land and their applications to own the
land have yet to be approved by the proper government agency. Regardless of the actual condition of the title to the
property, the party in peaceable quiet possession shall not be thrown out by a strong hand, violence or terror. Neither
is the unlawful withholding of property allowed. Courts will always uphold respect for prior possession.

Thus, a party who can prove prior possession can recover such possession even against the owner himself.
Whatever may be the character of his possession, if he has in his favor prior possession in time, he has the security that
entitles him to remain on the property until a person with a better right lawfully ejects him. To repeat, the only issue that
the court has to settle in an ejectment suit is the right to physical possession.[58] (Emphases ours.)

Based on the foregoing, we find that the RTC-Branch 88 erred in ordering the dismissal of Civil Case No. 8286 even before completion
of the proceedings before the MeTC. At the time said case was ordered dismissed by RTC-Branch 88, the MeTC had only gone so far as holding a
hearing on and eventually granting Muozs prayer for the issuance of a writ of preliminary mandatory injunction.

Muoz alleges in her complaint in Civil Case No. 8286 that she had been in prior possession of the subject property
since it was turned-over to her by the sheriff on January 10, 1994, pursuant to the Alias Writ of Execution issued by the RTCBranch 95 to implement
the final judgment in Civil Case No. Q-28580. The factual issue of who was in prior possession of the subject property should be litigated between
the parties regardless of whether or not the final judgment in Civil Case No. Q-28580 extended to the spouses Chan. Hence, the pendency of the
latter issue in Civil Case No. Q-28580 before the RTCBranch 95 did not warrant the dismissal of Civil Case No. 8286 before the MeTC on the
ground of litis pendentia. The two cases could proceed independently of one another.

Samuel Go Chan and Atty. Yabut aver that the spouses Chan have never lost possession of the subject property since acquiring the same
from BPI Family in 1990. This is a worthy defense to Muozs complaint for forcible entry, which Samuel Go Chan and Atty. Yabut should
substantiate with evidence in the continuation of the proceedings in Civil Case No. 8286 before the MeTC.

In addition, Civil Case No. 8286, a forcible entry case, is governed by the Revised Rule on Summary Procedure, Section 19 whereof
provides:

SEC. 19. Prohibited pleadings and motions. The following pleadings, motions, or petitions shall
not be allowed in the cases covered by this Rule:

xxxx

(g) Petition for certiorari, mandamus, or prohibition against any interlocutory order issued by the
court.

The purpose of the Rule on Summary Procedure is to achieve an expeditious and inexpensive determination of cases
without regard to technical rules. Pursuant to this objective, the Rule prohibits petitions for certiorari, like a number of other pleadings, in order to
prevent unnecessary delays and to expedite the disposition of cases. [59]

Interlocutory orders are those that determine incidental matters that do not touch on the merits of the case or put an
end to the proceedings.[60] An order granting a preliminary injunction, whether mandatory or prohibitory, is interlocutory and unappealable.[61]

The writ of preliminary mandatory injunction issued by the MeTC in its Order dated May 16, 1994, directing that Muoz be placed in
possession of the subject property during the course of Civil Case No. 8286, is an interlocutory order. Samuel Go Chan and Atty. Yabut assailed
the said order before the RTC-Branch 88 via a petition for certiorari, docketed as Civil Case No. Q-94-20632. The RTC-Branch 88 gave due course
to said petition, and not only declared the MeTC Order dated May 16, 1994 null and void, but went further by dismissing Civil Case No. 8286.

The prohibition in Section 19(g) of the Revised Rule on Summary Procedure is plain enough. Its further exposition is unnecessary
verbiage.[62] The petition for certiorari of Samuel Go Chan and Atty. Yabut in Civil Case No. Q-94-20632 is clearly covered by the said prohibition,
thus, it should have been dismissed outright by the RTC-Branch 88. While the circumstances involved in Muozs forcible entry case against Samuel
Go Chan and Atty. Yabut are admittedly very peculiar, these are insufficient to except the petition for certiorari of Samuel Go Chan and Atty.
Yabut in Civil Case No. Q-94-20632 from the prohibition. The liberality in the interpretation and application of the rules applies only in proper
cases and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case
must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration of justice.[63]

Nonetheless, even though the peculiar circumstances extant herein do not justify the dismissal of Civil Case No. 8286, they do require
limiting pro hac vice the reliefs the MeTC may accord to Muoz in the event that she is able to successfully prove forcible entry by Samuel Go Chan
and Atty. Yabut into the subject property (i.e., that the sheriff actually turned-over to Muoz the possession of the subject property on January 10,
1994, and that she was deprived of such possession by Samuel Go Chan and Atty. Yabut on February 2, 1994 by means of force, intimidation,
threat, strategy, and stealth). Taking into account our ruling in G.R. No. 146718 that the final judgment in Civil Case No. Q-28580 does not extend
to the spouses Chan, who were not impleaded as parties to the said case the MeTC is precluded from granting to Muoz relief, whether
preliminary or final, that will give her possession of the subject property. Otherwise, we will be perpetuating the wrongful execution of the

34
final judgment in Civil Case No. Q-28580. Based on the same reason, Muoz can no longer insist on the reinstatement of the MeTC Order dated
May 16, 1994 granting a preliminary mandatory injunction that puts her in possession of the subject property during the course of the trial. Muoz
though may recover damages if she is able to prove wrongful deprivation of possession of the subject property from February 2, 1994 until the
finality of this decision in G.R. No. 146718.

WHEREFORE, in view of the foregoing, we:

(1) GRANT Emerita Muozs petition in G.R. No. 142676. We REVERSE and SET ASIDE the Decision dated July 21, 1995 and Resolution
dated March 9, 2000 of the Court of Appeals in CA-G.R. SP No. 35322, which affirmed the Orders dated June 10, 1994 and August 5, 1994 of the
Regional Trial Court, Branch 88 of Quezon City in Civil Case No. Q-9420632. We DIRECT the Metropolitan Trial Court, Branch 33 of Quezon
City to reinstate Emerita Muozs complaint for forcible entry in Civil Case No. 8286 and to resume the proceedings only to determine whether or
not Emerita Muoz was forcibly deprived of possession of the subject property from February 2, 1994 until finality of this judgment, and if so,
whether or not she is entitled to an award for damages for deprivation of possession during the aforementioned period of time; and

(2) DENY Emerita Munozs petition in G.R. No. 146718 for lack of merit, and AFFIRM the Decision dated September 29, 2000 and
Resolution dated January 5, 2001 of the Court of Appeals in CA-G.R. SP No. 40019, which in turn, affirmed the Orders dated August 21, 1995 and
October 3, 1995 of the Regional Trial Court, Branch 95 of Quezon City in Civil Case No. Q-28580.

No pronouncement as to costs.

SO ORDERED.

[G.R. No. 158407. January 17, 2005]

FILOMENA DOMAGAS, petitioner, vs. VIVIAN LAYNO JENSEN, respondent. D E C I S I O
N CALLEJO, SR., J.:
This is a petition for review on certiorari, under Rule 45 of the Rules of Court, of the Decision [1] of the Court of Appeals (CA) in
CA-G.R. CV No. 73995, which affirmed the Decision[2] of the Regional Trial Court (RTC) of Dagupan City, Branch 44, in Civil Case
No. 2000-0244-D, which declared null and void the decision of the Municipal Trial Court (MTC) of Calasiao, Pangasinan in Civil Case
No. 879.[3] The antecedent facts follow.
On February 19, 1999, petitioner Filomena Domagas filed a complaint for forcible entry against respondent Vivian Jensen before
the MTC of Calasiao, Pangasinan. The petitioner alleged in her complaint that she was the registered owner of a parcel of land covered
by Original Certificate of Title (OCT) No. P-30980, situated in Barangay Buenlag, Calasiao, Pangasinan, and with an area of 827
square meters. On January 9, 1999 the respondent, by means of force, strategy and stealth, gained entry into the petitioners property
by excavating a portion thereof and thereafter constructing a fence thereon. As such, the petitioner was deprived of a 68-square meter
portion of her property along the boundary line. The petitioner prayed that, after due proceedings, judgment be rendered in her favor,
thus:
3. And, after trial, judgment be rendered:
a) DECLARING the writ of Preliminary Mandatory Injunction and Writ of Preliminary Injunction permanent;
b) ORDERING defendant, his representatives, agents and persons acting under her, to vacate the portion of the property of the
plaintiff occupied by them and to desist from entering, excavating and constructing in the said property of the plaintiff
described in paragraph 2 hereof and/or from disturbing the peaceful ownership and possession of the plaintiff over the said
land, pending the final resolution of the instant action;
c) ORDERING defendant to pay reasonable rental at FIVE THOUSAND (P5,000.00) PESOS per month from January 9, 1999
up to the time she finally vacates and removes all constructions made by her in the property of the plaintiff and up to the time
she finally restores the said property in the condition before her illegal entry, excavation and construction in the property of
the plaintiff;
d) ORDERING defendant to pay actual damages in the amount of TWENTY THOUSAND (P20,000.00) PESOS; moral damages
in the amount of TWENTY THOUSAND (P20,000.00) PESOS; attorneys fees of THIRTY THOUSAND (P30,000.00)
PESOS in retainers fee and ONE THOUSAND FIVE HUNDRED (P1,500.00) PESOS per court appearance fee; exemplary
damages in the amount of TWENTY THOUSAND (P20,000.00) PESOS, and, costs.
Plaintiff further prays for other reliefs and remedies just and equitable in the premises.[4]
The case was docketed as Civil Case No. 879. The summons and the complaint were not served on the respondent because
the latter was apparently out of the country. This was relayed to the Sheriff by her (the respondents) brother, Oscar Layno, who was
then in the respondents house at No. 572 Barangay Buenlag, Calasiao, Pangasinan. The Sheriff left the summons and complaint with
Oscar Layno, who received the same.[5]
Nonetheless, on May 17, 1999, the court rendered judgment ordering the respondent and all persons occupying the property for
and in the latters behalf to vacate the disputed area and to pay monthly rentals therefor, including actual damages, attorneys fees,
and exemplary damages. The falloof the decision reads:
1) Ordering the defendant, her representatives, agents and persons acting under her, to vacate the 68-square meters which she
encroached upon;
2) Ordering the defendant to pay a monthly rental of P1,000.00 to the plaintiff;
3) To pay plaintiff actual damages of P20,000.00; attorneys fees of P15,000.00 and exemplary damages in the amount of P20,000.00
plus the costs.
SO ORDERED.[6]
The respondent failed to appeal the decision. Consequently, a writ of execution was issued on September 27, 1999.
On August 16, 2000, the respondent filed a complaint against the petitioner before the RTC of Dagupan City for the annulment
of the decision of the MTC in Civil Case No. 879, on the ground that due to the Sheriffs failure to serve the complaint and summons
on her because she was in Oslo, Norway, the MTC never acquired jurisdiction over her person. The respondent alleged therein that
the service of the complaint and summons through substituted service on her brother, Oscar Layno, was improper because of the
following: (a) when the complaint in Civil Case No. 879 was filed, she was not a resident of Barangay Buenlag, Calasiao, Pangasinan,
but of Oslo, Norway, and although she owned the house where Oscar Layno received the summons and the complaint, she had then
leased it to Eduardo Gonzales; (b) she was in Oslo, Norway, at the time the summons and the complaint were served; (c) her brother,
Oscar Layno, was merely visiting her house in Barangay Buenlag and was not a resident nor an occupant thereof when he received

35
the complaint and summons; and (d) Oscar Layno was never authorized to receive the summons and the complaint for and in her
behalf.[7]
The respondent further alleged that the MTC had no jurisdiction over the subject matter of the complaint in Civil Case No. 879
because the petitioner, the plaintiff therein, failed to show prior possession of the property. She further claimed that the alleged forcible
entry was simply based on the result of the survey conducted by Geodetic Engineer Leonardo de Vera showing that the property of
the respondent encroached on that of the petitioner.
The respondent filed a Manifestation dated August 31, 2000, and appended thereto the following: (a) a copy [8] of her passport
showing that she left the country on February 17, 1999; (b) a copy[9] of the Contract of Lease dated November 24, 1997, executed by
her and Eduardo D. Gonzales over her house for a period of three (3) years or until November 24, 2000; (c) her affidavit [10] stating,
inter alia, that she owned the house at Barangay Buenlag, Calasiao, Pangasinan, which she leased to Eduardo Gonzales; that she
was married to Jarl Jensen, a citizen of Norway, on August 23, 1987 and had resided in Norway with her husband since 1993; that
she arrived in the Philippines on December 31, 1998, but left on February 17, 1999; she returned to the Philippines on July 30, 2000
and learned, only then, of the complaint against her and the decision of the MTC in Civil Case No. 879; her brother Oscar Layno was
not a resident of the house at Barangay Buenlag; and that she never received the complaint and summons in said case; (d) the
affidavit[11] of Oscar Layno declaring that sometime in April 1999, he was in the respondents house to collect rentals from Eduardo
Gonzales; that the Sheriff arrived and served him with a copy of the summons and the complaint in Civil Case No. 879; and that he
never informed the respondent of his receipt of the said summons and complaint; (e) an affidavit [12] of Eduardo Gonzales stating that
he leased the house of the respondent and resided thereat; the respondent was not a resident of the said house although he
(Gonzales) allowed the respondent to occupy a room therein whenever she returned to the Philippines as a balikbayan; and that Oscar
Layno was not residing therein but only collected the rentals.
In her answer to the complaint, the petitioner alleged that the respondent was a resident of Barangay Buenlag, Calasiao,
Pangasinan and was the owner of the subject premises where Oscar Layno was when the Sheriff served the summons and complaint;
that the service of the complaint and summons by substituted service on the respondent, the defendant in Civil Case No. 879, was
proper since her brother Oscar Layno, a resident and registered voter of Barangay. Buenlag, Calasiao, Pangasinan, received the
complaint and summons for and in her behalf.
The petitioner appended the following to her answer: (a) a copy [13] of the Deed of Absolute Sale executed by Jose Layno in her
favor, dated August 26, 1992, showing that the respondent was a resident of Barangay Buenlag, Calasiao, Pangasinan; (b) a Real
Estate Mortgage[14] executed by the respondent, dated February 9, 1999 showing that she was a resident of Barangay Buenlag,
Calasiao, Pangasinan; (c) the Joint Affidavit[15] of Vicenta Peralta and Orlando Macalanda, both residents of Barangay Buenlag,
Calasiao, Pangasinan, declaring that the respondent and her brother Oscar Layno were their neighbors; that the respondent and her
brother had been residents of Barangay Buenlag since their childhood; that although the respondent left the country on several
occasions, she returned to the Philippines and resided in her house at No. 572 located in the said barangay; and (d) the Voters
Registration Record[16] of Oscar Layno, approved on June 15, 1997.
After due proceedings, the trial court rendered a decision in favor of the respondent. The dispositive portion reads:
WHEREFORE, judgment is rendered in favor of plaintiff Vivian Layno Jensen and against defendant Filomena Domagas, as follows:
1. The Decision of the Municipal Trial Court of Calasiao, Pangasinan in Civil Case No. 879, entitled Filomena Domagas versus Vivian
Layno Jensen is declared null and void, for lack of jurisdiction over the person of the plaintiff and the subject matter.
2. Defendant Filomena Domagas is ordered to pay plaintiff, the following:
a.) Actual damages, representing litigation expenses in the amount of P50,000.00;
b.) Attorneys fees in the amount of P50,000.00;
c.) Moral Damages in the amount of P50,000.00;
d.) Exemplary Damages in the amount of P50,000.00; and
e.) Costs of suit.
SO ORDERED.[17]
The trial court declared that there was no valid service of the complaint and summons on the respondent, the defendant in Civil
Case No. 879, considering that she left the Philippines on February 17, 1999 for Oslo, Norway, and her brother Oscar Layno was
never authorized to receive the said complaint and summons for and in her behalf.
The petitioner appealed the decision to the CA which, on May 6, 2003, rendered judgment affirming the appealed decision with
modifications. The CA ruled that the complaint in Civil Case No. 879 was one for ejectment, which is an action quasi in rem. The
appellate court ruled that since the defendant therein was temporarily out of the country, the summons and the complaint should have
been served via extraterritorial service under Section 15 in relation to Section 16, Rule 14 of the Rules of Court, which likewise requires
prior leave of court. Considering that there was no prior leave of court and none of the modes of service prescribed by the Rules of
Court was followed by the petitioner, the CA concluded that there was really no valid service of summons and complaint upon the
respondent, the defendant in Civil Case No. 879.
Hence, the present petition.
The petitioner assails the decision of the CA, alleging that the appellate court erred in holding that the respondents complaint for
ejectment is an action quasi in rem. The petitioner insists that the complaint for forcible entry is an action in personam; therefore,
substituted service of the summons and complaint on the respondent, in accordance with Section 7, Rule 14 of the Rules of Court, is
valid. The petitioner, likewise, asserts that Oscar Layno is a resident and a registered voter of Barangay Buenlag, Calasiao,
Pangasinan; hence, the service of the complaint and summons on the respondent through him is valid.
The respondent, on the other hand, asserts that the action for forcible entry filed against her was an action quasi in rem, and that
the applicable provision of the Rules of Court is Section 15 of Rule 14, which calls for extraterritorial service of summons.
The sole issue is whether or not there was a valid service of the summons and complaint in Civil Case No. 879 on the respondent
herein who was the defendant in the said case. The resolution of the matter is anchored on the issue of whether or not the action of
the petitioner in the MTC against the respondent herein is an action in personam or quasi in rem.
The ruling of the CA that the petitioners complaint for forcible entry of the petitioner against the respondent in Civil Case No. 879
is an action quasi in rem, is erroneous. The action of the petitioner for forcible entry is a real action and one in personam.
The settled rule is that the aim and object of an action determine its character. [18] Whether a proceeding is in rem, or in personam,
or quasi in rem for that matter, is determined by its nature and purpose, and by these only. [19] A proceeding in personam is a proceeding
to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may
involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance
with the mandate of the court.[20] The purpose of a proceeding in personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the defendant.[21] Of this character are suits to compel a defendant to specifically
perform some act or actions to fasten a pecuniary liability on him. [22] An action in personam is said to be one which has for its object
a judgment against the person, as distinguished from a judgment against the propriety to determine its state. It has been held that an
action in personam is a proceeding to enforce personal rights or obligations; such action is brought against the person. As far as suits

36
for injunctive relief are concerned, it is well-settled that it is an injunctive act in personam.[23] In Combs v. Combs,[24] the appellate court
held that proceedings to enforce personal rights and obligations and in which personal judgments are rendered adjusting the rights
and obligations between the affected parties is in personam. Actions for recovery of real property are in personam.[25]
On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject the property of such persons to
the discharge of the claims assailed.[26] In an action quasi in rem, an individual is named as defendant and the purpose of the
proceeding is to subject his interests therein to the obligation or loan burdening the property. [27] Actions quasi in rem deal with the
status, ownership or liability of a particular property but which are intended to operate on these questions only as between the particular
parties to the proceedings and not to ascertain or cut off the rights or interests of all possible claimants. The judgments therein are
binding only upon the parties who joined in the action. [28]
Section 1, Rule 70 of the Rules of Court provides:
Section 1. Who may institute proceedings, and when. - Subject to the provisions of the next succeeding section, a person deprived of the possession
of any land or building in force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession
of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession by virtue of any contract, express
or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any time within one (1) year after
such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages
and costs.
Under Section 15, Rule 70 of the said Rule, the plaintiff may be granted a writ of preliminary prohibition or mandatory injunction:
Sec. 15. Preliminary Injunction. The court may grant preliminary injunction, in accordance with the provisions of Rule 58 hereof, to prevent the
defendant from committing further acts of dispossession against the plaintiff.
A possessor deprived of his possession through forcible entry or unlawful detainer may, within five (5) days from the filing of the complaint, present
a motion in the action for forcible entry or unlawful detainer for the issuance of a writ of preliminary mandatory injunction to restore him in his
possession. The court shall decide the motion within thirty (30) days from the filing thereof.
If, after due proceedings, the trial court finds for the plaintiff, it shall then render judgment in his or her favor, thus:
Sec. 17. Judgment. If, after trial, the court finds that the allegations of the complaint are true, it shall render judgment in favor of the plaintiff for
the restitution of the premises, the sum justly due as arrears of rent or as reasonable compensation for the use and occupation of the premises,
attorneys fees and costs. If it finds that said allegations are not true, it shall render judgment for the defendant to recover his costs. If a counterclaim
is established, the court shall render judgment for the sum found in arrears from either party and award costs as justice requires.
From the aforementioned provisions of the Rules of Court and by its very nature and purpose, an action for unlawful detainer or
forcible entry is a real action and in personam because the plaintiff seeks to enforce a personal obligation or liability on the defendant
under Article 539 of the New Civil Code,[29] for the latter to vacate the property subject of the action, restore physical possession
thereof to the plaintiff, and pay actual damages by way of reasonable compensation for his use or occupation of the property. [30]
As gleaned from the averments of the petitioners complaint in the MTC, she sought a writ of a preliminary injunction from the
MTC and prayed that the said writ be made permanent. Under its decision, the MTC ordered the defendant therein (the respondent in
this case), to vacate the property and pay a monthly rental of P1,000.00 to the plaintiff therein (the petitioner in this case).
On the issue of whether the respondent was validly served with the summons and complaint by the Sheriff on April 5, 1999, the
petitioner asserts that since her action of forcible entry against the respondent in Civil Case No. 879 was in personam, summons may
be served on the respondent, by substituted service, through her brother, Oscar Layno, in accordance with Section 7, Rule 14 of the
Rules of Court. The petitioner avers that Oscar Layno, a person of suitable age and discretion, was residing in the house of the
respondent on April 5, 1999. She avers that the fact that the house was leased to and occupied by Eduardo Gonzales was of no
moment. Moreover, the Sheriff is presumed to have performed his duty of properly serving the summons on the respondent by
substituted service.
The contention of the petitioner has no merit.
In Asiavest Limited v. Court of Appeals,[31] the Court had the occasion to state:
In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. Jurisdiction over
the person of a resident defendant who does not voluntarily appear in court can be acquired by personal service of summons as provided under
Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with summons within a reasonable time, substituted service may be
made in accordance with Section 8 of said Rule. If he is temporarily out of the country, any of the following modes of service may be resorted to:
(a) substituted service set forth in Section 8; (2) personal service outside the country, with leave of court; (3) service by publication, also with leave
of court; or (4) any other manner the court may deem sufficient. [32]
Thus, any judgment of the court which has no jurisdiction over the person of the defendant is null and void. [33]
In the present case, the records show that the respondent, before and after his marriage to Jarl Jensen on August 23, 1987,
remained a resident of Barangay Buenlag, Calasiao, Pangasinan. This can be gleaned from the Deed of Absolute Sale dated August
26, 1992 in which she declared that she was a resident of said barangay. Moreover, in the Real Estate Mortgage Contract dated
February 9, 1999, ten days before the complaint in Civil
Case No. 879 was filed, the petitioner categorically stated that she was a Filipino and a resident of Barangay Buenlag, Calasiao,
Pangasinan. Considering that the respondent was in Oslo, Norway, having left the Philippines on February 17, 1999, the summons
and complaint in Civil Case No. 879 may only be validly served on her through substituted service under Section 7, Rule 14 of the
Rules of Court, which reads:
SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section,
service may be effected (a) by leaving copies of the summons at the defendants residence with some person of suitable age and discretion then
residing therein, or (b) by leaving the copies at defendants office or regular place of business with some competent person in charge thereof.
Strict compliance with the mode of service is required in order that the court may acquire jurisdiction over the person of the
defendant.[34] The statutory requirement of substituted service must be followed faithfully and strictly and any substituted service other
than that authorized by the statute is rendered ineffective.[35] As the Court held in Hamilton v. Levy:[36]
The pertinent facts and circumstances attendant to the service of summons must be stated in the proof of service or Officers Return; otherwise, any
substituted service made in lieu of personal service cannot be upheld. This is necessary because substituted service is in derogation of the usual
method of service. It is a method extraordinary in character and hence may be used only as prescribed and in the circumstances authorized by
statute. Here, no such explanation was made. Failure to faithfully, strictly, and fully comply with the requirements of substituted service renders
said service ineffective.[37]
In Keister v. Narcereo,[38] the Court held that the term dwelling house or residence are generally held to refer to the time of
service; hence, it is not sufficient to leave the summons at the formers dwelling house, residence or place of abode, as the case may
be. Dwelling house or residence refers to the place where the person named in the summons is living at the time when the service is
made, even though he may be temporarily out of the country at the time. It is, thus, the service of the summons intended for the
defendant that must be left with the person of suitable age and discretion residing in the house of the defendant. Compliance with the
rules regarding the service of summons is as much important as the issue of due process as of jurisdiction.[39]

37
 The Return of Service filed by Sheriff Eduardo J. Abulencia on the service of summons reads:
Respectfully returned to the court of origin the herein summons and enclosures in the above-entitled case, the undersigned caused the service on
April 5, 1999.
Defendant Vivian Layno Jensen is out of the country as per information from her brother Oscar Layno, however, copy of summons and enclosures
was received by her brother Oscar Layno on April 5, 1999 as evidenced by his signature appearing in the original summons.
Calasiao, Pangasinan, April 6, 1999.
(Sgd.)
EDUARDO J. ABULENCIA
Junior Process Server[40]
As gleaned from the said return, there is no showing that as of April 5, 1999, the house where the Sheriff found Oscar Layno
was the latters residence or that of the respondent herein. Neither is there any showing that the Sheriff tried to ascertain where the
residence of the respondent was on the said date. It turned out that the occupant of the house was a lessor, Eduardo Gonzales, and
that Oscar Layno was in the premises only to collect the rentals from him. The service of the summons on a person at a place where
he was a visitor is not considered to have been left at the residence or place or abode, where he has another place at which he
ordinarily stays and to which he intends to return.[41]
The Voters Registration Record of Oscar Layno dated June 15, 1997 wherein he declared that he was a resident of No. 572
Barangay Buenlag, Calasiao, Pangasinan, as well as the Joint Affidavit of Vicenta Peralta and Orlando Macasalda cannot prevail over
the Contract of Lease the respondent had executed in favor of Eduardo
Gonzales showing that the latter had resided and occupied the house of the respondent as lessee since November 24, 1997, and the
affidavit of Eduardo Gonzales that Oscar Layno was not residing in the said house on April 5, 1999.
In sum, then, the respondent was not validly served with summons and the complaint in Civil Case No. 879 on April 5, 1999, by
substituted service. Hence, the MTC failed to acquire jurisdiction over the person of the respondent; as such, the decision of the MTC
in Civil Case No. 879 is null and void.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. No costs. SO ORDERED.

G.R. No. 100643 December 12, 1995

ADEZ REALTY, INCORPORATED, petitioner, vs.
HONORABLE COURT OF APPEALS, THE PRESIDING JUDGE, REGIONAL TRIAL COURT, Br. 79, Morong Rizal, THE
REGISTER OF DEEDS FOR QUEZON CITY, and AGUEDO EUGENIO, respondents.
RESOLUTION

BELLOSILLO, J.:
On 30 October 1992 the Court found movant, Atty. Benjamin M. Dacanay, guilty of intercalating a material fact in a decision of the
Court of Appeals, which he appealed to this Court on certiorari, thereby altering the factual findings of the Court of Appeals with the
apparent purpose of misleading this Court in order to obtain a favorable judgment. Consequently, Atty. Dacanay was disbarred from
the practice of law.1
On 20 November 1992 movant filed a Motion for Reconsideration and Leave to Offer Evidence Re Charge of Unauthorized
Intercalation in a Judicial Record dated 18 November 1992. He claimed that the inserted words were written by his client, the President
of Adez Realty, Inc., in the draft of the petition to be filed before the Supreme Court and unwittingly adopted by movant's secretary
when the latter formalized the petition. He manifested that he would not risk committing the act for which he was found guilty
considering that he was a nominee of the Judicial and Bar Council to the President for appointment as regional trial judge. 2 But the
Court on 3 December 1992 denied the motion for want of a compelling reason to justify a reversal of the questioned resolution.3
On 23 February 1994 movant Dacanay filed a Motion to Lift (Disbarment) stating that he was already 62 years old, has learned his
lesson from his mistake, was terribly sorry for what he had done, and in all candor promised that if given another chance he would
live up to the exacting demands of the legal profession. He appended to his motion certifications of good moral character from: Fr.
Celso Fernando, Parochial Vicar, Parish of St. Michael Archangel, Marilao, Bulacan; Fr. Lauro V. Larlar, OAR, Rector, San Sebastian
College-Recoletos; Sis. Aniceta B. Abion, EMM, Chairperson, Center for Housing and Ecology Development Foundation, Inc.; Dean
Rufus B.
Rodriquez, College of Law, San Sebastian College-Recoletos; Judge Pedro T. Santiago, Executive Judge, RTC,
Quezon City; Judge Teodoro P. Regino, RTC-Br. 84, Quezon City; Judge Antonio P. Solano, RTC-Br. 86, Quezon City; and Judge
Gregorio D. Dayrit, MTC-Br. 35, Quezon City.4 However, on 11 August 1994 the Court denied the motion. 5
On 1 December 1994 movant again filed an Ex-Parte Motion to Lift Disbarment alleging among others that he had been deprived of
his means to life; he had pursued civic, religious and community work, especially for the poor and the underprivileged short of
extending legal assistance because of his incapacity; he had admitted "with profound regret and with utmost humility his commission
of an unpardonable mistake and ask(ed) that he be given another chance;" and, he was "remorseful for what he has done and comes
to this Honorable Court with a contrite heart."6
His wife Norma M. Dacanay likewise wrote the Court on 1 December 1994 saying that while she did not condone what her husband
had done, it had been her fervent wish that the Court took a second look into its decision disbarring her husband as her entire family
had been traumatized by his disbarment.7
On 6 March 1995 movant sent a letter addressed to the Chief Justice and the Associate Justices of the Court reiterating his Ex-Parte
Motion to Lift Disbarment of 1 December 1994. Thus —
I am truly penitent for the serious offense I committed and admit full responsibility for it. I realize it was dishonest
and unfair to pass the blame to my secretary who was merely following my instructions. The intercalation was my
own act and I am justly punished for it.
Your Honors, I do not question your decision but I only beg for your mercy. I have a wife and children to support but
my only means of livelihood has been withdrawn from me. I am destitute and desperate and can only turn to you
for relief . . . .
Looking back, I cannot imagine how I could have even thought of blackening the law profession, to which I owe so
much. Please let me redeem myself by admitting me back to its precincts, where I swear to live strictly according
to its canons . . . .8
On 21 March 1995 the Court noted the letter of 6 March 1995 of movant Dacanay.
On 4 August 1995 movant again prayed for his reinstatement —
It has been 33 long months since my disbarment, during which time I have been struggling to make both ends
meet to provide for my wife and three children. Please give me the chance to prove that I am a reformed offender
who will henceforth do nothing whatsoever to dishonor the legal profession. 9
On 12 September 1995 the Court noted respondent's 4 August 1995 letter. 10

38
On 17 November, 1995 movant once more wrote the Court —
I humbly acknowledge again that I committed a grievous offense for which I was justly punished at the time with the
extreme sanction of disbarment.
I have been suffering much since my disbarment more than 36 months ago, but it is my wife and children who have
suffered more for my transgression. Although innocent, they bear with me the stigma and burden of my
punishment.11
The disbarment of movant Benjamin M. Dacanay for three (3) years has, quite apparently, given him sufficient time and occasion to
soul-search and reflect on his professional conduct, redeem himself and prove once more that he is worthy to practice law and be
capable of upholding the dignity of the legal profession. His admission of guilt and repeated pleas for compassion and reinstatement
show that he is ready once more to meet the exacting standards the legal profession demands from its practitioners. Accordingly, the
Court lifts the
disbarment of Benjamin M. Dacanay. However he should be sternly warned that —
[T]he practice of law is a privilege burdened with conditions. Adherence to the rigid standards of mental fitness,
maintenance of the highest degree of morality and faithful compliance with the rules of the legal profession are the
conditions required for remaining a member of good standing of the bar and for enjoying the privilege to practice
law. The Supreme Court, as guardian of the legal profession, has ultimate disciplinary power over attorneys. This
authority to discipline its members is not only a right, but a bounden duty as well . . . That is why respect and fidelity
to the Court is demanded of its members . . .12
WHEREFORE, the disbarment of BENJAMIN M. DACANAY from the practice of law is LIFTED and he is therefore allowed
to resume the practice of law upon payment of the required legal fees. This resolution is effective immediately.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, Hermosisima, Jr. and
Panganiban, JJ., concur.
Feliciano, J., is on leave.
G.R. No. 161417 February 8, 2007 MA. TERESA
CHAVES BIACO, Petitioner, vs.
PHILIPPINE COUNTRYSIDE RURAL BANK, Respondent.
D E C I S I O N TINGA, J.:
Petitioner, Ma. Teresa Chaves Biaco, seeks a review of the Decision 1 of the Court of Appeals in CA-G.R. No. 67489 dated August 27,
2003, which denied her petition for annulment of judgment, and the Resolution 2 dated December 15, 2003 which denied her motion
for reconsideration.
The facts as succinctly stated by the Court of Appeals are as follows:
Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves Biaco. While employed in the Philippine Countryside Rural Bank
(PCRB) as branch manager, Ernesto obtained several loans from the respondent bank as evidenced by the following promissory
notes: Feb. 17, 1998 ₱ 65,000.00

Mar. 18, 1998 30,000.00

May 6, 1998 60,000.00

May 20, 1998 350,000.00

July 30, 1998 155,000.00

Sept. 8, 1998 40,000.00

Sept. 8, 1998 120,000.00

As security for the payment of the said loans, Ernesto executed a real estate mortgage in favor of the bank covering the parcel of land
described in Original Certificate of Title (OCT) No. P-14423. The real estate mortgages bore the signatures of the spouses Biaco.
When Ernesto failed to settle the above-mentioned loans on its due date, respondent bank through counsel sent him a written demand
on September 28, 1999. The amount due as of September 30, 1999 had already reached ONE MILLION EIGHTY THOUSAND SIX
HUNDRED SEVENTY SIX AND FIFTY CENTAVOS (₱1,080,676.50).
The written demand, however, proved futile.
On February 22, 2000, respondent bank filed a complaint for foreclosure of mortgage against the spouses Ernesto and Teresa Biaco
before the RTC of Misamis Oriental. Summons was served to the spouses Biaco through Ernesto at his office (Export and Industry
Bank) located at Jofelmor Bldg., Mortola Street, Cagayan de Oro City.
Ernesto received the summons but for unknown reasons, he failed to file an answer. Hence, the spouses Biaco were declared in
default upon motion of the respondent bank. The respondent bank was allowed to present its evidence ex parte before the Branch
Clerk of Court who was then appointed by the court as Commissioner. Arturo Toring, the branch manager of the respondent bank,
testified that the spouses Biaco had been obtaining loans from the bank since 1996 to 1998. The loans for the years 1996-1997 had
already been paid by the spouses Biaco, leaving behind a balance of ₱1,260,304.33 representing the 1998 loans. The amount
being claimed is inclusive of interests, penalties and service charges as agreed upon by the parties. The appraisal value of the land
subject of the mortgage is only ₱150,000.00 as reported by the Assessor’s Office. Based on the report of the Commissioner, the
respondent judge ordered as follows:
WHEREFORE, judgment is hereby rendered ordering defendants spouses ERNESTO R. BIACO and MA. THERESA [CHAVES]
BIACO to pay plaintiff bank within a period of not less than ninety (90) days nor more than one hundred (100) days from receipt of this
decision the loan of ONE MILLION TWO HUNDRED SIXTY THOUSAND THREE HUNDRED FOUR PESOS and THIRTY THREE
CENTAVOS (₱1,260,304.33) plus litigation expenses in the amount of SEVEN THOUSAND SIX HUNDRED FORTY PESOS
(₱7,640.00) and attorney’s fees in the amount of TWO HUNDRED FIFTY TWO THOUSAND THIRTY PESOS and FORTY
THREE CENTAVOS (₱252,030.43) and cost of this suit.
In case of non-payment within the period, the Sheriff of this Court is ordered to sell at public auction the mortgaged Lot, a parcel of
registered land (Lot 35802, Cad. 237 {Lot No. 12388-B, Csd-10-002342-D}), located at Gasi, Laguindingan, Misamis Oriental and
covered by TCT No. P-14423 to satisfy the mortgage debt, and the surplus if there be any should be delivered to the defendants
spouses ERNESTO and MA. THERESA [CHAVES] BIACO. In the event however[,] that the proceeds of the auction sale of the

39
mortgage[d] property is not enough to pay the outstanding obligation, the defendants are ordered to pay any deficiency of the judgment
as their personal liability.
SO ORDERED.
On July 12, 2000, the sheriff personally served the above-mentioned judgment to Ernesto Biaco at his office at
Export and Industry Bank. The spouses Biaco did not appeal from the adverse decision of the trial court. On October 13, 2000, the
respondent bank filed an ex parte motion for execution to direct the sheriff to sell the mortgaged lot at public auction. The respondent
bank alleged that the order of the court requiring the spouses Biaco to pay within a period of 90 days had passed, thus making it
necessary to sell the mortgaged lot at public auction, as previously mentioned in the order of the court. The motion for execution was
granted by the trial court per Order dated October 20, 2000.
On October 31, 2000, the sheriff served a copy of the writ of execution to the spouses Biaco at their residence in #92 9th Street,
Nazareth, Cagayan de Oro City. The writ of execution was personally received by Ernesto. By virtue of the writ of execution issued
by the trial court, the mortgaged property was sold at public auction in favor of the respondent bank in the amount of ONE HUNDRED
FIFTY THOUSAND PESOS (₱150,000.00).
The amount of the property sold at public auction being insufficient to cover the full amount of the obligation, the respondent bank filed
an "ex parte motion for judgment" praying for the issuance of a writ of execution against the other properties of the spouses Biaco for
the full settlement of the remaining obligation. Granting the motion, the court ordered that a writ of execution be issued against the
spouses Biaco to enforce and satisfy the judgment of the court for the balance of ONE MILLION THREE HUNDRED SIXTY NINE
THOUSAND NINE
HUNDRED SEVENTY FOUR PESOS AND SEVENTY CENTAVOS (₱1,369,974.70).
The sheriff executed two (2) notices of levy against properties registered under the name of petitioner Ma. Teresa Chaves Biaco.
However, the notices of levy were denied registration because Ma. Teresa had already sold the two (2) properties to her daughters
on April 11, 2001.3
Petitioner sought the annulment of the Regional Trial Court decision contending that extrinsic fraud prevented her from participating
in the judicial foreclosure proceedings. According to her, she came to know about the judgment in the case only after the lapse of
more than six (6) months after its finality. She claimed that extrinsic fraud was perpetrated against her because the bank failed to
verify the authenticity of her signature on the real estate mortgage and did not inquire into the reason for the absence of her signature
on the promissory notes. She moreover asserted that the trial court failed to acquire jurisdiction because summons were served on
her through her husband without any explanation as to why personal service could not be made.
The Court of Appeals considered the two circumstances that kept petitioner in the dark about the judicial foreclosure proceedings: (1)
the failure of the sheriff to personally serve summons on petitioner; and (2) petitioner’s husband’s concealment of his knowledge of
the foreclosure proceedings. On the validity of the service of summons, the appellate court ruled that judicial foreclosure proceedings
are actions quasi in rem. As such, jurisdiction over the person of the defendant is not essential as long as the court acquires jurisdiction
over the res. Noting that the spouses Biaco were not opposing parties in the case, the Court of Appeals further ruled that the fraud
committed by one against the other cannot be considered extrinsic fraud.
Her motion for reconsideration having been denied, petitioner filed the instant Petition for Review, 4 asserting that even if the action is
quasi in rem, personal service of summons is essential in order to afford her due process.
The substituted service made by the sheriff at her husband’s office cannot be deemed proper service absent any explanation that
efforts had been made to personally serve summons upon her but that such efforts failed. Petitioner contends that extrinsic fraud was
perpetrated not so much by her husband, who did not inform her of the judicial foreclosure proceedings, but by the sheriff who allegedly
connived with her husband to just leave a copy of the summons intended for her at the latter’s office.
Petitioner further argues that the deficiency judgment is a personal judgment which should be deemed void for lack of jurisdiction over
her person.
Respondent PCRB filed its Comment,5 essentially reiterating the appellate court’s ruling. Respondent avers that service of summons
upon the defendant is not necessary in actions quasi in rem it being sufficient that the court acquire jurisdiction over the res. As regards
the alleged conspiracy between petitioner’s husband and the sheriff, respondent counters that this is a new argument which cannot
be raised for the first time in the instant petition.
We required the parties to file their respective memoranda in the Resolution 6 dated August 18, 2004.
Accordingly, petitioner filed her Memorandum 7 dated October 10, 2004, while respondent filed its Memorandum for Respondent 8dated
September 9, 2004.
Annulment of judgment is a recourse equitable in character, allowed only in exceptional cases as where there is no available or other
adequate remedy. Jurisprudence and Sec. 2, Rule 47 of the 1997 Rules of Civil Procedure
(Rules of Court) provide that judgments may be annulled only on grounds of extrinsic fraud and lack of jurisdiction or denial of due
process.9
Petitioner asserts that extrinsic fraud consisted in her husband’s concealment of the loans which he obtained from respondent PCRB;
the filing of the complaint for judicial foreclosure of mortgage; service of summons; rendition of judgment by default; and all other
proceedings which took place until the writ of garnishment was served. 10
Extrinsic fraud exists when there is a fraudulent act committed by the prevailing party outside of the trial of the case, whereby the
defeated party was prevented from presenting fully his side of the case by fraud or deception practiced on him by the prevailing party.11
Extrinsic fraud is present where the unsuccessful party had been prevented from exhibiting fully his case, by fraud or deception
practiced on him by his opponent, as by keeping him away from court, a false promise of a compromise; or where the defendant never
had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently or without authority
assumes to represent a party and connives at his defeat; or where the attorney regularly employed corruptly sells out his client’s
interest to the other side. The overriding consideration is that the fraudulent scheme of the prevailing litigant prevented a party from
having his day in court.12
With these considerations, the appellate court acted well in ruling that there was no fraud perpetrated by respondent bank upon
petitioner, noting that the spouses Biaco were co-defendants in the case and shared the same interest. Whatever fact or
circumstance concealed by the husband from the wife cannot be attributed to respondent bank.
Moreover, petitioner’s allegation that her signature on the promissory notes was forged does not evince extrinsic fraud. It is well-
settled that the use of forged instruments during trial is not extrinsic fraud because such evidence does not preclude the participation
of any party in the proceedings.13
The question of whether the trial court has jurisdiction depends on the nature of the action, i.e., whether the action is in personam, in
rem, or quasi in rem. The rules on service of summons under Rule 14 of the Rules of Court likewise apply according to the nature of
the action.
An action in personam is an action against a person on the basis of his personal liability. An action in rem is an action against the
thing itself instead of against the person. An action quasi in rem is one wherein an individual is named as defendant and the purpose
of the proceeding is to subject his interest therein to the obligation or lien burdening the property. 14

40
In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. In
a proceeding in rem or quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the
court provided that the court acquires jurisdiction over the res. Jurisdiction over the res is acquired either (1) by the seizure of the
property under legal process, whereby it is brought into actual custody of the law; or (2) as a result of the institution of legal
proceedings, in which the power of the court is recognized and made effective. 15
Nonetheless, summons must be served upon the defendant not for the purpose of vesting the court with jurisdiction but merely for
satisfying the due process requirements.16
A resident defendant who does not voluntarily appear in court, such as petitioner in this case, must be personally served with summons
as provided under Sec. 6, Rule 14 of the Rules of Court. If she cannot be personally served with summons within a reasonable time,
substituted service may be effected (1) by leaving copies of the summons at the defendant’s residence with some person of suitable
age and discretion then residing therein, or (2) by leaving the copies at defendant’s office or regular place of business with some
competent person in charge thereof in accordance with Sec. 7, Rule 14 of the Rules of Court.
In this case, the judicial foreclosure proceeding instituted by respondent PCRB undoubtedly vested the trial court with jurisdiction over
the res. A judicial foreclosure proceeding is an action quasi in rem. As such, jurisdiction over the person of petitioner is not required,
it being sufficient that the trial court is vested with jurisdiction over the subject matter.
There is a dimension to this case though that needs to be delved into. Petitioner avers that she was not personally served summons.
Instead, summons was served to her through her husband at his office without any explanation as to why the particular surrogate
service was resorted to. The Sheriff’s Return of Service dated March 21, 2000 states: x x x x
That on March 16, 2000, the undersigned served the copies of Summons, complaint and its annexes to the defendants Sps.
Ernesto R. & Ma. Teresa Ch. Biaco thru Ernesto R. Biaco[,] defendant of the above-entitled case at his office EXPORT &
INDUSTRY BANK, Jofelmore Bldg.[,] Mortola St., Cagayan de Oro City and he
acknowledged receipt thereof as evidenced with his signature appearing on the original copy of the
Summons.17 [Emphasis supplied]
Without ruling on petitioner’s allegation that her husband and the sheriff connived to prevent summons from being served upon her
personally, we can see that petitioner was denied due process and was not able to participate in the judicial foreclosure proceedings
as a consequence. The violation of petitioner’s constitutional right to due process arising from want of valid service of summons on
her warrants the annulment of the judgment of the trial court.
There is more, the trial court granted respondent PCRB’s ex-parte motion for deficiency judgment and ordered the issuance of a writ
of execution against the spouses Biaco to satisfy the remaining balance of the award. In short, the trial court went beyond its jurisdiction
over the res and rendered a personal judgment against the spouses Biaco. This cannot be countenanced.1awphil.net
In Sahagun v. Court of Appeals,18 suit was brought against a non-resident defendant, Abelardo Sahagun, and a writ of attachment
was issued and subsequently levied on a house and lot registered in his name. Claiming ownership of the house, his wife, Carmelita
Sahagun, filed a motion to intervene. For failure of plaintiff to serve summons extraterritorially upon Abelardo, the complaint was
dismissed without prejudice.
Subsequently, plaintiff filed a motion for leave to serve summons by publication upon Abelardo. The trial court granted the motion.
Plaintiff later filed an amended complaint against Abelardo, this time impleading Carmelita and Rallye as additional defendants.
Summons was served on Abelardo through publication in the Manila Evening Post. Abelardo failed to file an answer and was declared
in default. Carmelita went on certiorari to the Court of Appeals assailing as grave abuse of discretion the declaration of default of
Abelardo. The Court of Appeals dismissed the petition and denied reconsideration.
In her petition with this Court, Carmelita raised the issue of whether the trial court acquired jurisdiction over her husband, a non-
resident defendant, by the publication of summons in a newspaper of general circulation in the Philippines. The Court sustained the
correctness of extrajudicial service of summons by publication in such newspaper.
The Court explained, citing El Banco Español-Filipino v. Palanca,19 that foreclosure and attachment proceedings are both actions
quasi in rem. As such, jurisdiction over the person of the (non-resident) defendant is not essential. Service of summons on a non-
resident defendant who is not found in the country is required, not for purposes of physically acquiring jurisdiction over his person but
simply in pursuance of the requirements of fair play, so that he may be informed of the pendency of the action against him and the
possibility that property belonging to him or in which he has an interest may be subjected to a judgment in favor of a resident, and that
he may thereby be accorded an opportunity to defend in the action, should he be so minded.
Significantly, the Court went on to rule, citing De Midgely v. Ferandos, et. al.20 and Perkins v. Dizon, et al.21 that in a proceeding in
rem or quasi in rem, the only relief that may be granted by the court against a defendant over whose person it has not acquired
jurisdiction either by valid service of summons or by voluntary submission to its jurisdiction, is limited to the res.
Similarly, in this case, while the trial court acquired jurisdiction over the res, its jurisdiction is limited to a rendition of judgment on the
res. It cannot extend its jurisdiction beyond the res and issue a judgment enforcing petitioner’s personal liability. In doing so without
first having acquired jurisdiction over the person of petitioner, as it did, the trial court violated her constitutional right to due process,
warranting the annulment of the judgment rendered in the case.
WHEREFORE, the instant petition is GRANTED. The Decision dated August 27, 2003 and the Resolution dated December 15, 2003
of the Court of Appeals in CA-G.R. SP No. 67489 are SET ASIDE. The Judgment dated July 11, 2000 and Order dated February 9,
2001 of the Regional Trial Court of Cagayan de Oro City, Branch 20, are likewise SET ASIDE. SO ORDERED.
SECOND DIVISION

VIRRA MALL TENANTS ASSOCIATION, G.R. No. 182902

INC., Petitioner,
Present:

CARPIO, J., Chairperson,

BRION,
- versus - PEREZ,
MENDOZA,* and
SERENO, JJ.

VIRRA GREENHILLS Promulgated:

MALL LOLITA C.

41
 ASSOCIATION, INC.,
REGALADO, ANNIE L. TRIAS, WILSON
GO, PABLO OCHOA, JR., BILL OBAG and October 5, 2011
GEORGE V. WINTERNITZ,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

SERENO, J.:

Before us is a Petition for Review of the 21 May 2007 Decision[1] and 14 May 2008 Resolution[2] of the Court of Appeals (CA) dismissing
the Complaint-in-Intervention and denying the Motion for Reconsideration both filed by petitioner. Ortigas & Company, Limited Partnership
(Ortigas) is the owner of the Greenhills Shopping Center (GSC). On 5 November 1975, Ortigas and Virra Realty Development Corporation (Virra
Realty) entered into a Contract of Lease (First
Contract of Lease) over a portion of the GSC. The 25-year lease was to expire on 15 November 2000. Pursuant thereto, Virra Realty constructed a
commercial building, the Virra Mall Shopping Center (Virra Mall), which was divided into either units for lease or units whose leasehold rights
were sold.[3]
Thereafter, Virra Realty organized respondent Virra Mall Greenhills Association (VMGA), an association of all the tenants and leasehold
right holders, who managed and operated Virra Mall. In the First Contract of Lease, VMGA assumed and was subrogated to all the rights, obligations
and liabilities of Virra Realty.[4]
On 22 November 2000, VMGA, through its president, William Uy (Uy), requested from Ortigas the renewal of the
First Contract of Lease.[5]
VGMA secured two insurance policies to protect Virra Mall against damage by fire and other causes. However, these insurance coverages
expired simultaneously with the First Contract of Lease on 15 November 2000.[6] Subsequently, on 13
March 2001, VGMA acquired new sets of insurance policies effective 10 January 2001 to 31 December 2001. [7]
On 5 May 2001, Virra Mall was gutted by fire, requiring substantial repair and restoration. VMGA thus filed an insurance claim through
the insurance broker, respondent Winternitz Associates Insurance Company, Inc. (Winternitz). Thereafter, the proceeds of the insurance were
released to VMGA.[8]
On 3 September 2001, Ortigas entered into a Contract of Lease (Second Contract of Lease) with Uy effective 2 November 2001 to 31
December 2004. On 11 September 2001, the latter assigned and transferred to petitioner Virra Mall Tenants Association (VMTA) all his rights and
interests over the property.[9]
On 7 February 2003, Ortigas filed a Complaint for Specific Performance with Damages and Prayer for Issuance of a Writ
of Preliminary Attachment against several defendants, including herein respondents. It accused them of fraud, misappropriation and conversion of
substantial portions of the insurance proceeds for their own personal use unrelated to the repair and restoration of Virra Mall. To secure the subject
insurance proceeds, Ortigas also sought the issuance of a writ of preliminary attachment against herein respondents. The case was docketed as Civil
Case No. 69312, and raffled to the Regional Trial Court, National Capital Judicial Region, Pasig City, Branch 67 (RTC Br. 67), which issued a
Writ of Preliminary Attachment on 12 February 2003.[10]
On 17 February 2003, VMTA filed a Complaint-in-Intervention.[11] It claimed that as the assignee or transferee of the rights and
obligations of Uy in the Second Contract of Lease, and upon the order of Ortigas, it had engaged the services of various contractors. These
contractors undertook the restoration of the damaged area of Virra Mall amounting to P18,902,497.75. Thus, VMTA sought the reimbursement of
the expenses it had incurred in relation thereto.[12] RTC Br. 67 admitted the Complaint-in-Intervention in its Order dated 8 January 2004.[13]
On 5 March 2004, herein respondents moved for the dismissal of the Complaint-in-Intervention on the ground that it stated no cause of
action.[14] In its Omnibus Order dated 2 August 2005, RTC Br. 67 denied this Motion to Dismiss.[15]The trial court based its Decision on the grounds
that (a) by filing the said motion, herein respondents hypothetically admitted the truth of the facts alleged in the Complaint-in-Intervention, and (b)
the test of sufficiency of the facts alleged was whether or not the court could render a valid judgment as prayed for, accepting as true the exclusive
facts set forth in the Complaint.[16] Thus, RTC Br. 67 held that if there are doubts as to the truth of the facts averred, then the court must not dismiss
the Complaint, but instead require an answer and proceed to trial on the merits.[17]
On a Rule 65 Petition for Certiorari alleging grave abuse of discretion, the CA reversed the ruling of RTC Br. 67 and dismissed the Complaint-in-
Intervention on the following grounds: (a) VMTA failed to state a cause of action; (b) VMTA has no legal interest in the matter in litigation; and
(c) the Complaint-in-Intervention would cause a delay in the trial of the action, make the issues more complicated, prejudice the adjudication of the
rights of the parties, stretch the issues, and increase the breadth of the remedies and relief. [18] The relevant portions of the Decision read:
Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or omission by which a
party violates the right of another. Its essential elements are as follows:

1. A right in favor of the plaintiff by whatever means and under

whatever law it arises or is created;
2. An obligation on the part of the named defendant to respect or not
to violate such right; and
3. Act or omission on the part of such defendant in violation of the
right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which
the latter may maintain an action for recovery of damages or other appropriate relief.

It is, thus, only upon the occurrence of the last element that a cause of action arises, giving the plaintiff the right to
maintain an action in court for recovery of damages or other appropriate relief. (Swagman Hotels and Travel, Inc. v. Court of
Appeals, G.R. No. 161135, April 8, 2005, 455 SCRA 175, 183). If these elements are absent, the complaint is dismissible on
the ground of failure to state a cause of action.
What VMTA actually seeks in filing a complaint-in-intervention is the reimbursement of the cost
of the restoration and rehabilitation of the burned area of the Virra Mall building. And VMTA believes that such reimbursement
must be made from the fire insurance proceeds released to VMGA. Such position cannot be sustained.

Firstly, We find that the complaint-in-intervention fails to state a cause of action against the
petitioners. The material averments of the complaint-in-intervention belie any correlative obligation on the part of herein
petitioners vis--vis the legal right of VMTA for reimbursement. The petitioners are not the proper parties against whom the
subject action for reimbursement must be directed to. On the contrary, since x x x plaintiff Ortigas, as owner of the building,

42
 has ordered intervenor VMTA to undertake with dispatch the restoration and rehabilitation of the burned area or section of the
Virra Mall buiding x x x (par. 7 of Complaint-in-Intervention), VMTAs recourse would be to file and direct its claim against
ORTIGAS who has the obligation to pay for the same. The complaint-in-intervention is not the proper action for VMTA to
enforce its right of reimbursement. At any rate, VMTAs rights, if any, can be ventilated and protected in a separate action. The
complaint-in-intervention is therefore dismissible for failure to state a cause of action against the petitioners.

Secondly, VMTA has no legal interest in the matter in litigation. It is not privy to the Contract of
Lease between ORTIGAS and VMGA. It came into the picture only after the expiration of the said contract.

Finally, Section 1, Rule 19 of the 1997 Rules of Civil Procedure provides:

Section 1. Who may intervene. A person who has a legal interest in the matter in
litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of the property in the custody of the court or of an
offices thereof may, with leave of court, be allowed to intervene in the action. The court shall consider
whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original
parties, and whether or not the intervenors rights may be fully protected in a separate proceeding.

As a general guide in determining whether a party may intervene, the court shall consider whether
or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not
the intervenors rights may be fully protected in a separate proceeding (Sec. 2(b), Rule 12; Balane, et al. vs. De Guzman, et al.,
20 SCRA 177 [1967]).

The complaint below is primarily on the issue of specific performance. The relief being sought by the VMTA in its
complaint-in-intervention is the reimbursement of expenses incurred by it for the repair/restoration of the Virra Mall Building.
VMTAs cause of action has a standpoint which is unique to itself. New, unrelated, and conflicting issues would be raised which
do not concern the petitioners herein, or VMTA as intervenor. Inevitably, the allowance of the intervention will not only cause
delay in the trial of the action, make the issues even more complicated, and stretch the issues in the action as well as amplify
the breadth of the remedies and relief.

Thereafter, VMTA filed a Motion for Reconsideration, which the CA denied in the assailed Resolution dated 14 May 2008.[19] Hence,
the instant Petition raising the following issues:
I.
With due respect, the Honorable Court of Appeals committed grave error in declaring that the complaint in intervention failed
to state a cause of action against private respondents when it declared that the complaint in intervention belies any correlative
obligation on the part of private respondents vis--vis the legal right of petitioner for reimbursement.

II.
With due respect, the Honorable Court of Appeals committed grave error in holding that private respondents are not the proper
parties against whom the subject action for reimbursement must be directed to but recourse would be for petitioner VMTA to
file and direct its claim against OCLP who has the obligation to pay petitioner VMTA since it was OCLP who has (sic) ordered
to undertake the restoration and rehabilitation of the burned area or section of the Virra Mall Building.

III.
With due respect, the Honorable Court of Appeals similarly committed grave error when it ruled that the complaint-in-
intervention is not the proper action to enforce its right in the controversy between OCLP and private respondents since the
proper remedy is for petitioner VMTA to ventilate and protect its right in a separate action. [20]
The determination of whether the CA committed reversible error in dismissing the Complaint-in-Intervention filed
by VMTA boils down to the sole issue of the propriety of this remedy in enforcing the latters rights.
According to VMTA, it has a legal interest in Civil Case No. 69312, which is rooted in the alleged failure of VMGA
to turn over the insurance proceeds for the restoration and rehabilitation of Virra Mall, in breach of the latters contractual obligation to Ortigas.
However, the CA ruled against this position taken by VMTA not only because, in the CAs view, VMTAs Complaint-in-Intervention failed to state
a cause of action, but also because it has no legal interest in the matter in litigation. We rule in favor of VMTA.
Section 1, Rule 19 of the Rules of Court provides:
Who may intervene. A person who has a legal interest in the matter in litigation, or in the success
of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in
the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights
of the original parties, and whether or not the intervenors rights may be fully protected in a separate proceeding.

In Executive Secretary v. Northeast Freight,[21] this Court explained intervention in this wise:
Intervention is not a matter of absolute right but may be permitted by the court when the applicant shows facts which
satisfy the requirements of the statute authorizing intervention. Under our Rules of Court, what qualifies a person to intervene
is his possession of a legal interest in the matter in litigation or in the success of either of the parties, or an interest against
both; or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of
the court or an officer thereof. As regards the legal interest as qualifying factor, this Court has ruled that such interest must be
of a direct and immediate character so that the intervenor will either gain or lose by the direct legal operation of the judgment.
The interest must be actual and material, a concern which is more than mere curiosity, or academic or sentimental desire; it
must not be indirect and contingent, indirect and remote, conjectural, consequential or collateral. However, notwithstanding
the presence of a legal interest, permission to intervene is subject to the sound discretion of the court, the exercise of which is
limited by considering whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the
original parties and whether or not the intervenors rights may be fully protected in a separate proceeding. [22] (Emphasis
supplied.)

43
 Applying the foregoing points to the case at bar, VMTA may be allowed to intervene, and the ruling of RTC Br. 67 allowing intervention
was wrongly reversed by the CA because such a ruling does not constitute grave abuse of discretion. VMTA has a cause of action
A cause of action is defined as the act or omission by which a party violates a right of another.[23] In Shell Philippines v. Jalos,[24] this
Court expounded on what constitutes a cause of action, to wit:
A cause of action is the wrongful act or omission committed by the defendant in violation of the
primary rights of the plaintiff. Its elements consist of: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the
defendant to respect the plaintiffs right, and (3) an act or omission of the defendant in violation of such right. To sustain a
motion to dismiss for lack of cause of action, however, the complaint must show that the claim for relief does not exist and not
only that the claim was defectively stated or is ambiguous, indefinite or uncertain. [25]

In the case at bar, VMTA, in its Complaint-in-Intervention, explicitly laid down its cause of action as follows: [26]
Pursuant to and by virtue of such claim, defendant VMGA and defendant VMGA Board Members,
impleaded as party defendants herein, received, at various times, from their insurance broker, and it is in their custody, the
insurance proceeds arising out of such claim which, as of January 8, 2003, aggregated P48.6-Million. Having failed to deliver
the said proceeds to the real beneficiary inspite of due notice and demand, plaintiff Ortigas herein instituted the present
action against all the defendants to compel delivery of the said insurance proceeds which are being unlawfully and illegally
withheld by all the defendant VMGA and defendant VMGA Board Members inspite of written demands made therefor.
Worse, a portion of said insurance proceeds, aggregating P8.6-Million had already been disbursed and misappropriated in
breach of trust and fiduciary duty. (Emphasis supplied.)

It is clear from the foregoing allegations that VMTAs purported right is rooted in its claim that it is the real beneficiary
of the insurance proceeds, on the grounds that it had (a) facilitated the repair and restoration of the insured infrastructure upon the orders of Ortigas,
and (b) advanced the costs thereof. Corollarily, respondents have a duty to reimburse it for its expenses since the insurance proceeds had already
been issued in favor of respondent VMGA, even if the latter was not rightfully entitled thereto. Finally, the imputed act or omission on the part of
respondents that supposedly violated the right of VMTA was respondent VMGAs refusal, despite demand, to release the insurance proceeds it
received to reimburse the former for the expenses it had incurred in relation to the restoration and repair of Virra Mall. Clearly, then, VMTA was
able to establish its cause of action.
VMTA has a legal interest in the matter in litigation

VMTA was also able to show its legal interest in the matter in litigation VMGAs insurance proceeds considering that it had already
advanced the substantial amount of P18,902,497.75 for the repair and restoration of Virra Mall. That VMTA seeks reimbursement from Ortigas is
precisely the reason why intervention is proper. The main issue in Civil Case No. 69312 is whether Ortigas has a contractual right to the insurance
proceeds received by VMGA. Thus, the recoupment by VMTA of the expenses it incurred in the repair of Virra Mall depends on the success of
either party in the main case. VMTA therefore has an undeniable stake in Civil Case No. 69312 that would warrant its intervention therein.
Further, the issuance to Ortigas of a Writ of Preliminary Attachment against VMGA puts VMTA in a situation in
which it will be adversely affected by a distribution or other disposition of the property in the custody of the court, pursuant to the said writ. The
prospect of any distribution or disposition of the attached property will likewise affect VMTAs claim for reimbursement.
VMTAs intervention in Civil Case No. 69312 will avoid a multiplicity of suits

Lastly, allowing VMTA to intervene in Civil Case No. 69312 finds support in Heirs of Medrano v. De Vera,[27] to wit:
The purpose of intervention is to enable a stranger to an action to become a party in order for him to
protect his interest and for the court to settle all conflicting claims. Intervention is allowed to avoid multiplicity of suits more than
on due process considerations.[28]

Thus, although the CA was correct in stating that VMTA could always file a separate case against Ortigas, allowing VMTA
to intervene will facilitate the orderly administration of justice and avoid a multiplicity of suits. We do not see how delay will be inordinately
occasioned by the intervention of VMTA, contrary to the fear of the CA.
WHEREFORE, the instant petition is GRANTED. The Decision dated 21 May 2007 and Resolution dated 14 May 2008 of the CA are
hereby REVERSED and SET ASIDE insofar as the dismissal of the Complaint-in-Intervention filed by VMTA is concerned. The Complaint-in-
Intervention of VMTA in Civil Case No. 69312 is allowed to proceed before RTC Br.
67.

G.R. No. 191178 March 13, 2013

ANCHOR SAVINGS BANK (FORMERLY ANCHOR FINANCE AND INVESTMENT
CORPORATION), Petitioner, vs.
HENRY H. FURIGAY, GELINDA C. FURIGAY, HERRIETTE C. FURIGAY and HEGEM C.
FURIGAY, Respondents.
D E C I S I O N MENDOZA, J.:
This concerns a petition for review_ on certiorari filed by petitioner Anchor Savings Bank (ASB) under Rule 45 of the 1997 Rules of
Civil Procedure, assailing the May 28, 2009 Decision 1 and the January 22, 2010 Resolution2 of the Court of Appeals (CA), in CA-G.R.
CV No. 90123, dismissing the appeal.3 The assailed resolution denied the separate motions for reconsideration of both parties. The
Facts
On April 21, 1999, ASB filed a verified complaint for sum of money and damages with application for replevin against Ciudad Transport
Services, Inc. (CTS), its president, respondent Henry H. Furigay; his wife, respondent
Gelinda C. Furigay; and a "John Doe." The case was docketed as Civil Case No. 99-865 and raffled to Branch
143 of the Regional Trial Court of Makati City (RTC).4
On November 7, 2003, the RTC rendered its Decision5 in favor of ASB, the dispositive portion of which reads: WHEREFORE, judgment
is hereby rendered in favor of plaintiff Anchor Savings Bank ordering defendants Ciudad Transport Services, Inc., Henry H. Furigay
and Genilda C. Furigay to pay the following:
1) The amount of Eight Million Six Hundred Ninety Five Thousand Two Hundred Two pesos and Fifty
Nine centavos (Php8,695,202.59) as PRINCIPAL OBLIGATION as of 12 April 1999;
2) An INTEREST of Twelve per cent (12%) per annum until fully paid;
3) PENALTY CHARGE of Twelve per cent (12%) per annum until fully paid; 4) LIQUIDATED DAMAGES of Ten (10%) per
cent of the total amount due; 5) One Hundred Thousand pesos as reasonable ATTORNEY’S FEES;
6) Costs of suit.

44
SO ORDERED.6
While Civil Case No. 99-865 was pending, respondent spouses donated their registered properties in Alaminos,
Pangasinan, to their minor children, respondents Hegem G. Furigay and Herriette C. Furigay. As a result, Transfer Certificate of Title
(TCT) Nos. 21743,7 21742,8 21741,9 and 2174010 were issued in the names of Hegem and Herriette Furigay.
Claiming that the donation of these properties was made in fraud of creditors, ASB filed a Complaint for Rescission of Deed of
Donation, Title and Damages11 against the respondent spouses and their children. The case was docketed as Civil Case No. A-
3040 and raffled to Branch 55 of the RTC of Alaminos, Pangasinan. In its Complaint, ASB made the following allegations: x x x x
4. That Ciudad Transport Services, Inc., Henry H. Furigay and Gelinda C. Furigay obtained a loan from Anchor
Savings Bank and subsequently the former defaulted from their loan obligation which prompted Anchor Savings Bank to file the case
entitled "Anchor Savings Bank vs. Ciudad Transport Services, Inc., Henry H. Furigay and Gelinda C. Furigay" lodged before Makati
City Regional Trial Court Branch 143 and docketed as Civil Case No. 99-865. On 7 November 2003 the Honorable Court in the
aforesaid case issued a Decision the dispositive portion of which reads as follows: x x x x
5. That defendants Sps. Henry H. Furigay and Gelinda C. Furigay are the registered owners of various real properties located at the
Province of Pangasinan covered by Transfer Certificate of Title Nos. 19721, 21678, 21679, and 21682. x x x
6. That on 8 March 2001 defendants Sps. Henry H. Furigay and Gelinda C. Furigay executed a Deed of Donation in favor of their
children herein defendants Hegem C. Furigay and Herriette C. Furigay donating to them all of the above-mentioned properties.
Hence, the following titles were issued under their names to wit:
Transfer Certificate of Title Nos. 21743, 21742, 21741, and 21740. x x x
7. That the donation made by defendants Sps. Henry H. Furigay and Gelinda C. Furigay were done with the intention to defraud its
creditors particularly Anchor Savings Bank. Said transfer or conveyance is the one contemplated by Article 1387 of the New Civil
Code, which reads: x x x x
8. x x x In the instant case, Sps. Furigay donated the properties at the time there was a pending case against them. x x x. In the
instant case, the Sps. Furigay donated the properties to their son and daughter. Moreover, the transfer or donation was executed
in 2001 when both donees Hegem C. Furigay and Herriette C. Furigay are minors.
9. Clearly, the Donation made by defendants Sps. Furigay was intended to deprive plaintiff Anchor Savings Bank from going after
the subject properties to answer for their due and demandable obligation with the Bank. The donation being undertaken in fraud
of creditors then the same may be rescinded pursuant to Article 1381 of the
New Civil Code. The said provision provides that: x x x x
Consequently, Transfer Certificate of Title Nos. 21743, 21742, 21741, and 21740 issued under the names of defendants Herriette C.
Furigay and Hegem C. Furigay should likewise be cancelled and reverted to the names of co-defendants Henry and Gelinda Furigay.
10. That because of the fraud perpetrated by defendants, plaintiff suffered the following damages.
11. Plaintiff suffered actual and compensatory damages as a result of the filing of the case the bank has spent a lot of man-hours of
its employees and officers re-evaluating the account of defendant Sps. Furigay. Such manhour when converted into monetary
consideration represents the salaries and per diems of its employees particularly the CI/Appraiser, Head Office Lawyer and Bank
Auditor;
12. Said claim likewise represents administrative expenses such as transportation expenses, reproduction of documents, and courier
expenses among others;
13. Defendants should be made to pay plaintiff Anchor Savings Bank the amount of PESOS: ONE MILLION (₱1,000,000.00) as moral
damages for the damage it caused to the latter’s business goodwill and reputation; 14. By way of example for the public and to
deter others from the malicious filing of baseless (sic) suit, defendants should be ordered to pay [plaintiff] the amount of PESOS:
TWO HUNDRED THOUSAND
(₱200,000.00) as exemplary damages.
15. Attorneys fees equivalent to twenty-five percent (25%) of the total amount that can be collected from defendant;
16. Defendants should also be held liable to pay for the cost of suit. 12
Instead of filing an answer, respondents sought the dismissal of the complaint, principally arguing that the RTC failed to acquire
jurisdiction over their persons as well as over the subject matter in view of the failure of the ASB to serve the summons properly and
to pay the necessary legal fees. RTC Resolutions
On September 29, 2006, the RTC issued an Order13 denying the motion to dismiss. Respondents sought reconsideration of the Order
adding that the ASB’s action for rescission had already prescribed.
Upon filing of ASB’s opposition to the motion for reconsideration, on February 27, 2007, the RTC reconsidered its earlier
pronouncement and dismissed the complaint for failure of ASB to pay the correct docket fees and for prescription.14 RTC explained
that the service of summons by publication made by ASB was valid because respondents’ whereabouts could not have been
ascertained with exactitude and because Section 14, Rule 14 of the Rules of Court did not distinguish what kind of action it would
apply.
On the issue of lack of jurisdiction over the subject matter of the case, the RTC ruled that the complaint was actually a real action as
it affected title to or possession of real property. Accordingly, the basis for determining the correct docket fees was the fair market
value of the real property under litigation as stated in its current tax declaration or its current zonal valuation, whichever was higher.
Considering that ASB did not state the current tax declaration or current zonal valuation of the real properties involved, as well as the
amount of actual damages and attorney’s fees it prayed for, the trial court was of the view that ASB purposely evaded the payment of
the correct filing fees.
On the issue of prescription, the RTC ruled that the action for rescission had already prescribed. It stated that an action for rescission
grounded on fraud should be filed within four (4) years from the discovery of fraud. ASB filed the action for rescission only on October
14, 2005 or after four (4) years from the time the Deed of Donation was registered in the Register of Deeds of Alaminos, Pangasinan,
on April 4, 2001. The four-year prescriptive period should be reckoned from the date of registration of the deed of donation and not
from the date of the actual discovery of the registration of the deeds of donation because registration is considered notice to the whole
world. Thus, the RTC disposed:
WHEREFORE, premises considered, the Order dated September 29, 2006 is hereby reconsidered and set aside, in lieu thereof, the
instant complaint is hereby ordered dismissed on the account of lack of jurisdiction over the subject matter of the case for failure of
the plaintiff to pay the correct docket fees upon its institution attended by bad faith and on the ground of prescription.
SO ORDERED.15
ASB sought reconsideration, but to no avail.16
Ruling of the CA
On appeal, the CA agreed with ASB that its complaint should not have been dismissed on the ground that it failed to pay the c orrect
docket fees. It stated that the lack of specific amount of actual damages and attorney’s fees in ASB’s complaint did not, by itself,

45
amount to evident bad faith. The CA noted that ASB had previously manifested before the trial court that it was willing to pay additional
docket fees should the same be found insufficient.
On the issue of prescription, however, the CA saw things differently. Considering the subsidiary nature of an action for rescission, the
CA found that the action of ASB had not yet prescribed, but was premature. The CA noted that ASB failed to allege in its complaint
that it had resorted to all legal remedies to obtain satisfaction of its claim. The CA wrote:
After a thorough examination of the foregoing precepts and the facts engirding this case, this court opines that plaintiff-appellant’s
action for rescission has not yet prescribed for it must be emphasized that it has not even accrued in the first place. To stress, an
action for rescission or accion pauliana accrues only if all five requisites are present, to wit:
1) That the plaintiff asking for rescission, has a credit prior to the alienation, although demandable later; 2) That the debtor
has made a subsequent contract conveying a patrimonial benefit to a third person; 3) That the creditor has no other legal
remedy to satisfy his claim, but would benefit by rescission of the conveyance to the third person;
4) That the act being impugned is fraudulent; and
5) That the third person who received the property conveyed, if by onerous title, has been an accomplice in the fraud.
In the instant case, the plaintiff-appellant failed to satisfy the third requirement considering that it did not allege in its complaint that it
has resorted to all legal remedies to obtain satisfaction of his claim. It did not even point out in its complaint if the decision in Civil
Case No. 99-865 has already become final and executory and whether the execution thereof yielded negative result in satisfying its
claims. Even the skip tracing allegedly done by the plaintiff-appellant to locate the properties of the defendant-appellees was not
mentioned. And although the skip tracing reports were subsequently presented by the plaintiff-appellant, such reports are not sufficient
to satisfy the third requirement. First, they are not prepared and executed by the sheriff, and second, they do not demonstrate that the
sheriff failed to enforce and satisfy the judgment of the court and that the plaintiff-appellant has exhausted the property of the
defendant-appellees. Perforce, the action for rescission filed by the plaintiffappellant is dismissible. 17
As stated at the outset, both parties sought reconsideration but were rebuffed. Issue
Hence, this recourse of ASB to the Court, presenting the lone issue of:
WHETHER OR NOT THE COURT OF APPEALS, IN CA G.R. CV NO 90123, HAS DECIDED A QUESTION OF
SUBSTANCE, NOT HERETOFORE DETERMINED BY THE SUPREME COURT, OR HAS DECIDED IT IN A
WAY PROBABLY NOT IN ACCORDANCE WITH LAW OR THE APPLICABLE DECISIONS OF THE SUPREME
COURT, WHEN IT RENDERED THE DECISION DATED 28 MAY 2009, AND RESOLUTION DATED 22
JANUARY 2010, IN FINDING THAT PETITIONER FAILED TO PROVE THAT IT HAS RESORTED TO ALL
LEGAL REMEDIES TO OBTAIN SATISFACTION OF ITS CLAIM, WITHOUT GIVING PETITIONER THE
OPPORTUNITY TO BE HEARD OR THE CHANCE TO PRESENT EVIDENCE TO SUPPORT ITS ACTION,
THEREBY DEPRIVING THE LATTER OF THE RIGHT TO DUE PROCESS.18
ASB argues that, considering that its action was still in its preliminary stages, the CA erred in dismissing its action on the ground that
it failed to allege in its complaint the fact that it had resorted to all other legal remedies to satisfy its claim, because it is a matter that
need not be alleged in its complaint, but, rather, to be proved during trial. It asserts that its action is not yet barred by prescription,
insisting that the reckoning point of the four (4)-year prescriptive period should be counted from September 2005, when it discovered
the fraudulent donation made by respondent spouses.
The basic issue in this case is whether the CA was correct in dismissing ASB’s complaint on the ground that the action against
respondents was premature.
Ruling of the Court The
Court finds the petition bereft of merit.
Section 1 of Rule 2 of the Revised Rules of Court requires that every ordinary civil action must be based on a cause of action. Section
2 of the same rule defines a cause of action as an act or omission by which a party violates the right of another. In order that one
may claim to have a cause of action, the following elements must concur: (1) a right in favor of the plaintiff by whatever means and
under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right;
and (3) an act or omission on the part of such defendant in violation of the right of the plaintiff or constituting a breach of the obligation
of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages or other appropriate relief. 19 In
other words, "a cause of action arises when that should have been done is not done, or that which should not have been done is
done."20
In Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc., 21 it was held that "before an action can properly be
commenced, all the essential elements of the cause of action must be in existence, that is, the cause of action must be complete. All
valid conditions precedent to the institution of the particular action, whether prescribed by statute, fixed by agreement of the parties
or implied by law must be performed or complied with before commencing the action, unless the conduct of the adverse party has
been such as to prevent or waive performance or excuse non-performance of the condition."
Moreover, it is not enough that a party has, in effect, a cause of action.
The rules of procedure require that the complaint must contain a concise statement of the ultimate or essential facts constituting the
plaintiff's cause of action. "The test of the sufficiency of the facts alleged in the complaint is whether or not, admitting the facts alleged,
the court can render a valid judgment upon the same in accordance with the prayer of plaintiff." 22 The focus is on the sufficiency, not
the veracity, of the material allegations. Failure to make a sufficient allegation of a cause of action in the complaint warrants its
dismissal.23
In relation to an action for rescission, it should be noted that the remedy of rescission is subsidiary in nature; it cannot be instituted
except when the party suffering damage has no other legal means to obtain reparation for the same. 24 Article 1177 of the New Civil
Code provides:
The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and
bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn the actions
which the debtor may have done to defraud them. (Emphasis added) Consequently, following the subsidiary nature of the remedy of
rescission, a creditor would have a cause of action to bring an action for rescission, if it is alleged that the following successive
measures have already been taken: (1) exhaust the properties of the debtor through levying by attachment and execution upon all the
property of the debtor, except such as are exempt by law from execution; (2) exercise all the rights and actions of the debto r, save
those personal to him (accion subrogatoria); and (3) seek rescission of the contracts executed by the debtor in fraud of their rights
(accion pauliana).25
With respect to an accion pauliana, it is required that the ultimate facts constituting the following requisites must all be alleged in the
complaint, viz.:
1) That the plaintiff asking for rescission, has credit prior to the alienation, although demandable later;
2) That the debtor has made a subsequent contract conveying a patrimonial benefit to a third person; 3) That the creditor
has no other legal remedy to satisfy his claim, but would benefit by rescission of the conveyance to the third person;

46
 4) That act being impugned is fraudulent; and
5) That the third person who received the property conveyed, if by onerous title, has been an accomplice in
the fraud.26 A cursory reading of the allegations of ASB’s complaint would show that it failed to allege the ultimate facts
constituting its cause of action and the prerequisites that must be complied before the same may be instituted.
ASB, without availing of the first and second remedies, that is, exhausting the properties of CTS, Henry H. Furigay and Genilda C.
Furigay or their transmissible rights and actions, simply undertook the third measure and filed an action for annulment of the donation.
This cannot be done. The Court hereby quotes with approval the thorough discourse of the CA on this score: 27
To answer the issue of prescription, the case of Khe Hong Cheng vs. Court of Appeals (G.R. No. 144169, March 28, 2001) is pertinent.
In said case, Philam filed an action for collection against Khe Hong Cheng. While the case was still pending, or on December 20,
1989, Khe Hong Cheng, executed deeds of donations over parcels of land in favor of his children, and on December 27, 1989, said
deeds were registered. Thereafter, new titles were issued in the names of Khe Hong Cheng’s children. Then, the decision became
final and executory. But upon enforcement of writ of execution, Philam found out that Khe Hong Cheng no longer had any property in
his name. Thus, on February 25, 1997, Philam filed an action for rescission of the deeds of donation against Khe Hong Cheng alleging
that such was made in fraud of creditors. However, Khe Hong Cheng moved for the dismissal of the action averring that it has already
prescribed since the four-year prescriptive period for filing an action for rescission pursuant to Article 1389 of the Civil Code
commenced to run from the time the deeds of donation were registered on December 27, 1989. Khe Hong Cheng averred that
registration amounts to constructive notice and since the complaint was filed only on February 25, 1997, or more than four (4) years
after said registration, the action was already barred by prescription. The trial court ruled that the complaint had not yet prescribed
since the prescriptive period began to run only from December 29, 1993, the date of the decision of the trial court. Such decision was
affirmed by this court but reckoned the accrual of Philam's cause of action in January 1997, the time when it first learned that the
judgment award could not be satisfied because the judgment creditor, Khe Hong Cheng, had no more properties in his name. Hence,
the case reached the Supreme Court which ruled that the action for rescission has not yet prescribed, ratiocinating as follows:
"Essentially, the issue for resolution posed by petitioners is this: When did the four (4) year prescriptive period as provided for in Article
1389 of the Civil Code for respondent Philam to file its action for rescission of the subject deeds of donation commence to run? The
petition is without merit.
Article 1389 of the Civil Code simply provides that, ‘The action to claim rescission must be commenced within four years.’ Since this
provision of law is silent as to when the prescriptive period would commence, the general rule, i.e, from the moment the cause of
action accrues, therefore, applies. Article 1150 of the Civil Code is particularly instructive:
ARTICLE 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be
counted from the day they may be brought.
Indeed, this Court enunciated the principle that it is the legal possibility of bringing the action which determines the starting point
for the computation of the prescriptive period for the action. Article 1383 of the Civil Code provides as follows:
ARTICLE 1383. An action for rescission is subsidiary; it cannot be instituted except when the party suffering damage has no other
legal means to obtain reparation for the same.
It is thus apparent that an action to rescind or an accion pauliana must be of last resort, availed of only after all other legal remedies
have been exhausted and have been proven futile.1âwphi1 For an accion pauliana to accrue, the following requisites must concur:
1) That the plaintiff asking for rescission, has a credit prior to the alienation, although demandable later; 2) That the debtor has made
a subsequent contract conveying a patrimonial benefit to a third person; 3) That the creditor has no other legal remedy to satisfy his
claim, but would benefit by rescission of the conveyance to the third person; 4) That the act being impugned is fraudulent; 5) That
the third person who received the property conveyed, if by onerous title, has been an accomplice in the fraud. We quote with
approval the following disquisition of the CA on the matter:
An accion pauliana accrues only when the creditor discovers that he has no other legal remedy for the satisfaction of his claim against
the debtor other than an accion pauliana. The accion pauliana is an action of a last resort. For as long as the creditor still has a remedy
at law for the enforcement of his claim against the debtor, the creditor will not have any cause of action against the creditor for
rescission of the contracts entered into by and between the debtor and another person or persons. Indeed, an accion pauliana
presupposes a judgment and the issuance by the trial court of a writ of execution for the satisfaction of the judgment and the failure
of the Sheriff to enforce and satisfy the judgment of the court. It presupposes that the creditor has exhausted the property of the
debtor. The date of the decision of the trial court against the debtor is immaterial. What is important is that the credit of the plaintiff
antedates that of the fraudulent alienation by the debtor of his property. After all, the decision of the trial court against the debtor will
retroact to the time when the debtor became indebted to the creditor.
Petitioners, however, maintain that the cause of action of respondent Philam against them for the rescission of the deeds of donation
accrued as early as December 27, 1989, when petitioner Khe Hong Cheng registered the subject conveyances with the Register of
Deeds. Respondent Philam allegedly had constructive knowledge of the execution of said deeds under Section 52 of Presidential
Decree No. 1529, quoted infra, as follows: SECTION 52. Constructive knowledge upon registration. — Every conveyance, mortgage,
lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the Office
of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the
time of such registering, filing, or entering.
Petitioners argument that the Civil Code must yield to the Mortgage and Registration Laws is misplaced, for in no way does this imply
that the specific provisions of the former may be all together ignored. To count the four year prescriptive period to rescind an allegedly
fraudulent contract from the date of registration of the
conveyance with the Register of Deeds, as alleged by the petitioners, would run counter to Article 1383 of the Civil Code as well as
settled jurisprudence. It would likewise violate the third requisite to file an action for rescission of an allegedly fraudulent conveyance
of property, i.e., the creditor has no other legal remedy to satisfy his claim.
An accion pauliana thus presupposes the following: 1) A judgment; 2) the issuance by the trial court of a writ of execution for the
satisfaction of the judgment, and 3) the failure of the sheriff to enforce and satisfy the judgment of the court. It requires that the creditor
has exhausted the property of the debtor. The date of the decision of the trial court is immaterial. What is important is that the credit
of the plaintiff antedates that of the fraudulent alienation by the debtor of his property. After all, the decision of the trial court against
the debtor will retroact to the time when the debtor became indebted to the creditor. x x x x
Even if respondent Philam was aware, as of December 27, 1989, that petitioner Khe Hong Cheng had executed the deeds of donation
in favor of his children, the complaint against Butuan Shipping Lines and/or petitioner Khe Hong Cheng was still pending before the
trial court. Respondent Philam had no inkling, at the time, that the trial court's judgment would be in its favor and further, that such
judgment would not be satisfied due to the deeds of donation executed by petitioner Khe Hong Cheng during the pendency of the
case. Had respondent Philam filed his complaint on December 27, 1989, such complaint would have been dismissed for being
premature. Not only were all other legal remedies for the enforcement of respondent Philam's claims not yet exhausted at the time
the deeds of donation were executed and registered. Respondent Philam would also not have been able to prove then that petitioner

47
Khe Hong Cheng had no more property other than those covered by the subject deeds to satisfy a favorable judgment by the trial
court. x x x x
As mentioned earlier, respondent Philam only learned about the unlawful conveyances made by petitioner Khe Hong Cheng in January
1997 when its counsel accompanied the sheriff to Butuan City to attach the properties of petitioner Khe Hong Cheng. There they
found that he no longer had any properties in his name. It was only then that respondent
Philam's action for rescission of the deeds of donation accrued because then it could be said that respondent Philam had exhausted
all legal means to satisfy the trial court's judgment in its favor. Since respondent Philam filed its complaint for accion pauliana against
petitioners on February 25, 1997, barely a month from its discovery that petitioner Khe Hong Cheng had no other property to satisfy
the judgment award against him, its action for rescission of the subject deeds clearly had not yet prescribed."
From the foregoing, it is clear that the four-year prescriptive period commences to run neither from the date of the registration of the
deed sought to be rescinded nor from the date the trial court rendered its decision but from the day it has become clear that there are
no other legal remedies by which the creditor can satisfy his claims.
[Emphases in the original]
In all, it is incorrect for ASB to argue that a complaint need not allege all the elements constituting its cause of action since it would
simply adduce proof of the same during trial. "Nothing is more settled than the rule that in a motion to dismiss for failure to state a
cause of action, the inquiry is "into the sufficiency, not the veracity, of the material allegations." 28 The inquiry is confined to the four
comers of the complaint, and no other.29 Unfortunately for ASB, the Court finds the allegations of its complaint insufficient in
establishing its cause of action and in apprising the respondents of the same so that they could defend themselves intelligently and
effectively pursuant to their right to due process. It is a rule of universal application that courts of justice are constituted to adjudicate
substantive rights. While courts should consider public policy and necessity in putting an end to litigations speedily they must
nevertheless harmonize such necessity with the fundamental right of litigants to due process.
WHEREFORE, the petition is DENIED.
LOURDES DELA CRUZ, G.R. No. 139442
Petitioner, Present:

QUISUMBING, J., Chairperson, -

versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

HON. COURT OF APPEALS Promulgated: and

MELBA TAN TE,
Respondents. December 6, 2006
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away
even that which he hath.

Holy Bible, Matthew 25:29

The Case

This petition for review seeks to nullify the April 30, 1999 Decision and the July 16, 1999 Resolution of the Court of Appeals in CA-G.R. SP No.
49097, which reversed the Decision of the Manila Regional Trial Court (RTC), Branch 35, in Civil Case No. 98-89174, and reinstated the Decision
of the Manila Metropolitan Trial Court (MeTC), Branch 20, which ordered petitioner Dela Cruz to vacate the subject lot in favor of respondent Tan
Te.[1] The Facts

The Reyes family, represented by Mr. Lino Reyes, owned the lot located at No. 1332 Lacson Street (formerly Gov. Forbes Street),
Sampaloc, Manila. Petitioner Lourdes Dela Cruz was one of their lessees, and she religiously paid rent over a portion of the lot for well over 40
years. Sometime in 1989, a fire struck the premises and destroyed, among others, petitioners dwelling. After the fire, petitioner and some tenants
returned to the said lot and rebuilt their respective houses; simultaneously, the Reyes family made several verbal demands on the remaining lessees,
including petitioner, to vacate the lot but the latter did not comply. On February 21, 1994, petitioner was served a written demand to vacate said lot
but refused to leave. Despite the setback, the Reyes family did not initiate court proceedings against any of the lessees.

On November 26, 1996, the disputed lot was sold by the Reyeses to respondent Melba Tan Te by virtue of the November 26, 1996 Deed of Absolute
Sale.Respondent bought the lot in question for residential purposes. Despite the sale, petitioner Dela Cruz did not give up the lot.

On January 14, 1997, petitioner was sent a written demand to relinquish the premises which she ignored, prompting respondent Tan Te to initiate
conciliation proceedings at the barangay level. While respondent attempted to settle the dispute by offering financial assistance, petitioner countered
by asking PhP 500,000.00 for her house.Respondent rejected the counter offer which she considered unconscionable. As a result, a certificate to
file action was issued to Tan Te.

On September 8, 1997, respondent Tan Te filed an ejectment complaint with damages before the Manila MeTC, entitled Melba Tan Te v. Lourdes
Dela Cruz and docketed as Civil Case No. 156730-CV. The complaint averred that: (1) the previous owners, the Reyeses were in possession and
control of the contested lot; (2) on November 26, 1996, the lot was sold to Tan Te; (3) prior to the sale, Dela Cruz forcibly entered the property
with strategy and/or stealth; (4) the petitioner unlawfully deprived the respondent of physical possession of the property and continues to do so;
and, (5) the respondent sent several written demands to petitioner to vacate the premises but refused to do so.

48
On October 24, 1997, petitioner filed her answer and alleged that: (1) the MeTC had no jurisdiction over the case because it falls within the
jurisdiction of the RTC as more than one year had elapsed from petitioners forcible entry; (2) she was a rentpaying tenant protected by PD 20;[2]
(3) her lease constituted a legal encumbrance upon the property; and (4) the lot was subject of expropriation.

The Ruling of the Manila MeTC On April

3, 1998, the MeTC decided as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff as follows:

1. Ordering the defendant and all persons claiming right under her to vacate the premises situated at 1332 Lacson
Street (formerly Gov. Forbes Street), Sampaloc, Manila and peacefully return possession thereof to plaintiff;

2. Ordering the defendant to pay the plaintiff the amount of P360.00 a month from December 1996 to November
1997; P432.00 a month from December 1997 to November 1998, plus 20% for each subsequent year until the premises
shall have been vacated and turned over to the plaintiff;

3. Ordering the defendant to pay the plaintiff the amount of P10,000.00 as attorneys fees; and, the costs of the suit.

SO ORDERED.[3]

The Ruling of the Regional Trial Court

Unconvinced, petitioner Dela Cruz appealed the Decision of the MeTC in the Manila RTC and the appeal was docketed as Civil Case
No. 98-89174. On September 1, 1998, the RTC rendered its judgment setting aside the April 3, 1998 Decision of the Manila MeTC and dismissed
respondent Tan Tes Complaint on the ground that it was the RTC and not the MeTC which had jurisdiction over the subject matter of the case. The
RTC believed that since Tan Tes predecessor-in-interest learned of petitioners intrusion into the lot as early as February 21, 1994, the ejectment
suit should have been filed within the one-year prescriptive period which expired on February 21, 1995. Since the Reyes did not file the ejectment
suit and respondent Tan Te filed the action only on September 8, 1997, then the suit had become an accion publiciana cognizable by the RTC.

The Ruling of the Court of Appeals

Disappointed at the turn of events, respondent Tan Te appealed the adverse Decision to the Court of Appeals (CA) which was docketed
as CA-G.R. SP No. 49097. This time, the CA rendered a Decision in favor of respondent Tan Te reversing the Manila RTC September 1, 1998
Decision and reinstated the Manila MeTC April 3, 1998 Decision.

Petitioner tried to have the CA reconsider its Decision but was rebutted in its July 16, 1999 Resolution.

Unyielding to the CA Decision and the denial of her request for reconsideration, petitioner Dela Cruz now seeks legal remedy through the instant
Petition for Review on Certiorari before the Court.

The Issues

Petitioner Dela Cruz claims two (2) reversible errors on the part of the appellate court, to wit:

THE HON. COURT OF APPEALS, WITH DUE RESPECT, WENT BEYOND THE ISSUES OF THE CASE AND
CONTRARY TO THOSE OF THE TRIAL COURT.

THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED IN REVERSING THE DECISION OF THE RTC AND IN
EFFECT, REINSTATING THE DECISION OF THE [MeTC]
WHICH IS CONTRADICTED BY THE EVIDENCE ON RECORD.[4]

The Courts Ruling

Discussion on Rule 45

Before we dwell on the principal issues, a few procedural matters must first be resolved.

Petitioner Dela Cruz asks the Court to review the findings of facts of the CA, a course of action proscribed by Section 1, Rule 45. Firm is the rule
that findings of fact of the CA are final and conclusive and cannot be reviewed on appeal to this Court provided they are supported by evidence on
record or substantial evidence.Fortunately for petitioner, we will be liberal with her petition considering that the CAs factual findings contradict
those of the RTC, and there was an asseveration that the court a quo went beyond the issues of the case. Indeed, these grounds were considered
exceptions to the factual issue bar rule.

Secondly, the petition unnecessarily impleaded the CA in violation of Section 4, Rule 45. We will let this breach pass only because there is a need
to entertain the petition due to the conflicting rulings between the lower courts; however, a repetition may result to sanctions.

49
The actual threshold issue is which court, the Manila RTC or the Manila MeTC, has jurisdiction over the Tan Te ejectment suit. Once the
jurisdictional issue is settled, the heart of the dispute is whether or not respondent is entitled to the ejectment of petitioner Dela Cruz from the
premises.

However, the petition is bereft of merit.

On the Issue of Jurisdiction

Jurisdiction is the power or capacity given by the law to a court or tribunal to entertain, hear and determine certain
controversies.[5] Jurisdiction over the subject matter is conferred by law.

Section 33 of Chapter III -- on Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts
of B. P. No. 129[6] provides:

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 Trial Courts shall exercise: x x x
x

(2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when, in such
cases, the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved
without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of
possession.

Thus exclusive, original jurisdiction over ejectment proceedings (accion interdictal) is lodged with the first level
courts. This is clarified in Section 1, Rule 70 of the 1997 Rules of Civil Procedure that embraces an action for forcible entry (detentacion), where
one is deprived of physical possession of any land or building by means of force, intimidation, threat, strategy, or stealth. In actions for forcible
entry, three (3) requisites have to be met for the municipal trial court to acquire jurisdiction. First, the plaintiffs must allege their prior physical
possession of the property. Second, they must also assert that they were deprived of possession either by force, intimidation, threat, strategy, or
stealth. Third, the action must be filed within one (1) year from the time the owners or legal possessors learned of their deprivation of physical
possession of the land or building.

The other kind of ejectment proceeding is unlawful detainer (desahucio), where one unlawfully withholds possession
of the subject property after the expiration or termination of the right to possess. Here, the issue of rightful possession is the one decisive; for in
such action, the defendant is the party in actual possession and the plaintiffs cause of action is the termination of the defendants right to continue
in possession.[7] The essential requisites of unlawful detainer are: (1) the fact of lease by virtue of a contract express or implied; (2) the expiration
or termination of the possessors right to hold possession;
(3) withholding by the lessee of the possession of the land or building after expiration or termination of the right to possession; (4) letter of demand
upon lessee to pay the rental or comply with the terms of the lease and vacate the premises; and (5) the action must be filed within one (1) year
from date of last demand received by the defendant.

A person who wants to recover physical possession of his real property will prefer an ejectment suit because it is governed by the Rule
on Summary Procedure which allows immediate execution of the judgment under Section 19, Rule 70 unless the defendant perfects an appeal in
the RTC and complies with the requirements to stay execution; all of which are nevertheless beneficial to the interests of the lot owner or the holder
of the right of possession.

On the other hand, Section 19, of Chapter II of B.P. No. 129 on Regional Trial Courts provides:

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

xxxx

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, except actions
for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon
Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts.

Two (2) kinds of action to recover possession of real property which fall under the jurisdiction of the RTC are: (1)
the plenary action for the recovery of the real right of possession (accion publiciana) when the dispossession has lasted for more than one year or
when the action was filed more than one (1) year from date of the last demand received by the lessee or defendant; and (2) an action for the recovery
of ownership (accion reivindicatoria) which includes the recovery of possession.

These actions are governed by the regular rules of procedure and adjudication takes a longer period than the summary
ejectment suit.

To determine whether a complaint for recovery of possession falls under the jurisdiction of the MeTC (first level
court) or the RTC (second level court), we are compelled to go over the allegations of the complaint. The general rule is that what determines the
nature of the action and the court that has jurisdiction over the case are the allegations in the complaint. These cannot be made to depend upon the
defenses set up in the answer or pleadings filed by the defendant. [8]

This general rule however admits exceptions. In Ignacio v. CFI of Bulacan, it was held that while the allegations in the complaint make
out a case for forcible entry, where tenancy is averred by way of defense and is proved to be the real issue, the case should be dismissed for lack of
jurisdiction as the case should properly be filed with the then Court of Agrarian Relations.[9]

50
 The cause of action in a complaint is not what the designation of the complaint states, but what the allegations in the body of the complaint
define and describe. The designation or caption is not controlling, more than the allegations in the complaint themselves are, for it is not even an
indispensable part of the complaint.[10]

Let us refer to the allegations of the complaint filed in the Manila MeTC in Civil Case No. 98-89174, which we quote
verbatim:

3. That plaintiff is the absolute and registered owner of a parcel of land located at No. 1332, Lacson Street,
Sampaloc, Manila now being occupied by defendant;

4. That plaintiff purchased the above-said parcel of land together with its improvements from the legal heirs of the
late EMERLINDA DIMAYUGA REYES on November 26, 1996, under and by virtue of a Deed of Absolute Sale x x
x;
5. That pursuant to the said deed of sale, the title to the land and all its improvements was transferred in plaintiffs
name as evidenced by Transfer Certificate of Title No. 233273 issued by the Register of Deeds of Manila on April 22,
1997 x x x;

6. That prior to said sale, the previous owners, represented by Mr. Lino Reyes, husband of the said deceased
Emerlinda D. Reyes and the administrator of her estate, was in possession and control of the property subject of this
complaint;
7. That also prior to said sale, defendant, without the knowledge and consent of Mr. Lino Reyes, surreptitiously and
by means of stealth and strategy entered, used and occupied the said premises thus depriving the former of rightful
possession thereof;
8. That on February 21, 1994, Mr. Lino Reyes, through Atty. Alejo Sedico, his lawyer, furnished the defendants a
letter formally demanding that defendant vacate the premises x x x;

9. That, however, defendant failed and refused to vacate despite just and legal demand by Mr. Lino Reyes;

10. That after the sale to plaintiff of said premises, plaintiff has several times demanded of defendants to vacate the
premises, the last demand having been made on them personally and in writing on January 14, 1997 x x x;

11. That defendant failed and refused and still fails and refuses to vacate the premises without legal cause or justifiable
reason whatsoever;[11]

The answer of petitioner averred:

4. The Court has no jurisdiction over the case, having been filed by plaintiff more than the reglementary one year period to
commence forcible entry case, which is reckoned from the date of the alleged unlawful entry of defendant by the use of
stealth and strategy into the premises;

5. For more than four decades now, defendant has been and still is a rent-paying tenant of the subject land occupied by their
residential house, dating back to the original owner-lessor, the Dimayuga family. Her lease with no definite duration,
commenced with a rent at P60.00 per month until it was gradually increased in the ensuing years. As of November 1996,
it stood at P300.00 a month;

6. In this circumstances [sic], defendant enjoys the protective mantle of P.D. 20 and the subsequent rental control status
against dispossession. She cannot be ejected other than for causes prescribed under B.P. Blg. 25. Further, in case of sale
of the land, she has the right of first refusal under the express provision of P.D. 1571;

7. Throughout the years of her tenancy, defendant has been updated in her rental payment until the collector of the original
owner-lessor no longer came around as she has done theretofore;

7.1. As a result, she was compelled to file a petition for consignation of rent before the Metropolitan Trial Court of Manila;

8. A bona fide tenant within the ambit if [sic] P.D. 20 and the subsequent rental control status, including B.P. Blg. 25, under
its terms, cannot be ousted on a plea of expiration of her monthly lease;

9. Her lease constitutes a legal encumbrance upon the property of the lessor/owner and binds the latters successor-in-interest
who is under obligation to respect it;

10. The land at bench is the subject of a pending expropriation proceedings;

11. Plaintiff being a married woman cannot sue or be sued without being joined by her husband; [12]

Undeniably, the aforequoted allegations of the complaint are vague and iffy in revealing the nature of the action for
ejectment.

The allegations in the complaint show that prior to the sale by Lino Reyes, representing the estate of his wife Emerlinda Reyes, he was
in possession and control of the subject lot but were deprived of said possession when petitioner, by means of stealth and strategy, entered and
occupied the same lot. These circumstances imply that he had prior physical possession of the subject lot and can make up a forcible entry complaint.
On the other hand, the allegation that petitioner Dela Cruz was served several demands to leave the premises but

51
refused to do so would seem to indicate an action for unlawful detainer since a written demand is not necessary in an action for forcible entry. It is
a fact that the MeTC complaint was filed on September 8, 1997within one (1) year from the date of the last written demand upon petitioner Dela
Cruz on January 14, 1997.

As previously discussed, the settled rule is jurisdiction is based on the allegations in the initiatory pleading and the defenses in the answer
are deemed irrelevant and immaterial in its determination. However, we relax the rule and consider the complaint at bar as an exception in view of
the special and unique circumstances present. First, as in Ignacio v. CFI of Bulacan,[13] the defense of lack of jurisdiction was raised in the answer
wherein there was an admission that petitioner Dela Cruz was a lessee of the former owners of the lot, the Reyeses, prior to the sale to respondent
Tan Te. The fact that petitioner was a tenant of the predecessors-in-interest of respondent Tan Te is material to the determination of jurisdiction.
Since this is a judicial admission against the interest of petitioner, such admission can be considered in determining jurisdiction. Second, the
ejectment suit was filed with the Manila MeTC on September 8, 1997 or more than nine (9) years ago. To dismiss the complaint would be a serious
blow to the effective dispensation of justice as the parties will start anew and incur additional legal expenses after having litigated for a long time.
Equitable justice dictates that allegations in the answer should be considered to aid in arriving at the real nature of the action. Lastly, Section 6,
Rule 1 of the Rules of Court clearly empowers the Court to construe Rule 70 and other pertinent procedural issuances in a liberal manner to promote
just, speedy, and inexpensive disposition of every action and proceeding.

Based on the complaint and the answer, it is apparent that the Tan Te ejectment complaint is after all a complaint for
unlawful detainer. It was admitted that petitioner Dela Cruz was a lessee of the Reyeses for around four (4) decades. Thus, initially petitioner as
lessee is the legal possessor of the subject lot by virtue of a contract of lease. When fire destroyed her house, the Reyeses considered the lease
terminated; but petitioner Dela Cruz persisted in returning to the lot and occupied it by strategy and stealth without the consent of the owners. The
Reyeses however tolerated the continued occupancy of the lot by petitioner. Thus, when the lot was sold to respondent Tan Te, the rights of the
Reyeses, with respect to the lot, were transferred to their subrogee, respondent Tan Te, who for a time also tolerated the stay of petitioner until she
decided to eject the latter by sending several demands, the last being the January 14, 1997 letter of demand. Since the action was filed with the
MeTC on September 8, 1997, the action was instituted well within the one (1) year period reckoned from January 14, 1997. Hence, the nature of
the complaint is one of unlawful detainer and the Manila MeTC had jurisdiction over the complaint.

Thus, an ejectment complaint based on possession by tolerance of the owner, like the Tan Te complaint, is a specie
of unlawful detainer cases.

As early as 1913, case law introduced the concept of possession by tolerance in ejectment cases as follows: It is true that the
landlord might, upon the failure of the tenant to pay the stipulated rents, consider the contract broken and demand
immediate possession of the rented property, thus converting a legal possession into illegal possession. Upon the other
hand, however, the landlord might conclude to give the tenant credit for the payment of the rents and allow him to continue
indefinitely in the possession of the property. In other words, the landlord might choose to give the tenant credit from
month to month or from year to year for the payment of their rent, relying upon his honesty of his financial ability to pay
the same. During such period the tenant would not be in illegal possession of the property and the landlord could not
maintain an action of desahucio until after he had taken steps to convert the legal possession into illegal possession. A mere
failure to pay the rent in accordance with the contract would justify the landlord, after the legal notice, in bringing an action
of desahucio. The landlord might, however, elect to recognize the contract as still in force and sue for the sums due under
it. It would seem to be clear that the landlord might sue for the rents due and [unpaid, without electing to terminate the
contract of tenancy;] [w]hether he can declare the contract of tenancy broken and sue in an action desahucio for the
possession of the property and in a separate actions for the rents due and damages, etc.[14]
The concept of possession by tolerance in unlawful detainer cases was further refined and applied in pertinent cases
submitted for decision by 1966. The rule was articulated as follows:

Where despite the lessees failure to pay rent after the first demand, the lessor did not choose to bring an action in court
but suffered the lessee to continue occupying the land for nearly two years, after which the lessor made a second
demand, the one-year period for bringing the detainer case in the justice of the peace court should be counted not from
the day the lessee refused the first demand for payment of rent but from the time the second demand for rents and
surrender of possession was not complied with.[15]
In Calubayan v. Pascual, a case usually cited in subsequent decisions on ejectment, the concept of possession by
tolerance was further elucidated as follows:

In allowing several years to pass without requiring the occupant to vacate the premises nor filing an action to eject him,
plaintiffs have acquiesced to defendants possession and use of the premises. It has been held that a person who
occupies the land of another at the latters tolerance or permission, without any contract between them, is
necessarily bound by an implied promise that he will vacate upon demand, failing which a summary action for
ejectment is the proper remedy against them. The status of the defendant is analogous to that of a lessee or tenant whose
term of lease has expired but whose occupancy continued by tolerance of the owner. In such a case, the unlawful
deprivation or withholding of possession is to be counted from the date of the demand to vacate. [16] (Emphasis
supplied.)

From the foregoing jurisprudence, it is unequivocal that petitioners possession after she intruded into the lot after the
firewas by tolerance or leniency of the Reyeses and hence, the action is properly an unlawful detainer case falling under the jurisdiction of the
Manila MeTC.

Even if we concede that it is the RTC and not the MeTC that has jurisdiction over the Tan Te complaint, following
the reasoning that neither respondent nor her predecessor-in-interest filed an ejectment suit within one (1) year from February 21, 1994 when the
Reyeses knew of the unlawful entry of petitioner, and hence, the complaint is transformed into an accion publiciana, the Court deems it fair and
just to suspend its rules in order to render efficient, effective, and expeditious justice considering the nine (9) year pendency of the ejectment suit.
More importantly, if there was uncertainty on the issue of jurisdiction that arose from the averments of the complaint, the same cannot be attributed
to respondent Tan Te but to her counsel who could have been confused as to the actual nature of the ejectment suit. The lawyers apparent imprecise
language used in the preparation of the complaint without any participation on the part of Tan Te is sufficient special or compelling reason for the
grant of relief.

The case of Barnes v. Padilla[17] elucidates the rationale behind the exercise by this Court of the power to relax, or

52
even suspend, the application of the rules of procedure:

Let it be emphasized that the rules of procedure should be viewed as mere tools designed to facilitate the attainment of
justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote
substantial justice, must always be eschewed. Even the Rules of Court reflect this principle. The power to suspend or
even disregard rules can be so pervasive and compelling as to alter even that which this Court itself has already declared
to be final x x x.

The emerging trend in the rulings of this Court is to afford every party litigant the amplest opportunity for the proper
and just determination of his cause, free from the constraints of technicalities. Time and again, this Court has
consistently held that rules must not be applied rigidly so as not to override substantial justice. [18]

Moreover, Section 8, Rule 40 authorizes the RTCin case of affirmance of an order of the municipal trial court
dismissing a case without trial on the merits and the ground of dismissal is lack of jurisdiction over the subject matterto try the case on the merits
as if the case was originally filed with it if the RTC has jurisdiction over the case. In the same vein, this Court, in the exercise of its rule-making
power, can suspend its rules with respect to this particular case (pro hac vice), even if initially, the MeTC did not have jurisdiction over the ejectment
suit, and decide to assume jurisdiction over it in order to promptly resolve the dispute.

The issue of jurisdiction settled, we now scrutinize the main issue.

At the heart of every ejectment suit is the issue of who is entitled to physical possession of the lot or possession de
facto.

We rule in favor of respondent Tan Te for the following reasons:

1. Petitioner admitted in her Answer that she was a rent-paying tenant of the Reyeses, predecessors-in-interest of
respondent Tan Te. As such, she recognized the ownership of the lot by respondent, which includes the right of possession.

2. After the fire raged over the structures on the subject lot in late 1989 the contracts of lease expired, as a result of
which Lino Reyes demanded that all occupants, including petitioner, vacate the lot but the latter refused to abandon the premises. During
the duration of the lease, petitioners possession was legal but it became unlawful after the fire when the lease contracts were deemed
terminated and demands were made for the tenants to return possession of the lot.

3. Petitioners possession is one by the Reyeses tolerance and generosity and later by respondent Tan Tes.

Petitioner fully knows that her stay in the subject lot is at the leniency and magnanimity of Mr. Lino Reyes and later of respondent Tan
Te; and her acquiescence to such use of the lot carries with it an implicit and assumed commitment that she would leave the premises the moment
it is needed by the owner. When respondent Tan Te made a last, written demand on January 14, 1997and petitioner breached her promise to leave
upon demand, she lost her right to the physical possession of the lot. Thus, respondent Tan Te should now be allowed to occupy her lot for residential
purposes, a dream that will finally be realized after nine (9) years of litigation.

Petitioner raises the ancillary issue that on March 15, 1998, the Manila City Council passed and approved Ordinance No. 7951:
[a]uthorizing the Manila City Mayor to acquire either by negotiation or expropriation certain parcels of land covered
by Transfer Certificates of Title Nos. 233273, 175106 and 140471, containing an area of One Thousand Four Hundred
Twenty Five (1,425) square meters, located at Maria Clara and Governor Forbes Streets, Sta. Cruz, Manila, for low
cost housing and award to actual bonafide residents thereat and further authorizing the City Mayor to avail for that
purpose any available funds of the city and other existing funding facilities from other government agencies x x x. [19]

It readily appears that this issue was not presented before the Court of Appeals in CA-G.R. SP No. 49097 despite the
fact that the respondents petition was filed on September 25, 1998, six months after the ordinance was passed. Thus, this issue is proscribed as are
all issues raised for the first time before the Court are proscribed.

Even granting for the sake of argument that we entertain the issue, we rule that the intended expropriation of respondents lot (TCT No.
233273) by the city government of Manila will not affect the resolution of this petition. For one thing, the issue can be raised by petitioner in the
appropriate legal proceeding. Secondly, the intended expropriation might not even be implemented since it is clear from the ordinance that the City
Mayor will still locate available funds for project, meaning the said expense is not a regular item in the budget.

WHEREFORE, this petition is DENIED for lack of merit. The April 30, 1999 Decision of the Court of Appeals reinstating the April 3,
1998 MeTC Decision in Civil Case No. 156730-CV and the July 16, 1999 Resolution in CA-G.R. SP No. 49097 are hereby AFFIRMED IN TOTO.

No costs.

G.R. No. 173297 March 6, 2013

STRONGHOLD INSURANCE COMPANY, INC., Petitioner, vs.
TOMAS CUENCA, MARCELINA CUENCA, MILAGROS CUENCA, BRAMIE T. TAYACTAC, and MANUEL D.
MARANON, JR., Respondents.
D E C I S I O N BERSAMIN, J.:
The personality of a corporation is distinct and separate from the personalities of its stockholders. Hence, its stockholders are not
themselves the real parties in interest to claim and recover compensation for the damages arising from the wrongful attachment of its
assets. Only the corporation is the real party in interest for that purpose.
The Case

53
Stronghold Insurance Company, Inc. (Stronghold Insurance), a domestic insurance company, assails the decision promulgated on
January 31, 2006,1 whereby the Court of Appeals (CA) in CA-G.R. CV No. 79145 affirmed the judgment rendered on April 28, 2003
by the Regional Trial Court in Parafiaque City (RTC) holding Stronghold Insurance and respondent Manuel D. Marafion, Jr. jointly and
solidarily liable for damages to respondents Tomas Cuenca, Marcelina Cuenca, Milagros Cuenca (collectively referred to as Cuencas),
and Bramie Tayactac, upon the latter’s claims against the surety bond issued by Stronghold Insurance for the benefit of Marañon.2
Antecedents
On January 19, 1998, Marañon filed a complaint in the RTC against the Cuencas for the collection of a sum of money and damages.
His complaint, docketed as Civil Case No. 98-023, included an application for the issuance of a writ of preliminary attachment. 3 On
January 26, 1998, the RTC granted the application for the issuance of the writ of preliminary attachment conditioned upon the posting
of a bond of ₱1,000,000.00 executed in favor of the Cuencas. Less than a month later, Marañon amended the complaint to implead
Tayactac as a defendant.4
On February 11, 1998, Marañon posted SICI Bond No. 68427 JCL (4) No. 02370 in the amount of ₱1,000,000.00 issued by Stronghold
Insurance. Two days later, the RTC issued the writ of preliminary attachment.5 The sheriff served the writ, the summons and a copy
of the complaint on the Cuencas on the same day. The service of the writ, summons and copy of the complaint were made on Tayactac
on February 16,
1998.6
Enforcing the writ of preliminary attachment on February 16 and February 17, 1998, the sheriff levied upon the equipment, supplies,
materials and various other personal property belonging to Arc Cuisine, Inc. that were found in the leased corporate office-cum-
commissary or kitchen of the corporation.7 On February 19, 1998, the sheriff submitted a report on his proceedings, 8 and filed an ex
parte motion seeking the transfer of the levied properties to a safe place. The RTC granted the ex parte motion on February 23, 1998.9
On February 25, 1998, the Cuencas and Tayactac presented in the RTC a Motion to Dismiss and to Quash Writ of Preliminary
Attachment on the grounds that: (1) the action involved intra-corporate matters that were within the original and exclusive jurisdiction
of the Securities and Exchange Commission (SEC); and (2) there was another action pending in the SEC as well as a criminal
complaint in the Office of the City Prosecutor of Parañaque City. 10
On March 5, 1998, Marañon opposed the motion. 11
On August 10, 1998, the RTC denied the Motion to Dismiss and to Quash Writ of Preliminary Attachment, stating that the action, being
one for the recovery of a sum of money and damages, was within its jurisdiction.12 Under date of September 3, 1998, the Cuencas
and Tayactac moved for the reconsideration of the denial of their Motion to Dismiss and to Quash Writ of Preliminary Attachment, but
the RTC denied their motion for reconsideration on September 16, 1998.
Thus, on October 14, 1998, the Cuencas and Tayactac went to the CA on certiorari and prohibition to challenge the August 10, 1998
and September 16, 1998 orders of the RTC on the basis of being issued with grave abuse of discretion amounting to lack or exc ess
of jurisdiction (C.A.-G.R. SP No. 49288).13
On June 16, 1999, the CA promulgated its assailed decision in C.A.-G.R. SP No. 49288,14 granting the petition. It annulled and set
aside the challenged orders, and dismissed the amended complaint in Civil Case No. 98-023 for lack of jurisdiction, to wit:
WHEREFORE, the Orders herein assailed are hereby ANNULLED AND SET ASIDE, and the judgment is hereby rendered
DISMISSING the Amended Complaint in Civil Case No. 98-023 of the respondent court, for lack of jurisdiction.
SO ORDERED.
On December 27, 1999, the CA remanded to the RTC for hearing and resolution of the Cuencas and Tayactac’s claim for the damages
sustained from the enforcement of the writ of preliminary attachment.15 On February 17, 2000,16 the sheriff reported to the RTC, as
follows:
On the scheduled inventory of the properties (February 17, 2000) and to comply with the Resolution of the Court of Appeals dated
December 24, 1999 ordering the delivery of the attached properties to the defendants, the proceedings thereon being:
1. With the assistance for (sic) the counsel of Cuencas, Atty. Pulumbarit, Atty. Ayo, defendant Marcelina
Cuenca, and two Court Personnel, Robertson Catorce and Danilo Abanto, went to the warehouse where Mr. Marañon
recommended for safekeeping the properties in which he personally assured its safety, at No. 14, Marian II Street, East
Service Road, Parañaque Metro Manila.
2. That to our surprise, said warehouse is now tenanted by a new lessee and the properties were all gone and missing.
3. That there are informations (sic) that the properties are seen at Conti’s Pastry & Bake Shop owned by Mr. Marañon,
located at BF Homes in Parañaque City.
On April 6, 2000, the Cuencas and Tayactac filed a Motion to Require Sheriff to Deliver Attached Properties and to Set Case for
Hearing,17 praying that: (1) the Branch Sheriff be ordered to immediately deliver the attached properties to them; (2) Stronghold
Insurance be directed to pay them the damages being sought in accordance with its undertaking under the surety bond for
₱1,000,0000.00; (3) Marañon be held personally liable to them considering the insufficiency of the amount of the surety bond; (4) they
be paid the total of ₱1,721,557.20 as actual damages representing the value of the lost attached properties because they, being
accountable for the properties, would be turning that amount over to Arc Cuisine, Inc.; and (5) Marañon be made to pay ₱200,000.00
as moral damages, ₱100,000.00 as exemplary damages, and ₱100,000.00 as attorney’s fees. Stronghold Insurance filed its answer
and opposition on April 13, 2000. In turn, the Cuencas and Tayactac filed their reply on May 5, 2000.
On May 25, 2000, Marañon filed his own comment/opposition to the Motion to Require Sheriff to Deliver Attached Properties and to
Set Case for Hearing of the Cuencas and Tayactac, arguing that because the attached properties belonged to Arc Cuisine, Inc. 50%
of the stockholding of which he and his relatives owned, it should follow that 50% of the value of the missing attached properties
constituted liquidating dividends that should remain with and belong to him. Accordingly, he prayed that he should be required to
return only
₱100,000.00 to the Cuencas and Tayactac.18
On June 5, 2000, the RTC commanded Marañon to surrender all the attached properties to the RTC through the sheriff within 10 days
from notice; and directed the Cuencas and Tayactac to submit the affidavits of their witnesses in support of their claim for damages. 19
On June 6, 2000, the Cuencas and Tayactac submitted their Manifestation and Compliance. 20 Ruling of the RTC
After trial, the RTC rendered its judgment on April 28, 2003, holding Marañon and Stronghold Insurance jointly and solidarily liable for
damages to the Cuencas and Tayactac,21 viz:
WHEREFORE, premises considered, as the defendants were able to preponderantly prove their entitlement for damages by reason
of the unlawful and wrongful issuance of the writ of attachment, MANUEL D. MARAÑON, JR., plaintiff and defendant, Stronghold
Insurance Company Inc., are found to be jointly and solidarily liable to pay the defendants the following amount to wit: (1)
Ph₱1,000,000.00 representing the amount of the bond;
(2) PhP 100,000.00 as moral damages;
(3) PhP 50,000.00 as exemplary damages;
(4) Php 100,000.00 as attorney’s fees; and

54
 (5) To pay the cost of suit.
SO ORDERED.
Ruling of the CA
Only Stronghold Insurance appealed to the CA (C.A.-G.R. CV No. 79145), assigning the following errors to the RTC, to wit:
I.
THE LOWER COURT ERRED IN ORDERING SURETY-APPELLANT TO PAY THE AMOUNT OF ₱1,000,000.00 REPRESENTING
THE AMOUNT OF THE BOND AND OTHER DAMAGES TO THE DEFENDANTS.
II.
THE LOWER COURT ERRED IN NOT TAKING INTO ACCOUNT THE INDEMNITY AGREEMENT (EXH. "2SURETY") EXECUTED
BY MANUEL D. MARAÑON, JR. IN FAVOR OF STRONGHOLD WHEREIN HE BOUND
HIMSELF TO INDEMNIFY STRONGHOLD OF WHATEVER AMOUNT IT MAY BE HELD LIABLE ON
ACCOUNT OF THE ISSUANCE OF THE ATTACHMENT BOND.22
On January 31, 2006, the CA, finding no reversible error, promulgated its decision affirming the judgment of the RTC.23
Stronghold Insurance moved for reconsideration, but the CA denied its motion for reconsideration on June 22, 2006.
Issues
Hence, this appeal by petition for review on certiorari by Stronghold Insurance, which submits that:
I.
THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR AND DECIDED QUESTIONS OF
SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND APPLICABLE DECISIONS OF THE
HONORABLE COURT CONSIDERING THAT THE COURT OF APPEALS AFFIRMED THE ERRONEOUS
DECISION OF THE TRIAL COURT HOLDING RESPONDENT MARA[Ñ]ON AND PETITIONER STRONGHOLD
JOINTLY AND SOLIDARILY LIABLE TO PAY THE RESPONDENTS CUENCA, et al., FOR PURPORTED DAMAGES BY REASON
OF THE ALLEGED UNLAWFUL AND WRONGFUL ISSUANCE OF THE WRIT OF ATTACHMENT, DESPITE THE FACT THAT:
A) RESPONDENT CUENCA et al., ARE NOT THE OWNERS OF THE PROPERTIES ATTACHED AND THUS, ARE NOT
THE PROPER PARTIES TO CLAIM ANY PURPORTED DAMAGES ARISING THEREFROM.
B) THE PURPORTED DAMAGES BY REASON OF THE ALLEGED UNLAWFUL AND WRONGFUL
ISSUANCE OF THE WRIT OF ATTACHMENT WERE CAUSED BY THE NEGLIGENCE OF THE BRANCH SHERIFF OF
THE TRIAL COURT AND HIS FAILURE TO COMPLY WITH THE PROVISIONS OF THE RULES OF COURT PERTAINING
TO THE ATTACHMENT OF PROPERTIES.
C) THE TRIAL COURT GRAVELY ERRED WHEN IT HELD PETITIONER STRONGHOLD TO BE
SOLIDARILY LIABLE WITH RESPONDENT MARA[Ñ]ON TO RESPONDENTS CUENCA et al., FOR MORAL
DAMAGES, EXEMPLARY DAMAGES, ATTORNEY’S FEES AND COST OF SUIT DESPITE THE FACT THAT THE
GUARANTY OF PETITIONER STRONGHOLD PURSUANT TO ITS SURETY
BOND IS LIMITED ONLY TO THE AMOUNT OF ₱1,000,000.00.
II
IN ANY EVENT, THE DECISION OF THE COURT APPEALS SHOULD HAVE HELD RESPONDENT
MARA[Ñ]ON TO BE LIABLE TO INDEMNIFY PETITIONER STRONGHOLD FOR ALL PAYMENTS, DAMAGES,
COSTS, LOSSES, PENALTIES, CHARGES AND EXPENSES IT SUSTAINED IN CONNECTION WITH THE
INSTANT CASE, PURSUANT TO THE INDEMNITY AGREEMENT ENTERED INTO BY PETITIONER
STRONGHOLD AND RESPONDENT MARA[Ñ]ON.24
On their part, the Cuencas and Tayactac counter:
A. Having actively participated in the trial and appellate proceedings of this case before the Regional
Trial Court and the Court of Appeals, respectively, petitioner Stronghold is legally and effectively BARRED by ESTOPPEL
from raising for the first time on appeal before this Honorable Court a defense and/or issue not raised below. 25
B. Even assuming arguendo without admitting that the principle of estoppel is not applicable in this instant case, the assailed
Decision and Resolution find firm basis in law considering that the writ of attachment issued and enforced against herein
respondents has been declared ILLEGAL, NULL AND VOID for having been issued beyond the jurisdiction of the trial
court.
C. There having been a factual and legal finding of the illegality of the issuance and consequently, the enforcement of the
writ of attachment, Maranon and his surety Stronghold, consistent with the facts and the law, including the contract of
suretyship they entered into, are JOINTLY AND SEVERALLY liable for the damages sustained by herein respondents by
reason thereof.
D. Contrary to the allegations of Stronghold, its liability as surety under the attachment bond without which the writ of
attachment shall not issue and be enforced against herein respondent if prescribed by law. In like manner, the obligations
and liability on the attachment bond are also prescribed by law and not left to the discretion or will of the contracting
parties to the prejudice of the persons against whom the writ was issued.
E. Contrary to the allegations of Stronghold, its liability for the damages sustained by herein respondents is both a statutory
and contractual obligation and for which, it cannot escape accountability and liability in favor of the person against whom
the illegal writ of attachment was issued and enforced. To allow Stronghold to delay, excuse or exempt itself from liability
is unconstitutional, unlawful, and contrary to the basic tenets of equity and fair play.
F. While the liability of Stronghold as surety indeed covers the principal amount of ₱1,000,000.00, nothing in the law and
the contract between the parties limit or exempt Stronghold from liability for other damages. Including costs of suit and
interest.26
In his own comment,27
Marañon insisted that he could not be personally held liable under the attachment bond because the judgment of the RTC was
rendered without jurisdiction over the subject matter of the action that involved an intra-corporate controversy among the stockholders
of Arc Cuisine, Inc.; and that the jurisdiction properly pertained to the SEC, where another action was already pending between the
parties. Ruling
Although the question of whether the Cuencas and Tayactac could themselves recover damages arising from the wrongful attachment
of the assets of Arc Cuisine, Inc. by claiming against the bond issued by Stronghold Insurance was not raised in the CA, we do not
brush it aside because the actual legal interest of the parties in the subject of the litigation is a matter of substance that has jurisdictional
impact, even on appeal before this Court.
The petition for review is meritorious.

55
There is no question that a litigation should be disallowed immediately if it involves a person without any interest at stake, for it would
be futile and meaningless to still proceed and render a judgment where there is no actual controversy to be thereby determined.
Courts of law in our judicial system are not allowed to delve on academic issues or to render advisory opinions. They only resolve
actual controversies, for that is what they are authorized to do by the Fundamental Law itself, which forthrightly ordains that the judicial
power is wielded only to settle actual controversies involving rights that are legally demandable and enforceable. 28
To ensure the observance of the mandate of the Constitution, Section 2, Rule 3 of the Rules of Court requires that unless otherwise
authorized by law or the Rules of Court every action must be prosecuted or defended in the name of the real party in interest.29 Under
the same rule, a real party in interest is one who stands to be benefited or injured by the judgment in the suit, or one who is entitled
to the avails of the suit. Accordingly, a person , to be a real party in interest in whose name an action must be prosecuted, should
appear to be the present real owner of the right sought to be enforced, that is, his interest must be a present substantial interest, not
a mere expectancy, or a future, contingent, subordinate, or consequential interest. 30
Where the plaintiff is not the real party in interest, the ground for the motion to dismiss is lack of cause of action.31The reason for this
is that the courts ought not to pass upon questions not derived from any actual controversy. Truly, a person having no material interest
to protect cannot invoke the jurisdiction of the court as the plaintiff in an action. 32 Nor does a court acquire jurisdiction over a case
where the real party in interest is not present or impleaded.
The purposes of the requirement for the real party in interest prosecuting or defending an action at law are: (a) to prevent the
prosecution of actions by persons without any right, title or interest in the case; (b) to require that the actual party entitled to legal relief
be the one to prosecute the action; (c) to avoid a multiplicity of suits; and (d) to discourage litigation and keep it within certain bounds,
pursuant to sound public policy.33 Indeed, considering that all civil actions must be based on a cause of action, 34 defined as the act or
omission by which a party violates the right of another, 35 the former as the defendant must be allowed to insist upon being opposed
by the real party in interest so that he is protected from further suits regarding the same claim. 36 Under this rationale, the requirement
benefits the defendant because "the defendant can insist upon a plaintiff who will afford him a setup providing good res judicata
protection if the struggle is carried through on the merits to the end."37 The rule on real party in interest ensures, therefore, that the
party with the legal right to sue brings the action, and this interest ends when a judgment involving the nominal plaintiff will protect the
defendant from a subsequent identical action. Such a rule is intended to bring before the court the party rightfully interested in the
litigation so that only real controversies will be presented and the judgment, when entered, will be binding and conclusive and the
defendant will be saved from further harassment and vexation at the hands of other claimants to the same demand.38
But the real party in interest need not be the person who ultimately will benefit from the successful prosecution of
the action. Hence, to aid itself in the proper identification of the real party in interest, the court should first ascertain the nature of the
substantive right being asserted, and then must determine whether the party asserting that right is recognized as the real party in
interest under the rules of procedure. Truly, that a party stands to gain from the litigation is not necessarily controlling. 39
It is fundamental that the courts are established in order to afford reliefs to persons whose rights or property interests have been
invaded or violated, or are threatened with invasion by others’ conduct or acts, and to give relief only at the instance of such persons.
The jurisdiction of a court of law or equity may not be invoked by or for an individual whose rights have not been breached. 40
The remedial right or the remedial obligation is the person’s interest in the controversy. The right of the plaintiff or other claimant is
alleged to be violated by the defendant, who has the correlative obligation to respect the right of the former. Otherwise put, without
the right, a person may not become a party plaintiff; without the obligation, a person may not be sued as a party defendant; without
the violation, there may not be a suit. In such a situation, it is legally impossible for any person or entity to be both plaintiff and
defendant in the same action, thereby ensuring that the controversy is actual and exists between adversary parties. Where there are
no adversary parties before it, the court would be without jurisdiction to render a judgment.41
There is no dispute that the properties subject to the levy on attachment belonged to Arc Cuisine, Inc. alone, not to the Cuencas and
Tayactac in their own right. They were only stockholders of Arc Cuisine, Inc., which had a personality distinct and separate from that
of any or all of them.42 The damages occasioned to the properties by the levy on attachment, wrongful or not, prejudiced Arc Cuisine,
Inc., not them. As such, only Arc Cuisine, Inc. had the right under the substantive law to claim and recover such damages. This right
could not also be asserted by the Cuencas and Tayactac unless they did so in the name of the corporation itself. But that did not
happen herein, because Arc Cuisine, Inc. was not even joined in the action either as an original party or as an intervenor.
The Cuencas and Tayactac were clearly not vested with any direct interest in the personal properties coming under the levy on
attachment by virtue alone of their being stockholders in Arc Cuisine, Inc. Their stockholdings represented only their proportionate or
aliquot interest in the properties of the corporation, but did not vest in them any legal right or title to any specific properties of the
corporation. Without doubt, Arc Cuisine, Inc. remained the owner as a distinct legal person. 43
Given the separate and distinct legal personality of Arc Cuisine, Inc., the Cuencas and Tayactac lacked the legal personality to claim
the damages sustained from the levy of the former’s properties. According to Asset Privatization Trust v. Court of Appeals, 44 even
when the foreclosure on the assets of the corporation was wrongful and done in bad faith the stockholders had no standing to recover
for themselves moral damages; otherwise, they would be appropriating and distributing part of the corporation’s assets prior to the
dissolution of the corporation and the liquidation of its debts and liabilities. Moreover, in Evangelista v. Santos, 45 the Court, resolving
whether or not the minority stockholders had the right to bring an action for damages against the principal officers of the corporation
for their own benefit, said:
As to the second question, the complaint shows that the action is for damages resulting from mismanagement of the affairs and assets
of the corporation by its principal officer, it being alleged that defendant’s maladministration has brought about the ruin of the
corporation and the consequent loss of value of its stocks. The injury complained of is thus primarily to the corporation, so that the
suit for the damages claimed should be by the corporation rather than by the stockholders (3 Fletcher, Cyclopedia of Corporation pp.
977-980). The stockholders may not directly claim those damages for themselves for that would result in the appropriation by, and the
distribution among them of part of the corporate assets before the dissolution of the corporation and the liquidation of its debts and
liabilities, something which cannot be legally done in view of section 16 of the Corporation Law, which provides:
No shall corporation shall make or declare any stock or bond dividend or any dividend whatsoever except from the surplus profits
arising from its business, or divide or distribute its capital stock or property other than actual profits among its members or
stockholders until after the payment of its debts and the termination of its existence by limitation or lawful dissolution. x x x x
In the present case, the plaintiff stockholders have brought the action not for the benefit of the corporation but for their own benefit,
since they ask that the defendant make good the losses occasioned by his mismanagement and pay to them the value of their
respective participation in the corporate assets on the basis of their respective holdings. Clearly, this cannot be done until all corporate
debts, if there be any, are paid and the existence of the corporation terminated by the limitation of its charter or by lawful dissolution
in view of the provisions of section 16 of the Corporation Law. (Emphasis ours)
It results that plaintiffs complaint shows no cause of action in their favor so that the lower court did not err in dismissing the complaint
on that ground.
While plaintiffs ask for remedy to which they are not entitled unless the requirement of section 16 of the Corporation Law be first
complied with, we note that the action stated in their complaint is susceptible of being converted into a derivative suit for the benefit

56
of the corporation by a mere change in the prayer. Such amendment, however, is not possible now, since the complaint has been
filed in the wrong court, so that the same has to be dismissed. 46
That Marañon knew that Arc Cuisine, Inc. owned the properties levied on attachment but he still excluded Arc
Cuisine, Inc. from his complaint was of no consequence now. The Cuencas and Tayactac still had no right of action even if the affected
properties were then under their custody at the time of the attachment, considering that their custody was only incidental to the
operation of the corporation.
It is true, too, that the Cuencas and Tayactac could bring in behalf of Arc Cuisine, Inc. a proper action to recover damages resulting
from the attachment. Such action would be one directly brought in the name of the corporation. Yet, that was not true here, for, instead,
the Cuencas and Tayactac presented the claim in their own names.
In view of the outcome just reached, the Court deems it unnecessary to give any extensive consideration to the remaining issues.
WHEREFORE, the Court GRANTS the petition for review; and REVERSES and SETS ASIDE the decision of the Court of Appeals in
CA-G.R. CV No. 79145 promulgated on January 31,2006.
No pronouncements on costs of suit.
SO ORDERED.
SECOND DIVISION

EDUARDO L. RAYO, G.R. No. 165142

Petitioner,
Present:

QUISUMBING, J., Chairperson,

CARPIO,
CARPIO MORALES,
TINGA, and
- versus - VELASCO, JR., JJ.

METROPOLITAN BANK AND TRUST OFPromulgated:

COMPANY AND BRANCH 223 THE
REGIONAL TRIAL COURT OF QUEZON December 10, 2007
CITY,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

QUISUMBING, J.:
Before us is a petition for review assailing the Resolutions dated June 15, 2004 [1]and August 23, 2004[2] of the Court of Appeals in CA-G.R. SP
No. 83895 for annulment of judgment.
The pertinent facts are undisputed.
Midas Diversified Export Corp. (Midas), thru its president, Mr. Samuel U. Lee, obtained six (6) loans from private respondent
Metropolitan Bank and Trust Company (Metrobank), amounting to P588,870,000 as evidenced by promissory notes. To secure the payment of an
P8,000,000 loan, Louisville Realty & Development Corporation (Louisville), thru its president, Mr. Samuel U. Lee, executed in favor of Metrobank,
a real estate mortgage over three parcels of land situated at No. 40 Timog Ave., Brgy. Laging Handa, Quezon City, with all the buildings and
improvements thereon. The properties are covered by Transfer Certificates of Title (TCT) Nos. N-163455, N-166349 and N-166350 issued by the
Registry of Deeds of Quezon City.
When the debtor-mortgagor failed to pay, Metrobank extra-judicially foreclosed the real estate mortgage in accordance with
Act No. 3135,[3] as amended. Thereafter, in a public auction, Metrobank was the highest bidder. A Certificate of Sale [4] dated December 11, 2000
was duly registered with the Registry of Deeds of Quezon City on December 13, 2000. When Louisville refused to turn over the real properties, on
March 17, 2001, Metrobank filed before the Regional Trial Court (RTC), Branch 223, Quezon City, an ex parte petition[5] for the issuance of a writ
of possession docketed as LRC Case No. Q-13915(01). After presentation of evidence ex parte, the RTC granted the petition in an Order[6] dated
July 5, 2001, the dispositive portion of which reads as follows:
WHEREFORE, in consideration of the foregoing premises, the instant petition is hereby GRANTED. Upon the filing of a bond
in the amount of ONE HUNDRED THOUSAND PESOS ([P]100,000.00), let a Writ of Possession over the properties covered
by Transfer Certificates of Title Nos. N-163455, N-166349 & N166350 issue in favor of the petitioner METROPOLITAN
BANK & TRUST COMPANY to be implemented by the Deputy Sheriff of Branch 223, Regional Trial Court of Quezon City
by placing the petitioner in possession over the parcels of land with all its improvements. SO ORDERED. [7]
On September 24, 2001, Metrobank posted the required bond. Consequently, a writ of possession was issued on October 9, 2001. This was partially
implemented as to TCT No. N-163455, as evidenced by the Turn-Over Receipt[8] dated December 13, 2002. The writ over the two remaining
properties, under TCT Nos. N-166349 and N-166350, were subsequently implemented as evidenced by the Turn-Over Receipt[9]dated December
3, 2003.
Meanwhile, on April 3, 2002, petitioner Eduardo L. Rayo filed a complaint[10] docketed as Civil Case No. Q02-46514 against Metrobank
for Nullification of Real Estate Mortgage Contract(s) and Extrajudicial Foreclosure Sale, in the RTC, Branch 99, Quezon City.
On May 13, 2004, petitioner Rayo filed with the Court of Appeals a Petition [11] for Annulment of Judgment on the ground of absolute lack of due
process. Petitioner alleged that his predecessor, Louisville, was not notified of the proceedings and that Section 7 [12] (ex parte motion or petition
for the issuance of a writ of possession) of Act No. 3135 is unconstitutional.
On June 15, 2004, the Court of Appeals denied the petition for lack of merit. The Court of Appeals ruled that
petitioner is neither the registered owner nor the successor-in-interest of the registered owner; hence, not a real party-ininterest. It also ruled that
there is no basis to challenge the constitutionality of Section 7 of Act No. 3135, as amended as it constitutes a collateral attack against said
provision.Further, petitioner availed of the wrong remedy in filing Civil Case No.
Q02-46514.Petitioner sought reconsideration, but was likewise denied.
Petitioner now comes before us raising the following as primary issue:
WHETHER OR NOT SECTION 7 OF ACT NO. 3135 IS CONTRARY TO THE DUE PROCESS PROVISION OF
THE PHILIPPINE CONSTITUTION CONSIDERING THAT SUCH SECTION 7 OF THE LAW PROVIDES OR
ALLOWS, ACCORDING TO THIS HONORABLE COURT, FOR AN EX-PARTE PROCEEDING WHICH IS A

57
 JUDICIAL PROCEEDING BROUGHT FOR THE BENEFIT OF ONE PARTY ONLY, AND WITHOUT NOTICE
TO, OR CONSENT BY ANY
PERSON ADVERSELY INTERESTED OR A PROCEEDING WHEREIN RELIEF IS GRANTED WITHOUT AN
OPPORTUNITY FOR THE PERSON AGAINST WHOM THE RELIEF IS
SOUGHT TO BE HEARD, AS HELD IN THE CASE OF GOVERNMENT SERVICE INSURANCE
SYSTEM VS. COURT OF APPEALS, 169 SCRA 244 @ 255, JANUARY 20, 1989.[13]
He also raises the following as secondary issues:
I.
WHETHER OR NOT THE PETITIONER HAS THE LEGAL PERSONALITY TO SEEK THE ANNULMENT OF JUDGMENT IN
[THE] SUBJECT LRC CASE NO. Q-13915(01).
II.
WHETHER OR NOT PRIVATE RESPONDENT VIOLATED THE RULE AGAINST FORUMSHOPPING WHEN IT DID NOT
INFORM THE HONORABLE BRANCH 223 OF THE REGIONAL
TRIAL COURT OF QUEZON CITY REGARDING THE FILING OF CIVIL CASE NO. Q-02-46514 FOR NULLIFICATION OF
REAL ESTATE MORTGAGE CONTRACT AND THE EXTRA-JUDICIAL
FORECLOSURE SALE OF THE SAME SUBJECT REAL PROPERTIES AND THE PENDENCY OF
THE SAME BEFORE THE HONORABLE BRANCH 99 OF THE SAME REGIONAL TRIAL COURT. [14]
Stated simply, the issues raised are: (1) Does petitioner have the legal personality in the annulment of judgment proceedings? (2) Is
Section 7 of Act No. 3135, as amended, unconstitutional? (3) Is respondent guilty of forum-shopping?
Petitioner insists that contrary to the ruling of the Court of Appeals, he has the legal personality to institute the annulment of judgment
case against Metrobank, considering that the March 25, 2002 deed of assignment he entered into with Louisville and Winston Linwy L. Chua makes
him a co-assignee over the subject real properties.
For its part, Metrobank claims that it was not a party to the deed of assignment among Louisville, Chua and petitioner,
hence, it has no privity of contract with petitioner Rayo. Moreover, Metrobank points out that the real properties had already been extrajudicially
foreclosed when petitioner and his assignors executed the deed of assignment.
Under Section 2,[15] Rule 3 of the Rules of Court, every action must be prosecuted or defended in the name of the
real party-in-interest, or one who stands to be benefited or injured by the judgment in the suit.[16] A real party-in-interest is one with a present
substantial interest which means such interest of a party in the subject matter of the action as will entitle him, under the substantive law, to recover
if the evidence is sufficient, or that he has the legal title to demand. [17]
Now, is petitioner Rayo a real party-in-interest? Initially, we recognized herein petitioner as the co-assignee of the subject real properties
as shown in the March 25, 2002 deed of assignment. However, while petitioner would be injured by the judgment in this suit, we find that petitioner
has no present substantial interest to institute the annulment of judgment proceedings and nullify the order granting the writ of possession.
First, there was no violation of petitioners right to constitutional due process. In a long line of cases, [18] we have
consistently ruled that the issuance of a writ of possession in favor of the purchaser in a foreclosure sale of a mortgaged property under Section 7
of Act No. 3135, as amended is a ministerial duty of the court. The purchaser of the foreclosed property, upon ex parte application and the posting
of the required bond, has the right to acquire possession of the foreclosed property during the 12-month redemption period and with more reason,
after the expiration of the redemption period.
An ex parte petition for the issuance of a writ of possession under Section 7 of Act No. 3135 is not, strictly speaking,
a judicial process as contemplated in Article 433[19] of the Civil Code. It is a judicial proceeding for the enforcement of ones right of possession as
purchaser in a foreclosure sale. It is not an ordinary suit filed in court, by which one party sues another for the enforcement of a wrong or protection
of a right, or the prevention or redress of a wrong. It is a non-litigious proceeding authorized in an extrajudicial foreclosure of mortgage pursuant
to Act No. 3135, as amended, and is brought for the benefit of one party only, and without notice to, or consent by any person adversely interested.
It is a proceeding where the relief is granted without requiring an opportunity for the person against whom the relief is sought to be heard. No notice
is needed to be served upon persons interested in the subject property. [20]
Second, in the deed of assignment, petitioner also acknowledged that the subject real properties were already sold
at various extrajudicial foreclosure sales and bought by Metrobank. Clearly, petitioner recognized the prior existing right of Metrobank as the
mortgagee-purchaser over the subject real properties.[21] Actual knowledge of a prior mortgage with Metrobank is equivalent to notice of
registration[22] in accordance with Article 2125[23] of the Civil Code.Conformably with Articles 1312 [24] and 2126[25] of the Civil Code, a real right
or lien in favor of Metrobank had already been established, subsisting over the properties until the discharge of the principal obligation, whoever
the possessor(s) of the land might be.[26] As petitioner is not a party whose interest is adverse to that of Louisville, there was no bar to the issuance
of a writ of possession to Metrobank. It does not matter that petitioner was not specifically named in the writ of possession nor notified of such
proceedings.
Third, we also note that petitioner availed of the wrong remedy in filing Civil Case No. Q02-46514, for nullification
of real estate mortgage and extrajudicial foreclosure sale, more than six (6) months after the issuance of the writ of possession considering the
mandate of Section 8[27] of Act No. 3135, as amended. Hence, even petitioners action for annulment of judgment cannot prosper as it cannot be a
substitute for a lost remedy.
Now, petitioner is challenging the constitutionality of Section 7 of Act No. 3135, as amended. He avers that Section 7 violates the due
process clause because, by the mere filing of an ex parte motion in the proper cadastral court, the purchaser in a foreclosure sale is allowed to obtain
possession of the foreclosed property during the redemption period.
The Court of Appeals ruled that petitioners attempt to challenge the constitutionality of Section 7 of Act No. 3135,
as amended, constitutes a collateral attack that is not allowed. We fully agree with the appellate courts ruling. For reasons of public policy, the
constitutionality of a law cannot be attacked collaterally. [28]
With regard to forum-shopping; forum-shopping is the filing of multiple suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of obtaining a favorable judgment. It exists where the elements of litis pendentia are present
or where a final judgment in one case will amount to res judicata in another.[29] The issuance of the writ of possession being a ministerial function,
and summary in nature, it cannot be said to be a judgment on the merits. It is only an incident in the transfer of title. Hence, a separate case for
annulment of mortgage and foreclosure sale cannot be barred by litis pendentia or res judicata.[30] Clearly, insofar as LRC Case No. Q-13915(01)
and Civil Case No. Q02-46514 are concerned, Metrobank is not guilty of forum-shopping.
WHEREFORE, the petition is DENIED for lack of merit. The assailed Resolutions dated June 15, 2004 and August 23, 2004 of the
Court of Appeals in CA-G.R. SP No. 83895 are hereby AFFIRMED. Costs against the petitioner.

58
G.R. No. 208566 November 19, 2013
GRECO ANTONIOUS BEDA B. BELGICA JOSE M. VILLEGAS JR. JOSE L. GONZALEZ REUBEN M. ABANTE and
QUINTIN PAREDES SAN DIEGO, Petitioners, vs.
HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA JR. SECRETARY OF BUDGET AND
MANAGEMENT FLORENCIO B. ABAD, NATIONAL TREASURER ROSALIA V. DE LEON SENATE OF THE
PHILIPPINES represented by FRANKLIN M. DRILON m his capacity as SENATE PRESIDENT and HOUSE OF
REPRESENTATIVES represented by FELICIANO S. BELMONTE, JR. in his capacity as SPEAKER OF THE HOUSE,
Respondents.
x-----------------------x
G.R. No. 208493
SOCIAL JUSTICE SOCIETY (SJS) PRESIDENT SAMSON S. ALCANTARA, Petitioner, vs.
HONORABLE FRANKLIN M. DRILON in his capacity as SENATE PRESIDENT and HONORABLE FELICIANO S.
BELMONTE, JR., in his capacity as SPEAKER OF THE HOUSE OF REPRESENTATIVES, Respondents.
x-----------------------x
G.R. No. 209251
PEDRITO M. NEPOMUCENO, Former Mayor-Boac, Marinduque Former Provincial Board Member Province of
Marinduque, Petitioner, vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III* and SECRETARY FLORENCIO BUTCH ABAD, DEPARTMENT OF BUDGET
AND MANAGEMENT, Respondents.
D E C I S I O N PERLAS-BERNABE, J.:
"Experience is the oracle of truth."1
-James Madison
Before the Court are consolidated petitions 2 taken under Rule 65 of the Rules of Court, all of which assail the constitutionality of
the Pork Barrel System. Due to the complexity of the subject matter, the Court shall heretofore discuss the system‘s conceptual
underpinnings before detailing the particulars of the constitutional challenge.
The Facts I.
Pork Barrel: General Concept.
"Pork Barrel" is political parlance of American -English origin.3 Historically, its usage may be traced to the degrading ritual of
rolling out a barrel stuffed with pork to a multitude of black slaves who would cast their famished bodies into the porcine feast
to assuage their hunger with morsels coming from the generosity of their well-fed master.4 This practice was later compared
to the actions of American legislators in trying to direct federal budgets in favor of their districts.5 While the advent of
refrigeration has made the actual pork barrel obsolete, it persists in reference to political bills that "bring home the bacon" to
a legislator‘s district and constituents.6 In a more technical sense, "Pork Barrel" refers to an appropriation of government
spending meant for localized projects and secured solely or primarily to bring money to a representative's district. 7Some
scholars on the subject further use it to refer to legislative control of local appropriations. 8
In the Philippines, "Pork Barrel" has been commonly referred to as lump-sum, discretionary funds of Members of the
Legislature,9 although, as will be later discussed, its usage would evolve in reference to certain funds of the Executive.
II. History of Congressional Pork Barrel in the Philippines. A. Pre-Martial
Law Era (1922-1972).
Act 3044,10 or the Public Works Act of 1922, is considered11 as the earliest form of "Congressional Pork Barrel" in the
Philippines since the utilization of the funds appropriated therein were subjected to postenactment legislator approval.
Particularly, in the area of fund release, Section 3 12 provides that the sums appropriated for certain public works projects 13
"shall be distributed x x x subject to the approval of a joint committee elected by the Senate and the House of
Representatives. "The committee from each House may also authorize one of its members to approve the distribution made
by the Secretary of Commerce and Communications."14 Also, in the area of fund realignment, the same section provides
that the said secretary, "with the approval of said joint committee, or of the authorized members thereof, may, for the
purposes of said distribution, transfer unexpended portions of any item of appropriation under this Act to any other item
hereunder."
In 1950, it has been documented15 that post-enactment legislator participation broadened from the areas of fund release and
realignment to the area of project identification. During that year, the mechanics of the public works act was modified to the extent that
the discretion of choosing projects was transferred from the Secretary of Commerce and Communications to legislators. "For the first
time, the law carried a list of projects selected by Members of Congress, they ‘being the representatives of the people, either on their
own account or by consultation with local officials or civil leaders.‘" 16 During this period, the pork barrel process commenced with local
government councils, civil groups, and individuals appealing to Congressmen or Senators for projects. Petitions that were
accommodated formed part of a legislator‘s allocation, and the amount each legislator would eventually get is determined in a caucus
convened by the majority. The amount was then integrated into the administration bill prepared by the Department of Public Works
and Communications. Thereafter, the Senate and the House of Representatives added their own provisions to the bill until it was
signed into law by the President – the Public Works Act.17 In the 1960‘s, however, pork barrel legislation reportedly ceased in view of
the stalemate between the House of Representatives and the Senate. 18 B. Martial Law Era (1972-1986).
While the previous" Congressional Pork Barrel" was apparently discontinued in 1972 after Martial Law was declared, an era
when "one man controlled the legislature,"19 the reprieve was only temporary. By 1982, the Batasang Pambansa had already
introduced a new item in the General Appropriations Act
(GAA) called the" Support for Local Development Projects" (SLDP) under the article on "National Aid to Local Government
Units". Based on reports,20 it was under the SLDP that the practice of giving lumpsum allocations to individual legislators
began, with each assemblyman receiving ₱500,000.00. Thereafter, assemblymen would communicate their project
preferences to the Ministry of Budget and
Management for approval. Then, the said ministry would release the allocation papers to the Ministry of Local Governments,
which would, in turn, issue the checks to the city or municipal treasurers in the assemblyman‘s locality. It has been further reported
that "Congressional Pork Barrel" projects under the SLDP also began to cover not only public works projects, or so- called "hard
projects", but also "soft projects",21 or non-public works projects such as those which would fall under the categories of, among
others, education, health and livelihood.22 C. Post-Martial Law Era:
Corazon Cojuangco Aquino Administration (1986-1992).
After the EDSA People Power Revolution in 1986 and the restoration of Philippine democracy,
"Congressional Pork Barrel" was revived in the form of the "Mindanao Development Fund" and the
"Visayas Development Fund" which were created with lump-sum appropriations of ₱480 Million and ₱240 Million,
respectively, for the funding of development projects in the Mindanao and Visayas areas in 1989. It has been documented 23

59
 that the clamor raised by the Senators and the Luzon legislators for a similar funding, prompted the creation of the
"Countrywide Development Fund" (CDF) which was integrated into the 1990 GAA 24 with an initial funding of ₱2.3 Billion to
cover "small local infrastructure and other priority community projects."
Under the GAAs for the years 1991 and 1992,25 CDF funds were, with the approval of the President, to be released directly
to the implementing agencies but "subject to the submission of the required list of projects and activities."Although the GAAs
from 1990 to 1992 were silent as to the amounts of allocations of the individual legislators, as well as their participation in
the identification of projects, it has been reported26 that by 1992, Representatives were receiving ₱12.5 Million each in CDF
funds, while Senators were receiving ₱18 Million each, without any limitation or qualification, and that they could identify any
kind of project, from hard or infrastructure projects such as roads, bridges, and buildings to "soft projects" such as textbooks,
medicines, and scholarships.27 D. Fidel Valdez Ramos (Ramos) Administration (1992-1998).
The following year, or in 1993,28 the GAA explicitly stated that the release of CDF funds was to be made upon the submission
of the list of projects and activities identified by, among others, individual legislators. For the first time, the 1993 CDF Article
included an allocation for the Vice-President.29 As such, Representatives were allocated ₱12.5 Million each in CDF funds,
Senators, ₱18 Million each, and the Vice-President, ₱20 Million.
In 1994,30 1995,31 and 1996,32 the GAAs contained the same provisions on project identification and fund release as found
in the 1993 CDF Article. In addition, however, the Department of Budget and
Management (DBM) was directed to submit reports to the Senate Committee on Finance and the House
Committee on Appropriations on the releases made from the funds. 33
Under the 199734 CDF Article, Members of Congress and the Vice-President, in consultation with the implementing agency
concerned, were directed to submit to the DBM the list of 50% of projects to be funded from their respective CDF allocations
which shall be duly endorsed by (a) the Senate President and the Chairman of the Committee on Finance, in the case of
the Senate, and (b) the Speaker of the House of Representatives and the Chairman of the Committee on Appropriations, in
the case of the House of Representatives; while the list for the remaining 50% was to be submitted within six (6) months
thereafter. The same article also stated that the project list, which would be published by the DBM,35 "shall be the basis for
the release of funds" and that "no funds appropriated herein shall be disbursed for projects not included in the list herein
required."
The following year, or in 1998,36 the foregoing provisions regarding the required lists and endorsements were reproduced,
except that the publication of the project list was no longer required as the list itself sufficed for the release of CDF Funds.
The CDF was not, however, the lone form of "Congressional Pork Barrel" at that time. Other forms of
"Congressional Pork Barrel" were reportedly fashioned and inserted into the GAA (called "Congressional Insertions" or "CIs")
in order to perpetuate the ad ministration‘s political agenda.37 It has been articulated that since CIs "formed part and parcel of the
budgets of executive departments, they were not easily identifiable and were thus harder to monitor." Nonetheless, the lawmakers
themselves as well as the finance and budget officials of the implementing agencies, as well as the DBM, purportedly knew about the
insertions.38 Examples of these CIs are the Department of Education (DepEd) School Building Fund, the Congressional Initiative
Allocations, the Public Works Fund, the El Niño Fund, and the Poverty Alleviation Fund. 39 The allocations for the School Building
Fund, particularly, ―shall be made upon prior consultation with the representative of the legislative district concerned.” 40 Similarly, the
legislators had the power to direct how, where and when these appropriations were to be spent. 41 E. Joseph Ejercito Estrada (Estrada)
Administration (1998-2001).
In 1999,42 the CDF was removed in the GAA and replaced by three (3) separate forms of CIs, namely, the "Food Security
Program Fund,"43 the "Lingap Para Sa Mahihirap Program Fund,"44and the "Rural/Urban Development Infrastructure
Program Fund,"45 all of which contained a special provision requiring "prior consultation" with the Member s of Congress for
the release of the funds.
It was in the year 200046 that the "Priority Development Assistance Fund" (PDAF) appeared in the GAA. The requirement
of "prior consultation with the respective Representative of the District" before PDAF funds were directly released to the
implementing agency concerned was explicitly stated in the 2000 PDAF Article. Moreover, realignment of funds to any
expense category was expressly allowed, with the sole condition that no amount shall be used to fund personal services
and other personnel benefits.47 The succeeding PDAF provisions remained the same in view of the re-enactment48 of the
2000 GAA for the year 2001.
F. Gloria Macapagal-Arroyo (Arroyo) Administration (2001-2010).
The 200249 PDAF Article was brief and straightforward as it merely contained a single special provision ordering the release
of the funds directly to the implementing agency or local government unit concerned, without further qualifications. The
following year, 2003,50 the same single provision was present, with simply an expansion of purpose and express authority to
realign. Nevertheless, the provisions in the 2003 budgets of the Department of Public Works and Highways 51 (DPWH) and
the DepEd52 required prior consultation with Members of Congress on the aspects of implementation delegation and project
list submission, respectively. In 2004, the 2003 GAA was re-enacted.53
In 2005,54 the PDAF Article provided that the PDAF shall be used "to fund priority programs and projects under the ten point
agenda of the national government and shall be released directly to the implementing agencies." It also introduced the
program menu concept,55 which is essentially a list of general programs and implementing agencies from which a particular
PDAF project may be subsequently chosen by the identifying authority. The 2005 GAA was re-enacted56 in 2006 and hence,
operated on the same bases.
In similar regard, the program menu concept was consistently integrated into the 2007,57 2008,58 2009,59
and 201060 GAAs.
Textually, the PDAF Articles from 2002 to 2010 were silent with respect to the specific amounts allocated for the individual
legislators, as well as their participation in the proposal and identification of PDAF projects to be funded. In contrast to the PDAF
Articles, however, the provisions under the DepEd School Building Program and the DPWH budget, similar to its predecessors,
explicitly required prior consultation with the concerned Member of Congress61anent certain aspects of project implementation.
Significantly, it was during this era that provisions which allowed formal participation of nongovernmental organizations (NGO) in the
implementation of government projects were introduced. In the Supplemental Budget for 2006, with respect to the appropriation for
school buildings, NGOs were, by law, encouraged to participate. For such purpose, the law stated that "the amount of at least ₱250
Million of the ₱500 Million allotted for the construction and completion of school buildings shall be made available to NGOs including
the Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. for its "Operation Barrio School" program, with capability
and proven track records in the construction of public school buildings x x x." 62 The same allocation was made available to NGOs in
the 2007 and 2009 GAAs under the DepEd Budget.63 Also, it was in 2007 that the Government Procurement Policy Board 64 (GPPB)
issued Resolution No. 12-2007 dated June 29, 2007 (GPPB Resolution 12-2007), amending the implementing rules and regulations 65
of RA 9184,66 the Government Procurement Reform Act, to include, as a form of negotiated procurement, 67 the procedure whereby
the Procuring Entity68(the implementing agency) may enter into a memorandum of agreement with an NGO, provided that "an

60
appropriation law or ordinance earmarks an amount to be specifically contracted out to NGOs." 69 G. Present Administration (2010-
Present).
Differing from previous PDAF Articles but similar to the CDF Articles, the 201170 PDAF Article included an express statement
on lump-sum amounts allocated for individual legislators and the Vice-President: Representatives were given ₱70 Million
each, broken down into ₱40 Million for "hard projects" and ₱30 Million for "soft projects"; while ₱200 Million was given to
each Senator as well as the Vice-President, with a ₱100 Million allocation each for "hard" and "soft projects." Likewise, a
provision on realignment of funds was included, but with the qualification that it may be allowed only once. The same
provision also allowed the Secretaries of Education, Health, Social Welfare and Development, Interior and Local
Government, Environment and Natural Resources, Energy, and Public Works and Highways to realign PDAF Funds, with
the further conditions that: (a) realignment is within the same implementing unit and same project category as the original
project, for infrastructure projects; (b) allotment released has not yet been obligated for the original scope of work, and (c)
the request for realignment is with the concurrence of the legislator concerned.71
In the 201272 and 201373 PDAF Articles, it is stated that the "identification of projects and/or designation of beneficiaries shall
conform to the priority list, standard or design prepared by each implementing agency (priority list requirement) x x x."
However, as practiced, it would still be the individual legislator who would choose and identify the project from the said priority
list.74
Provisions on legislator allocations75 as well as fund realignment76 were included in the 2012 and 2013
PDAF Articles; but the allocation for the Vice-President, which was pegged at ₱200 Million in the 2011 GAA, had been
deleted. In addition, the 2013 PDAF Article now allowed LGUs to be identified as implementing agencies if they have the
technical capability to implement the projects.77 Legislators were also allowed to identify programs/projects, except for
assistance to indigent patients and scholarships, outside of his legislative district provided that he secures the written
concurrence of the legislator of the intended outside-district, endorsed by the Speaker of the House.78 Finally, any
realignment of PDAF funds, modification and revision of project identification, as well as requests for release of funds, were
all required to be favorably endorsed by the House Committee on Appropriations and the Senate Committee on Finance, as
the case may be.79
III. History of Presidential Pork Barrel in the Philippines.
While the term "Pork Barrel" has been typically associated with lump-sum, discretionary funds of Members of Congress, the
present cases and the recent controversies on the matter have, however, shown that the term‘s usage has expanded to
include certain funds of the President such as the Malampaya Funds and the Presidential Social Fund.
On the one hand, the Malampaya Funds was created as a special fund under Section 8 80 of Presidential Decree No. (PD)
910,81 issued by then President Ferdinand E. Marcos (Marcos) on March 22, 1976. In enacting the said law, Marcos
recognized the need to set up a special fund to help intensify, strengthen, and consolidate government efforts relating to the
exploration, exploitation, and development of indigenous energy resources vital to economic growth. 82 Due to the energy-
related activities of the government in the Malampaya natural gas field in Palawan, or the "Malampaya Deep Water Gas-
toPower Project",83 the special fund created under PD 910 has been currently labeled as Malampaya Funds.
On the other hand the Presidential Social Fund was created under Section 12, Title IV 84 of PD 1869,85 or the Charter of the
Philippine Amusement and Gaming Corporation (PAGCOR). PD 1869 was similarly issued by Marcos on July 11, 1983.
More than two (2) years after, he amended PD 1869 and accordingly issued PD 1993 on October 31, 1985,86 amending
Section 1287 of the former law. As it stands, the Presidential Social Fund has been described as a special funding facility
managed and administered by the Presidential Management Staff through which the President provides direct assistance to
priority programs and projects not funded under the regular budget. It is sourced from the share of the government in the
aggregate gross earnings of PAGCOR.88 IV. Controversies in the Philippines.
Over the decades, "pork" funds in the Philippines have increased tremendously, 89 owing in no small part to previous
Presidents who reportedly used the "Pork Barrel" in order to gain congressional support. 90 It was in 1996 when the first
controversy surrounding the "Pork Barrel" erupted. Former Marikina City Representative Romeo Candazo (Candazo), then
an anonymous source, "blew the lid on the huge sums of government money that regularly went into the pockets of legislators
in the form of kickbacks."91 He said that "the kickbacks were ‘SOP‘ (standard operating procedure) among legislators and
ranged from a low 19 percent to a high 52 percent of the cost of each project, which could be anything from dredging, rip
rapping, sphalting, concreting, and construction of school buildings." 92 "Other sources of kickbacks that Candazo identified
were public funds intended for medicines and textbooks. A few days later, the tale of the money trail became the banner
story of the Philippine Daily Inquirer issue of August 13, 1996, accompanied by an illustration of a roasted pig." 93 "The
publication of the stories, including those about congressional initiative allocations of certain lawmakers, including ₱3.6 Billion
for a Congressman, sparked public outrage."94
Thereafter, or in 2004, several concerned citizens sought the nullification of the PDAF as enacted in the 2004 GAA for being
unconstitutional. Unfortunately, for lack of "any pertinent evidentiary support that illegal misuse of PDAF in the form of
kickbacks has become a common exercise of unscrupulous
Members of Congress," the petition was dismissed.95
Recently, or in July of the present year, the National Bureau of Investigation (NBI) began its probe into allegations that "the
government has been defrauded of some ₱10 Billion over the past 10 years by a syndicate using funds from the pork barrel
of lawmakers and various government agencies for scores of ghost projects." 96 The investigation was spawned by sworn
affidavits of six (6) whistle-blowers who declared that JLN Corporation – "JLN" standing for Janet Lim Napoles (Napoles) –
had swindled billions of pesos from the public coffers for "ghost projects" using no fewer than 20 dummy NGOs for an entire
decade. While the NGOs were supposedly the ultimate recipients of PDAF funds, the whistle-blowers declared that the
money was diverted into Napoles‘ private accounts.97 Thus, after its investigation on the Napoles controversy, criminal
complaints were filed before the Office of the Ombudsman, charging five (5) lawmakers for Plunder, and three (3) other
lawmakers for Malversation, Direct Bribery, and Violation of the Anti-Graft and Corrupt Practices Act. Also recommended to
be charged in the complaints are some of the lawmakers‘ chiefs -of-staff or representatives, the heads and other officials of
three (3) implementing agencies, and the several presidents of the NGOs set up by Napoles. 98
On August 16, 2013, the Commission on Audit (CoA) released the results of a three-year audit investigation99covering the
use of legislators' PDAF from 2007 to 2009, or during the last three (3) years of the Arroyo administration. The purpose of
the audit was to determine the propriety of releases of funds under PDAF and the Various Infrastructures including Local
Projects (VILP)100 by the DBM, the application of these funds and the implementation of projects by the appropriate
implementing agencies and several government-owned-and-controlled corporations (GOCCs).101 The total releases covered
by the audit amounted to ₱8.374 Billion in PDAF and ₱32.664 Billion in VILP, representing 58% and 32%, respectively, of
the total PDAF and VILP releases that were found to have been made nationwide during the audit period.102 Accordingly,
the Co A‘s findings contained in its Report No. 2012-03 (CoA Report), entitled "Priority Development Assistance Fund (PDAF)
and Various Infrastructures including Local

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 Projects (VILP)," were made public, the highlights of which are as follows: 103
● Amounts released for projects identified by a considerable number of legislators significantly exceeded their
respective allocations.
● Amounts were released for projects outside of legislative districts of sponsoring members of the Lower House.
● Total VILP releases for the period exceeded the total amount appropriated under the 2007 to 2009 GAAs.
● Infrastructure projects were constructed on private lots without these having been turned over to the government.
● Significant amounts were released to implementing agencies without the latter‘s endorsement and without
considering their mandated functions, administrative and technical capabilities to implement projects.
● Implementation of most livelihood projects was not undertaken by the implementing agencies themselves but by
NGOs endorsed by the proponent legislators to which the Funds were transferred.
● The funds were transferred to the NGOs in spite of the absence of any appropriation law or ordinance.
● Selection of the NGOs were not compliant with law and regulations.
● Eighty-Two (82) NGOs entrusted with implementation of seven hundred seventy two (772) projects amount to
₱6.156 Billion were either found questionable, or submitted questionable/spurious documents, or failed to
liquidate in whole or in part their utilization of the Funds.
● Procurement by the NGOs, as well as some implementing agencies, of goods and services reportedly used in
the projects were not compliant with law.
As for the "Presidential Pork Barrel", whistle-blowers alleged that" at least ₱900 Million from royalties in the operation of the
Malampaya gas project off Palawan province intended for agrarian reform beneficiaries has gone into a dummy NGO." 104
According to incumbent CoA Chairperson Maria Gracia
Pulido Tan (CoA Chairperson), the CoA is, as of this writing, in the process of preparing "one consolidated
report" on the Malampaya Funds.105 V. The Procedural Antecedents.
Spurred in large part by the findings contained in the CoA Report and the Napoles controversy, several petitions were lodged
before the Court similarly seeking that the "Pork Barrel System" be declared unconstitutional. To recount, the relevant
procedural antecedents in these cases are as follows:
On August 28, 2013, petitioner Samson S. Alcantara (Alcantara), President of the Social Justice Society, filed a
Petition for Prohibition of even date under Rule 65 of the Rules of Court (Alcantara Petition), seeking that the "Pork Barrel System" be
declared unconstitutional, and a writ of prohibition be issued permanently restraining respondents Franklin M. Drilon and Feliciano S.
Belmonte, Jr., in their respective capacities as the incumbent Senate President and Speaker of the House of Representatives, from
further taking any steps to enact legislation appropriating funds for the "Pork Barrel System," in whatever form and by whatever name
it may be called, and from approving further releases pursuant thereto. 106 The Alcantara Petition was docketed as G.R.
No. 208493.
On September 3, 2013, petitioners Greco Antonious Beda B. Belgica, Jose L. Gonzalez, Reuben M. Abante,
Quintin Paredes San Diego (Belgica, et al.), and Jose M. Villegas, Jr. (Villegas) filed an Urgent Petition For Certiorari and Prohibition
With Prayer For The Immediate Issuance of Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction dated August
27, 2013 under Rule 65 of the Rules of Court (Belgica Petition), seeking that the annual "Pork Barrel System," presently embodied in
the provisions of the GAA of 2013 which provided for the 2013 PDAF, and the Executive‘s lump-sum, discretionary funds, such as the
Malampaya Funds and the Presidential Social Fund,107 be declared unconstitutional and null and void for being acts constituting grave
abuse of discretion. Also, they pray that the Court issue a TRO against respondents Paquito N. Ochoa, Jr., Florencio B. Abad
(Secretary Abad) and Rosalia V. De Leon, in their respective capacities as the incumbent Executive Secretary, Secretary of the
Department of Budget and Management (DBM), and National Treasurer, or their agents, for them to immediately cease any
expenditure under the aforesaid funds. Further, they pray that the Court order the foregoing respondents to release to the CoA and
to the public: (a) "the complete schedule/list of legislators who have availed of their PDAF and VILP from the years 2003 to 2013,
specifying the use of the funds, the project or activity and the recipient entities or individuals, and all pertinent data thereto"; and (b)
"the use of the Executive‘s lump-sum, discretionary funds, including the proceeds from the x x x Malampaya Funds and remittances
from the PAGCOR x x x from 2003 to 2013, specifying the x x x project or activity and the recipient entities or individuals, and all
pertinent data thereto."108 Also, they pray for the "inclusion in budgetary deliberations with the Congress of all presently off-budget,
lump-sum, discretionary funds including, but not limited to, proceeds from the Malampaya Funds and remittances from the
PAGCOR."109 The Belgica Petition was docketed as G.R. No. 208566.110
Lastly, on September 5, 2013, petitioner Pedrito M. Nepomuceno (Nepomuceno), filed a Petition dated August 23, 2012 (Nepomuceno
Petition), seeking that the PDAF be declared unconstitutional, and a cease and desist order be issued restraining President Benigno
Simeon S. Aquino III (President Aquino) and Secretary Abad from releasing such funds to Members of Congress and, instead, allow
their release to fund priority projects identified and approved by the Local Development Councils in consultation with the executive
departments, such as the DPWH, the Department of Tourism, the Department of Health, the Department of Transportation, and
Communication and the National Economic Development Authority. 111 The Nepomuceno Petition was docketed as UDK-14951.112
On September 10, 2013, the Court issued a Resolution of even date (a) consolidating all cases; (b) requiring public respondents to
comment on the consolidated petitions; (c) issuing a TRO (September 10, 2013 TRO) enjoining the DBM, National Treasurer, the
Executive Secretary, or any of the persons acting under their authority from releasing (1) the remaining PDAF allocated to Members
of Congress under the GAA of 2013, and (2) Malampaya Funds under the phrase "for such other purposes as may be hereafter
directed by the President" pursuant to Section 8 of PD 910 but not for the purpose of "financing energy resource development and
exploitation programs and projects of the government‖ under the same provision; and (d) setting the consolidated cases for Oral
Arguments on October 8, 2013.
On September 23, 2013, the Office of the Solicitor General (OSG) filed a Consolidated Comment (Comment) of even date before the
Court, seeking the lifting, or in the alternative, the partial lifting with respect to educational and medical assistance purposes, of the
Court‘s September 10, 2013 TRO, and that the consolidated petitions be dismissed for lack of merit. 113
On September 24, 2013, the Court issued a Resolution of even date directing petitioners to reply to the Comment.
Petitioners, with the exception of Nepomuceno, filed their respective replies to the Comment: (a) on September
30, 2013, Villegas filed a separate Reply dated September 27, 2013 (Villegas Reply); (b) on October 1, 2013, Belgica, et al. filed a
Reply dated September 30, 2013 (Belgica Reply); and (c) on October 2, 2013, Alcantara filed a Reply dated October 1, 2013.
On October 1, 2013, the Court issued an Advisory providing for the guidelines to be observed by the parties for the Oral Arguments
scheduled on October 8, 2013. In view of the technicality of the issues material to the present cases, incumbent Solicitor General
Francis H. Jardeleza (Solicitor General) was directed to bring with him during the Oral Arguments representative/s from the DBM and
Congress who would be able to competently and completely answer questions related to, among others, the budgeting process and

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its implementation. Further, the CoA Chairperson was appointed as amicus curiae and thereby requested to appear before the Court
during the Oral Arguments.
On October 8 and 10, 2013, the Oral Arguments were conducted. Thereafter, the Court directed the parties to submit their respective
memoranda within a period of seven (7) days, or until October 17, 2013, which the parties subsequently did.
The Issues Before the Court
Based on the pleadings, and as refined during the Oral Arguments, the following are the main issues for the
Court‘s resolution:
I. Procedural Issues.
Whether or not (a) the issues raised in the consolidated petitions involve an actual and justiciable controversy; (b) the issues raised
in the consolidated petitions are matters of policy not subject to judicial review; (c)
petitioners have legal standing to sue; and (d) the Court‘s Decision dated August 19, 1994 in G.R. Nos. 113105, 113174, 113766, and
113888, entitled "Philippine Constitution Association v. Enriquez"114 (Philconsa) and Decision dated April 24, 2012 in G.R. No. 164987,
entitled "Lawyers Against Monopoly and Poverty v. Secretary of Budget and Management" 115 (LAMP) bar the re-litigatio n of the issue
of constitutionality of the "Pork Barrel System" under the principles of res judicata and stare decisis.
II. Substantive Issues on the "Congressional Pork Barrel."
Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel Laws similar thereto are unconstitutional considering
that they violate the principles of/constitutional provisions on (a) separation of powers; (b) non-delegability of legislative power; (c)
checks and balances; (d) accountability; (e) political dynasties; and (f) local autonomy.
III. Substantive Issues on the "Presidential Pork Barrel."
Whether or not the phrases (a) "and for such other purposes as may be hereafter directed by the President" under Section 8 of PD
910,116 relating to the Malampaya Funds, and (b) "to finance the priority infrastructure development projects and to finance the
restoration of damaged or destroyed facilities due to calamities, as may be directed and authorized by the Office of the President of
the Philippines" under Section 12 of PD 1869, as amended by PD 1993, relating to the Presidential Social Fund, are unconstitutional
insofar as they constitute undue delegations of legislative power.
These main issues shall be resolved in the order that they have been stated. In addition, the Court shall also tackle certain ancillary
issues as prompted by the present cases.
The Court’s Ruling The
petitions are partly granted. I. Procedural Issues.
The prevailing rule in constitutional litigation is that no question involving the constitutionality or validity of a law or governmental act
may be heard and decided by the Court unless there is compliance with the legal requisites for judicial inquiry, 117 namely: (a) there
must be an actual case or controversy calling for the exercise of judicial power; (b) the person challenging the act must have the
standing to question the validity of the subject act or issuance; (c) the question of constitutionality must be raised at the earliest
opportunity ; and (d) the issue of constitutionality must be the very lis mota of the case.118 Of these requisites, case law states that
the first two are the most important119and, therefore, shall be discussed forthwith. A. Existence of an Actual Case or Controversy.
By constitutional fiat, judicial power operates only when there is an actual case or controversy. 120 This is embodied in Section 1, Article
VIII of the 1987 Constitution which pertinently states that "judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable x x x." Jurisprudence provides that an actual case or
controversy is one which "involves a conflict of legal rights, an assertion of opposite legal claims, susceptible of judicial resolution as
distinguished from a hypothetical or abstract difference or dispute. 121 In other words, "there must be a contrariety of legal rights that
can be interpreted and enforced on the basis of existing law and jurisprudence." 122 Related to the requirement of an actual case or
controversy is the requirement of "ripeness," meaning that the questions raised for constitutional scrutiny are already ripe for
adjudication. "A question is ripe for adjudication when the act being challenged has had a direct adverse effect on the individual
challenging it. It is a prerequisite that something had then been accomplished or performed by either branch before a court may come
into the picture, and the petitioner must allege the existence of an immediate or threatened injury to itself as a result of the challenged
action."123 "Withal, courts will decline to pass upon constitutional issues through advisory opinions, bereft as they are of authority to
resolve hypothetical or moot questions." 124
Based on these principles, the Court finds that there exists an actual and justiciable controversy in these cases. The requirement of
contrariety of legal rights is clearly satisfied by the antagonistic positions of the parties on the constitutionality of the "Pork Barrel
System." Also, the questions in these consolidated cases are ripe for adjudication since the challenged funds and the provisions
allowing for their utilization – such as the 2013 GAA for the PDAF, PD 910 for the Malampaya Funds and PD 1869, as amended by
PD 1993, for the Presidential Social Fund – are currently existing and operational; hence, there exists an immediate or threatened
injury to petitioners as a result of the unconstitutional use of these public funds.
As for the PDAF, the Court must dispel the notion that the issues related thereto had been rendered moot and academic by the reforms
undertaken by respondents. A case becomes moot when there is no more actual controversy between the parties or no useful purpose
can be served in passing upon the merits.125 Differing from this description, the Court observes that respondents‘ proposed line-item
budgeting scheme would not terminate the controversy nor diminish the useful purpose for its resolution since said reform is geared
towards the 2014 budget, and not the 2013 PDAF Article which, being a distinct subject matter, remains legally effective and existing.
Neither will the President‘s declaration that he had already "abolished the PDAF" render the issues on PDAF moot precisely because
the Executive branch of government has no constitutional authority to nullify or annul its legal existence. By constitutional design, the
annulment or nullification of a law may be done either by Congress, through the passage of a repealing law, or by the Court, through
a declaration of unconstitutionality. Instructive on this point is the following exchange between Associate Justice Antonio T. Carpio
(Justice Carpio) and the Solicitor General during the Oral Arguments: 126
Justice Carpio: The President has taken an oath to faithfully execute the law,127 correct? Solicitor General Jardeleza: Yes, Your Honor.
Justice Carpio: And so the President cannot refuse to implement the General Appropriations Act, correct?
Solicitor General Jardeleza: Well, that is our answer, Your Honor. In the case, for example of the PDAF, the President has a duty to
execute the laws but in the face of the outrage over PDAF, the President was saying, "I am not sure that I will continue the release of
the soft projects," and that started, Your Honor. Now, whether or not that … (interrupted)
Justice Carpio: Yeah. I will grant the President if there are anomalies in the project, he has the power to stop the releases in the
meantime, to investigate, and that is Section 38 of Chapter 5 of Book 6 of the Revised
Administrative Code128 x x x. So at most the President can suspend, now if the President believes that the PDAF is unconstitutional,
can he just refuse to implement it?
Solicitor General Jardeleza: No, Your Honor, as we were trying to say in the specific case of the PDAF because of the CoA Report,
because of the reported irregularities and this Court can take judicial notice, even outside, outside of the COA Report, you have the
report of the whistle-blowers, the President was just exercising precisely the duty …. x x x x

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Justice Carpio: Yes, and that is correct. You‘ve seen the CoA Report, there are anomalies, you stop and investigate, and prosecute,
he has done that. But, does that mean that PDAF has been repealed?
Solicitor General Jardeleza: No, Your Honor x x x. x x x x
Justice Carpio: So that PDAF can be legally abolished only in two (2) cases. Congress passes a law to repeal it, or this Court declares
it unconstitutional, correct?
Solictor General Jardeleza: Yes, Your Honor.
Justice Carpio: The President has no power to legally abolish PDAF. (Emphases supplied)
Even on the assumption of mootness, jurisprudence, nevertheless, dictates that "the moot and academic‘ principle is not a magical
formula that can automatically dissuade the Court in resolving a case." The Court will decide cases, otherwise moot, if: first, there is
a grave violation of the Constitution; second, the exceptional character of the situation and the paramount public interest is involved;
third, when the constitutional issue raised requires formulation of controlling principles to guide the bench, the bar, and the public;
and fourth, the case is capable of repetition yet evading review.129
The applicability of the first exception is clear from the fundamental posture of petitioners – they essentially allege grave violations of
the Constitution with respect to, inter alia, the principles of separation of powers, nondelegability of legislative power, checks and
balances, accountability and local autonomy.
The applicability of the second exception is also apparent from the nature of the interests involved – the constitutionality of the very
system within which significant amounts of public funds have been and continue to be utilized and expended undoubtedly presents a
situation of exceptional character as well as a matter of paramount public interest. The present petitions, in fact, have been lodged at
a time when the system‘s flaws have never before been magnified. To the Court‘s mind, the coalescence of the CoA Report, the
accounts of numerous whistle-blowers, and the government‘s own recognition that reforms are needed "to address the reported
abuses of the PDAF"130 demonstrates a prima facie pattern of abuse which only underscores the importance of the matter. It is also
by this finding that the Court finds petitioners‘ claims as not merely theorized, speculative or hypothetical. Of note is the weight
accorded by the Court to the findings made by the CoA which is the constitutionally-mandated audit arm of the government. In Delos
Santos v. CoA,131 a recent case wherein the Court upheld the CoA‘s disallowance of irregularly disbursed PDAF funds, it was
emphasized that: The COA is endowed with enough latitude to determine, prevent, and disallow irregular, unnecessary, excessive,
extravagant or unconscionable expenditures of government funds. It is tasked to be vigilant and conscientious in safeguarding the
proper use of the government's, and ultimately the people's, property. The exercise of its general audit power is among the
constitutional mechanisms that gives life to the check and balance system inherent in our form of government.
It is the general policy of the Court to sustain the decisions of administrative authorities, especially one which is constitutionally-
created, such as the CoA, not only on the basis of the doctrine of separation of powers but also for their presumed expertise in the
laws they are entrusted to enforce. Findings of administrative agencies are accorded not only respect but also finality when the
decision and order are not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion. It is only when the
CoA has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, that
this Court entertains a petition questioning its rulings. x x x. (Emphases supplied)
Thus, if only for the purpose of validating the existence of an actual and justiciable controversy in these cases, the Court deems the
findings under the CoA Report to be sufficient.
The Court also finds the third exception to be applicable largely due to the practical need for a definitive ruling on the system‘s
constitutionality. As disclosed during the Oral Arguments, the CoA Chairperson estimates that thousands of notices of disallowances
will be issued by her office in connection with the findings made in the CoA Report. In this relation, Associate Justice Marvic Mario
Victor F. Leonen (Justice Leonen) pointed out that all of these would eventually find their way to the courts. 132 Accordingly, there is a
compelling need to formulate controlling principles relative to the issues raised herein in order to guide the bench, the bar, and the
public, not just for the expeditious resolution of the anticipated disallowance cases, but more importantly, so that the government may
be guided on how public funds should be utilized in accordance with constitutional principles. Finally, the application of the fourth
exception is called for by the recognition that the preparation and passage of the national budget is, by constitutional imprimatur, an
affair of annual occurrence.133 The relevance of the issues before the Court does not cease with the passage of a "PDAF -free budget
for 2014."134 The evolution of the "Pork Barrel System," by its multifarious iterations throughout the course of history, lends a
semblance of truth to petitioners‘ claim that "the same dog will just resurface wearing a different collar." 135 In Sanlakas v. Executive
Secretary,136 the government had already backtracked on a previous course of action yet the Court used the "capable of repetition
but evading review" exception in order "to prevent similar questions from re- emerging."137 The situation similarly holds true to these
cases. Indeed, the myriad of issues underlying the manner in which certain public funds are spent, if not resolved at this most
opportune time, are capable of repetition and hence, must not evade judicial review. B. Matters of Policy: the Political Question
Doctrine.
The "limitation on the power of judicial review to actual cases and controversies‖ carries the assurance that "the courts will not intrude
into areas committed to the other branches of government."138 Essentially, the foregoing limitation is a restatement of the political
question doctrine which, under the classic formulation of Baker v. Carr, 139applies when there is found, among others, "a textually
demonstrable constitutional commitment of the issue to a coordinate political department," "a lack of judicially discoverable and
manageable standards for resolving it" or "the impossibility of deciding without an initial policy determination of a kind clearly for non-
judicial discretion." Cast against this light, respondents submit that the "the political branches are in the best position not only to
perform budget-related reforms but also to do them in response to the specific demands of
their constituents" and, as such, "urge the Court not to impose a solution at this stage." 140
The Court must deny respondents‘ submission.
Suffice it to state that the issues raised before the Court do not present political but legal questions which are within its province to
resolve. A political question refers to "those questions which, under the Constitution, are to be decided by the people in their sovereign
capacity, or in regard to which full discretionary authority has been delegated to the Legislature or executive branch of the Government.
It is concerned with issues dependent upon the wisdom, not legality, of a particular measure." 141 The intrinsic constitutionality of the
"Pork Barrel System" is not an issue dependent upon the wisdom of the political branches of government but rather a legal one which
the Constitution itself has commanded the Court to act upon. Scrutinizing the contours of the system along constitutional lines is a
task that the political branches of government are incapable of rendering precisely because it is an exercise of judicial power. More
importantly, the present Constitution has not only vested the Judiciary the right to exercise judicial power but essentially makes it a
duty to proceed therewith. Section 1,
Article VIII of the 1987 Constitution cannot be any clearer: "The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law. It includes the duty of the courts of justice to settle actual controversies involving rights which
are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the Government." In Estrada v. Desierto, 142 the expanded
concept of judicial power under the 1987 Constitution and its effect on the political question doctrine was explained as follows: 143 To
a great degree, the 1987 Constitution has narrowed the reach of the political question doctrine when it expanded the power of judicial
review of this court not only to settle actual controversies involving rights which are legally demandable and enforceable but also to

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determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part o f any
branch or instrumentality of government. Heretofore, the judiciary has focused on the "thou shalt not's" of the Constitution directed
against the exercise of its jurisdiction. With the new provision, however, courts are given a greater prerogative to determine what it
can do to prevent grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
government. Clearly, the new provision did not just grant the Court power of doing nothing. x x x (Emphases supplied)
It must also be borne in mind that ― when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority
over the other departments; does not in reality nullify or invalidate an act of the legislature or the executive, but only asserts the solemn
and sacred obligation assigned to it by the
Constitution."144 To a great extent, the Court is laudably cognizant of the reforms undertaken by its co-equal branches of government.
But it is by constitutional force that the Court must faithfully perform its duty. Ultimately, it is the Court‘s avowed intention that a
resolution of these cases would not arrest or in any manner impede the endeavors of the two other branches but, in fact, help ensure
that the pillars of change are erected on firm constitutional grounds. After all, it is in the best interest of the people that each great
branch of government, within its own sphere, contributes its share towards achieving a holistic and genuine solution to the problems
of society. For all these reasons, the Court cannot heed respondents‘ plea for judicial restraint. C. Locus Standi.
"The gist of the question of standing is whether a party alleges such personal stake in the outcome of the controversy as to assure
that concrete adverseness which sharpens the presentation of issues upon which the court depends for illumination of difficult
constitutional questions. Unless a person is injuriously affected in any of his constitutional rights by the operation of statute or
ordinance, he has no standing."145
Petitioners have come before the Court in their respective capacities as citizen-taxpayers and accordingly, assert that they "dutifully
contribute to the coffers of the National Treasury."146 Clearly, as taxpayers, they possess the requisite standing to question the validity
of the existing "Pork Barrel System" under which the taxes they pay have been and continue to be utilized. It is undeniable that
petitioners, as taxpayers, are bound to suffer from the unconstitutional usage of public funds, if the Court so rules. Invariably, taxpayers
have been allowed to sue where there is a claim that public funds are illegally disbursed or that public money is being deflected to
any improper purpose, or that public funds are wasted through the enforcement of an invalid or unconstitutional law, 147 as in these
cases.
Moreover, as citizens, petitioners have equally fulfilled the standing requirement given that the issues they have raised may be
classified as matters "of transcendental importance, of overreaching significance to society, or of paramount public interest."148 The
CoA Chairperson‘s statement during the Oral Arguments that the present controversy involves "not merely a systems failure" but a
"complete breakdown of controls"149 amplifies, in addition to the matters above-discussed, the seriousness of the issues involved
herein. Indeed, of greater import than the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon
the fundamental law by the enforcement of an invalid statute. 150 All told, petitioners have sufficient locus standi to file the instant cases.
D. Res Judicata and Stare Decisis.
Res judicata (which means a "matter adjudged") and stare decisis non quieta et movere (or simply, stare decisis which means "follow
past precedents and do not disturb what has been settled") are general procedural law principles which both deal with the effects of
previous but factually similar dispositions to subsequent cases. For
the cases at bar, the Court examines the applicability of these principles in relation to its prior rulings in Philconsa and LAMP.
The focal point of res judicata is the judgment. The principle states that a judgment on the merits in a previous case rendered by a
court of competent jurisdiction would bind a subsequent case if, between the first and second actions, there exists an identity of
parties, of subject matter, and of causes of action. 151 This required identity is not, however, attendant hereto since Philconsa and
LAMP, respectively involved constitutional challenges against the 1994 CDF Article and 2004 PDAF Article, whereas the cases at bar
call for a broader constitutional scrutiny of the entire "Pork Barrel System." Also, the ruling in LAMP is essentially a dismissal based
on a procedural technicality – and, thus, hardly a judgment on the merits – in that petitioners therein failed to present any "convincing
proof x x x showing that, indeed, there were direct releases of funds to the Members of Congress, who actually spend them according
to their sole discretion" or "pertinent evidentiary support to demonstrate the illegal misuse of PDAF in the form of kickbacks and has
become a common exercise of unscrupulous Members of Congress." As such, the Court up held, in view of the presumption of
constitutionality accorded to every law, the 2004 PDAF Article, and saw "no need to review or reverse the standing pronouncements
in the said case." Hence, for the foregoing reasons, the res judicata principle, insofar as the Philconsa and LAMP cases are concerned,
cannot apply.
On the other hand, the focal point of stare decisis is the doctrine created. The principle, entrenched under Article 8152 of the Civil Code,
evokes the general rule that, for the sake of certainty, a conclusion reached in one case should be doctrinally applied to those that
follow if the facts are substantially the same, even though the parties may be different. It proceeds from the first principle of justice
that, absent any powerful countervailing considerations, like cases ought to be decided alike. Thus, where the same questions relating
to the same event have been put forward by the parties similarly situated as in a previous case litigated and decided by a competent
court, the rule of stare decisis is a bar to any attempt to re-litigate the same issue.153
Philconsa was the first case where a constitutional challenge against a Pork Barrel provision, i.e., the 1994 CDF Article, was resolved
by the Court. To properly understand its context, petitioners‘ posturing was that "the power given to the Members of Congress to
propose and identify projects and activities to be funded by the CDF is an encroachment by the legislature on executive power, since
said power in an appropriation act is in implementation of the law" and that "the proposal and identification of the projects do not
involve the making of laws or the repeal and amendment thereof, the only function given to the Congress by the Constitution." 154 In
deference to the foregoing submissions, the Court reached the following main conclusions: one, under the Constitution, the power of
appropriation, or the "power of the purse," belongs to Congress; two, the power of appropriation carries with it the power to specify
the project or activity to be funded under the appropriation law and it can be detailed and as broad as Congress wants it to be; and,
three, the proposals and identifications made by Members of Congress are merely recommendatory. At once, it is apparent that the
Philconsa resolution was a limited response to a separation of powers problem, specifically on the propriety of conferring
postenactment identification authority to Members of Congress. On the contrary, the present cases call for a more holistic examination
of (a) the inter-relation between the CDF and PDAF Articles with each other, formative as they are of the entire "Pork Barrel System"
as well as (b) the intra-relation of post-enactment measures contained within a particular CDF or PDAF Article, including not only
those related to the area of project identification but also to the areas of fund release and realignment. The complexity of the issues
and the broader legal analyses herein warranted may be, therefore, considered as a powerful countervailing reason against a
wholesale application of the stare decisis principle.
In addition, the Court observes that the Philconsa ruling was actually riddled with inherent constitutional inconsistencies which similarly
countervail against a full resort to stare decisis. As may be deduced from the main conclusions of the case, Philconsa‘s fundamental
premise in allowing Members of Congress to propose
and identify of projects would be that the said identification authority is but an aspect of the power of appropriation which has been
constitutionally lodged in Congress. From this premise, the contradictions may be easily seen. If the authority to identify projects is an
aspect of appropriation and the power of appropriation is a form of legislative power thereby lodged in Congress, then it follows that:
(a) it is Congress which should exercise such authority, and not its individual Members; (b) such authority must be exercised within

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the prescribed procedure of law passage and, hence, should not be exercised after the GAA has already been passed; and (c) such
authority, as embodied in the GAA, has the force of law and, hence, cannot be merely recommendatory. Justice Vitug‘s Concurring
Opinion in the same case sums up the Philconsa quandary in this wise: "Neither would it be objectionable for Congress, by law, to
appropriate funds for such specific projects as it may be minded; to give that authority, however, to the individual members of Congress
in whatever guise, I am afraid, would be constitutionally impermissible." As the Court now largely benefits from hindsight and current
findings on the matter, among others, the CoA Report, the Court must partially abandon its previous ruling in Philconsa insofar as it
validated the post-enactment identification authority of Members of Congress on the guise that the same was merely recommendatory.
This postulate raises serious constitutional inconsistencies which cannot be simply excused on the ground that such mechanism is
"imaginative as it is innovative." Moreover, it must be pointed out that the recent case of Abakada Guro Party List v.
Purisima155(Abakada) has effectively overturned Philconsa‘s allowance of post-enactment legislator participation in view of the
separation of powers principle. These constitutional inconsistencies and the Abakada rule will be discussed in greater detail in the
ensuing section of this Decision.
As for LAMP, suffice it to restate that the said case was dismissed on a procedural technicality and, hence, has not set any controlling
doctrine susceptible of current application to the substantive issues in these cases. In fine, stare decisis would not apply.
II. Substantive Issues.
A. Definition of Terms.
Before the Court proceeds to resolve the substantive issues of these cases, it must first define the terms "Pork Barrel System,"
"Congressional Pork Barrel," and "Presidential Pork Barrel" as they are essential to the ensuing discourse.
Petitioners define the term "Pork Barrel System" as the "collusion between the Legislative and Executive branches of government to
accumulate lump-sum public funds in their offices with unchecked discretionary powers to determine its distribution as political
largesse."156 They assert that the following elements make up the Pork Barrel System: (a) lump-sum funds are allocated through the
appropriations process to an individual officer; (b) the officer is given sole and broad discretion in determining how the funds will be
used or expended; (c) the guidelines on how to spend or use the funds in the appropriation are either vague, overbroad or inexistent;
and (d) projects funded are intended to benefit a definite constituency in a particular part of the country and to help the political careers
of the disbursing official by yielding rich patronage benefits.157 They further state that the Pork Barrel System is comprised of two (2)
kinds of discretionary public funds: first, the Congressional (or
Legislative) Pork Barrel, currently known as the PDAF; 158 and, second, the Presidential (or Executive) Pork Barrel, specifically, the
Malampaya Funds under PD 910 and the Presidential Social Fund under PD 1869, as amended by PD 1993.159 Considering
petitioners‘ submission and in reference to its local concept and legal history, the Court defines the Pork Barrel System as the
collective body of rules and practices that govern the manner by which lump-sum, discretionary funds, primarily intended for local
projects, are utilized through the respective participations of the Legislative and Executive branches of government, including its
members. The Pork Barrel System involves two (2) kinds of lump-sum discretionary funds:
First, there is the Congressional Pork Barrel which is herein defined as a kind of lump-sum, discretionary fund wherein legislators,
either individually or collectively organized into committees, are able to effectively control certain aspects of the fund’s utilization
through various post-enactment measures and/or practices. In particular, petitioners consider the PDAF, as it appears under the 2013
GAA, as Congressional Pork Barrel since it is, inter alia, a post-enactment measure that allows individual legislators to wield a
collective power;160 and
Second, there is the Presidential Pork Barrel which is herein defined as a kind of lump-sum, discretionary fund which allows the
President to determine the manner of its utilization. For reasons earlier stated, 161 the Court shall delimit the use of such term to refer
only to the Malampaya Funds and the Presidential Social Fund.
With these definitions in mind, the Court shall now proceed to discuss the substantive issues of these cases. B. Substantive Issues
on the Congressional Pork Barrel.
1. Separation of Powers.
a. Statement of Principle.
The principle of separation of powers refers to the constitutional demarcation of the three fundamental powers of government. In the
celebrated words of Justice Laurel in Angara v. Electoral Commission, 162 it means that the "Constitution has blocked out with deft
strokes and in bold lines, allotment of power to the executive, the legislative and the judicial departments of the government."163 To
the legislative branch of government, through
Congress,164belongs the power to make laws; to the executive branch of government, through the
President,165 belongs the power to enforce laws; and to the judicial branch of government, through the Court, 166 belongs the power to
interpret laws. Because the three great powers have been, by constitutional design, ordained in this respect, "each department of the
government has exclusive cognizance of matters within its jurisdiction, and is supreme within its own sphere." 167 Thus, "the legislature
has no authority to execute or construe the law, the executive has no authority to make or construe the law, and the judiciary has no
power to make or execute the law." 168 The principle of separation of powers and its concepts of autonomy and independence stem
from the notion that the powers of government must be divided to avoid concentration of these powers in any one branch; the division,
it is hoped, would avoid any single branch from lording its power over the other branches or the citizenry. 169 To achieve this purpose,
the divided power must be wielded by coequal branches of government that are equally capable of independent action in exercising
their respective mandates. Lack of independence would result in the inability of one branch of government to check the arbitrary or
self-interest assertions of another or others.170
Broadly speaking, there is a violation of the separation of powers principle when one branch of government unduly encroaches on the
domain of another. US Supreme Court decisions instruct that the principle of separation of powers may be violated in two (2) ways:
firstly, "one branch may interfere impermissibly with the other’s performance of its constitutionally assigned function"; 171 and
"alternatively, the doctrine may be violated when one branch assumes a function that more properly is entrusted to another." 172 In
other words, there is a violation of the principle when there is impermissible (a) interference with and/or (b) assumption of another
department‘s functions.
The enforcement of the national budget, as primarily contained in the GAA, is indisputably a function both constitutionally assigned
and properly entrusted to the Executive branch of government. In Guingona, Jr. v. Hon. Carague 173 (Guingona, Jr.), the Court
explained that the phase of budget execution "covers the various operational aspects of budgeting" and accordingly includes "the
evaluation of work and financial plans for individual activities," the "regulation and release of funds" as well as all "other related
activities" that comprise the budget execution cycle.174 This is rooted in the principle that the allocation of power in the three principal
branches of government is a grant of all powers inherent in them. 175 Thus, unless the Constitution provides otherwise, the Executive
department should exclusively exercise all roles and prerogatives which go into the implementation of the national budget as provided
under the GAA as well as any other appropriation law. In view of the foregoing, the Legislative branch of government, much more any
of its members, should not cross over the field of implementing the national budget since, as earlier stated, the same is properly the
domain of the Executive. Again, in Guingona, Jr., the Court stated that "Congress enters the picture when it deliberates or acts on the
budget proposals of the President. Thereafter, Congress, "in the exercise of its own judgment and wisdom, formulates an appropriation
act precisely following the process established by the Constitution, which specifies that no money may be paid from the Treasury

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except in accordance with an appropriation made by law." Upon approval and passage of the GAA, Congress‘ law -making role
necessarily comes to an end and from there the Executive‘s role of implementing the national budget begins. So as not to blur the
constitutional boundaries between them, Congress must "not concern it self with details for implementation by the Executive."176
The foregoing cardinal postulates were definitively enunciated in Abakada where the Court held that "from the moment the law
becomes effective, any provision of law that empowers Congress or any of its members to play any role in the implementation or
enforcement of the law violates the principle of separation of powers and is thus unconstitutional." 177 It must be clarified, however,
that since the restriction only pertains to "any role in the implementation or enforcement of the law," Congress may still exercise its
oversight function which is a mechanism of checks and balances that the Constitution itself allows. But it must be made clear that
Congress‘ role must be confined to mere oversight. Any post-enactment-measure allowing legislator participation beyond oversight is
bereft of any constitutional basis and hence, tantamount to impermissible interference and/or assumption of executive functions. As
the Court ruled in Abakada:178
Any post-enactment congressional measure x x x should be limited to scrutiny and investigation.1âwphi1 In particular, congressional
oversight must be confined to the following:
(1) scrutiny based primarily on Congress‘ power of appropriation and the budget hearings conducted in connection with
it, its power to ask heads of departments to appear before and be heard by either of its
Houses on any matter pertaining to their departments and its power of confirmation; and
(2) investigation and monitoring of the implementation of laws pursuant to the power of Congress to conduct inquiries
in aid of legislation.
Any action or step beyond that will undermine the separation of powers guaranteed by the Constitution. (Emphases
supplied) b. Application.
In these cases, petitioners submit that the Congressional Pork Barrel – among others, the 2013 PDAF Article – "wrecks the assignment
of responsibilities between the political branches" as it is designed to allow individual legislators to interfere "way past the time it should
have ceased" or, particularly, "after the GAA is
passed."179 They state that the findings and recommendations in the CoA Report provide "an illustration of how absolute and definitive
the power of legislators wield over project implementation in complete violation of the constitutional principle of separation of
powers."180 Further, they point out that the Court in the Philconsa case only allowed the CDF to exist on the condition that individual
legislators limited their role to recommending projects and not if they actually dictate their implementation.181
For their part, respondents counter that the separations of powers principle has not been violated since the
President maintains "ultimate authority to control the execution of the GAA‖ and that he "retains the final discretion to reject" the
legislators‘ proposals.182 They maintain that the Court, in Philconsa, "upheld the constitutionality of the power of members of
Congress to propose and identify projects so long as such proposal and identification are recommendatory." 183 As such, they claim
that "everything in the Special Provisions [of the 2013 PDAF Article follows the Philconsa framework, and hence, remains
constitutional."184 The Court rules in favor of petitioners.
As may be observed from its legal history, the defining feature of all forms of Congressional Pork Barrel would be the authority of
legislators to participate in the post-enactment phases of project implementation. At its core, legislators – may it be through project
lists,185 prior consultations186 or program menus187 – have been consistently accorded post-enactment authority to identify the projects
they desire to be funded through various Congressional Pork Barrel allocations. Under the 2013 PDAF Article, the statutory authority
of legislators to identify projects post-GAA may be construed from the import of Special Provisions 1 to 3 as well as the second
paragraph of Special Provision 4. To elucidate, Special Provision 1 embodies the program menu feature which, as evinced from past
PDAF Articles, allows individual legislators to identify PDAF projects for as long as the identified project falls under a general program
listed in the said menu. Relatedly, Special Provision 2 provides that the implementing agencies shall, within 90 days from the GAA is
passed, submit to Congress a more detailed priority list, standard or design prepared and submitted by implementing agencies from
which the legislator may make his choice. The same provision further authorizes legislators to identify PDAF projects outside his
district for as long as the representative of the district concerned concurs in writing. Meanwhile, Special Provision 3 clarifies that PDAF
projects refer to "projects to be identified by legislators" 188 and thereunder provides the allocation limit for the total amount of projects
identified by each legislator. Finally, paragraph 2 of Special Provision 4 requires that any modification and revision of the project
identification "shall be submitted to the House Committee on Appropriations and the Senate Committee on Finance for favorable
endorsement to the DBM or the implementing agency, as the case may be." From the foregoing special provisions, it cannot be
seriously doubted that legislators have been accorded post-enactment authority to identify PDAF projects.
Aside from the area of project identification, legislators have also been accorded post-enactment authority in the areas of fund release
and realignment. Under the 2013 PDAF Article, the statutory authority of legislators to participate in the area of fund release through
congressional committees is contained in Special Provision 5 which explicitly states that "all request for release of funds s hall be
supported by the documents prescribed under Special Provision No. 1 and favorably endorsed by House Committee on Appropriations
and the Senate Committee on Finance, as the case may be"; while their statutory authority to participate in the area of fund realignment
is contained in: first , paragraph 2, Special Provision 4 189 which explicitly state s, among others, that "any realignment of funds shall
be submitted to the House Committee on Appropriations and the Senate
Committee on Finance for favorable endorsement to the DBM or the implementing agency, as the case may be‖
; and, second , paragraph 1, also of Special Provision 4 which authorizes the "Secretaries of Agriculture,
Education, Energy, Interior and Local Government, Labor and Employment, Public Works and Highways, Social Welfare and
Development and Trade and Industry190 x x x to approve realignment from one project/scope to another within the allotment received
from this Fund, subject to among others (iii) the request is with the concurrence of the legislator concerned."
Clearly, these post-enactment measures which govern the areas of project identification, fund release and fund realignment are not
related to functions of congressional oversight and, hence, allow legislators to intervene and/or assume duties that properly belong to
the sphere of budget execution. Indeed, by virtue of the foregoing, legislators have been, in one form or another, authorized to
participate in – as Guingona, Jr. puts it – "the various operational aspects of budgeting," including "the evaluation of work and financial
plans for individual activities" and the "regulation and release of funds" in violation of the separation of powers principle. The
fundamental rule, as categorically articulated in Abakada, cannot be overstated – from the moment the law becomes effective, any
provision of law that empowers Congress or any of its members to play any role in the implementation or enforcement of the law
violates the principle of separation of powers and is thus unconstitutional. 191 That the said authority is treated as merely
recommendatory in nature does not alter its unconstitutional tenor since the prohibition, to repeat, covers any role in the
implementation or enforcement of the law. Towards this end, the Court must therefore abandon its ruling in Philconsa which sanctioned
the conduct of legislator identification on the guise that the same is merely recommendatory and, as such, respondents‘ reliance on
the same falters altogether.
Besides, it must be pointed out that respondents have nonetheless failed to substantiate their position that the identification authority
of legislators is only of recommendatory import. Quite the contrary, respondents – through the statements of the Solicitor General
during the Oral Arguments – have admitted that the identification of the legislator constitutes a mandatory requirement before his

67
PDAF can be tapped as a funding source, thereby highlighting the indispensability of the said act to the entire budget execution
process:192
Justice Bernabe: Now, without the individual legislator’s identification of the project, can the PDAF of the legislator be utilized?
Solicitor General Jardeleza: No, Your Honor. Justice Bernabe:
It cannot?
Solicitor General Jardeleza: It cannot… (interrupted)
Justice Bernabe: So meaning you should have the identification of the project by the individual legislator?
Solicitor General Jardeleza: Yes, Your Honor. x x x x
Justice Bernabe: In short, the act of identification is mandatory?
Solictor General Jardeleza: Yes, Your Honor. In the sense that if it is not done and then there is no identification. x x x x
Justice Bernabe: Now, would you know of specific instances when a project was implemented without the identification by the
individual legislator?
Solicitor General Jardeleza: I do not know, Your Honor; I do not think so but I have no specific examples. I would doubt very much,
Your Honor, because to implement, there is a need for a SARO and the NCA. And the SARO and the NCA are triggered by an
identification from the legislator. x x x x
Solictor General Jardeleza: What we mean by mandatory, Your Honor, is we were replying to a question, "How can a legislator make
sure that he is able to get PDAF Funds?" It is mandatory in the sense that he must identify, in that sense, Your Honor. Otherwise, if
he does not identify, he cannot avail of the PDAF Funds and his
district would not be able to have PDAF Funds, only in that sense, Your Honor. (Emphases supplied) Thus, for all the foregoing
reasons, the Court hereby declares the 2013 PDAF Article as well as all other provisions of law which similarly allow legislators to
wield any form of post-enactment authority in the implementation or enforcement of the budget, unrelated to congressional oversight,
as violative of the separation of powers principle and thus unconstitutional. Corollary thereto, informal practices, through which
legislators have effectively intruded into the proper phases of budget execution, must be deemed as acts of grave abuse of discretion
amounting to lack or excess of jurisdiction and, hence, accorded the same unconstitutional treatment. That such informal practices
do exist and have, in fact, been constantly observed throughout the years has not been substantially disputed here. As pointed out by
Chief Justice Maria Lourdes P.A. Sereno (Chief Justice Sereno) during the Oral Arguments of these cases:193 Chief Justice Sereno:
Now, from the responses of the representative of both, the DBM and two (2) Houses of Congress, if we enforces the initial thought
that I have, after I had seen the extent of this research made by my staff, that neither the Executive nor Congress frontally faced the
question of constitutional compatibility of how they were engineering the budget process. In fact, the words you have been using, as
the three lawyers of the DBM, and both Houses of Congress has also been using is surprise; surprised that all of these things are now
surfacing. In fact, I thought that what the 2013 PDAF provisions did was to codify in one section all the past practice that had been
done since 1991. In a certain sense, we should be thankful that they are all now in the PDAF Special Provisions. x x x (Emphasis and
underscoring supplied)
Ultimately, legislators cannot exercise powers which they do not have, whether through formal measures written into the law or informal
practices institutionalized in government agencies, else the Executive department be deprived of what the Constitution has vested as
its own.
2. Non-delegability of Legislative Power.
a. Statement of Principle.
As an adjunct to the separation of powers principle, 194 legislative power shall be exclusively exercised by the body to which the
Constitution has conferred the same. In particular, Section 1, Article VI of the 1987
Constitution states that such power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of
Representatives, except to the extent reserved to the people by the provision on initiative and referendum.195 Based on this provision,
it is clear that only Congress, acting as a bicameral body, and the people, through the process of initiative and referendum, may
constitutionally wield legislative power and no other. This premise embodies the principle of non-delegability of legislative power, and
the only recognized exceptions thereto would be: (a) delegated legislative power to local governments which, by immemorial practice,
are allowed to legislate on purely local matters; 196 and (b) constitutionally-grafted exceptions such as the authority of the President to,
by law, exercise powers necessary and proper to carry out a declared national policy in times of war or other national emergency, 197or
fix within specified limits, and subject to such limitations and restrictions as Congress may impose, tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the
Government.198 Notably, the principle of non-delegability should not be confused as a restriction to delegate rule-making authority to
implementing agencies for the limited purpose of either filling up the details of the law for its enforcement (supplementary rule-making)
or ascertaining facts to bring the law into actual operation (contingent rule-making).199The conceptual treatment and limitations of
delegated rule-making were explained in the case of People v. Maceren 200 as follows:
The grant of the rule-making power to administrative agencies is a relaxation of the principle of separation of powers and is an
exception to the nondelegation of legislative powers. Administrative regulations or "subordinate legislation" calculated to promote the
public interest are necessary because of "the growing complexity of modern life, the multiplication of the subjects of governmental
regulations, and the increased difficulty of administering the law." x x x x
Nevertheless, it must be emphasized that the rule-making power must be confined to details for regulating the mode or proceeding
to carry into effect the law as it has been enacted. The power cannot be extended to amending or expanding the statutory
requirements or to embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned. (Emphases
supplied) b. Application.
In the cases at bar, the Court observes that the 2013 PDAF Article, insofar as it confers post-enactment identification authority to
individual legislators, violates the principle of non-delegability since said legislators are effectively allowed to individually exercise the
power of appropriation, which – as settled in Philconsa – is lodged in Congress.201 That the power to appropriate must be exercised
only through legislation is clear from Section 29(1), Article VI of the 1987 Constitution which states that: "No money shall be paid out
of the Treasury except in pursuance of an appropriation made by law." To understand what constitutes an act of appropriation, the
Court, in Bengzon v. Secretary of Justice and Insular Auditor202 (Bengzon), held that the power of appropriation involves (a) the setting
apart by law of a certain sum from the public revenue for (b) a specified purpose. Essentially, under the 2013 PDAF Article, individual
legislators are given a personal lump-sum fund from which they are able to dictate (a) how much from such fund would go to (b) a
specific project or beneficiary that they themselves also determine. As these two (2) acts comprise the exercise of the power of
appropriation as described in Bengzon, and given that the 2013 PDAF Article authorizes individual legislators to perform the same,
undoubtedly, said legislators have been conferred the power to legislate which the Constitution does not, however, allow. Thus,
keeping with the principle of non-delegability of legislative power, the Court hereby declares the 2013 PDAF Article, as well as all
other forms of Congressional Pork Barrel which contain the similar legislative identification feature as herein discussed, as
unconstitutional.
3. Checks and Balances.

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a. Statement of Principle; Item-Veto Power.
The fact that the three great powers of government are intended to be kept separate and distinct does not mean that they are
absolutely unrestrained and independent of each other. The Constitution has also provided for an elaborate system of checks and
balances to secure coordination in the workings of the various departments of the government. 203 A prime example of a constitutional
check and balance would be the President’s power to veto an item written into an appropriation, revenue or tariff bill submitted to him
by Congress for approval through a process known
as "bill presentment." The President‘s item-veto power is found in Section 27(2), Article VI of the 1987 Constitution which reads as
follows:
Sec. 27. x x x.
xxxx
(2) The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff bill, but the veto shall
not affect the item or items to which he does not object.
The presentment of appropriation, revenue or tariff bills to the President, wherein he may exercise his power of item-veto, forms part
of the "single, finely wrought and exhaustively considered, procedures" for law-passage as specified under the Constitution.204 As
stated in Abakada, the final step in the law-making process is the "submission of the bill to the President for approval. Once approved,
it takes effect as law after the required publication." 205
Elaborating on the President‘s item-veto power and its relevance as a check on the legislature, the Court, in
Bengzon, explained that:206
The former Organic Act and the present Constitution of the Philippines make the Chief Executive an integral part of the law-making
power. His disapproval of a bill, commonly known as a veto, is essentially a legislative act. The questions presented to the mind of
the Chief Executive are precisely the same as those the legislature must determine in passing a bill, except that his will be a broader
point of view.
The Constitution is a limitation upon the power of the legislative department of the government, but in this respect it is a grant of power
to the executive department. The Legislature has the affirmative power to enact laws; the Chief Executive has the negative power by
the constitutional exercise of which he may defeat the will of the Legislature. It follows that the Chief Executive must find his authority
in the Constitution. But in exercising that authority he may not be confined to rules of strict construction or hampered by the unwise
interference of the judiciary. The courts will indulge every intendment in favor of the constitutionality of a veto in the same manner as
they will presume the constitutionality of an act as originally passed by the Legislature. (Emphases supplied)
The justification for the President‘s item-veto power rests on a variety of policy goals such as to prevent logrolling legislation, 207 impose
fiscal restrictions on the legislature, as well as to fortify the executive branch‘s role in the budgetary process. 208 In Immigration and
Naturalization Service v. Chadha, the US Supreme Court characterized the President‘s item-power as "a salutary check upon the
legislative body, calculated to guard the community against the effects of factions, precipitancy, or of any impulse unfriendly to the
public good, which may happen to influence a majority of that body"; phrased differently, it is meant to "increase the chances in favor
of the community against the passing of bad laws, through haste, inadvertence, or design." 209
For the President to exercise his item-veto power, it necessarily follows that there exists a proper "item" which may be the object of
the veto. An item, as defined in the field of appropriations, pertains to "the particulars, the details, the distinct and severable parts of
the appropriation or of the bill." In the case of Bengzon v. Secretary of Justice of the Philippine Islands, 210 the US Supreme Court
characterized an item of appropriation as follows: An item of an appropriation bill obviously means an item which, in itself, is a specific
appropriation of money, not some general provision of law which happens to be put into an appropriation bill. (Emphases supplied)
On this premise, it may be concluded that an appropriation bill, to ensure that the President may be able to exercise his power of
item veto, must contain "specific appropriations of money" and not only "general provisions" which provide for parameters of
appropriation.
Further, it is significant to point out that an item of appropriation must be an item characterized by singular correspondence – meaning
an allocation of a specified singular amount for a specified singular purpose, otherwise known as a "line-item."211 This treatment not
only allows the item to be consistent with its definition as a "specific appropriation of money" but also ensures that the President may
discernibly veto the same. Based on the foregoing formulation, the existing Calamity Fund, Contingent Fund and the Intelligence
Fund, being appropriations which state a specified amount for a specific purpose, would then be considered as "line- item"
appropriations which are rightfully subject to item veto. Likewise, it must be observed that an appropriation may be validly apportioned
into component percentages or values; however, it is crucial that each percentage or value must be allocated for its own corresponding
purpose for such component to be considered as a proper line-item. Moreover, as Justice Carpio correctly pointed out, a valid
appropriation may even have several related purposes that are by accounting and budgeting practice considered as one purpose,
e.g., MOOE (maintenance and other operating expenses), in which case the related purposes shall be deemed sufficiently specific
for the exercise of the President‘s item veto power. Finally, special purpose funds and discretionary funds would equally square with
the constitutional mechanism of item-veto for as long as they follow the rule on singular correspondence as herein discussed. Anent
special purpose funds, it must be added that Section 25(4), Article VI of the 1987 Constitution requires that the "special appropriations
bill shall specify the purpose for which it is intended, and shall be supported by funds actually available as certified by the National
Treasurer, or t o be raised by a corresponding revenue proposal therein." Meanwhile, with respect to discretionary funds, Section 2
5(6), Article VI of the 1987 Constitution requires that said funds "shall be disbursed only for public purposes to be supported by
appropriate vouchers and subject to such guidelines as may be prescribed by law."
In contrast, what beckons constitutional infirmity are appropriations which merely provide for a singular lumpsum amount to be tapped
as a source of funding for multiple purposes. Since such appropriation type necessitates the further determination of both the actual
amount to be expended and the actual purpose of the appropriation which must still be chosen from the multiple purposes stated in
the law, it cannot be said that the appropriation law already indicates a "specific appropriation of money‖ and hence, without a proper
line-item which the President may veto. As a practical result, the President would then be faced with the predicament of either vetoing
the entire appropriation if he finds some of its purposes wasteful or undesirable, or approving the entire appropriation so as not to
hinder some of its legitimate purposes. Finally, it may not be amiss to state that such arrangement also raises non-delegability issues
considering that the implementing authority would still have to determine, again, both the actual amount to be expended and the actual
purpose of the appropriation. Since the foregoing determinations constitute the integral aspects of the power to appropriate, the
implementing authority would, in effect, be exercising legislative prerogatives in violation of the principle of non-delegability. b.
Application.
In these cases, petitioners claim that "in the current x x x system where the PDAF is a lump-sum appropriation, the legislator‘s
identification of the projects after the passage of the GAA denies the President the chance to veto that item later on." 212 Accordingly,
they submit that the "item veto power of the President mandates that appropriations bills adopt line-item budgeting" and that "Congress
cannot choose a mode of budgeting which effectively renders the constitutionally-given power of the President useless."213
On the other hand, respondents maintain that the text of the Constitution envisions a process which is intended to meet the demands
of a modernizing economy and, as such, lump-sum appropriations are essential to financially address situations which are barely

69
foreseen when a GAA is enacted. They argue that the decision of the Congress to create some lump-sum appropriations is
constitutionally allowed and textually-grounded.214 The Court agrees with petitioners. Under the 2013 PDAF Article, the amount of
₱24.79 Billion only appears as a collective allocation limit since the said amount would be further divided among individual legislators
who would then receive personal lump-sum allocations and could, after the GAA is passed, effectively appropriate PDAF funds based
on their own discretion. As these intermediate appropriations are made by legislators only after the GAA is passed and hence, outside
of the law, it necessarily means that the actual items of PDAF appropriation would not have been written into the General
Appropriations Bill and thus effectuated without veto consideration. This kind of lumpsum/post-enactment legislative identification
budgeting system fosters the creation of a budget within a budget" which subverts the prescribed procedure of presentment and
consequently impairs the President‘s power of item veto. As petitioners aptly point out, the above-described system forces the
President to decide between (a) accepting the entire ₱24.79 Billion PDAF allocation without knowing the specific projects of the
legislators, which may or may not be consistent with his national agenda and (b) rejecting the whole PDAF to the detriment of all other
legislators with legitimate projects.215
Moreover, even without its post-enactment legislative identification feature, the 2013 PDAF Article would remain constitutionally flawed
since it would then operate as a prohibited form of lump-sum appropriation abovecharacterized. In particular, the lump-sum amount
of ₱24.79 Billion would be treated as a mere funding source allotted for multiple purposes of spending, i.e., scholarships, medical
missions, assistance to indigents, preservation of historical materials, construction of roads, flood control, etc. This setup connotes
that the appropriation law leaves the actual amounts and purposes of the appropriation for further determination and, therefore, does
not readily indicate a discernible item which may be subject to the President‘s power of item veto.
In fact, on the accountability side, the same lump-sum budgeting scheme has, as the CoA Chairperson relays, "limited state auditors
from obtaining relevant data and information that would aid in more stringently auditing the utilization of said Funds." 216 Accordingly,
she recommends the adoption of a "line by line budget or amount per proposed program, activity or project, and per implementing
agency."217
Hence, in view of the reasons above-stated, the Court finds the 2013 PDAF Article, as well as all Congressional Pork Barrel Laws
of similar operation, to be unconstitutional. That such budgeting system provides for a greater degree of flexibility to account for
future contingencies cannot be an excuse to defeat what the Constitution requires. Clearly, the first and essential truth of the matter
is that unconstitutional means do not justify even commendable ends. 218 c. Accountability.
Petitioners further relate that the system under which various forms of Congressional Pork Barrel operate defies public accountability
as it renders Congress incapable of checking itself or its Members. In particular, they point out that the Congressional Pork Barrel
"gives each legislator a direct, financial interest in the smooth, speedy passing of the yearly budget" which turns them "from
fiscalizers" into "financially-interested partners."219 They also claim that the system has an effect on re- election as "the PDAF excels
in self-perpetuation of elective officials." Finally, they add that the "PDAF impairs the power of impeachment" as such "funds are
indeed quite useful, ‘to well, accelerate the decisions of senators.‘" 220 The Court agrees in part.
The aphorism forged under Section 1, Article XI of the 1987 Constitution, which states that "public office is a public trust," is an
overarching reminder that every instrumentality of government should exercise their official functions only in accordance with the
principles of the Constitution which embodies the parameters of the people‘s trust. The notion of a public trust connotes
accountability,221 hence, the various mechanisms in the Constitution which are designed to exact accountability from public officers.
Among others, an accountability mechanism with which the proper expenditure of public funds may be checked is the power of
congressional oversight. As mentioned in Abakada,222 congressional oversight may be performed either through: (a) scrutiny based
primarily on Congress‘ power of appropriation and the budget hearings conducted in connection with it, its power to ask heads of
departments to appear before and be heard by either of its Houses on any matter pertaining to their departments and its power of
confirmation;223 or (b) investigation and monitoring of the implementation of laws pursuant to the power of Congress to conduct
inquiries in aid of legislation.224
The Court agrees with petitioners that certain features embedded in some forms of Congressional Pork Barrel, among others the 2013
PDAF Article, has an effect on congressional oversight. The fact that individual legislators are given post-enactment roles in the
implementation of the budget makes it difficult for them to become disinterested "observers" when scrutinizing, investigating or
monitoring the implementation of the appropriation law. To a certain extent, the conduct of oversight would be tainted as said
legislators, who are vested with post-enactment authority, would, in effect, be checking on activities in which they themselves
participate. Also, it must be pointed out that this very same concept of post-enactment authorization runs afoul of Section 14, Article
VI of the 1987 Constitution which provides that:
Sec. 14. No Senator or Member of the House of Representatives may personally appear as counsel before any court of justice or
before the Electoral Tribunals, or quasi-judicial and other administrative bodies. Neither shall he, directly or indirectly, be interested
financially in any contract with, or in any franchise or special privilege granted by the Government, or any subdivision, agency, or
instrumentality thereof, including any governmentowned or controlled corporation, or its subsidiary, during his term of office. He shall
not intervene in any matter before any office of the Government for his pecuniary benefit or where he may be called upon to act on
account of his office. (Emphasis supplied)
Clearly, allowing legislators to intervene in the various phases of project implementation – a matter before another office of
government – renders them susceptible to taking undue advantage of their own office. The Court, however, cannot completely
agree that the same post-enactment authority and/or the individual legislator‘s control of his PDAF per se would allow him to
perpetuate himself in office. Indeed, while the
Congressional Pork Barrel and a legislator‘s use thereof may be linked to this area of interest, the use of his PDAF for re-election
purposes is a matter which must be analyzed based on particular facts and on a case-tocase basis.
Finally, while the Court accounts for the possibility that the close operational proximity between legislators and the Executive
department, through the former‘s post-enactment participation, may affect the process of impeachment, this matter largely borders on
the domain of politics and does not strictly concern the Pork Barrel
System‘s intrinsic constitutionality. As such, it is an improper subject of judicial assessment.
In sum, insofar as its post-enactment features dilute congressional oversight and violate Section 14, Article VI of the 1987 Constitution,
thus impairing public accountability, the 2013 PDAF Article and other forms of Congressional Pork Barrel of similar nature are deemed
as unconstitutional.
4. Political Dynasties.
One of the petitioners submits that the Pork Barrel System enables politicians who are members of political dynasties to accumulate
funds to perpetuate themselves in power, in contravention of Section 26, Article II of the 1987 Constitution 225 which states that:
Sec. 26. The State shall guarantee equal access to opportunities for public service, and prohibit political dynasties as may be defined
by law. (Emphasis and underscoring supplied)
At the outset, suffice it to state that the foregoing provision is considered as not self-executing due to the qualifying phrase "as may
be defined by law." In this respect, said provision does not, by and of itself, provide a judicially enforceable constitutional right but
merely specifies guideline for legislative or executive

70
action.226 Therefore, since there appears to be no standing law which crystallizes the policy on political dynasties for enforcement, the
Court must defer from ruling on this issue.
In any event, the Court finds the above-stated argument on this score to be largely speculative since it has not been properly
demonstrated how the Pork Barrel System would be able to propagate political dynasties.
5. Local Autonomy.
The State‘s policy on local autonomy is principally stated in Section 25, Article II and Sections 2 and 3, Article X of the 1987 Constitution
which read as follows:
ARTICLE II Sec. 25.
The State shall ensure the autonomy of local governments. ARTICLE X
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local
government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum,
allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications,
election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to
the organization and operation of the local units.
Pursuant thereto, Congress enacted RA 7160,227 otherwise known as the "Local Government Code of 1991" (LGC), wherein the policy
on local autonomy had been more specifically explicated as follows:
Sec. 2. Declaration of Policy. – (a) It is hereby declared the policy of the State that the territorial and political subdivisions of the State
shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and
make them more effective partners in the attainment of national goals. Toward this end, the State shall provide for a more responsive
and accountable local government structure instituted through a system of decentralization whereby local government units shall be
given more powers, authority, responsibilities, and resources. The process of decentralization shall proceed from the National
Government to the local government units. x x x x
(c) It is likewise the policy of the State to require all national agencies and offices to conduct periodic consultations with appropriate
local government units, nongovernmental and people‘s organizations, and other concerned sectors of the community before any
project or program is implemented in their respective jurisdictions. (Emphases and underscoring supplied)
The above-quoted provisions of the Constitution and the LGC reveal the policy of the State to empower local government units (LGUs)
to develop and ultimately, become self-sustaining and effective contributors to the national economy. As explained by the Court in
Philippine Gamefowl Commission v. Intermediate Appellate
Court:228
This is as good an occasion as any to stress the commitment of the Constitution to the policy of local autonomy which is intended to
provide the needed impetus and encouragement to the development of our local political subdivisions as "self - reliant communities."
In the words of Jefferson, "Municipal corporations are the small republics from which the great one derives its strength." The vitalization
of local governments will enable their inhabitants to fully exploit their resources and more important, imbue them with a deepened
sense of involvement in public affairs as members of the body politic. This objective could be blunted by undue interference by the
national government in purely local affairs which are best resolved by the officials and inhabitants of such political units. The decision
we reach today conforms not only to the letter of the pertinent laws but also to the spirit of the Constitution. 229 (Emphases and
underscoring supplied)
In the cases at bar, petitioners contend that the Congressional Pork Barrel goes against the constitutional principles on local autonomy
since it allows district representatives, who are national officers, to substitute their judgments in utilizing public funds for local
development.230 The Court agrees with petitioners.
Philconsa described the 1994 CDF as an attempt "to make equal the unequal" and that "it is also a recognition that individual members
of Congress, far more than the President and their congressional colleagues, are likely to be knowledgeable about the needs of their
respective constituents and the priority to be given each project."231 Drawing strength from this pronouncement, previous legislators
justified its existence by stating that "the relatively small projects implemented under the Congressional Pork Barrel complement and
link the national development goals to the countryside and grassroots as well as to depressed areas which are overlooked by central
agencies which are preoccupied with mega-projects.232 Similarly, in his August 23, 2013 speech on the "abolition" of PDAF and
budgetary reforms, President Aquino mentioned that the Congressional Pork Barrel was originally established for a worthy goal, which
is to enable the representatives to identify projects for communities that the LGU concerned cannot afford. 233
Notwithstanding these declarations, the Court, however, finds an inherent defect in the system which actually belies the avowed
intention of "making equal the unequal." In particular, the Court observes that the gauge of PDAF and CDF allocation/division is based
solely on the fact of office, without taking into account the specific interests and peculiarities of the district the legislator represents. In
this regard, the allocation/division limits are clearly not based on genuine parameters of equality, wherein economic or geographic
indicators have been taken into consideration. As a result, a district representative of a highly-urbanized metropolis gets the same
amount of funding as a district representative of a far-flung rural province which would be relatively
"underdeveloped" compared to the former. To add, what rouses graver scrutiny is that even Senators and PartyList Representatives
– and in some years, even the Vice-President – who do not represent any locality, receive funding from the Congressional Pork Barrel
as well. These certainly are anathema to the Congressional Pork Barrel‘s original intent which is "to make equal the unequal."
Ultimately, the PDAF and CDF had become personal funds under the effective control of each legislator and given unto them on the
sole account of their office.
The Court also observes that this concept of legislator control underlying the CDF and PDAF conflicts with the functions of the
various Local Development Councils (LDCs) which are already legally mandated to "assist the corresponding sanggunian in setting
the direction of economic and social development, and coordinating development efforts within its territorial jurisdiction."234
Considering that LDCs are instrumentalities whose functions are essentially geared towards managing local affairs, 235 their
programs, policies and resolutions should not be overridden nor duplicated by individual legislators, who are national officers that
have no lawmaking authority except only when acting as a body. The undermining effect on local autonomy caused by the post-
enactment authority conferred to the latter was succinctly put by petitioners in the following wise: 236 With PDAF, a Congressman
can simply bypass the local development council and initiate projects on his own, and even take sole credit for its execution.
Indeed, this type of personality-driven project identification has not only contributed little to the overall development of the district,
but has even contributed to "further weakening infrastructure planning and coordination efforts of the government."
Thus, insofar as individual legislators are authorized to intervene in purely local matters and thereby subvert genuine local autonomy,
the 2013 PDAF Article as well as all other similar forms of Congressional Pork Barrel is deemed unconstitutional.
With this final issue on the Congressional Pork Barrel resolved, the Court now turns to the substantive issues involving the Presidential
Pork Barrel.
C. Substantive Issues on the Presidential Pork Barrel.
1. Validity of Appropriation.

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Petitioners preliminarily assail Section 8 of PD 910 and Section 12 of PD1869 (now, amended by PD 1993), which respectively provide
for the Malampaya Funds and the Presidential Social Fund, as invalid appropriations laws since they do not have the "primary and
specific" purpose of authorizing the release of public funds from the National Treasury. Petitioners submit that Section 8 of PD 910 is
not an appropriation law since the "primary and specific‖ purpose of PD 910 is the creation of an Energy Development Board and
Section 8 thereof only created a Special Fund incidental thereto.237 In similar regard, petitioners argue that Section 12 of PD 1869 is
neither a valid appropriations law since the allocation of the Presidential Social Fund is merely incidental to the
"primary and specific" purpose of PD 1869 which is the amendment of the Franchise and Powers of
PAGCOR.238 In view of the foregoing, petitioners suppose that such funds are being used without any valid law allowing for their
proper appropriation in violation of Section 29(1), Article VI of the 1987 Constitution which states that: "No money shall be paid out of
the Treasury except in pursuance of an appropriation made by law."239
The Court disagrees. "An appropriation made by law‖ under the contemplation of Section 29(1), Article VI of the 1987 Constitution
exists when a provision of law (a) sets apart a determinate or determinable 240 amount of money and (b) allocates the same for a
particular public purpose. These two minimum designations of amount and purpose stem from the very definition of the word
"appropriation," which means "to allot, assign, set apart or apply to a particular use or purpose," and hence, if written into the law,
demonstrate that the legislative intent to appropriate exists. As the Constitution "does not provide or prescribe any particular form of
words or religious recitals in which an authorization or appropriation by Congress shall be made, except that it be ‘made by law,‘" an
appropriation law may – according to Philconsa – be "detailed and as broad as Congress wants it to be" for as long as the intent to
appropriate may be gleaned from the same. As held in the case of Guingona, Jr.: 241
There is no provision in our Constitution that provides or prescribes any particular form of words or religious recitals in which an
authorization or appropriation by Congress shall be made, except that it be "made by law," such as precisely the authorization or
appropriation under the questioned presidential decrees. In other words, in terms of time horizons, an appropriation may be made
impliedly (as by past but subsisting legislations) as well as expressly for the current fiscal year (as by enactment of laws by the present
Congress), just as said appropriation may be made in general as well as in specific terms. The Congressional authorization may be
embodied in annual laws, such as a general appropriations act or in special provisions of laws of general or special application which
appropriate public funds for specific public purposes, such as the questioned decrees. An appropriation measure is sufficient if the
legislative intention clearly and certainly appears from the language employed (In re Continuing Appropriations, 32 P. 272), whether
in the past or in the present. (Emphases and underscoring supplied)
Likewise, as ruled by the US Supreme Court in State of Nevada v. La Grave:242
To constitute an appropriation there must be money placed in a fund applicable to the designated purpose. The word appropriate
means to allot, assign, set apart or apply to a particular use or purpose. An appropriation in the sense of the constitution means the
setting apart a portion of the public funds for a public purpose. No particular form of words is necessary for the purpose, if the intention
to appropriate is plainly manifested. (Emphases supplied)
Thus, based on the foregoing, the Court cannot sustain the argument that the appropriation must be the "primary and specific" purpose
of the law in order for a valid appropriation law to exist. To reiterate, if a legal provision designates a determinate or determinable
amount of money and allocates the same for a particular public purpose, then the legislative intent to appropriate becomes apparent
and, hence, already sufficient to satisfy the requirement of an "appropriation made by law" under contemplation of the Constitution.
Section 8 of PD 910 pertinently provides:
Section 8. Appropriations. x x x
All fees, revenues and receipts of the Board from any and all sources including receipts from service contracts and agreements such
as application and processing fees, signature bonus, discovery bonus, production bonus; all money collected from concessionaires,
representing unspent work obligations, fines and penalties under the Petroleum Act of 1949; as well as the government share
representing royalties, rentals, production share on service contracts and similar payments on the exploration, development and
exploitation of energy resources, shall form part of a Special Fund to be used to finance energy resource development and exploitation
programs and projects of the government and for such other purposes as may be hereafter directed by the President.
(Emphases supplied)
Whereas Section 12 of PD 1869, as amended by PD 1993, reads:
Sec. 12. Special Condition of Franchise. — After deducting five (5%) percent as Franchise Tax, the Fifty (50%) percent share of the
Government in the aggregate gross earnings of the Corporation from this Franchise, or 60% if the aggregate gross earnings be less
than ₱150,000,000.00 shall be set aside and shall accrue to the General Fund to finance the priority infrastructure development
projects and to finance the restoration of damaged or destroyed facilities due to calamities, as may be directed and authorized by the
Office of the President of the Philippines. (Emphases supplied)
Analyzing the legal text vis-à-vis the above-mentioned principles, it may then be concluded that (a) Section 8 of
PD 910, which creates a Special Fund comprised of "all fees, revenues, and receipts of the Energy
Development Board from any and all sources" (a determinable amount) "to be used to finance energy resource development and
exploitation programs and projects of the government and for such other purposes as may be hereafter directed by the President" (a
specified public purpose), and (b) Section 12 of PD 1869, as amended by PD 1993, which similarly sets aside, "after deducting five
(5%) percent as Franchise Tax, the Fifty (50%) percent share of the Government in the aggregate gross earnings of PAGCOR, or
60%, if the aggregate gross earnings be less than ₱150,000,000.00" (also a determinable amount) "to finance the priority infrastructure
development projects and x x x the restoration of damaged or destroyed facilities due to calamities, as may be directed and authorized
by the Office of the President of the Philippines" (also a specified public purpose), are legal appropriations under Section 29(1), Article
VI of the 1987 Constitution.
In this relation, it is apropos to note that the 2013 PDAF Article cannot be properly deemed as a legal appropriation under the said
constitutional provision precisely because, as earlier stated, it contains postenactment measures which effectively create a system of
intermediate appropriations. These intermediate appropriations are the actual appropriations meant for enforcement and since they
are made by individual legislators after the GAA is passed, they occur outside the law. As such, the Court observes that the real
appropriation made under the 2013 PDAF Article is not the ₱24.79 Billion allocated for the entire PDAF, but rather the post-enactment
determinations made by the individual legislators which are, to repeat, occurrences outside of the law. Irrefragably, the 2013 PDAF
Article does not constitute an "appropriation made by law" since it, in its truest sense, only authorizes individual legislators to
appropriate in violation of the non-delegability principle as afore-discussed.
2. Undue Delegation.
On a related matter, petitioners contend that Section 8 of PD 910 constitutes an undue delegation of legislative power since the phrase
"and for such other purposes as may be hereafter directed by the President" gives the President "unbridled discretion to determine
for what purpose the funds will be used."243 Respondents, on the other hand, urged the Court to apply the principle of ejusdem generis
to the same section and thus, construe the phrase "and for such other purposes as may be hereafter directed by the President" to
refer only to other purposes related "to energy resource development and exploitation programs and projects of the government." 244
The Court agrees with petitioners‘ submissions.

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While the designation of a determinate or determinable amount for a particular public purpose is sufficient for a legal appropriation to
exist, the appropriation law must contain adequate legislative guidelines if the same law delegates rule-making authority to the
Executive245 either for the purpose of (a) filling up the details of the law for its enforcement, known as supplementary rule-making, or
(b) ascertaining facts to bring the law into actual operation, referred to as contingent rule-making.246 There are two (2) fundamental
tests to ensure that the legislative guidelines for delegated rule-making are indeed adequate. The first test is called the "completeness
test." Case law states that a law is complete when it sets forth therein the policy to be executed, carried out, or implemented by the
delegate. On the other hand, the second test is called the "sufficient standard test." Jurisprudence holds that a law lays down a
sufficient standard when it provides adequate guidelines or limitations in the law to map out the boundaries of the delegate‘s authority
and prevent the delegation from running riot. 247 To be sufficient, the standard must specify the limits of the delegate‘s authority,
announce the legislative policy, and identify the conditions under which it is to be implemented. 248
In view of the foregoing, the Court agrees with petitioners that the phrase "and for such other purposes as may be hereafter directed
by the President" under Section 8 of PD 910 constitutes an undue delegation of legislative power insofar as it does not lay down a
sufficient standard to adequately determine the limits of the President‘s authority with respect to the purpose for which the Malampaya
Funds may be used. As it reads, the said phrase gives the President wide latitude to use the Malampaya Funds for any other purpose
he may direct and, in effect, allows him to unilaterally appropriate public funds beyond the purview of the law. That the subject phrase
may be confined only to "energy resource development and exploitation programs and projects of the government" under the principle
of ejusdem generis, meaning that the general word or phrase is to be construed to include – or be restricted to – things akin to,
resembling, or of the same kind or class as those specifically mentioned, 249 is belied by three (3) reasons: first, the phrase "energy
resource development and exploitation programs and projects of the government" states a singular and general class and hence,
cannot be treated as a statutory reference of specific things from which the general phrase "for such other purposes" may be limited;
second, the said phrase also exhausts the class it represents, namely energy development programs of the government; 250 and, third,
the Executive department has, in fact, used the Malampaya Funds for non-energy related purposes under the subject phrase, thereby
contradicting respondents‘ own position that it is limited only to "energy resource development and exploitation programs and projects
of the government."251 Thus, while Section 8 of PD 910 may have passed the completeness test since the policy of energy
development is clearly deducible from its text, the phrase "and for such other purposes as may be hereafter directed by the President"
under the same provision of law should nonetheless be stricken down as unconstitutional as it lies independently unfettered by any
sufficient standard of the delegating law. This notwithstanding, it must be underscored that the rest of Section 8, insofar as it allows
for the use of the Malampaya Funds "to finance energy resource development and exploitation programs and projects of the
government," remains legally effective and subsisting. Truth be told, the declared unconstitutionality of the aforementioned phrase is
but an assurance that the Malampaya Funds would be used – as it should be used – only in accordance with the avowed purpose
and intention of PD 910.
As for the Presidential Social Fund, the Court takes judicial notice of the fact that Section 12 of PD 1869 has already been amended
by PD 1993 which thus moots the parties‘ submissions on the same. 252 Nevertheless, since the amendatory provision may be readily
examined under the current parameters of discussion, the Court proceeds to resolve its constitutionality.
Primarily, Section 12 of PD 1869, as amended by PD 1993, indicates that the Presidential Social Fund may be used "to first, finance
the priority infrastructure development projects and second, to finance the restoration of damaged or destroyed facilities due to
calamities, as may be directed and authorized by the Office of the President of the Philippines." The Court finds that while the second
indicated purpose adequately curtails the authority of the President to spend the Presidential Social Fund only for restoration
purposes which arise from calamities, the first indicated purpose, however, gives him carte blanche authority to use the same fund
for any infrastructure project he may so determine as a "priority". Verily, the law does not supply a definition of "priority in frastructure
development projects" and hence, leaves the President without any guideline to construe the same. To note, the delimitation of a
project as one of "infrastructure" is too broad of a classification since the said term could pertain to any kind of facility. This may be
deduced from its lexicographic definition as follows: "the underlying framework of a system, especially public services and facilities
(such as highways, schools, bridges, sewers, and water-systems) needed to support commerce as well as economic and residential
development."253 In fine, the phrase "to finance the priority infrastructure development projects" must be stricken down as
unconstitutional since – similar to the above-assailed provision under Section 8 of PD 910 – it lies independently unfettered by any
sufficient standard of the delegating law. As they are severable, all other provisions of Section 12 of PD 1869, as amended by PD
1993, remains legally effective and subsisting. D. Ancillary Prayers. 1.
Petitioners’ Prayer to be Furnished Lists and Detailed Reports.
Aside from seeking the Court to declare the Pork Barrel System unconstitutional – as the Court did so in the context of its
pronouncements made in this Decision – petitioners equally pray that the Executive Secretary and/or the DBM be ordered to release
to the CoA and to the public: (a) "the complete schedule/list of legislators who have availed of their PDAF and VILP from the years
2003 to 2013, specifying the use of the funds, the project or activity and the recipient entities or individuals, and all pertinent data
thereto" (PDAF Use
Schedule/List);254 and (b) "the use of the Executive‘s lump-sum, discretionary funds, including the proceeds from the x x x Malampaya
Funds and remittances from the PAGCOR x x x from 2003 to 2013, specifying the x x x project or activity and the recipient entities or
individuals, and all pertinent data thereto"255 (Presidential Pork Use Report). Petitioners‘ prayer is grounded on Section 28, Article II
and Section 7, Article III of the 1987 Constitution which read as follows:
ARTICLE II
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all
its transactions involving public interest.
ARTICLE III Sec. 7.
The right of the people to information on matters of public concern shall be recognized. Access to official records, and to
documents and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis
for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law. The Court denies
petitioners‘ submission.
Case law instructs that the proper remedy to invoke the right to information is to file a petition for mandamus. As explained in the case
of Legaspi v. Civil Service Commission:256
While the manner of examining public records may be subject to reasonable regulation by the government agency in custody thereof,
the duty to disclose the information of public concern, and to afford access to public records cannot be discretionary on the part of
said agencies. Certainly, its performance cannot be made contingent upon the discretion of such agencies. Otherwise, the enjoyment
of the constitutional right may be rendered nugatory by any whimsical exercise of agency discretion. The constitutional duty, not being
discretionary, its performance may be compelled by a writ of mandamus in a proper case.
But what is a proper case for Mandamus to issue? In the case before Us, the public right to be enforced and the concomitant duty of
the State are unequivocably set forth in the Constitution.
The decisive question on the propriety of the issuance of the writ of mandamus in this case is, whether the information sought by the
petitioner is within the ambit of the constitutional guarantee. (Emphases supplied) Corollarily, in the case of Valmonte v. Belmonte

73
Jr.257 (Valmonte), it has been clarified that the right to information does not include the right to compel the preparation of "lists,
abstracts, summaries and the like." In the same case, it was stressed that it is essential that the "applicant has a well -defined, clear
and certain legal right to the thing demanded and that it is the imperative duty of defendant to perform the act required." Hence, without
the foregoing substantiations, the Court cannot grant a particular request for information. The pertinent portions of Valmonte are
hereunder quoted:258
Although citizens are afforded the right to information and, pursuant thereto, are entitled to "access to official records," the Constitution
does not accord them a right to compel custodians of official records to prepare lists, abstracts, summaries and the like in their desire
to acquire information on matters of public concern.
It must be stressed that it is essential for a writ of mandamus to issue that the applicant has a well-defined, clear and certain legal
right to the thing demanded and that it is the imperative duty of defendant to perform the act required. The corresponding duty of the
respondent to perform the required act must be clear and specific Lemi v. Valencia, G.R. No. L-20768, November 29,1968,126 SCRA
203; Ocampo v. Subido, G.R. No. L-28344, August 27, 1976, 72 SCRA 443.
The request of the petitioners fails to meet this standard, there being no duty on the part of respondent to prepare the list requested.
(Emphases supplied)
In these cases, aside from the fact that none of the petitions are in the nature of mandamus actions, the Court finds that petitioners
have failed to establish a "a well-defined, clear and certain legal right" to be furnished by the Executive Secretary and/or the DBM of
their requested PDAF Use Schedule/List and Presidential Pork Use Report. Neither did petitioners assert any law or administrative
issuance which would form the bases of the latter‘s duty to furnish them with the documents requested. While petitioners pray that
said information be equally released to the CoA, it must be pointed out that the CoA has not been impleaded as a party to these cases
nor has it filed any petition before the Court to be allowed access to or to compel the release of any official document relevant to the
conduct of its audit investigations. While the Court recognizes that the information requested is a matter of significant public concern,
however, if only to ensure that the parameters of disclosure are properly foisted and so as not to unduly hamper the equally important
interests of the government, it is constrained to deny petitioners‘ prayer on this score, without prejudice to a proper mandamus case
which they, or even the CoA, may choose to pursue through a separate petition.
It bears clarification that the Court‘s denial herein should only cover petitioners‘ plea to be furnished with such schedule/list and report
and not in any way deny them, or the general public, access to official documents which are already existing and of public record.
Subject to reasonable regulation and absent any valid statutory prohibition, access to these documents should not be proscribed.
Thus, in Valmonte, while the Court denied the application for mandamus towards the preparation of the list requested by petitioners
therein, it nonetheless allowed access to the documents sought for by the latter, subject, however, to the custodian‘s reasonable
regulations,viz.:259
In fine, petitioners are entitled to access to the documents evidencing loans granted by the GSIS, subject to reasonable regulations
that the latter may promulgate relating to the manner and hours of examination, to the end that damage to or loss of the records may
be avoided, that undue interference with the duties of the custodian of the records may be prevented and that the right of other persons
entitled to inspect the records may be insured Legaspi v. Civil Service Commission, supra at p. 538, quoting Subido v. Ozaeta, 80
Phil. 383, 387.
The petition, as to the second and third alternative acts sought to be done by petitioners, is meritorious.
However, the same cannot be said with regard to the first act sought by petitioners, i.e.,
"to furnish petitioners the list of the names of the Batasang Pambansa members belonging to the UNIDO and PDP-Laban who
were able to secure clean loans immediately before the February 7 election thru the intercession/marginal note of the then First
Lady Imelda Marcos." The Court, therefore, applies the same treatment here.
2. Petitioners’ Prayer to Include Matters in Congressional Deliberations.
Petitioners further seek that the Court "order the inclusion in budgetary deliberations with the Congress of all presently, off-budget,
lump sum, discretionary funds including but not limited to, proceeds from the x x x Malampaya Fund, remittances from the PAGCOR
and the PCSO or the Executive‘s Social Funds." 260
Suffice it to state that the above-stated relief sought by petitioners covers a matter which is generally left to the prerogative of the
political branches of government. Hence, lest the Court itself overreach, it must equally deny their prayer on this score.
3. Respondents’ Prayer to Lift TRO; Consequential Effects of Decision.
The final issue to be resolved stems from the interpretation accorded by the DBM to the concept of released funds. In response to the
Court‘s September 10, 2013 TRO that enjoined the release of the remaining PDAF allocated for the year 2013, the DBM issued
Circular Letter No. 2013-8 dated September 27, 2013 (DBM Circular 2013-8) which pertinently reads as follows:
3.0 Nonetheless, PDAF projects funded under the FY 2013 GAA, where a Special Allotment Release Order (SARO) has been issued
by the DBM and such SARO has been obligated by the implementing agencies prior to the issuance of the TRO, may continually be
implemented and disbursements thereto effected by the agencies concerned.
Based on the text of the foregoing, the DBM authorized the continued implementation and disbursement of PDAF funds as long as
they are: first, covered by a SARO; and, second, that said SARO had been obligated by the implementing agency concerned prior to
the issuance of the Court‘s September 10, 2013 TRO.
Petitioners take issue with the foregoing circular, arguing that "the issuance of the SARO does not yet involve the release of funds
under the PDAF, as release is only triggered by the issuance of a Notice of Cash Allocation [(NCA)]." 261 As such, PDAF
disbursements, even if covered by an obligated SARO, should remain enjoined.
For their part, respondents espouse that the subject TRO only covers "unreleased and unobligated allotments."
They explain that once a SARO has been issued and obligated by the implementing agency concerned, the PDAF funds covered by
the same are already "beyond the reach of the TRO because they cannot be considered as ‘remaining PDAF.‘" They conclude that
this is a reasonable interpretation of the TRO by the DBM.262
The Court agrees with petitioners in part.
At the outset, it must be observed that the issue of whether or not the Court‘s September 10, 2013 TRO should be lifted is a matter
rendered moot by the present Decision. The unconstitutionality of the 2013 PDAF Article as declared herein has the consequential
effect of converting the temporary injunction into a permanent one. Hence, from the promulgation of this Decision, the release of the
remaining PDAF funds for 2013, among others, is now permanently enjoined.
The propriety of the DBM‘s interpretation of the concept of "release" must, nevertheless, be resolved as it has a practical impact on
the execution of the current Decision. In particular, the Court must resolve the issue of whether or not PDAF funds covered by obligated
SAROs, at the time this Decision is promulgated, may still be disbursed following the DBM‘s interpretation in DBM Circular 2013-8.
On this score, the Court agrees with petitioners‘ posturing for the fundamental reason that funds covered by an obligated SARO are
yet to be "released" under legal contemplation. A SARO, as defined by the DBM itself in its website, is "aspecific authority issued to
identified agencies to incur obligations not exceeding a given amount during a specified period for the purpose indicated. It shall cover
expenditures the release of which is subject to compliance with specific laws or regulations, or is subject to separate approval or
clearance by competent authority."263

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Based on this definition, it may be gleaned that a SARO only evinces the existence of an obligation and not the directive to pay.
Practically speaking, the SARO does not have the direct and immediate effect of placing public funds beyond the control of the
disbursing authority. In fact, a SARO may even be withdrawn under certain circumstances which will prevent the actual release of
funds. On the other hand, the actual release of funds is brought about by the issuance of the NCA, 264 which is subsequent to the
issuance of a SARO. As may be
determined from the statements of the DBM representative during the Oral Arguments: 265 Justice Bernabe:
Is the notice of allocation issued simultaneously with the SARO? x x x x
Atty. Ruiz: It comes after. The SARO, Your Honor, is only the go signal for the agencies to obligate or to enter into commitments. The
NCA, Your Honor, is already the go signal to the treasury for us to be able to pay or to liquidate the amounts obligated in the SARO;
so it comes after. x x x The NCA, Your Honor, is the go signal for the MDS for the authorized government-disbursing banks to,
therefore, pay the payees depending on the projects or projects covered by the SARO and the NCA.
Justice Bernabe: Are there instances that SAROs are cancelled or revoked?
Atty. Ruiz: Your Honor, I would like to instead submit that there are instances that the SAROs issued are withdrawn by the DBM.
Justice Bernabe: They are withdrawn?
Atty. Ruiz: Yes, Your Honor x x x. (Emphases and underscoring supplied)
Thus, unless an NCA has been issued, public funds should not be treated as funds which have been "released." In this respect,
therefore, the disbursement of 2013 PDAF funds which are only covered by obligated SAROs, and without any corresponding NCAs
issued, must, at the time of this Decision’s promulgation, be enjoined and consequently reverted to the unappropriated surplus of the
general fund. Verily, in view of the declared unconstitutionality of the 2013 PDAF Article, the funds appropriated pursuant thereto
cannot be disbursed even though already obligated, else the Court sanctions the dealing of funds coming from an unconstitutional
source. This same pronouncement must be equally applied to (a) the Malampaya Funds which have been obligated but not released
– meaning, those merely covered by a SARO – under the phrase "and for such other purposes as may be hereafter directed by the
President" pursuant to Section 8 of PD 910; and (b) funds sourced from the Presidential Social Fund under the phrase "to finance
the priority infrastructure development projects" pursuant to Section 12 of PD 1869, as amended by PD 1993, which were altogether
declared by the Court as unconstitutional. However, these funds should not be reverted to the general fund as afore-stated but
instead, respectively remain under the Malampaya Funds and the Presidential Social Fund to be utilized for their corresponding
special purposes not otherwise declared as unconstitutional. E. Consequential Effects of Decision.
As a final point, it must be stressed that the Court‘s pronouncement anent the unconstitutionality of (a) the 2013 PDAF Article and its
Special Provisions, (b) all other Congressional Pork Barrel provisions similar thereto, and
(c) the phrases (1) "and for such other purposes as may be hereafter directed by the President" under Section 8 of PD 910, and (2)
"to finance the priority infrastructure development projects" under Section 12 of PD 1869, as amended by PD 1993, must only be
treated as prospective in effect in view of the operative fact doctrine. To explain, the operative fact doctrine exhorts the recognition
that until the judiciary, in an appropriate case, declares the invalidity of a certain legislative or executive act, such act is presumed
constitutional and thus, entitled to obedience and respect and should be properly enforced and complied with. As explained in the
recent case of Commissioner of Internal Revenue v. San Roque Power Corporation, 266 the doctrine merely "reflects awareness that
precisely because the judiciary is the governmental organ which has the final say on whether or not a legislative or executive measure
is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity.
It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such
adjudication."267 "In the language of an American Supreme Court decision: ‘The actual existence of a statute, prior to such a
determination of unconstitutionality, is an operative fact and may have consequences which cannot justly be ignored.‘" 268
For these reasons, this Decision should be heretofore applied prospectively. Conclusion
The Court renders this Decision to rectify an error which has persisted in the chronicles of our history. In the final analysis, the Court
must strike down the Pork Barrel System as unconstitutional in view of the inherent defects in the rules within which it operates. To
recount, insofar as it has allowed legislators to wield, in varying gradations, non-oversight, post-enactment authority in vital areas of
budget execution, the system has violated the principle of separation of powers; insofar as it has conferred unto legislators the power
of appropriation by giving them personal, discretionary funds from which they are able to fund specific projects which they themselves
determine, it has similarly violated the principle of non-delegability of legislative power ; insofar as it has created a system of budgeting
wherein items are not textualized into the appropriations bill, it has flouted the prescribed procedure of presentment and, in the process,
denied the President the power to veto items ; insofar as it has diluted the effectiveness of congressional oversight by giving legislators
a stake in the affairs of budget execution, an aspect of governance which they may be called to monitor and scrutinize, the system
has equally impaired public accountability ; insofar as it has authorized legislators, who are national officers, to intervene in affairs of
purely local nature, despite the existence of capable local institutions, it has likewise subverted genuine local autonomy ; and again,
insofar as it has conferred to the President the power to appropriate funds intended by law for energy-related purposes only to other
purposes he may deem fit as well as other public funds under the broad classification of "priority infrastructure development projects,"
it has once more transgressed the principle of non-delegability.
For as long as this nation adheres to the rule of law, any of the multifarious unconstitutional methods and mechanisms the Court has
herein pointed out should never again be adopted in any system of governance, by any name or form, by any semblance or similarity,
by any influence or effect. Disconcerting as it is to think that a system so constitutionally unsound has monumentally endured, the
Court urges the people and its co-stewards in government to look forward with the optimism of change and the awareness of the past.
At a time of great civic unrest and vociferous public debate, the Court fervently hopes that its Decision today, while it may not purge
all the wrongs of society nor bring back what has been lost, guides this nation to the path forged by the Constitution so that no one
may heretofore detract from its cause nor stray from its course. After all, this is the
Court‘s bounden duty and no other‘s.
WHEREFORE, the petitions are PARTLY GRANTED. In view of the constitutional violations discussed in this Decision, the Court
hereby declares as UNCONSTITUTIONAL: (a) the entire 2013 PDAF Article; (b) all legal provisions of past and present Congressional
Pork Barrel Laws, such as the previous PDAF and CDF Articles and the various Congressional Insertions, which authorize/d legislators
– whether individually or collectively organized into committees – to intervene, assume or participate in any of the various post-
enactment stages of the budget execution, such as but not limited to the areas of project identification, modification and revision of
project identification, fund release and/or fund realignment, unrelated to the power of congressional oversight; (c) all legal provisions
of past and present Congressional Pork Barrel Laws, such as the previous PDAF and CDF Articles and the various Congressional
Insertions, which confer/red personal, lump-sum allocations to legislators from which they are able to fund specific projects which they
themselves determine; (d) all informal practices of similar import and effect, which the Court similarly deems to be acts of grave abuse
of discretion amounting to lack or excess of jurisdiction; and (e) the phrases (1) "and for such other purposes as may be hereafter
directed by the President" under Section 8 of Presidential Decree No. 910 and (2) "to finance the priority infrastructure development
projects" under Section 12 of Presidential Decree No. 1869, as amended by Presidential Decree No. 1993, for both failing the sufficient
standard test in violation of the principle of nondelegability of legislative power.

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Accordingly, the Court‘s temporary injunction dated September 10, 2013 is hereby declared to be PERMANENT. Thus, the
disbursement/release of the remaining PDAF funds allocated for the year 2013, as well as for all previous years, and the funds sourced
from (1) the Malampaya Funds under the phrase "and for such other purposes as may be hereafter directed by the President" pursuant
to Section 8 of Presidential Decree No. 910, and (2) the Presidential Social Fund under the phrase "to finance the priority infrastructure
development projects" pursuant to Section 12 of Presidential Decree No. 1869, as amended by Presidential Decree No. 1993, which
are, at the time this Decision is promulgated, not covered by Notice of Cash Allocations (NCAs) but only by Special Allotment Release
Orders (SAROs), whether obligated or not, are hereby ENJOINED. The remaining PDAF funds covered by this permanent injunction
shall not be disbursed/released but instead reverted to the unappropriated surplus of the general fund, while the funds under the
Malampaya Funds and the Presidential Social Fund shall remain therein to be utilized for their respective special purposes not
otherwise declared as unconstitutional.
On the other hand, due to improper recourse and lack of proper substantiation, the Court hereby DENIES petitioners‘ prayer seeking
that the Executive Secretary and/or the Department of Budget and Management be ordered to provide the public and the Commission
on Audit complete lists/schedules or detailed reports related to the availments and utilization of the funds subject of these cases.
Petitioners‘ access to official documents already available and of public record which are related to these funds must, however, not
be prohibited but merely subjected to the custodian‘s reasonable regulations or any valid statutory prohibition on the same. This denial
is without prejudice to a proper mandamus case which they or the Commission on Audit may choose to pursue through a separate
petition.
The Court also DENIES petitioners prayer to order the inclusion of the funds subject of these cases in the budgetary deliberations of
Congress as the same is a matter left to the prerogative of the political branches of government.
Finally, the Court hereby DIRECTS all prosecutorial organs of the government to, within the bounds of reasonable dispatch, investigate
and accordingly prosecute all government officials and/or private individuals for possible criminal offenses related to the irregular,
improper and/or unlawful disbursement/utilization of all funds under the Pork Barrel System.
This Decision is immediately executory but prospective in effect.
SO ORDERED. THIRD DIVISION

ANTONIO B. BALTAZAR, G.R. No. 136433

Petitioner,

Present:
- versus -

QUISUMBING, J., Chairperson, CARPIO,

CARPIO MORALES,
HONORABLE OMBUDSMAN, EULOGIO M. TINGA, and
MARIANO, JOSE D. JIMENEZ, JR., TORIBIO E. VELASCO, JR., JJ.
ILAO, JR. and ERNESTO R.
SALENGA, Promulgated:
Respondents.

December 6, 2006

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

DECISION

VELASCO, JR., J.:

The Case

Ascribing grave abuse of discretion to respondent Ombudsman, this Petition for Review on Certiorari,[1] under Rule 45 pursuant to Section
27 of RA 6770,[2]seeks to reverse and set aside the November 26, 1997 Order[3] of the Office of the Special Prosecutor (OSP) in OMB-1-94-3425
duly approved by then Ombudsman Aniano Desierto on August 21, 1998, which recommended the dismissal of the Information [4] in Criminal Case
No. 23661 filed before the Sandiganbayan against respondents Pampanga Provincial Adjudicator Toribio E. Ilao, Jr., Chief Legal Officer Eulogio
M. Mariano and Legal Officer Jose D. Jimenez, Jr. (both of the DAR Legal Division in San Fernando, Pampanga), and Ernesto R. Salenga. The
petition likewise seeks to set aside the October 30, 1998 Memorandum[5] of the OSP duly approved by the Ombudsman on November 27, 1998
which denied petitioner's Motion for Reconsideration.[6] Previously, the filing of the Information against said respondents was authorized by the
May 10, 1996 Resolution[7] and October 3, 1996 Order[8] of the Ombudsman which found probable cause that they granted unwarranted benefits,
advantage, and preference to respondent Salenga in violation of
Section 3 (e) of RA 3019.[9]

The Facts

Paciencia Regala owns a seven (7)-hectare fishpond located at Sasmuan, Pampanga. Her Attorney-in-Fact Faustino R. Mercado leased
the fishpond for PhP 230,000.00 to Eduardo Lapid for a three (3)-year period, that is, from August 7, 1990to August 7, 1993. [10] Lessee Eduardo
Lapid in turn sub-leased the fishpond to Rafael Lopez for PhP 50,000.00 during the last seven (7) months of the original lease, that is, from January

76
10, 1993 to August 7, 1993.[11] Respondent Ernesto Salenga was hired by Eduardo Lapid as fishpond watchman (bante-encargado). In the sub-
lease, Rafael Lopez rehired respondent Salenga.

Meanwhile, on March 11, 1993, respondent Salenga, through a certain Francis Lagman, sent his January 28, 1993 demand letter [12] to
Rafael Lopez and Lourdes Lapid for unpaid salaries and non-payment of the 10% share in the harvest.

On June 5, 1993, sub-lessee Rafael Lopez wrote a letter to respondent Salenga informing the latter that for the last two (2) months of the
sub-lease, he had given the rights over the fishpond to Mario Palad and Ambit Perez for PhP 20,000.00. [13]This prompted respondent Salenga to
file a Complaint[14] before the Provincial Agrarian Reform Adjudication Board (PARAB), Region III, San Fernando, Pampanga docketed as
DARAB Case No. 552-P93 entitled Ernesto R. Salenga v. Rafael L. Lopez and Lourdes L. Lapid for Maintenance of Peaceful Possession, Collection
of Sum of Money and Supervision of Harvest. The Complaint was signed by respondent Jose D. Jimenez, Jr., Legal Officer of the Department of
Agrarian Reform (DAR) Region III Office in San Fernando, Pampanga, as counsel for respondent Salenga; whereas respondent Eulogio M. Mariano
was the Chief Legal Officer of DAR Region III. The case was assigned to respondent Toribio E. Ilao, Jr., Provincial Adjudicator of DARAB,
Pampanga.

On May 10, 1993, respondent Salenga amended his complaint. [15] The amendments included a prayer for the issuance of a temporary
restraining order (TRO) and preliminary injunction. However, before the prayer for the issuance of a TRO could be acted upon, on June 16, 1993,
respondent Salenga filed a Motion to Maintain Status Quo and to Issue Restraining Order [16] which was set for hearing on June 22, 1993. In the
hearing, however, only respondent Salenga with his counsel appeared despite notice to the other parties. Consequently, the ex-parte presentation of
respondent Salengas evidence in support of the prayer for the issuance of a restraining order was allowed, since the motion was unopposed, and on
July 21, 1993, respondent Ilao, Jr. issued a TRO.[17]

Thereafter, respondent Salenga asked for supervision of the harvest, which the board sheriff did. Accordingly, defendants Lopez and
Lapid received their respective shares while respondent Salenga was given his share under protest. In the subsequent hearing for the issuance of a
preliminary injunction, again, only respondent Salenga appeared and presented his evidence for the issuance of the writ.

Pending resolution of the case, Faustino Mercado, as Attorney-in-

Fact of the fishpond owner Paciencia Regala, filed a motion to intervene which was granted by respondent Ilao, Jr. through the November 15, 1993
Order. After the trial, respondent Ilao, Jr. rendered a Decision on May 29, 1995 dismissing the Complaint for lack of merit; but losing plaintiff,
respondent Salenga, appealed the decision before the DARAB Appellate Board.

Complaint Before the Ombudsman

On November 24, 1994, pending resolution of the agrarian case, the instant case was instituted by petitioner Antonio Baltazar, an alleged
nephew of Faustino Mercado, through a Complaint-Affidavit[18] against private respondents before the Office of the Ombudsman which was
docketed as OMB-1-94-3425 entitled Antonio B. Baltazar v. Eulogio Mariano, Jose Jimenez, Jr., Toribio Ilao, Jr. and Ernesto Salenga for violation
of RA 3019. Petitioner charged private respondents of conspiracy through the issuance of the TRO in allowing respondent Salenga to retain
possession of the fishpond, operate it, harvest the produce, and keep the sales under the safekeeping of other private respondents. Moreover,
petitioner maintains that respondent Ilao, Jr. had no jurisdiction to hear and act on DARAB Case No. 552-P93 filed by respondent Salenga as there
was no tenancy relation between respondent Salenga and Rafael L. Lopez, and thus, the complaint was dismissible on its face.

Through the December 14, 1994 Order,[19] the Ombudsman required private respondents to file their counter-
affidavits, affidavits of their witnesses, and other controverting evidence. While the other respondents submitted their counteraffidavits, respondent
Ilao, Jr. instead filed his February 9, 1995 motion to dismiss, February 21, 1995 Reply, and March 24, 1995 Rejoinder.

Ombudsmans Determination of Probable Cause

On May 10, 1996, the Ombudsman issued a Resolution[20] finding cause to bring respondents to court, denying the
motion to dismiss of respondent Ilao, Jr., and recommending the filing of an Information for violation of Section 3 (e) of RA 3019.Subsequently,
respondent Ilao, Jr. filed his September 16, 1996 Motion for Reconsideration and/or Reinvestigation[21] which was denied through the October 3,
1996 Order.[22] Consequently, the March 17, 1997 Information[23] was filed against all the private respondents before the Sandiganbayan which was
docketed as Criminal Case No. 23661.

Before the graft court, respondent Ilao, Jr. filed his May 19, 1997 Motion for Reconsideration and/or Re-investigation which was granted
through the August 29, 1997 Order.[24] On September 8, 1997, respondent Ilao, Jr. subsequently filed his Counter-Affidavit[25] with attachments
while petitioner did not file any reply-affidavit despite notice to him. The OSP of the Ombudsman conducted the re-investigation; and the result of
the re-investigation was embodied in the assailed November 26, 1997 Order [26] which recommended the dismissal of the complaint in OMB-1-94-
3425 against all private respondents. Upon review, the Ombudsman approved the OSPs recommendation on August 21, 1998.

Petitioners Motion for Reconsideration[27] was likewise denied by the OSP through the October 30, 1998 Memorandum[28] which was
approved by the Ombudsman on November 27, 1998. Consequently, the trial prosecutor moved orally before the Sandiganbayan for the dismissal
of Criminal Case No. 23661 which was granted through the December 11, 1998 Order. [29]

Thus, the instant petition is before us.

The Issues

Petitioner raises two assignments of errors, to wit:

THE HONORABLE OMBUDSMAN ERRED IN GIVING DUE COURSE A MISPLACED COUNTER-

AFFIDAVIT FILED AFTER THE TERMINATION OF THE PRELIMINARY INVESTIGATION AND/OR THE
CASE WAS ALREADY FILED BEFORE THE SANDIGANBAYAN.

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 ASSUMING OTHERWISE, THE HONORABLE OMBUDSMAN LIKEWISE ERRED IN REVERSING HIS OWN
RESOLUTION WHERE IT WAS RESOLVED THAT ACCUSED AS PROVINCIAL AGRARIAN ADJUDICATOR
HAS NO JURISDICTION OVER A COMPLAINT WHERE THERE EXIST [sic] NO TENANCY RELATIONSHIP
CONSIDERING [sic]
COMPLAINANT IS NOT A TENANT BUT A BANTE-ENCARGADO OR WATCHMANOVERSEER HIRED FOR A SALARY
OF P3,000.00 PER MONTH AS ALLEGED IN HIS OWN
COMPLAINT.[30]

Before delving into the errors raised by petitioner, we first address the preliminary procedural issue of the authority
and locus standi of petitioner to pursue the instant petition.

Preliminary Issue: Legal Standing

Locus standi is defined as a right of appearance in a court of justice x x x on a given question. [31] In private suits,
standing is governed by the real-parties-in interest rule found in Section 2, Rule 3 of the 1997 Rules of Civil Procedure which provides that every
action must be prosecuted or defended in the name of the real party in interest. Accordingly, the realparty-in interest is the party who stands to be
benefited or injured by the judgment in the suit or the party entitled to the avails of the suit. [32] Succinctly put, the plaintiffs standing is based on
their own right to the relief sought.
The records show that petitioner is a non-lawyer appearing for himself and conducting litigation in person. Petitioner
instituted the instant case before the Ombudsman in his own name. In so far as the Complaint-Affidavit filed before the Office of the Ombudsman
is concerned, there is no question on his authority and legal standing. Indeed, the Office of the Ombudsman is mandated to investigate and prosecute
on its own or on complaint by any person, any act or omission of any public officer or employee, office or agency, when such act or omission
appears to be illegal, unjust, improper or inefficient (emphasis supplied).[33] The Ombudsman can act on anonymous complaints and motu proprio
inquire into alleged improper official acts or omissions from whatever source, e.g., a newspaper. [34] Thus, any complainant may be entertained by
the Ombudsman for the latter to initiate an inquiry and investigation for alleged irregularities.

However, filing the petition in person before this Court is another matter. The Rules allow a non-lawyer to conduct
litigation in person and appear for oneself only when he is a party to a legal controversy. Section 34 of Rule 138 pertinently provides, thus:

SEC. 34. By whom litigation conducted. In the court of a justice of the peace a party may conduct his litigation in
person, with the aid of an agent or friend appointed by him for that purpose, or with the aid of an attorney. In any other
court, a party may conduct his litigation personally or by aid of an attorney, and his appearance must be either
personal or by a duly authorized member of the bar (emphases supplied).

Petitioner has no legal standing

Is petitioner a party or a real party in interest to have the locus standi to pursue the instant petition? We answer in the
negative.

While petitioner may be the complainant in OMB-1-94-3425, he is not a real party in interest. Section 2, Rule 3 of
the 1997 Rules of Civil Procedure stipulates, thus:

SEC. 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment
in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action
must be prosecuted or defended in the name of the real party in interest.

The same concept is applied in criminal and administrative cases.

In the case at bar which involves a criminal proceeding stemming from a civil (agrarian) case, it is clear that petitioner
is not a real party in interest. Except being the complainant, the records show that petitioner is a stranger to the agrarian case. It must be recalled
that the undisputed owner of the fishpond is Paciencia Regala, who intervened in DARAB Case No. 552-P93 through her Attorney-in-Fact Faustino
Mercado in order to protect her interest. The motion for intervention filed by Faustino Mercado, as agent of Paciencia Regala, was granted by
respondent Provincial Adjudicator Ilao, Jr. through the November 15, 1993 Order in DARAB Case No. 552-P93.

Agency cannot be further delegated

Petitioner asserts that he is duly authorized by Faustino Mercado to institute the suit and presented a Special Power
of Attorney[35] (SPA) from Faustino Mercado. However, such SPA is unavailing for petitioner. For one, petitioners principal, Faustino Mercado, is
an agent himself and as such cannot further delegate his agency to another. Otherwise put, an agent cannot delegate to another the same agency.
The legal maxim potestas delegata non delegare potest; a power once delegated cannot be re-delegated, while applied primarily in political law to
the exercise of legislative power, is a principle of agency.[36] For another, a re-delegation of the agency would be detrimental to the principal as the
second agent has no privity of contract with the former. In the instant case, petitioner has no privity of contract with Paciencia Regala, owner of the
fishpond and principal of Faustino Mercado.

Moreover, while the Civil Code under Article 1892[37] allows the agent to appoint a substitute, such is not the situation
in the instant case. The SPA clearly delegates the agency to petitioner to pursue the case and not merely as a substitute.Besides, it is clear in the
aforecited Article that what is allowed is a substitute and not a delegation of the agency.

Clearly, petitioner is neither a real party in interest with regard to the agrarian case, nor is he a real party in interest in the criminal
proceedings conducted by the Ombudsman as elevated to the Sandiganbayan. He is not a party who will be benefited or injured by the results of
both cases.

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Petitioner: a stranger and not an injured private complainant

Petitioner only surfaced in November 1994 as complainant before the Ombudsman. Aside from that, not being an
agent of the parties in the agrarian case, he has no locus standi to pursue this petition. He cannot be likened to an injured private complainant in a
criminal complaint who has direct interest in the outcome of the criminal case.
More so, we note that the petition is not pursued as a public suit with petitioner asserting a public right in assailing
an allegedly illegal official action, and doing so as a representative of the general public. He is pursuing the instant case as an agent of an ineffective
agency.

Petitioner has not shown entitlement to judicial protection

Even if we consider the instant petition as a public suit, where we may consider petitioner suing as a stranger, or in
the category of a citizen, or taxpayer, still petitioner has not adequately shown that he is entitled to seek judicial protection.In other words, petitioner
has not made out a sufficient interest in the vindication of the public order and the securing of relief as a citizen or taxpayer; more so when there is
no showing that he was injured by the dismissal of the criminal complaint before the Sandiganbayan.

Based on the foregoing discussion, petitioner indubitably does not have locus standi to pursue this action and the instant petition must be
forthwith dismissed on that score. Even granting arguendo that he has locus standi, nonetheless, petitioner fails to show grave abuse of discretion
of respondent Ombudsman to warrant a reversal of the assailed November 26, 1997 Order and the October 30, 1998 Memorandum.

First Issue: Submission of Counter-Affidavit

The Sandiganbayan, not the Ombudsman, ordered re-investigation

On the substantive aspect, in the first assignment of error, petitioner imputes grave abuse of discretion on public respondent Ombudsman
for allowing respondent Ilao, Jr. to submit his Counter-Affidavit when the preliminary investigation was already concluded and an Information
filed with the Sandiganbayan which assumed jurisdiction over the criminal case. This contention is utterly erroneous.

The facts clearly show that it was not the Ombudsman through the OSP who allowed respondent Ilao, Jr. to submit his Counter-Affidavit.
It was the Sandiganbayan who granted the prayed for re-investigation and ordered the OSP to conduct the re-investigation through its August 29,
1997 Order, as follows:

Considering the manifestation of Prosecutor Cicero Jurado, Jr. that accused Toribio E. Ilao, Jr. was not able to file his
counter-affidavit in the preliminary investigation, there appears to be some basis for granting the motion of said
accused for reinvestigation.

WHEREFORE, accused Toribio E. Ilao, Jr. may file his counter-affidavit, with documentary evidence attached, if any,
with the Office of the Special Prosecutor within then (10) days from today. The prosecution is ordered to conduct a
reinvestigation within a period of thirty (30) days.[38] (Emphases supplied.)

As it is, public respondent Ombudsman through the OSP did not exercise any discretion in allowing respondent Ilao, Jr. to submit his
Counter-Affidavit. The OSP simply followed the graft courts directive to conduct the re-investigation after the Counter-Affidavit of respondent
Ilao, Jr. was filed. Indeed, petitioner did not contest nor question the August 29, 1997 Order of the graft court. Moreover, petitioner did not file any
reply-affidavit in the re-investigation despite notice.

Re-investigation upon sound discretion of graft court

Furthermore, neither can we fault the graft court in granting the prayed for re-investigation as it can readily be seen
from the antecedent facts that respondent Ilao, Jr. was not given the opportunity to file his Counter-Affidavit. Respondent Ilao, Jr. filed a motion to
dismiss with the Ombudsman but such was not resolved before the Resolutionfinding cause to bring respondents to trialwas issued. In fact,
respondent Ilao, Jr.s motion to dismiss was resolved only through the May 10, 1996 Resolution which recommended the filing of an Information.
Respondent Ilao, Jr.s Motion for Reconsideration and/or Re-investigation was denied and the Information was filed with the graft court.

Verily, courts are given wide latitude to accord the accused ample opportunity to present controverting evidence even
before trial as demanded by due process.Thus, we held in Villaflor v. Vivar that [a] component part of due process in criminal justice, preliminary
investigation is a statutory and substantive right accorded to the accused before trial. To deny their claim to a preliminary investigation would be
to deprive them of the full measure of their right to due process.[39]

Second Issue: Agrarian Dispute

Anent the second assignment of error, petitioner contends that DARAB Case No. 552-P93 is not an agrarian dispute
and therefore outside the jurisdiction of the DARAB. He maintains that respondent Salenga is not an agricultural tenant but a mere watchman of
the fishpond owned by Paciencia Regala. Moreover, petitioner further argues that Rafael Lopez and Lourdes Lapid, the respondents in the DARAB
case, are not the owners of the fishpond.

Nature of the case determined by allegations in the complaint

This argument is likewise bereft of merit. Indeed, as aptly pointed out by respondents and as borne out by the
antecedent facts, respondent Ilao, Jr. could not have acted otherwise. It is a settled rule that jurisdiction over the subject matter is determined by the
allegations of the complaint.[40] The nature of an action is determined by the material averments in the complaint and the character of the relief
sought,[41] not by the defenses asserted in the answer or motion to dismiss.[42]Given that respondent Salengas complaint and its attachment clearly
spells out the jurisdictional allegations that he is an agricultural tenant in possession of the fishpond and is about to be ejected from it, clearly,
respondent Ilao, Jr. could not be faulted in assuming jurisdiction as said allegations characterize an agricultural dispute. Besides, whatever defense

79
asserted in an answer or motion to dismiss is not to be considered in resolving the issue on jurisdiction as it cannot be made dependent upon the
allegations of the defendant.

Issuance of TRO upon the sound discretion of hearing officer

As regards the issuance of the TRO, considering the proper assumption of jurisdiction by respondent Ilao, Jr., it can be readily culled
from the antecedent facts that his issuance of the TRO was a proper exercise of discretion. Firstly, the averments with evidence as to the existence
of the need for the issuance of the restraining order were manifest in respondent Salengas Motion to Maintain Status Quo and to Issue Restraining
Order,[43] the attached Police Investigation Report,[44] and Medical Certificate.[45] Secondly, only respondent Salenga attended the June 22, 1993
hearing despite notice to parties. Hence, Salengas motion was not only unopposed but his evidence adduced ex-parte also adequately supported the
issuance of the restraining order.
Premises considered, respondent Ilao, Jr. has correctly assumed jurisdiction and properly exercised his discretion in issuing the TROas
respondent Ilao, Jr. aptly maintained that giving due course to the complaint and issuing the TRO do not reflect the final determination of the merits
of the case. Indeed, after hearing the case, respondent Ilao, Jr. rendered a Decision on May 29, 1995 dismissing DARAB Case No. 552-P93 for lack
of merit.

Court will not review prosecutors determination of probable cause

Finally, we will not delve into the merits of the Ombudsmans reversal of its initial finding of probable cause or cause to bring respondents
to trial. Firstly, petitioner has not shown that the Ombudsman committed grave abuse of discretion in rendering such reversal. Secondly, it is clear
from the records that the initial finding embodied in the May 10, 1996 Resolution was arrived at before the filing of respondent Ilao, Jr.s Counter-
Affidavit. Thirdly, it is the responsibility of the public prosecutor, in this case the Ombudsman, to uphold the law, to prosecute the guilty, and to
protect the innocent. Lastly, the function of determining the existence of probable cause is proper for the Ombudsman in this case and we will not
tread on the realm of this executive function to examine and assess evidence supplied by the parties, which is supposed to be exercised at the start
of criminal proceedings. In Perez v. Hagonoy Rural Bank, Inc.,[46] as cited in Longos Rural Waterworks and Sanitation Association, Inc. v. Hon.
Desierto,[47] we had occasion to rule that we cannot pass upon the sufficiency or insufficiency of evidence to determine the existence of probable
cause.[48]

WHEREFORE, the instant petition is DENIED for lack of merit, and the November 26, 1997 Order and the October 30, 1998
Memorandum of the Office of the Special Prosecutor in Criminal Case No. 23661 (OMB-1-94-3425) are herebyAFFIRMED IN TOTO, with costs
against petitioner.

SO ORDERED.
THIRD DIVISION

PHILIP L. GO, PACIFICO Q. LIM and G.R. No. 194024

ANDREW Q. LIM
Petitioners, Present:

VELASCO, JR., J., Chairperson,

PERALTA,
- versus - ABAD,
MENDOZA, and
PERLAS-BERNABE, JJ.

DISTINCTION PROPERTIES
DEVELOPMENT AND CONSTRUCTION, Promulgated:
INC.
Respondent. April 25, 2012

X -------------------------------------------------------------------------------------- X

DECISION

MENDOZA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the March 17, 2010
Decision[1] and October 7, 2010 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 110013 entitled Distinction Properties Development
& Construction, Inc. v. Housing LandUse Regulatory Board (NCR), Philip L.
Go, Pacifico Q. Lim and Andrew Q. Lim.
Factual and Procedural Antecedents:

Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are registered individual owners of condominium units in Phoenix Heights
Condominium located at H. Javier/Canley Road, Bo. Bagong Ilog, Pasig City, Metro Manila.
Respondent Distinction Properties Development and Construction, Inc. (DPDCI) is a corporation existing under the
laws of the Philippines with principal office at No. 1020 Soler Street, Binondo, Manila. It was incorporated as a real estate developer, engaged in
the development of condominium projects, among which was the Phoenix Heights Condominium.

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 In February 1996, petitioner Pacifico Lim, one of the incorporators and the then president of DPDCI, executed a Master Deed and
Declaration of Restrictions(MDDR)[3] of Phoenix Heights Condominium, which was filed with the Registry of Deeds. As the developer, DPDCI
undertook, among others, the marketing aspect of the project, the sale of the units and the release of flyers and brochures.

Thereafter, Phoenix Heights Condominium Corporation (PHCC) was formally organized and incorporated. Sometime in 2000, DPDCI
turned over to PHCC the ownership and possession of the condominium units, except for the two saleable commercial units/spaces:

1. G/F Level BAS covered by Condominium Certificate of Title (CCT) No. 21030 utilized as the PHCCs administration office,
and

2. G/F Level 4-A covered by CCT No. PT-27396/C-136-II used as living quarters by the building administrator.
Although used by PHCC, DPDCI was assessed association dues for these two units.

Meanwhile, in March 1999, petitioner Pacifico Lim, as president of DPDCI, filed an Application for Alteration of Plan[4] pertaining to
the construction of 22 storage units in the spaces adjunct to the parking area of the building. The application, however, was disapproved as the
proposed alteration would obstruct light and ventilation.

In August 2004, through its Board,[5] PHCC approved a settlement offer from DPDCI for the set-off of the latters association dues arrears
with the assignment of title over CCT Nos. 21030 and PT-27396/C-136-II and their conversion into common areas. Thus, CCT Nos. PT-43400 and
PT-43399 were issued by the Registrar of Deeds of Pasig City in favor of PHCC in lieu of the old titles. The said settlement between the two
corporations likewise included the reversion of the 22 storage spaces into common areas. With the conformity of PHCC, DPDCIs application for
alteration (conversion of unconstructed 22 storage units and units GF4-A and BAS from saleable to common areas) was granted by the Housing
and Land Use Regulatory Board (HLURB).[6]

In August 2008, petitioners, as condominium unit-owners, filed a complaint[7]before the HLURB against DPDCI for unsound business
practices and violation of the MDDR. The case was docketed as REM- 080508-13906. They alleged that DPDCI committed misrepresentation in
their circulated flyers and brochures as to the facilities or amenities that would be available in the condominium and failed to perform its obligation
to comply with the MDDR.
In defense, DPDCI denied that it had breached its promises and representations to the public concerning the facilities
in the condominium. It alleged that the brochure attached to the complaint was a mere preparatory draft and not the official one actually distributed
to the public, and that the said brochure contained a disclaimer as to the binding effect of the supposed offers therein. Also, DPDCI questioned the
petitioners personality to sue as the action was a derivative suit.

After due hearing, the HLURB rendered its decision[8] in favor of petitioners.It held as invalid the agreement entered
into between DPDCI and PHCC, as to the alteration or conversion of the subject units into common areas, which it previously approved, for the
reason that it was not approved by the majority of the members of PHCC as required under Section 13 of the MDDR. It stated that DPDCIs defense,
that the brochure was a mere draft, was against human experience and a convenient excuse to avoid its obligation to provide the facility of the
project. The HLURB further stated that the case was not a derivative suit but one which involved contracts of sale of the respective units between
the complainants and DPDCI, hence, within its jurisdiction pursuant to Section 1, Presidential Decree (P.D.) No. 957 (The Subdivision and
Condominium Buyers Protective Decree), as amended. The decretal portion of the HLURB decision reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered:

1. Ordering respondent to restore/provide proper gym facilities, to restore the hallway at the mezzanine floor.

2. Declaring the conversion/alteration of 22 storage units and Units GF4-A and BAS as illegal, and
consequently, and ordering respondent to continue paying the condominium dues for these units, with
interest and surcharge.

3. Ordering the Respondent to pay the sum of Php998,190.70, plus interests and surcharges, as condominium
dues in arrears and turnover the administration office to PHCC without any charges pursuant to the
representation of the respondent in the brochures it circulated to the public with a corresponding credit to
complainants individual shares as members of PHCC entitled to such refund or reimbursements.

4. Ordering the Respondent to refund to the PHCC the amount of Php1,277,500.00, representing the cost of
the deep well, with interests and surcharges with a corresponding credit to complainants individual shares
as members of PHCC entitled to such refund or reimbursements.

5. Ordering the Respondent to pay the complainants moral and exemplary damages in the amount of
₱10,000.00 and attorneys fees in the amount of ₱10,000.00. All other claims and counterclaims are hereby
dismissed accordingly.

IT IS SO ORDERED.[9]

Aggrieved, DPDCI filed with the CA its Petition for Certiorari and Prohibition[10] dated August 11, 2009, on the
ground that the HLURB decision was a patent nullity constituting an act without or beyond its jurisdiction and that it had no other plain, speedy
and adequate remedy in the course of law.

On March 17, 2010, the CA rendered the assailed decision which disposed of the case in favor of DPDCI as follows:

WHEREFORE, in view of the foregoing, the petition is GRANTED.Accordingly, the assailed Decision of
the HLURB in Case No. REM-0800508-13906 is ANNULLED and SET ASIDE and a new one is entered
DISMISSING the Complaint a quo.

81
 IT IS SO ORDERED.[11]

The CA ruled that the HLURB had no jurisdiction over the complaint filed by petitioners as the controversy did not fall within the scope
of the administrative agencys authority under P.D. No. 957. The HLURB not only relied heavily on the brochures which, according to the CA, did
not set out an enforceable obligation on the part of DPDCI, but also erroneously cited Section 13 of the MDDR to support its finding of contractual
violation.

The CA held that jurisdiction over PHCC, an indispensable party, was neither acquired nor waived by
estoppel. Citing Carandang v. Heirs of De Guzman,[12] it held that, in any event, the action should be dismissed because the absence of PHCC, an
indispensable party, rendered all subsequent actuations of the court void, for want of authority to act, not only as to the absent parties but even as
to those present.

Finally, the CA held that the rule on exhaustion of administrative remedies could be relaxed. Appeal was not a speedy and adequate
remedy as jurisdictional questions were continuously raised but ignored by the HLURB. In the present case, however, [t]he bottom line is that the
challenged decision is one that had been rendered in excess of jurisdiction, if not with grave abuse of discretion amounting to lack or excess of
jurisdiction.[13]
Petitioners filed a motion for reconsideration[14] of the said decision. The motion, however, was denied by the CA in
its Resolution dated October 7, 2010.

Hence, petitioners interpose the present petition before this Court anchored on the following

GROUNDS

(1)
THE COURT OF APPEALS ERRED IN HOLDING THAT THE HLURB HAS NO JURISDICTION OVER THE INSTANT
CASE;
(2)
THE COURT OF APPEALS ALSO ERRED IN FINDING THAT PHCC IS AN INDISPENSABLE PARTY WHICH
WARRANTED THE DISMISSAL OF THE CASE BY REASON OF IT NOT HAVING BEEN IMPLEADED IN THE
CASE;

(3)
THE COURT OF APPEALS HAS LIKEWISE ERRED IN RELAXING THE RULE ON NONEXHAUSTION OF
ADMINISTRATIVE REMEDIES BY DECLARING THAT THE APPEAL MAY NOT BE A SPEEDY AND
ADEQUATE REMEDY WHEN JURISDICTIONAL QUESTIONS WERE CONTINUOUSLY RAISED BUT
IGNORED BY THE HLURB; and

(4)
THAT FINALLY, THE COURT A QUO ALSO ERRED IN NOT GIVING DUE RESPECT OR EVEN FINALITY TO THE
FINDINGS OF THE HLURB.[15]

Petitioners contend that the HLURB has jurisdiction over the subject matter of this case. Their complaint with the HLURB clearly alleged
and demanded specific performance upon DPDCI of the latters contractual obligation under their individual contracts to provide a back-up water
system as part of the amenities provided for in the brochure, together with an administration office, proper gym facilities, restoration of a hallway,
among others. They point out that the violation by DPDCI of its obligations enumerated in the said complaint squarely put their case within the
ambit of Section 1, P.D. No. 957, as amended, enumerating the cases that are within the exclusive jurisdiction of the HLURB. Likewise, petitioners
argue that the case was not a derivative suit as they were not suing for and in behalf of PHCC. They were suing, in their individual capacities as
condominium unit buyers, their developer for breach of contract. In support of their view that PHCC was not an indispensable party, petitioners
even quoted the dispositive portion of the HLURB decision to show that complete relief between or among the existing parties may be obtained
without the presence of PHCC as a party to this case. Petitioners further argue that DPDCIs petition before the CA should have been dismissed
outright for failure to comply with Section 1, Rule XVI of the 2004 Rules of Procedure of the HLURB providing for an appeal to the Board of
Commissioners by a party aggrieved by a decision of a regional officer.

DPDCI, in its Comment,[16] strongly objects to the arguments of petitioners and insists that the CA did not err in granting its petition. It
posits that the HLURB has no jurisdiction over the complaint filed by petitioners because the controversies raised therein are in the nature of intra-
corporate disputes. Thus, the case does not fall within the jurisdiction of the HLURB under Section 1, P.D. No. 957 and P.D. No. 1344. According
to DPDCI, petitioners sought to address the invalidation of the corporate acts duly entered and executed by PHCC as a corporation of which
petitioners are admittedly members of, and not the acts pertaining to their ownership of the units. Such being the case, PHCC should have been
impleaded as a party to the complaint. Its non-inclusion as an indispensable party warrants the dismissal of the case. DPDCI further avers that the
doctrine of exhaustion is inapplicable inasmuch as the issues raised in the petition with the CA are purely legal; that the challenged administrative
act is patently illegal; and that the procedure of the HLURB does not provide a plain, speedy and adequate remedy and its application may cause
great and irreparable damage. Finally, it claims that the decision of the HLURB Arbiter has not attained finality, the same having been issued
without jurisdiction.

Essentially, the issues to be resolved are: (1) whether the HLURB has jurisdiction over the complaint filed by the petitioners; (2) whether
PHCC is an indispensable party; and (3) whether the rule on exhaustion of administrative remedies applies in this case.

The petition fails.

Basic as a hornbook principle is that jurisdiction over the subject matter of a case is conferred by law and determined
by the allegations in the complaint which comprise a concise statement of the ultimate facts constituting the plaintiff's cause of action. The nature
of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff,
irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. The averments in the complaint
and the character of the relief sought are the ones to be consulted. Once vested by the allegations in the complaint, jurisdiction also remains vested
irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. [17] Thus, it was ruled that the

82
jurisdiction of the HLURB to hear and decide cases is determined by the nature of the cause of action, the subject matter or property involved and
the parties.[18]

Generally, the extent to which an administrative agency may exercise its powers depends largely, if not wholly, on
the provisions of the statute creating or empowering such agency. [19] With respect to the HLURB, to determine if said agency has jurisdiction over
petitioners cause of action, an examination of the laws defining the HLURBs jurisdiction and authority becomes imperative. P.D. No. 957,[20]
specifically Section 3, granted the National Housing Authority (NHA) the "exclusive jurisdiction to regulate the real estate trade and business."
Then came P.D. No. 1344[21] expanding the jurisdiction of the NHA (now HLURB), as follows:
SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its powers
provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive jurisdiction to hear
and decide cases of the following nature:
(a) Unsound real estate business practices;
(b) Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project
owner, developer, dealer, broker or salesman; and
(c) Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner, developer, dealer, broker or salesman.

This provision must be read in light of the laws preamble, which explains the reasons for enactment of the law or the
contextual basis for its interpretation.[22] A statute derives its vitality from the purpose for which it is enacted, and to construe it in a manner that
disregards or defeats such purpose is to nullify or destroy the law.[23] P.D. No. 957, as amended, aims to protect innocent subdivision lot and
condominium unit buyers against fraudulent real estate practices.[24]

The HLURB is given a wide latitude in characterizing or categorizing acts which may constitute unsound business
practice or breach of contractual obligations in the real estate trade. This grant of expansive jurisdiction to the HLURB does not mean, however,
that all cases involving subdivision lots or condominium units automatically fall under its jurisdiction. The CA aptly quoted the case of Christian
General Assembly, Inc. v. Ignacio,[25] wherein the Court held that:
The mere relationship between the parties, i.e., that of being subdivision owner/developer and subdivision
lot buyer, does not automatically vest jurisdiction in the HLURB. For an action to fall within the exclusive
jurisdiction of the HLURB, the decisive element is the nature of the action as enumerated in Section 1 of P.D. 1344.
On this matter, we have consistently held that the concerned administrative agency, the National Housing Authority
(NHA) before and now the HLURB, has jurisdiction over complaints aimed at compelling the subdivision developer
to comply with its contractual and statutory obligations.[26] [Emphases supplied]

In this case, the complaint filed by petitioners alleged causes of action that apparently are not cognizable by the HLURB considering the
nature of the action and the reliefs sought. A perusal of the complaint discloses that petitioners are actually seeking to nullify and invalidate the
duly constituted acts of PHCC - the April 29, 2005 Agreement[27] entered into by PHCC with DPDCI and its Board Resolution[28] which authorized
the acceptance of the proposed offsetting/settlement of DPDCIs indebtedness and approval of the conversion of certain units from saleable to
common areas. All these were approved by the HLURB. Specifically, the reliefs sought or prayers are the following:

1. Ordering the respondent to restore the gym to its original location;

2. Ordering the respondent to restore the hallway at the second floor;

3. Declaring the conversion/alteration of 22 storage units and Units GF4-A and BAS as illegal, and consequently, ordering
respondent to continue paying the condominium dues for these units, with interest and surcharge;

4. Ordering the respondent to pay the sum of PHP998,190.70, plus interest and surcharges, as condominium dues in
arrears and turnover the administration office to PHCC without any charges pursuant to the representation of the
respondent in the brochures it circulated to the public;

5. Ordering the respondent to refund to the PHCC the amount of PHP1,277,500.00, representing the cost of the deep
well, with interests and surcharges;

6. Ordering the respondent to pay the complainants moral/exemplary damages in the amount of PHP100,000.00; and

7. Ordering the respondent to pay the complainant attorneys fees in the amount of PHP100,000.00, and PHP3,000.00
for every hearing scheduled by the Honorable Office.[29]

As it is clear that the acts being assailed are those of PHHC, this case cannot prosper for failure to implead the proper
party, PHCC.

An indispensable party is defined as one who has such an interest in the controversy or subject matter that a final
adjudication cannot be made, in his absence, without injuring or affecting that interest. [30] In the recent case of Nagkakaisang Lakas ng Manggagawa
sa Keihin (NLMK-OLALIA-KMU) v. Keihin Philippines Corporation,[31] the Court had the occasion to state that:

Under Section 7, Rule 3 of the Rules of Court, "parties in interest without whom no final determination can be had
of an action shall be joined as plaintiffs or defendants." If there is a failure to implead an indispensable party, any judgment
rendered would have no effectiveness. It is "precisely when an indispensable party is not before the court (that) an action should
be dismissed. The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority
to act, not only as to the absent parties but even to those present." The purpose of the rules on joinder of indispensable parties
is a complete determination of all issues not only between the parties themselves, but also as regards other persons who may

83
 be affected by the judgment. A decision valid on its face cannot attain real finality where there is want of indispensable
parties.[32] (Underscoring supplied)

Similarly, in the case of Plasabas v. Court of Appeals,[33] the Court held that a final decree would necessarily affect the rights of indispensable
parties so that the Court could not proceed without their presence. In support thereof, the Court in Plasabas cited the following authorities, thus:

"The general rule with reference to the making of parties in a civil action requires the joinder of all indispensable
parties under any and all conditions, their presence being a sine qua non of the exercise of judicial power. (Borlasa
v. Polistico, 47 Phil. 345, 348) For this reason, our Supreme Court has held that when it appears of record that there
are other persons interested in the subject matter of the litigation, who are not made parties to the action, it is the
duty of the court to suspend the trial until such parties are made either plaintiffs or defendants. (Pobre, et al. v.
Blanco, 17 Phil. 156). x x x Where the petition failed to join as party defendant the person interested in sustaining
the proceeding in the court, the same should be dismissed. x x x When an indispensable party is not before the court,
the action should be dismissed. (People, et al. v. Rodriguez, et al., G.R. Nos. L-
14059-62, September 30, 1959) (sic)
"Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.
(Sec. 7, Rule 3, Rules of Court). The burden of procuring the presence of all indispensable parties is on the plaintiff. (39
Amjur [sic] 885). The evident purpose of the rule is to prevent the multiplicity of suits by requiring the person arresting a right
against the defendant to include with him, either as co-plaintiffs or as co-defendants, all persons standing in the same position,
so that the whole matter in dispute may be determined once and for all in one litigation. (Palarca v. Baginsi, 38 Phil. 177, 178).

From all indications, PHCC is an indispensable party and should have been impleaded, either as a plaintiff or as a defendant, [34] in the
complaint filed before the HLURB as it would be directly and adversely affected by any determination therein. To belabor the point, the causes of
action, or the acts complained of, were the acts of PHCC as a corporate body. Note that in the judgment rendered by the HLURB, the dispositive
portion in particular, DPDCI was ordered (1) to pay ₱998,190.70, plus interests and surcharges, as condominium dues in arrears and turnover the
administration office to PHCC; and (2) to refund to PHCC₱1,277,500.00, representing the cost of the deep well, with interests and surcharges.Also,
the HLURB declared as illegal the agreement regarding the conversion of the 22 storage units and Units GF4-A and BAS, to which agreement
PHCC was a party.

Evidently, the cause of action rightfully pertains to PHCC. Petitioners cannot exercise the same except through a
derivative suit. In the complaint, however, there was no allegation that the action was a derivative suit. In fact, in the petition, petitioners claim that
their complaint is not a derivative suit.[35] In the cited case of Chua v. Court of Appeals,[36] the Court ruled:

For a derivative suit to prosper, it is required that the minority stockholder suing for and on behalf of the corporation
must allege in his complaint that he is suing on a derivative cause of action on behalf of the corporation and all other
stockholders similarly situated who may wish to join him in the suit. It is a condition sine qua non that the corporation
be impleaded as a party because not only is the corporation an indispensable party, but it is also the present rule that
it must be served with process. The judgment must be made binding upon the corporation in order that the
corporation may get the benefit of the suit and may not bring subsequent suit against the same defendants for the
same cause of action. In other words, the corporation must be joined as party because it is its cause of action that is
being litigated and because judgment must be a res adjudicata against it.
(Underscoring supplied)

Without PHCC as a party, there can be no final adjudication of the HLURBs judgment. The CA was, thus, correct in
ordering the dismissal of the case for failure to implead an indispensable party.

To justify its finding of contractual violation, the HLURB cited a provision in the MDDR, to wit:

Section 13. Amendment. After the corporation shall have been created, organized and operating, this MDDR may be
amended, in whole or in part, by the affirmative vote of Unit owners constituting at least fifty one (51%) percent of the Unit
shares in the Project at a meeting duly called pursuant to the Corporation By Laws and subject to the provisions of the
Condominium Act.

This citation, however, is misplaced as the above-quoted provision pertains to the amendment of the MDDR. It should be stressed that petitioners
are not asking for any change or modification in the terms of the MDDR. What they are really praying for is a declaration that the agreement
regarding the alteration/conversion is illegal.Thus, the Court sustains the CAs finding that:

There was nothing in the records to suggest that DPDCI sought the amendment of a part or the whole of such MDDR.
The cited section is somewhat consistent only with the principle that an amendment of a corporations Articles of
Incorporation must be assented to by the stockholders holding more than 50% of the shares. The MDDR does not
contemplate, by such provision, that all corporate acts ought to be with the concurrence of a majority of the unit
owners.[37]

Moreover, considering that petitioners, who are members of PHCC, are ultimately challenging the agreement entered
into by PHCC with DPDCI, they are assailing, in effect, PHCCs acts as a body corporate. This action, therefore, partakes the nature of an intra-
corporate controversy, the jurisdiction over which used to belong to the Securities and Exchange Commission (SEC), but transferred to the courts
of general jurisdiction or the appropriate Regional Trial
Court (RTC), pursuant to Section 5b of P.D. No. 902-A,[38] as amended by Section 5.2 of Republic Act (R.A.) No. 8799.[39]

An intra-corporate controversy is one which "pertains to any of the following relationships: (1) between the
corporation, partnership or association and the public; (2) between the corporation, partnership or association and the State in so far as its franchise,
permit or license to operate is concerned; (3) between the corporation, partnership or association and its stockholders, partners, members or officers;
and (4) among the stockholders, partners or associates themselves."[40]

84
 Based on the foregoing definition, there is no doubt that the controversy in this case is essentially intra-corporate in character, for being
between a condominium corporation and its members-unit owners. In the recent case of Chateau De Baie Condominium Corporation v. Sps.
Moreno,[41] an action involving the legality of assessment dues against the condominium owner/developer, the Court held that, the matter being an
intra-corporate dispute, the RTC had jurisdiction to hear the same pursuant to R.A. No. 8799.

As to the alleged failure to comply with the rule on exhaustion of administrative remedies, the Court again agrees
with the position of the CA that the circumstances prevailing in this case warranted a relaxation of the rule.

The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system. The thrust of the rule
is that courts must allow administrative agencies to carry out their functions and discharge their responsibilities within the specialized areas of their
respective competence.[42] It has been held, however, that the doctrine of exhaustion of administrative remedies and the doctrine of primary
jurisdiction are not ironclad rules. In the case of Republic of the Philippines v. Lacap,[43] the Court enumerated the numerous exceptions to these
rules, namely: (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act is patently
illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant;
(d) where the amount involved is relatively so small as to make the rule impractical and oppressive; (e) where the question involved is purely legal
and will ultimately have to be decided by the courts of justice; (f) where judicial intervention is urgent; (g) where the application of the doctrine
may cause great and irreparable damage; (h) where the controverted acts violate due process; (i) where the issue of non-exhaustion of administrative
remedies has been rendered moot; (j) where there is no other plain, speedy and adequate remedy; (k) where strong public interest is involved; and
(l) in quo warranto proceedings.[44] [Underscoring supplied]

The situations (b) and (e) in the foregoing enumeration obtain in this case.

The challenged decision of the HLURB is patently illegal having been rendered in excess of jurisdiction, if not with grave abuse of discretion
amounting to lack or excess of jurisdiction. Also, the issue on jurisdiction is purely legal which will have to be decided ultimately by a regular court
of law. As the Court wrote in Vigilar v. Aquino:[45]

It does not involve an examination of the probative value of the evidence presented by the parties. There is a question
of law when the doubt or difference arises as to what the law is on a certain state of facts, and not as to the truth or
the falsehood of alleged facts. Said question at best could be resolved only tentatively by the administrative
authorities. The final decision on the matter rests not with them but with the courts of justice. Exhaustion of
administrative remedies does not apply, because nothing of an administrative nature is to be or can be done. The
issue does not require technical knowledge and experience but one that would involve the interpretation and
application of law.

Finally, petitioners faulted the CA in not giving respect and even finality to the findings of fact of the HLURB. Their reliance on the case of Dangan
v. NLRC,[46]reiterating the well-settled principles involving decisions of administrative agencies, deserves scant consideration as the decision of the
HLURB in this case is manifestly not supported by law and jurisprudence.

Petitioners, therefore, cannot validly invoke DPDCIs failure to fulfill its obligation on the basis of a plain draft leaflet
which petitioners were able to obtain, specifically Pacifico Lim, having been a president of DPDCI. To accord petitioners the right to demand
compliance with the commitment under the said brochure is to allow them to profit by their own act. This, the Court cannot tolerate.
In sum, inasmuch as the HLURB has no jurisdiction over petitioners complaint, the Court sustains the subject
decision of the CA that the HLURB decision is null and void ab initio. This disposition, however, is without prejudice to any action that the parties
may rightfully file in the proper forum.

WHEREFORE, the petition is DENIED.

SO ORDERED.

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