A.M. NO.
05-10-20-SC March 10, 2010 power of Congress to repeal, alter or supplement rules concerning
IN RE: EXEMPTION OF THE NATIONAL POWER CORPORATION
FROM PAYMENT OF FILING/ DOCKET FEES
RESOLUTION
MENDOZA, J.:
The National Power Corporation (NPC) seeks clarification from the Court
on whether or not it is exempt from the payment of filing fees, appeal
bonds and supersedeas bonds.
On December 6, 2005, the Court issued A.M. No. 05-10-20-SC, In re:
Exemption of the National Power Corporation from the Payment of
Filing/Docket Fees, on the basis of Section 13, Republic Act No. 6395
(An Act Revising the Charter of the National Power Corporation). It reads:
The Court Resolved, upon the recommendation of the Office of the Court
Administrator, to DECLARE that the National Power Corporation (NPC) is
still exempt from the payment of filing fees, appeals bond, and
supersedeas bonds.
On October 27, 2009, however, the Court issued A.M. No. 05-10-20-SC
stating that:
The Court Resolved, upon recommendation of the Committee on the
Revision of the Rules of Court, to DENY the request of the National
Power Corporation (NPC) for exemption from the payment of filing fees
pursuant to Section 10 of Republic Act No. 6395, as amended by Section
13 of Presidential Decree No. 938. The request appears to run counter to
Section 5(5), Article VIII of the Constitution, in the rule-making power of
the Supreme Court over the rules on pleading, practice and procedure in
all courts, which includes the sole power to fix the filing fees of cases in
courts.
Hence, the subject letter of NPC for clarification as to its exemption from
the payment of filing fees and court fees.
Section 22 of Rule 141 reads:
Sec. 22. Government exempt. – The Republic of the Philippines, its
agencies and instrumentalities are exempt from paying the legal fees
provided in this rule. Local government units and government-owned or
controlled corporations with or without independent charters are not
exempt from paying such fees. (emphasis supplied)
Section 70 of Republic Act No. 9136 (Electric Power Industry Reform Act
of 2001), on privatization of NPC assets, expressly states that the NPC
"shall remain as a national government-owned and controlled
corporation."
Thus, NPC is not exempt from payment of filing fees.
The non-exemption of NPC is further fortified by the promulgation on -
February 11, 2010 of A.M. No. 08-2-01-0, In re: Petition for Recognition of
the Exemption of the Government Service Insurance System (GSIS) from
Payment of Legal Fees. In said case, the Court, citing Echegaray v.
1
Secretary of Justice, stressed that the 1987 Constitution took away the
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pleading, practice, and procedure; and that the power to promulgate
these rules is no longer shared by the Court with Congress and the
Executive, thus:
Since the payment of legal fees is a vital component of the rules
promulgated by this Court concerning pleading, practice and procedure, it
cannot be validly annulled, changed or modified by Congress. As one of
the safeguards of this Court’s institutional independence, the power to
promulgate rules of pleading, practice and procedure is now the Court’s
exclusive domain. That power is no longer shared by this Court with
Congress, much less the Executive.
Speaking for the Court, then Associate Justice (now Chief Justice)
Reynato S. Puno traced the history of the rule-making power of this Court
and highlighted its evolution and development in Echegaray v. Secretary
of Justice:
Under the 1935 Constitution, the power of this Court to promulgate rules
concerning pleading, practice and procedure was granted but it appeared
to be co-existent with legislative power for it was subject to the power of
Congress to repeal, alter or supplement. Thus, its Section 13, Article VIII
provides:
Sec.13. The Supreme Court shall have the power to promulgate rules
concerning pleading, practice and procedure in all courts, and the
admission to the practice of law. Said rules shall be uniform for all courts
of the same grade and shall not diminish, increase, or modify substantive
rights. The existing laws on pleading, practice, and procedure are hereby
repealed as statutes, and are declared Rules of Court, subject to the
power of the Supreme Court to alter and modify the same. The Congress
shall have the power to repeal, alter or supplement the rules concerning
pleading, practice and procedure, and the admission to the practice of
law in the Philippines.
xxx xxx xxx
[T]he 1973 Constitution reiterated the power of this Court "to promulgate
rules concerning pleading, practice, and procedure in all courts, x x x
which, however, may be repealed, altered or supplemented by the
Batasang Pambansa x x x." More completely, Section 5(2) [sic] 5 of its
Article X provided:
xxx xxx xxx
Sec. 5. The Supreme Court shall have the following powers.
xxx xxx xxx
(5) Promulgate rules concerning pleading, practice, and procedure in all
courts, the admission to the practice of law, and the integration of the Bar,
which, however, may be repealed, altered, or supplemented by the
Batasang Pambansa. Such rules shall provide a simplified and
inexpensive procedure for the speedy disposition of case, shall be
uniform for all courts of the same grade, and shall not diminish, increase, UNICAPITAL, INC., UNICAPITAL REALTY, INC., and JAIME J.
or modify substantive rights. MARTINEZ, Petitioners,
xxx xxx xxx vs.
The 1987 Constitution molded an even stronger and more independent RAFAEL JOSE CONSING, JR., and THE PRESIDING JUDGE OF THE
judiciary. Among others, it enhanced the rule making power of this Court. REGIONAL TRIAL COURT OF PASIG CITY, BRANCH
Its Section 5(5), Article VIII provides: 168, Respondents.
xxx xxx xxx x-----------------------x
Section 5. The Supreme Court shall have the following powers. G.R. No. 192073
xxx xxx xxx RAFAEL JOSE CONSING, JR., Petitioner,
(5) Promulgate rules concerning the protection and enforcement of vs.
constitutional rights, pleading, practice, and procedure in all courts, the HON. MARISSA MACARAIG-GUILLEN, in her capacity as the
admission to the practice of law, the Integrated Bar, and legal assistance Presiding Judge of the Regional Trial Court of Makati City, Branch
to the underprivileged. Such rules shall provide a simplified and 60 and UNICAPITAL, INC., Respondents.
inexpensive procedure for the speedy disposition of cases, shall be DECISION
uniform for all courts of the same grade, and shall not diminish, increase, PERLAS-BERNABE, J.:
or modify substantive rights. Rules of procedure of special courts and Before the Court are consolidated petitions for review on
1
quasi-judicial bodies shall remain effective unless disapproved by the certiorari assailing separate issuances of the Court of Appeals (CA) as
Supreme Court. follows:
The rule making power of this Court was expanded. This Court for the (a) The petitions in G.R. Nos. 175277 and 175285 filed by
first time was given the power to promulgate rules concerning the Unicapital, Inc., (Unicapital), Unicapital Realty, Inc. (URI), and
protection and enforcement of constitutional rights. The Court was also Unicapital Director and Treasurer Jaime J. Martirez
2
granted for the first time the power to disapprove rules of procedure of (Martirez)assail the CA’s Joint Decision dated October 20, 2005
3
special courts and quasi-judicial bodies. But most importantly, the 1987 and Resolution dated October 25, 2006 in CA-G.R. SP Nos.
4
Constitution took away the power of Congress to repeal, alter, or 64019and 64451 which affirmed the Resolution dated
5
supplement rules concerning pleading, practice and procedure. In fine, September 14,1999 and Order dated February 15, 2001 of the
the power to promulgate rules of pleading, practice and procedure is no Regional Trial Court (RTC) of Pasig City, Branch 68 (RTC-Pasig
longer shared by this Court with Congress, more so with the Executive. City) in SCA No. 1759, upholding the denial of their motion to
The separation of powers among the three co-equal branches of our dismiss; and
government has erected an impregnable wall that keeps the power to (b) The petition in G.R. No. 192073 filed by Rafael Jose Consing,
6
promulgate rules of pleading, practice and procedure within the sole Jr. (Consing, Jr.) assails the CA’s Decision dated September 30,
7
province of this Court. The other branches trespass upon this prerogative 2009 and Resolution dated April 28, 2010 inCA-G.R. SP No.
8
if they enact laws or issue orders that effectively repeal, alter or modify 101355 which affirmed the Orders dated July16, 2007 and
9
any of the procedural rules promulgated by this Court. Viewed from this September 4, 2007 of the RTC of Makati City, Branch 60 (RTC-
perspective, the claim of a legislative grant of exemption from the Makati City) in Civil Case No. 99-1418,upholding the denial of his
payment of legal fees under Section 39 of RA 8291 necessarily motion for consolidation.
fails.1avvphi1 The Facts
With the foregoing categorical pronouncement of the Court, it is clear that In 1997, Consing, Jr., an investment banker, and his mother, Cecilia Dela
NPC can no longer invoke Republic Act No. 6395 (NPC Charter), as Cruz (Dela Cruz), obtained an ₱18,000,000.00 loan from
amended by Presidential Decree No. 938, as its basis for exemption from Unicapital,₱12,000,000.00 of which was acquired on July 24, 1997 and
the payment of legal fees. the remaining₱6,000,000.00 on August 1, 1997. The said loan was
10 11
WHEREFORE, it is hereby CLARIFIED that the National Power secured by Promissory Notes and a Real Estate Mortgage over a
Corporation is not exempt from the payment of legal fees. 42,443 square meter-parcel of land located at Imus, Cavite, registered in
SO ORDERED. the name of Dela Cruz as per Transfer Certificate of Title (TCT) No. T-
12
G.R. Nos. 175277 & 175285 September 11, 2013 687599 (subject property). Prior to these transactions, Plus Builders,
Inc. (PBI), a real estate company, was already interested to develop the
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 13
subject property into a residential subdivision. In this regard, PBI
entered into a joint venture agreement with Unicapital, through its real
estate development arm, URI. In view of the foregoing, the loan and
mortgage over the subject property was later on modified into an Option
14
to Buy Real Property and, after further negotiations, Dela Cruz decided
to sell the same to Unicapital and PBI. For this purpose, Dela Cruz
15
appointed Consing, Jr. as her attorney-in-fact.
Eventually, Unicapital, through URI, purchased one-half of the subject
property for a consideration of ₱21,221,500.00 (against which Dela
Cruz’s outstanding loan obligations were first offset), while PBI bought the
16
remaining half for the price of ₱21,047,000.00. In this relation, Dela
Cruz caused TCT No. T-687599 to be divided into three separate titles as
17
follows: (a) TCT No. T-851861 for URI; (b) TCT No. T-851862 for
18
PBI; and (c)TCT No. T-51863 which was designated as a road
19
lot. However, even before URI and PBI were able to have the titles
transferred to their names, Juanito Tan Teng (Teng) and Po Willie Yu
(Yu) informed Unicapital that they are the lawful owners of the subject
20
property as evidenced by TCT No.T-114708; that they did not sell the
subject property; and that Dela Cruz’s title, i.e., TCT No. T-687599,
21
thereto was a mere forgery. Prompted by Teng and Yu’s assertions, PBI
conducted further investigations on the subject property which later
revealed that Dela Cruz's title was actually of dubious origin. Based on
22
this finding, PBI and Unicapital sent separate demand letters to Dela
Cruz and Consing, Jr., seeking the return of the purchase price they had
paid for the subject property.
From the above-stated incidents stemmed the present controversies as
detailed hereunder.
The Proceedings Antecedent to G.R. Nos. 175277 & 175285
On May 3, 1999, Consing, Jr. filed a complaint, denominated as a
23
Complex Action for Declaratory Relief and later amended to Complex
24
Action for Injunctive Relief (Consing, Jr.’s complaint) before the RTC-
Pasig City against Unicapital, URI, PBI, Martirez, PBI General Manager
Mariano Martinez (Martinez), Dela Cruz and Does 1-20, docketed as SCA
No. 1759. In his complaint, Consing, Jr. claimed that the incessant
demands/recovery efforts made upon him by Unicapital and PBI to return
to them the purchase price they had paid for the subject property
constituted harassment and oppression which severely affected his
25
personal and professional life. He also averred that he was coerced to
26
commit a violation of Batas Pambansa Blg. 22 as Unicapital and PBI,
over threats of filing acase against him, kept on forcing him to issue a
post-dated check in the amount sought to be recovered, notwithstanding
27
their knowledge that he had no funds for the same. He further alleged
that Unicapital and URI required him to sign blank deeds of sale and
transfers without cancelling the old one sin violation of the laws on land
28
registration and real estate development. Likewise, Consing, Jr. added
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that Unicapital and PBI’s representatives were" speaking of him in a
29
manner that was inappropriate and libelous," and that some John Does
"deliberately engaged in a fraudulent scheme to compromise Consing,
Jr.’s honor, integrity and fortune x x x consisting of falsifying or causing to
be falsified, or attempting to present as falsified certain transfers of Land
30
Titles and Deeds for profit," classifying the foregoing as ultra vires acts
which should warrant sanctions under the corporation law, Revised
31
Securities Act and related laws. Accordingly, Consing, Jr. prayed that:
(a) he be declared as a mere agent of Dela Cruz, and as such, devoid of
any obligation to Unicapital, URI, and PBI for the transactions entered
into concerning the subject property; (b) Unicapital, URI, and PBI be
enjoined from harassing or coercing him, and from speaking about him in
a derogatory fashion; and (c) Unicapital, URI, and PBI pay him actual and
consequential damages in the amount of ₱2,000,000.00, moral damages
of at least ₱1,000,000.00, exemplary damages of ₱1,000,000.00, all per
month, reckoned from May 1, 1999 and until the controversy is resolved,
32
and attorney's fees and costs of suit.
For their part, Unicapital, URI, and Martirez (Unicapital, et al.) filed
33
separate Motions to Dismiss Consing, Jr.’s complaint (Unicapital, et al.’s
motion to dismiss) on the ground of failure to state a cause of action,
considering that: (a) no document was attached against which Consing,
Jr. supposedly derived his right and against which his rights may be as
certained; (b) the demands to pay against Consing, Jr. and for him to
tender post-dated checks to cover the amount due were well within the
rights of Unicapital as an unpaid creditor, as Consing, Jr. had already
admitted his dealings with them; (c) the utterances purportedly
constituting libel were not set out in the complaint; and (d) the laws
supposedly violated were not properly identified. Moreover, Unicapital, et
al. posited that the RTC-PasigCity did not acquire jurisdiction over the
case given that Consing, Jr. failed to pay the proper amount of docket
fees. In the same vein, they maintained that the RTC-Pasig City had no
jurisdiction over their supposed violations of the Corporation Code and
Revised Securities Act, which, discounting its merits, should have been
supposedly lodged with the Securities and Exchange Commission.
Finally, they pointed out that Consing, Jr.’s complaint suffers from a
34
defective verification and, thus, dismissible.
Similar to Unicapital et al.’s course of action, PBI and its General
Manager, Martinez (Unicapital and PBI, et al.), sought the dismissal of
Consing, Jr.’s complaint on the ground that it does not state a cause of
action. They also denied having singled out Consing, Jr. because their
collection efforts were directed at both Consing, Jr. and Dela Cruz, which
35
should be deemed as valid and, therefore, should not be restrained.
On September 14, 1999, the RTC-Pasig City issued a
36
Resolution denying the above mentioned motions to dismiss, holding
that Consing, Jr.’s complaint sufficiently stated a cause of action for tort

and damages pursuant to Article 19 of the Civil Code. It ruled that where
there is abusive behavior, a complainant, like Consing, Jr., has the right
to seek refuge from the courts. It also noted that the elements of libel in a
criminal case are not the same as those for a civil action founded on the
provisions of the Civil Code, and therefore, necessitates a different
treatment. It equally refused to dismiss the action on the ground of non-
payment of docket fees, despite Consing, Jr.’s escalated claims for
damages therein, as jurisdiction was already vested in it upon the filing of
the original complaint. Moreover, it resolved to apply the liberal
construction rule as regards the subject complaint’s verification and
certification, despite its improper wording, considering further that such
defect was not raised at the first opportunity. Consequently, it ordered
Unicapital and PBI, et al. to file their Answer and, in addition, to submit"
any Comment or Reaction within five (5) days from receipt hereof on the
allegations of Consing, Jr. in his rejoinder of September 9, 1999regarding
37
the supposed filing of an identical case in Makati City," i.e., Civil Case
No. 99-1418. Unperturbed, Unicapital and PBI, et al. moved for
reconsideration therefrom which was, however, denied by the RTC-Pasig
38
City in an Order dated February 15, 2001 for lack of merit. Aggrieved,
they elevated the denial of their motions to dismiss before the CA via a
39
petition for certiorari and prohibition, docketed as CA-G.R. SP Nos.
64019 and 64451.
40
On October 20, 2005, the CA rendered a Joint Decision holding that no
grave abuse of discretion was committed by the RTC-Pasig City in
refusing to dismiss Consing, Jr.'s complaint.1âwphi1 At the outset, it ruled
that while the payment of the prescribed docket fee is a jurisdictional
requirement, its non-payment will not automatically cause the dismissal of
the case. In this regard, it considered that should there be any deficiency
in the payment of such fees, the same shall constitute a lien on the
41
judgment award. It also refused to dismiss the complaint for lack of
proper verification upon a finding that the copy of the amended complaint
42
submitted to the RTC-Pasig City was properly notarized. Moreover, it
upheld the order of the RTC-Pasig City for Unicapital and PBI, et al. to
submit their comment due to the alleged existence of a similar case filed
43
before the RTC-Makati City.
Anent the substantive issues of the case, the CA concurred with the RTC-
Pasig City that Consing Jr.'s complaint states a cause of action. It found
that Unicapital and PBI, et al.’s purportedly abusive manner in enforcing
their claims against Consing, Jr. was properly constitutive of a cause of
action as the same, if sufficiently proven, would have subjected him to
"defamation of his name in business circles, the threats and coercion
against him to reimburse the purchase price, fraud and falsification and
breach of fiduciary obligation." It also found that the fact that Consing Jr.'s
complaint contains "nebulous" allegations will not warrant its dismissal as
any vagueness therein can be clarified through a motion for a bill of
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44
particulars." Furthermore, it noted that Consing, Jr. does not seek to
recover his claims against any particular provision of the corporation code
or the securities act but against the actions of Unicapital and PBI, et al.;
hence, Consing, Jr.’s complaint was principally one for damages over
which the RTC has jurisdiction, and, in turn, there lies no misjoinder of
45
causes of action.
Dissatisfied, only Unicapital, et al. sought reconsideration therefrom but
46
the same was denied by the CA in a Resolution dated October 25,2006.
Hence, the present petitions for review on certiorari in G.R. Nos.175277
and 175285.
The Proceedings Antecedent to G.R. No. 192073
47
On the other hand, on August 4, 1999, Unicapital filed a complaint for
sum of money with damages against Consing, Jr. and Dela Cruz before
the RTC-Makati City, docketed as Civil Case No. 99-1418, seeking to
recover (a) the amount of ₱42,195,397.16, representing the value of their
indebtedness based on the Promissory Notes (subject promissory notes)
plus interests; (b) ₱5,000,000.00 as exemplary damages; (c) attorney's
48
fees; and (d) costs of suit.
PBI also filed a complaint for damages and attachment against Consing,
Jr. and Dela Cruz before the RTC of Manila, Branch 12, docketed as Civil
Case No. 99-95381, also predicated on the same set of facts as above
49
narrated. In its complaint, PBI prayed that it be allowed to recover the
following: (a) ₱13,369,641.79, representing the total amount of
installment payments made as actual damages plus interests; (b)
₱200,000.00 as exemplary damages; (c) ₱200,000.00 as moral
50
damages; (d) attorney's fees; and (e) costs of suit. Civil Case No. 99-
95381 was subsequently consolidated with SCA No. 1759 pending before
51
the RTC-Pasig City.
For his part, Consing, Jr. filed a Motion to Dismiss Civil Case No. 99-1418
52
which was, however, denied by the RTC-Makati City in an Order dated
November 16, 1999. Thereafter, he filed a Motion for
53
Consolidation (motion for consolidation) of Civil Case No. 99-1418 with
his own initiated SCA No. 1759 pending before the RTC-Pasig City.
54
In an Order dated July 16, 2007, the RTC-Makati City dismissed
Consing, Jr.’s motion for consolidation and, in so doing, ruled that the
cases sought to be consolidated had no identity of rights or causes of
action and the reliefs sought for by Consing, Jr. from the RTC-Pasig City
will not bar Unicapital from pursuing its money claims against him.
Moreover, the RTC-Makati City noted that Consing, Jr. filed his motion
only as an after thought as it was made after the mediation proceedings
between him and Unicapital failed. Consing, Jr.'s motion for
55
reconsideration therefrom was denied in an Order dated September 4,
2007. Hence, he filed a petition for certiorari before the CA, docketed as
CA-G.R. SP No. 101355, ascribing grave abuse of discretion on the part
of the RTC-Makati City in refusing to consolidate Civil Case No. 99-1418
with SCA No. 1759 in Pasig City.
56
On September 30, 2009, the CA rendered a Decision sustaining the
Orders dated July 16, 2007 and September 4, 2007 of the RTC-Makati
City which denied Consing, Jr.’s motion for consolidation. It held that
consolidation is a matter of sound discretion on the part of the trial court
which could be gleaned from the use of the word "may" in Section 1,
Rule38 of the Rules of Court. Considering that preliminary steps (such as
mediation) have already been undertaken by the parties in Civil Case
No.99-1418 pending before the RTC-Makati City, its consolidation with
SCA No. 1759 pending before the RTC-Pasig City "would merely result in
complications in the work of the latter court or squander the resources or
57
remedies already utilized in the Makati case." Moreover, it noted that
the records of the consolidated Pasig and Manila cases, i.e., SCA No.
1759 and Civil Case No. 99-95381, respectively, had already been
elevated to the Court, that joint proceedings have been conducted in
those cases and that the pre-trial therein had been terminated as early as
October 23, 2007.Therefore, due to these reasons, the consolidation
prayed for would be impracticable and would only cause a procedural
faux pas. Undaunted, Consing, Jr. filed a motion for reconsideration
58
therefrom but was denied by the CA in a Resolution dated April 28,
2010. Hence, the present petition for review on certiorari in G.R. No.
192073.
The Proceedings Before the Court
After the filing of the foregoing cases, the parties were required to file
their respective comments and replies. Further, considering that G.R.
No.192073 (Makati case) involves the same parties and set of facts with
those in G.R. Nos. 175277 & 175285 (Pasig case), these cases were
59
ordered consolidated per the Court's Resolution dated November 17,
2010. On March 9, 2011, the Court resolved to give due course to the
instant petitions and required the parties to submit their respective
60
memoranda.
The Issues Before the Court
The essential issues in these cases are as follows: (a) in G.R.
Nos.175277 and 175285, whether or not the CA erred in upholding the
RTC-Pasig City’s denial of Unicapital, et al.’s motion to dismiss; and (b) in
G.R. No. 192073, whether or not the CA erred in upholding the RTC-
Makati City’s denial of Consing, Jr.’s motion for consolidation.
The Court’s Ruling
A. Propriety of the denial of
Unicapital, et al.’s motion to
dismiss and ancillary issues.
A cause of action is defined as the act or omission by which a party
61
violates a right of another. It is well-settled that the existence of a cause
62
of action is determined by the allegations in the complaint. In this
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relation, a complaint is said to sufficiently assert a cause of action if,
admitting what appears solely on its face to be correct, the plaintiff would
63
be entitled to the relief prayed for. Thus, if the allegations furnish
adequate basis by which the complaint can be maintained, then the same
should not be dismissed, regardless of the defenses that may be averred
64
by the defendants. As edified in the case of Pioneer Concrete
65
Philippines, Inc. v. Todaro, citing Hongkong and Shanghai Banking
66
Corporation, Limited. v. Catalan (HSBC):
The elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief demanded.
Stated otherwise, may the court render a valid judgment upon the facts
alleged therein? The inquiry is into the sufficiency, not the veracity of the
material allegations. If the allegations in the complaint furnish sufficient
basis on which it can be maintained, it should not be dismissed
regardless of the defense that may be presented by the
67
defendants. (Emphasis supplied)
Stated otherwise, the resolution on this matter should stem from an
analysis on whether or not the complaint is able to convey a cause of
action; and not that the complainant has no cause of action. Lest it be
misunderstood, failure to state a cause of action is properly a ground for a
68
motion to dismiss under Section 1(g), Rule 16 of the Rules of
Court(Rules), while the latter is not a ground for dismissal under the same
rule.
In this case, the Court finds that Consing, Jr.’s complaint in SCA No.1759
properly states a cause of action since the allegations there insufficiently
bear out a case for damages under Articles 19 and 26 of the Civil Code.
Records disclose that Consing, Jr.’s complaint contains allegations which
aim to demonstrate the abusive manner in which Unicapital and PBI, et
al. enforced their demands against him. Among others, the complaint
states that Consing, Jr. "has constantly been harassed and bothered by
Unicapital and PBI, et al.; x x x besieged by phone calls from them; x x x
has had constant meetings with them variously, and on a continuing
basis, such that he is unable to attend to his work as an investment
69
banker." In the same pleading, he also alleged that Unicapital and PBI,
et al.’s act of "demanding a postdated check knowing fully well that he
does not have the necessary funds to cover the same, nor is he
expecting to have them is equivalent to asking him to commit a crime
70
under unlawful coercive force." Accordingly, these specific allegations, if
hypothetically admitted, may result into the recovery of damages
pursuant to Article 19 of the Civil Code which states that "every person
must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith."
As explained in the HSBC case:
When a right is exercised in a manner which does not conform with the
norms enshrined in Article 19 and results in damage to another, a legal

wrong is thereby committed for which the wrongdoer must beheld
responsible. But a right, though by itself legal because it is recognized or
granted by law as such, may nevertheless become the source of some
illegality. A person should be protected only when he acts in the
legitimate exercise of his right, that is, when he acts with prudence and in
good faith; but not when he acts with negligence or abuse. There is an
abuse of right when it is exercised for the only purpose of prejudicing or
injuring another. The exercise of a right must be in accordance with the
purpose for which it was established, and must not be excessive or
71
unduly harsh; there must be no intention to injure another. (Emphasis
supplied)
Likewise, Consing, Jr.’s complaint states a cause of action for damages
under Article 26 of the Civil Code which provides that:
Article 26. Every person shall respect the dignity, personality, privacy and
peace of mind of his neighbors and other persons. The following and
similar acts, though they may not constitute a criminal offense, shall
produce a cause of action for damages, prevention and other relief:
(1) Prying into the privacy of another's residence;
(2) Meddling with or disturbing the private life or family relations
of another;
(3) Intriguing to cause another to be alienated from his friends;
(4) Vexing or humiliating another on account of his religious
beliefs, lowly station in life, place of birth, physical defect, or other
personal condition.
The rationale therefor was explained in the case of Manaloto v. Veloso
72 73
III, citing Concepcion v. CA, to wit:
The philosophy behind Art. 26 underscores the necessity for its inclusion
in our civil law. The Code Commission stressed in no uncertain terms that
the human personality must be exalted. The sacredness of human
personality is a concomitant consideration of every plan for human
amelioration. The touchstone of every system of law, of the culture and
civilization of every country, is how far it dignifies man. If the statutes
insufficiently protect a person from being unjustly humiliated, in short, if
human personality is not exalted - then the laws are indeed defective.
Thus, under this article, the rights of persons are amply protected, and
damages are provided for violations of a person's dignity, personality,
74
privacy and peace of mind.
To add, a violation of Article 26 of the Civil Code may also lead to the
75
payment of moral damages under Article 2219(10) of the Civil Code.
Records reveal that Consing, Jr., in his complaint, alleged that "he has
come to discover that Unicapital and PBI, et al. are speaking of him in a
manner that is inappropriate and libelous; and that they have spread their
virulent version of events in the business and financial community such
that he has suffered and continues to suffer injury upon his good name
and reputation which, after all, is the most sacred and valuable wealth he
! 17!
76
possesses - especially considering that he is an investment banker." In
similar regard, the hypothetical admission of these allegations may result
into the recovery of damages pursuant to Article 26, and even
Article2219(10), of the Civil Code.
77
Corollary thereto, Unicapital, et al.’s contention that the case should be
dismissed on the ground that it failed to set out the actual libelous
statements complained about cannot be given credence. These incidents,
as well as the specific circumstances surrounding the manner in which
Unicapital and PBI, et al. pursued their claims against Consing, Jr. may
be better ventilated during trial. It is a standing rule that issues that
require the contravention of the allegations of the complaint, as well as
the full ventilation, in effect, of the main merits of the case, should not be
78
within the province of a mere motion to dismiss, as in this case. Hence,
as what is only required is that the allegations furnish adequate basis by
which the complaint can be maintained, the Court – in view of the above-
stated reasons – finds that the RTC-Pasig City’s denial of Unicapital, et
al.’s motion to dismiss on the ground of failure to state a cause of action
was not tainted with grave abuse of discretion which would necessitate
the reversal of the CA’s ruling. Verily, for grave abuse of discretion to
exist, the abuse of discretion must be patent and gross so as to amount
to an evasion of a positive duty or a virtual refusal to perform a duty
79
enjoined by law, or to act at all in contemplation of law. This the Court
does not perceive in the case at bar.
Further, so as to obviate any confusion on the matter, the Court equally
finds that the causes of action in SCA No. 1759 were not – as Unicapital,
et al. claim – misjoined even if Consing, Jr. averred that Unicapital and
PBI, et al. violated certain provisions of the Corporation Law and the
80
Revised Securities Act.
The rule is that a party’s failure to observe the following conditions under
Section 5, Rule 2 of the Rules results in a misjoinder of causes of
81
action:
SEC. 5. Joinder of causes of action . - A party may in one pleading
assert, in the alternative or otherwise, as many causes of action as he
may have against an opposing party, subject to the following conditions:
(a) The party joining the causes of action shall comply with the
rules on joinder of parties;
(b) The joinder shall not include special civil actions governed by
special rules;
(c) Where the causes of action are between the same parties but
pertain to different venues or jurisdictions, the joinder may be
allowed in the Regional Trial Court provided one of the causes of
action falls within the jurisdiction of said court and the venue lies
therein; and
 (d) Where the claims in all the causes of action are principally for
recovery of money the aggregate amount claimed shall be the
test of jurisdiction. (Emphasis supplied)
A careful perusal of his complaint discloses that Consing, Jr. did not seek
to hold Unicapital and PBI, et al. liable for any specific violation of the
Corporation Code or the Revised Securities Act. Rather, he merely
sought damages for Unicapital and PBI, et al.’s alleged acts of making
him sign numerous documents and their use of the same against him. In
this respect, Consing, Jr. actually advances an injunction and damages
82
case which properly falls under the jurisdiction of the RTC-Pasig
83
City. Therefore, there was no violation of Section 5, Rule 2 of the Rules,
particularly, paragraph (c) thereof. Besides, even on the assumption that
there was a misjoinder of causes of action, still, such defect should not
result in the dismissal of Consing, Jr.’s complaint. Section 6, Rule 2 of the
Rules explicitly states that a "misjoinder of causes of action is not a
ground for dismissal of an action" and that "a misjoined cause of action
may, on motion of a party or on the initiative of the court, be severed and
proceeded with separately."
Neither should Consing, Jr.’s failure to pay the required docket fees lead
to the dismissal of his complaint.1âwphi1 It has long been settled that
while the court acquires jurisdiction over any case only upon the payment
of the prescribed docket fees, its non-payment at the time of the filing of
the complaint does not automatically cause the dismissal of the complaint
provided that the fees are paid within a reasonable
84
period. Consequently, Unicapital, et al.’s insistence that the stringent
rule on non-payment of docket fees enunciated in the case of Manchester
85
Development Corporation v. CA should be applied in this case cannot
be sustained in the absence of proof that Consing, Jr. intended to defraud
the government by his failure to pay the correct amount of filing fees. As
86
pronounced in the case of Heirs of Bertuldo Hinog v. Hon. Melicor:
Plainly, while the payment of the prescribed docket fee is a jurisdictional
requirement, even its
non-payment at the time of filing does not automatically cause the
dismissal of the case, as long as the fee is paid within the applicable
prescriptive or reglementary period, more so when the party involved
demonstrates a willingness to abide by the rules prescribing such
payment.
Thus, when insufficient filing fees were initially paid by the plaintiffs and
there was no intention to defraud the government, the Manchester rule
87
does not apply. (Emphasis and italics in the original)
Indeed, while the Court acknowledges Unicapital, et al.'s apprehension
that Consing, Jr.'s "metered" claim for damages to the tune of around
88
₱2,000,000.00 per month may balloon to a rather huge amount by the
time that this case is finally disposed of, still, any amount that may by
then fall due shall be subject to assessment and any additional fees
! 18!
determined shall constitute as a lien against the judgment as explicitly
89
provided under Section 2, Rule 141 of the Rules.
Finally, on the question of whether or not Consing, Jr.'s complaint was
properly verified, suffice it to state that since the copy submitted to the
trial court was duly notarized by one Atty. Allan B. Gepty and that it was
only Unicapital, et al.’s copy which lacks the notarization, then there was
90
sufficient compliance with the requirements of the rules on pleadings.
In fine, the Court finds no reversible error on the part of the CA in
sustaining the RTC-Pasig City’s denial of Unicapital et al.’s motion to
dismiss. As such, the petitions in G.R. Nos. 175277 and 175285 must be
denied.
B. Propriety of the denial of
Consing, Jr.’s motion for
consolidation.
The crux of G.R. No. 192073 is the propriety of the RTC-Makati City’s
denial of Consing, Jr.’s motion for the consolidation of the Pasig case,
i.e., SCA No. 1759, and the Makati case, i.e., Civil Case No. 99-
1418.Records show that the CA upheld the RTC-Makati City’s denial of
the foregoing motion, finding that the consolidation of these cases was
merely discretionary on the part of the trial court. It added that it was
"impracticable and would cause a procedural faux pas
91
"if it were to "allow the RTC-Pasig City to preside over the Makati case."
The CA’s ruling is proper.
It is hornbook principle that when or two or more cases involve the same
parties and affect closely related subject matters, the same must be
consolidated and jointly tried, in order to serve the best interest of the
parties and to settle the issues between them promptly, thus, resulting in
a speedy and inexpensive determination of cases. In addition,
consolidation serves the purpose of avoiding the possibility of conflicting
decisions rendered by the courts in two or more cases, which otherwise
92
could be disposed of in a single suit. The governing rule is Section 1,
Rule 31 of the Rules which provides:
SEC. 1. Consolidation. - When actions involving a common question of
law or fact are pending before the court, it may order a joint hearing or
trial of any or all the matters in issue in the actions; it may order all the
actions consolidated; and it may make such orders concerning
proceedings therein as may tend to avoid unnecessary costs or delay.
In the present case, the Court observes that the subject cases, i.e., SCA
No. 1759 and Civil Case No. 99-1418, although involving the same
parties and proceeding from a similar factual milieu, should remain
unconsolidated since they proceed from different sources of obligations
and, hence, would not yield conflicting dispositions. SCA No. 1759 is an
injunction and damages case based on the Civil Code provisions on
abuse of right and defamation, while Civil Case No. 99-1418 is a
collection and damages suit based on actionable documents, i.e., the
subject promissory notes. In particular, SCA No. 1759 deals with whether obligations to it. In case the vehicles are not sold, Proton would return
or not Unicapital and BPI, et al, abused the manner in which they them to BNP, together with all the accompanying documents of title.
demanded payment from Consing, Jr., while Civil Case No. 99-1418 Allegedly, Proton failed to deliver the proceeds of the sale and return the
deals with whether or not Unicapital may demand payment from Consing, unsold motor vehicles.
Jr. based on the subject promissory notes. Clearly, a resolution in one Pursuant to the corporate guarantee, BNP demanded from Automotive,
case would have no practical effect as the core issues and reliefs sought Asea and Autocorp the payment of the amount of
6
in each case are separate and distinct from the other. US$1,544,984.40 representing Proton's total outstanding obligations.
Likewise, as the CA correctly pointed out, the RTC-Makati City could not These guarantors refused to pay, however. Hence, BNP filed on
have been failured in retaining Civil Case No. 99-1418 in its dockets since September 7, 1998 before the Makati Regional Trial Court (RTC) a
pre-trial procedures have already been undertaken therein and, thus, its complaint against petitioners praying that they be ordered to pay (1)
consolidation with SCA No. 1759 pending before the RTC-Pasig City US$1,544,984.40 plus accrued interest and other related charges thereon
would merely result in complications on the part of the latter court or subsequent to August 15, 1998 until fully paid and (2) an amount
squander the resources or remedies already utilized in Civil Case No. 99- equivalent to 5% of all sums due from petitioners as attorney's fees.
93
1418. In this light, aside from the perceived improbability of having The Makati RTC Clerk of Court assessed the docket fees which BNP paid
7 8
conflicting decisions, the consolidation of SCA No. 1759 and Civil Case at ₱352,116.30 which was computed as follows:
No. 99-1418 would, contrary to its objective, only delay the proceedings
First Cause of Action $ 844,674.07
and entail unnecessary costs.
All told, the Court finds the consolidation of SCA No. 1759 and Civil Case Second Cause of Action 171,120.53
No. 99-1418 to be improper, impelling the affirmance of the CA’s ruling.
Consequently, the petition in G.R. No. 192073 must also be denied. Third Cause of Action 529,189.80
WHEREFORE, the petitions in G.R. Nos. 175277, 175285 and 192073
are DENIED. Accordingly, the Court of Appeals’ Joint Decision dated $1,544,984.40
October 20, 2005 and Resolution dated October 25, 2006 in CA-G.R. SP
Nos. 64019 and 64451 and the Decision dated September 30, 2009 and 5% as Attorney's Fees $ 77,249.22
Resolution dated April 28, 2010 in CA-G.R. No. 101355 are hereby TOTAL ………….. $1,622,233.62
AFFIRMED.
G.R. No. 151242 June 15, 2005 Conversion rate to peso x 43_
PROTON PILIPINAS CORPORATION, AUTOMOTIVE PHILIPPINES,
ASEA ONE CORPORATION and AUTOCORP, Petitioners, TOTAL ………….. ₱69,756,000.00
vs. (roundoff)
1
BANQUE NATIONALE DE PARIS, Respondent. Computation based on Rule 141:
DECISION
CARPIO MORALES, J.:
COURT JDF
It appears that sometime in 1995, petitioner Proton Pilipinas Corporation
(Proton) availed of the credit facilities of herein respondent, Banque ₱ 69,756,000.00 ₱ 69.606.000.00
Nationale de Paris (BNP). To guarantee the payment of its obligation, its
co-petitioners Automotive Corporation Philippines (Automotive), Asea - 150,000.00 x .003
One Corporation (Asea) and Autocorp Group (Autocorp) executed a
2 69,606,000.00 208,818.00
corporate guarantee to the extent of US$2,000,000.00. BNP and Proton
subsequently entered into three trust receipt agreements dated June 4,
3 4
1996, January 14, 1997, and April 24, 1997.
5 x .002 + 450.00
Under the terms of the trust receipt agreements, Proton would receive 139,212.00 ₱ 209,268.00
imported passenger motor vehicles and hold them in trust for BNP.
Proton would be free to sell the vehicles subject to the condition that it + 150.00
would deliver the proceeds of the sale to BNP, to be applied to its
! 19!
 ₱ 139,362.00
LEGAL : ₱139,362.00
+ 209,268.00
₱348,630.00 x 1% = ₱3,486.30
₱ 139,362.00
+ 209,268.00
3,486.00
₱ 352,116.30 - Total fees paid by the plaintiff
To the complaint, the defendants-herein petitioners filed on October 12,
9 Petitioners thereupon brought the case on certiorari and mandamus to
1998 a Motion to Dismiss on the ground that BNP failed to pay the
correct docket fees to thus prevent the trial court from acquiring
10
jurisdiction over the case. As additional ground, petitioners raised
prematurity of the complaint, BNP not having priorly sent any demand
11
letter.
12
By Order of August 3, 1999, Branch 148 of the Makati RTC denied
petitioners' Motion to Dismiss, viz:
Resolving the first ground relied upon by the defendant, this court
believes and so hold that the docket fees were properly paid. It is the
Office of the Clerk of Court of this station that computes the correct
docket fees, and it is their duty to assess the docket fees correctly, which
they did.1avvphi1.zw+
Even granting arguendo that the docket fees were not properly paid, the
court cannot just dismiss the case. The Court has not yet ordered (and it
will not in this case) to pay the correct docket fees, thus the Motion to
dismiss is premature, aside from being without any legal basis.
As held in the case of National Steel Corporation vs. CA, G.R. No.
123215, February 2, 1999, the Supreme Court said:
xxx
Although the payment of the proper docket fees is a jurisdictional
requirement, the trial court may allow the plaintiff in an action to pay the
same within a reasonable time within the expiration of applicable
prescription or reglementary period. If the plaintiff fails to comply with this
requirement, the defendant should timely raise the issue of jurisdiction or
else he would be considered in estoppel. In the latter case, the balance
between appropriate docket fees and the amount actually paid by the
plaintiff will be considered a lien or (sic) any award he may obtain in his
favor.
! 20!
As to the second ground relied upon by the defendants, in that a review
of all annexes to the complaint of the plaintiff reveals that there is not a
single formal demand letter for defendants to fulfill the terms and
conditions of the three (3) trust agreements.
In this regard, the court cannot sustain the submission of defendant. As
correctly pointed out by the plaintiff, failure to make a formal demand for
the debtor to pay the plaintiff is not among the legal grounds for the
dismissal of the case. Anyway, in the appreciation of the court, this is
simply evidentiary.
xxx
WHEREFORE, for lack of merit, the Motion to Dismiss interposed by the
13
defendants is hereby DENIED. (Underscoring supplied)
14
Petitioners filed a motion for reconsideration of the denial of their Motion
15
to Dismiss, but it was denied by the trial court by Order of October 3,
2000.
16
17
the Court of Appeals which, by Decision of July 25, 2001, denied it in
this wise:
… Section 7(a) of Rule 141 of the Rules of Court excludes interest
accruing from the principal amount being claimed in the pleading in the
computation of the prescribed filing fees. The complaint was submitted for
the computation of the filing fee to the Office of the Clerk of Court of the
Regional Trial Court of Makati City which made an assessment that
respondent paid accordingly. What the Office of the Clerk of Court did
and the ruling of the respondent Judge find support in the decisions of the
Supreme Court in Ng Soon vs. Alday and Tacay vs. RTC of
Tagum, Davao del Norte. In the latter case, the Supreme Court explicitly
ruled that "where the action is purely for recovery of money or damages,
the docket fees are assessed on the basis of the aggregate amount
claimed, exclusive only of interests and costs."
Assuming arguendo that the correct filing fees was not made, the rule is
that the court may allow a reasonable time for the payment of the
prescribed fees, or the balance thereof, and upon such payment, the
defect is cured and the court may properly take cognizance of the action
unless in the meantime prescription has set in and consequently barred
the right of action. Here respondent Judge did not make any finding, and
rightly so, that the filing fee paid by private respondent was insufficient.
On the issue of the correct dollar-peso rate of exchange, the Office of the
Clerk of Court of the RTC of Makati pegged it at ₱ 43.21 to US$1. In the
absence of any office guide of the rate of exchange which said court
functionary was duty bound to follow, the rate he applied is presumptively
correct.
Respondent Judge correctly ruled that the matter of demand letter is
evidentiary and does not form part of the required allegations in a
complaint. Section 1, Rule 8 of the 1997 Rules of Civil Procedure
pertinently provides:
"Every pleading shall contain in a methodical and logical form, a plain,
concise and direct statement of the ultimate facts on which the party
pleading relies for his claim or defense, as the case may be, omitted the
statement of mere evidentiary facts."
Judging from the allegations of the complaint particularly paragraphs 6,
12, 18, and 23 where allegations of imputed demands were made upon
the defendants to fulfill their respective obligations, annexing the demand
letters for the purpose of putting up a sufficient cause of action is not
required.
In fine, respondent Judge committed no grave abuse of discretion
amounting to lack or excess of jurisdiction to warrant certiorari and
18
mandamus. (Underscoring supplied)
19
Their Motion for Reconsideration having been denied by the Court of
20
Appeals, petitioners filed the present petition for review on
21
certiorari and pray for the following reliefs:
WHEREFORE, in view of all the foregoing, it is most respectfully prayed
of this Honorable Court to grant the instant petition by REVERSING and
SETTING ASIDE the questioned Decision of July 25, 2001 and the
Resolution of December 18, 2001 for being contrary to law, to
Administrative Circular No. 11-94 and Circular No. 7 and instead direct
the court a quo to require Private Respondent Banque to pay the correct
docket fee pursuant to the correct exchange rate of the dollar to the peso
on September 7, 1998 and to quantify its claims for interests on the
principal obligations in the first, second and third causes of actions in its
22
Complaint in Civil Case No. 98-2180. (Underscoring supplied)
23
Citing Administrative Circular No. 11-94, petitioners argue that BNP
failed to pay the correct docket fees as the said circular provides that in
the assessment thereof, interest claimed should be included. There being
an underpayment of the docket fees, petitioners conclude, the trial court
did not acquire jurisdiction over the case.
Additionally, petitioners point out that the clerk of court, in converting
BNP's claims from US dollars to Philippine pesos, applied the wrong
exchange rate of US $1 = ₱43.00, the exchange rate on September 7,
1998 when the complaint was filed having been pegged at US $1 =
₱43.21. Thus, by petitioners' computation, BNP's claim as of August 15,
24
1998 was actually ₱70,096,714.72, not ₱69,756,045.66.
Furthermore, petitioners submit that pursuant to Supreme Court Circular
25
No. 7, the complaint should have been dismissed for failure to specify
the amount of interest in the prayer.
Circular No. 7 reads:
TO: JUDGES AND CLERKS OF COURT OF THE COURT OF TAX
APPEALS, REGIONAL TRIAL COURTS, METROPOLITAN TRIAL
COURTS IN CITIES, MUNICIPAL TRIAL COURTS, MUNICIPAL
! 21!
CIRCUIT TRIAL COURTS, SHARI'A DISTRICT COURTS;AND THE
INTEGRATED BAR OF THE PHILIPPINES
SUBJECT: ALL COMPLAINTS MUST SPECIFY AMOUNT OF
DAMAGES SOUGHT NOT ONLY IN THE BODY OF THE
PLEADING, BUT ALSO IN THE PRAYER IN ORDER TO BE
ACCEPTED AND ADMITTED FOR FILING. THE AMOUNT OF
DAMAGES SO SPECIFIED IN THE COMPLAINT SHALL BE THE BASIS
FOR ASSESSING THE AMOUNT OF THE FILING FEES.
In Manchester Development Corporation vs. Court of Appeals, No. L-
75919, May 7, 1987, 149 SCRA 562, this Court condemned the practice
of counsel who in filing the original complaint omitted from the prayer any
specification of the amount of damages although the amount of over P78
million is alleged in the body of the complaint. This Court observed that
"(T)his is clearly intended for no other purpose than to evade the payment
of the correct filing fees if not to mislead the docket clerk, in the
assessment of the filing fee. This fraudulent practice was compounded
when, even as this Court had taken cognizance of the anomaly and
ordered an investigation, petitioner through another counsel filed an
amended complaint, deleting all mention of the amount of damages being
asked for in the body of the complaint. xxx"
For the guidance of all concerned, the WARNING given by the court in
the afore-cited case is reproduced hereunder:
"The Court serves warning that it will take drastic action upon a repetition
of this unethical practice.
To put a stop to this irregularity, henceforth all complaints, petitions,
answers and other similar pleadings should specify the amount of
damages being prayed for not only in the body of the pleading but
also in the prayer, and said damages shall be considered in the
assessment of the filing fees in any case. Any pleading that fails to
comply with this requirement shall not be accepted nor admitted, or
shall otherwise be expunged from the record.
The Court acquires jurisdiction over any case only upon the payment of
the prescribed docket fee. An amendment of the complaint or similar
pleading will not thereby vest jurisdiction in the Court, much less the
payment of the docket fee based on the amount sought in the amended
pleading. The ruling in the Magaspi case (115 SCRA 193) in so far as it is
inconsistent with this pronouncement is overturned and reversed."
Strict compliance with this Circular is hereby enjoined.
Let this be circularized to all the courts hereinabove named and to the
President and Board of Governors of the Integrated Bar of the
Philippines, which is hereby directed to disseminate this Circular to all its
members.
March 24, 1988.
(Sgd). CLAUDIO TEEHANKEE
Chief Justice
(Emphasis and underscoring supplied) it made an overpayment.
On the other hand, respondent maintains that it had paid the filing fee When Tacay was decided in 1989, the pertinent rule applicable was
which was assessed by the clerk of court, and that there was no violation Section 5 (a) of Rule 141 which provided for the following:
of Supreme Court Circular No. 7 because the amount of damages was SEC. 5. Clerks of Regional Trial Courts. - (a) For filing an action or
clearly specified in the prayer, to wit: proceeding, or a permissive counter-claim or cross-claim not arising out
2. On the FIRST CAUSE OF ACTION - of the same transaction subject of the complaint, a third-party complaint
(c) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS and a complaint in intervention and for all services in the same, if the
EIGHT HUNDRED FORTY FOUR THOUSAND SIX HUNDRED sum claimed, exclusive of interest, of the value of the property in
SEVENTY FOUR AND SEVEN CENTS (US$ 844,674.07), plus accrued litigation, or the value of the estate, is:
interests and other related charges thereon subsequent to August 15,
Less than ₱ 5,000.00 ₱
1998, until fully paid; and (ii) an amount equivalent to 5% of all sums due 1.
….……………………………… 32.00
from said Defendant, as and for attorney's fees;
3. On the SECOND CAUSE OF ACTION - ₱ 5,000.00 or more but less than ₱ 10,000.00
(d) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS 2. 48.00
…………
ONE HUNDRED TWENTY AND FIFTY THREE CENTS
(US$171,120.53), plus accrued interests and other related charges ₱ 10,000.00 or more but less than ₱ 20,000.00
3. 64.00
thereon subsequent to August 15, 1998 until fully paid; and (ii) an amount ………..
equivalent to 5% of all sums due from said Defendant, as and for
attorney's fees; ₱ 20,000.00 or more but less than ₱ 40,000.00
4. 80.00
4. On the THIRD CAUSE OF ACTION - ………..
(e) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS
FIVE HUNDRED TWENTY NINE THOUSAND ONE HUNDRED EIGHTY ₱ 40,000.00 or more but less than ₱ 60,000.00
5. 120.00
NINE AND EIGHTY CENTS (US$529,189.80), plus accrued interests and ………..
other related charges thereon subsequent to August 15, 1998 until fully ₱ 60,000.00 or more but less than ₱ 80,000.00
paid; and (ii) an amount equivalent to 5% or all sums due from said 6. 160.00
……….
Defendant, as and for attorney's fees;
5. On ALL THE CAUSES OF ACTION - ₱ 80,000.00 or more but less than ₱ 150,000.00
Defendants AUTOMOTIVE CORPORATION PHILIPPINES, ASEA ONE 7. 200.00
………
CORPORATION and AUTOCORP GROUP to be ordered to pay Plaintiff
BNP the aggregate sum of (i) US DOLLARS ONE MILLION FIVE And for each ₱ 1,000.00 in excess of ₱
8. 4.00
HUNDRED FORTY FOUR THOUSAND NINE HUNDRED EIGHTY 150,000.00 .....
FOUR AND FORTY CENTS (US$1,544,984.40) (First through Third
Causes of Action), plus accrued interest and other related charges When the value of the case cannot be estimated
9. 400.00
thereon subsequent to August 15, 1998 until fully paid; and (ii) an amount ………
equivalent to 5% of all sums due from said Defendants, as and for
26 10. When the case does not concern property
attorney's fees.
(naturalization, adoption, legal separation, etc.)
Moreover, respondent posits that the amount of US$1,544,984.40
..……... 64.00
represents not only the principal but also interest and other related
charges which had accrued as of August 15, 1998. Respondent goes 11. In forcible entry and illegal detainer cases
even further by suggesting that in light of Tacay v. Regional Trial Court of appealed from inferior courts
27
Tagum, Davao del Norte where the Supreme Court held, …………………………………. 40.00
Where the action is purely for the recovery of money or damages, the
docket fees are assessed on the basis of the aggregate amount If the case concerns real estate, the assessed value thereof shall be
28
claimed, exclusive only of interests and costs. (Emphasis and considered in computing the fees.
underscoring supplied),
! 22!
In case the value of the property or estate or the sum claim is less or 200,000.00 …
more in accordance with the appraisal of the court, the difference of fees
shall be refunded or paid as the case may be. (Emphasis and underscoring supplied)
When the complaint in this case was filed in 1998, however, as correctly The clerk of court should thus have assessed the filing fee by taking into
pointed out by petitioners, Rule 141 had been amended by Administrative consideration "the total sum claimed, inclusive of interest, damages of
29
Circular No. 11-94 which provides: whatever kind, attorney's fees, litigation expenses, and costs, or the
BY RESOLUTION OF THE COURT, DATED JUNE 28, 1994, stated value of the property in litigation." Respondent's and the Court of
PURSUANT TO SECTION 5 (5) OF ARTICLE VIII OF THE Appeals' reliance then on Tacay was not in order.
CONSTITUTION, RULE 141, SECTION 7 (a) AND (d), and SECTION 8 Neither was, for the same reason, the Court of Appeals' reliance on
30
(a) and (b) OF THE RULES OF COURT ARE HEREBY AMENDED TO the 1989 case of Ng Soon v. Alday, where this Court held:
READ AS FOLLOWS: …The failure to state the rate of interest demanded was not fatal not
RULE 141 only because it is the Courts which ultimately fix the same, but
LEGAL FEES also because Rule 141, Section 5(a) of the Rules of Court, itemizing
xxx the filing fees, speaks of "the sum claimed, exclusive of
Sec. 7. Clerks of Regional Trial Courts interest." This clearly implies that the specification of the interest
(a) For filing an action or a permissive counterclaim or money claim rate is not that indispensable.
against an estate not based on judgment, or for filing with leave of court a Factually, therefore, not everything was left to "guesswork" as respondent
third-party, fourth-party, etc. complaint, or a complaint in intervention, and Judge has opined. The sums claimed were ascertainable, sufficient
for all clerical services in the same, if the total sum claimed, inclusive enough to allow a computation pursuant to Rule 141, section 5(a).
of interest, damages of whatever kind, attorney's fees, litigation Furthermore, contrary to the position taken by respondent Judge, the
expenses, and costs, or the stated value of the property in litigation, amounts claimed need not be initially stated with mathematical
is: precision. The same Rule 141, section 5(a) (3rd paragraph), allows
31
an appraisal "more or less." Thus:
Not more than ₱ 100,000.00 ₱ "In case the value of the property or estate or the sum claimed is less or
1.
…………………………… 400.00 more in accordance with the appraisal of the court, the difference of fee
₱ 100,000.00, or more but not more than ₱ shall be refunded or paid as the case may be."
2. 600.00 In other words, a final determination is still to be made by the Court, and
150,000.00 …
the fees ultimately found to be payable will either be additionally paid by
For each ₱ 1,000.00 in excess of ₱ 150,000.00 the party concerned or refunded to him, as the case may be. The above
3. 5.00 provision clearly allows an initial payment of the filing fees corresponding
………….
to the estimated amount of the claim subject to adjustment as to what
xxx later may be proved.
Sec. 8. Clerks of Metropolitan and Municipal Trial Courts ". . . there is merit in petitioner's claim that the third paragraph of Rule
(a) For each civil action or proceeding, where the value 141, Section 5(a) clearly contemplates a situation where an amount is
of the subject matter involved, or the amount of the alleged or claimed in the complaint but is less or more than what is later
demand, inclusive of interest, damages or whatever proved. If what is proved is less than what was claimed, then a refund will
kind, attorney's fees, litigation expenses, and costs, be made; if more, additional fees will be exacted. Otherwise stated, what
is: is subject to adjustment is the difference in the fee and not the whole
Not more than ₱ 20,000.00 ₱ amount" (Pilipinas Shell Petroleum Corp., et als., vs. Court of Appeals, et
1. 32
als., G.R. No. 76119, April 10, 1989). (Emphasis and underscoring
…………………………… ... 120.00
supplied)
More than ₱ 20,000.00 but not more than ₱ Respecting the Court of Appeals' conclusion that the clerk of court did not
2. 400.00
100,000.00 …. err when he applied the exchange rate of US $1 = ₱43.00 "[i]n the
absence of any office guide of the rate of exchange which said court
3. More than ₱ 100,000.00 but not more than ₱ 850.00 functionary was duty bound to follow,[hence,] the rate he applied is
! 23!
presumptively correct," the same does not lie. The presumption of
regularity of the clerk of court's application of the exchange rate is not
33 34
conclusive. It is disputable. As such, the presumption may be
35
overturned by the requisite rebutting evidence. In the case at bar,
36
petitioners have adequately proven with documentary evidence that the
exchange rate when the complaint was filed on September 7, 1998 was
US $1 = ₱43.21.
In fine, the docket fees paid by respondent were insufficient.
With respect to petitioner's argument that the trial court did not acquire
jurisdiction over the case in light of the insufficient docket fees, the same
does not lie.
37
True, in Manchester Development Corporation v. Court of Appeals, this
Court held that the court acquires jurisdiction over any case only upon the
38
payment of the prescribed docket fees, hence, it concluded that the trial
court did not acquire jurisdiction over the case.
It bears emphasis, however, that the ruling in Manchester was clarified
39
in Sun Insurance Office, Ltd. (SIOL) v. Asuncion when this Court held
that in the former there was clearly an effort to defraud the government in
avoiding to pay the correct docket fees, whereas in the latter the plaintiff
demonstrated his willingness to abide by paying the additional fees as
required.
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, unlikeManchester, 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.
Nevertheless, petitioners contend that the docket fee that was paid is still
insufficient considering the total amount of the claim. This is a matter
which the clerk of court of the lower court and/or his duly authorized
docket clerk or clerk in charge should determine and, thereafter, if any
! 24!
amount is found due, he must require the private respondent to pay the
same.
Thus, the Court rules as follows:
1. 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. Where the filing of the initiatory pleading is
not accompanied by payment of the docket fee, the court may
allow payment of the fee within a reasonable time but in no case
beyond the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party
claims and similar pleadings, which shall not be considered filed
until and unless the filing fee prescribed therefor is paid. The
court may also allow payment of said fee within a reasonable
time but also in no case beyond its applicable prescriptive or
reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the
filing of the appropriate pleading and payment of the prescribed
filing fee but, subsequently, the judgment awards a claim not
specified in the pleading, or if specified the same has been left for
determination by the court, the additional filing fee therefor shall
constitute a lien on the judgment. It shall be the responsibility of
the Clerk of Court or his duly authorized deputy to enforce said
40
lien and assess and collect the additional fee. (Emphasis and
underscoring supplied)
The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs
41
of Bertuldo Hinog v. Hon. Achilles Melicor:
Plainly, while the payment of the prescribed docket fee is a jurisdictional
requirement, even its non-payment at the time of filing does not
automatically cause the dismissal of the case, as long as the fee is paid
within the applicable prescriptive or reglementary period, more so when
the party involved demonstrates a willingness to abide by the rules
prescribing such payment. Thus, when insufficient filing fees were
initially paid by the plaintiffs and there was no intention to defraud
the government, the Manchester rule does not apply. (Emphasis and
underscoring supplied; citations omitted)
In the case at bar, respondent merely relied on the assessment made by
the clerk of court which turned out to be incorrect. Under the
circumstances, the clerk of court has the responsibility of reassessing
what respondent must pay within the prescriptive period, failing which the
complaint merits dismissal.
Parenthetically, in the complaint, respondent prayed for "accrued
interest… subsequent to August 15, 1998 until fully paid." The complaint
having been filed on September 7, 1998, respondent's claim includes the
interest from August 16, 1998 until such date of filing.
Respondent did not, however, pay the filing fee corresponding to its claim
for interest from August 16, 1998 until the filing of the complaint on
September 7, 1998. As priorly discussed, this is required under Rule 141,
as amended by Administrative Circular No. 11-94, which was the rule
applicable at the time. Thus, as the complaint currently stands,
respondent cannot claim the interest from August 16, 1998 until
September 7, 1998, unless respondent is allowed by motion to amend its
complaint within a reasonable time and specify the precise amount of
interest petitioners owe from August 16, 1998 to September 7,
42
1998 and pay the corresponding docket fee therefor.
With respect to the interest accruing after the filing of the complaint, the
same can only be determined after a final judgment has been handed
down. Respondent cannot thus be made to pay the corresponding docket
fee therefor. Pursuant, however, to Section 2, Rule 141, as amended by
Administrative Circular No. 11-94, respondent should be made to pay
additional fees which shall constitute a lien in the event the trial court
adjudges that it is entitled to interest accruing after the filing of the
complaint.
Sec. 2. Fees as lien. - Where the court in its final judgment awards a
claim not alleged, or a relief different or more than that claimed in the
pleading, the party concerned shall pay the additional fees which shall
constitute a lien on the judgment in satisfaction of said lien. The clerk of
court shall assess and collect the corresponding fees.
43
In Ayala Corporation v. Madayag, in interpreting the third rule laid down
in Sun Insurance regarding awards of claims not specified in the
pleading, this Court held that the same refers only to damages
arising after the filing of the complaint or similar pleading as to
which the additional filing fee therefor shall constitute a lien on the
judgment.
… The amount of any claim for damages, therefore, arising on or before
the filing of the complaint or any pleading should be specified. While it is
true that the determination of certain damages as exemplary or corrective
damages is left to the sound discretion of the court, it is the duty of the
parties claiming such damages to specify the amount sought on the basis
of which the court may make a proper determination, and for the proper
assessment of the appropriate docket fees. The exception
contemplated as to claims not specified or to claims although
specified are left for determination of the court is limited only to any
damages that may arise after the filing of the complaint or similar
pleading for then it will not be possible for the claimant to specify
44
nor speculate as to the amount thereof. (Emphasis and underscoring
supplied; citation omitted)1avvphi1.zw+
WHEREFORE, the petition is GRANTED in part. The July 25, 2001
Decision and the December 18, 2001 Resolution of the Court Appeals are
hereby MODIFIED. The Clerk of Court of the Regional Trial Court of
! 25!
Makati City is ordered to reassess and determine the docket fees that
should be paid by respondent, BNP, in accordance with the Decision of
this Court, and direct respondent to pay the same within fifteen (15) days,
provided the applicable prescriptive or reglementary period has not yet
expired. Thereafter, the trial court is ordered to proceed with the case
with utmost dispatch.
SO ORDERED.
A.M. No. 08-11-7-SC August 28, 2009
1
RE: REQUEST OF NATIONAL COMMITTEE ON LEGAL AID TO
EXEMPT LEGAL AID CLIENTS FROM PAYING FILING, DOCKET AND
OTHER FEES.
RESOLUTION
CORONA, J.:
On September 23, 2008 the Misamis Oriental Chapter of the Integrated
Bar of the Philippines (IBP) promulgated Resolution No. 24, series of
2
2008. The resolution requested the IBP’s National Committee on Legal
3
Aid (NCLA) to ask for the exemption from the payment of filing, docket
and other fees of clients of the legal aid offices in the various IBP
chapters. Resolution No. 24, series of 2008 provided:
RESOLUTION NO. 24, SERIES OF 2008
RESOLUTION OF THE IBP–MISAMIS ORIENTAL CHAPTER FOR THE
IBP NATIONAL LEGAL AID OFFICE TO REQUEST THE COURTS
AND OTHER QUASI-JUDICIAL BODIES, THE PHILIPPINE
MEDIATION CENTER AND PROSECUTOR’S OFFICES TO EXEMPT
LEGAL AID CLIENTS FROM PAYING FILING, DOCKET AND OTHER
FEES INCIDENTAL TO THE FILING AND LITIGATION OF ACTIONS,
AS ORIGINAL PROCEEDINGS OR ON APPEAL.
WHEREAS, Section 1, Article I of the Guidelines Governing the
Establishment and Operation of Legal Aid Offices in All Chapters of the
Integrated Bar of the Philippines (otherwise known as ["]Guideline[s] on
Legal Aid["]) provides: Legal aid is not a matter of charity. It is a means
for the correction of social imbalances that may often lead to injustice, for
which reason, it is a public responsibility of the Bar. The spirit of public
service should therefore unde[r]ly all legal aid offices. The same should
be so administered as to give maximum possible assistance to indigent
and deserving members of the community in all cases, matters and
situations in which legal aid may be necessary to forestall injustice.
WHEREAS, Section 2 of the same provides: In order to attain the
objectives of legal aid, legal aid office should be as close as possible to
those who are in need thereof – the masses. Hence, every chapter of the
IBP must establish and operate an adequate legal aid office.
WHEREAS, the Legal Aid Office of the IBP–Misamis Oriental Chapter
has long been operational, providing free legal services to numerous
indigent clients, through the chapter’s members who render volunteer
services in the spirit of public service;
WHEREAS, the courts, quasi-judicial bodies, the various mediation
centers and prosecutor’s offices are collecting fees, be they filing, docket,
motion, mediation or other fees in cases, be they original proceedings or
on appeal;
WHEREAS, IBP Legal Aid clients are qualified under the same indigency
and merit tests used by the Public Attorney’s Office (PAO), and would
have qualified for PAO assistance, but for reasons other than indigency,
are disqualified from availing of the services of the PAO, like the
existence of a conflict of interests or conflicting defenses, and other
similar causes;
WHEREAS, PAO clients are automatically exempt from the payment of
docket and other fees for cases, be they original proceedings or on
appeal, by virtue of the provisions of Section 16–D of R.A. 9406 (PAO
Law), without the need for the filing of any petition or motion to declare
them as pauper litigants;
WHEREAS, there is no similar provision in any substantive law or
procedural law giving IBP Legal Aid clients the same benefits or
privileges enjoyed by PAO clients with respect to the payment of docket
and other fees before the courts, quasi-judicial bodies and prosecutor’s
offices;
WHEREAS, the collection of docket and other fees from the IBP Legal
Aid clients poses an additional strain to their next to non-existent
finances;
WHEREAS, the quarterly allowance given by the National Legal Aid
Office to the IBP Misamis Oriental Chapter is insufficient to even cover
the incidental expenses of volunteer legal aid lawyers, much less answer
for the payment of docket and other fees collected by the courts, quasi-
judicial bodies and prosecutor’s offices and mediation fees collected by
the Philippine Mediation Center;
NOW THEREFORE, on motion of the Board of Officers of the IBP–
Misamis Oriental Chapter, be it resolved as it is hereby resolved, to move
the IBP National Legal Aid Office to make the necessary requests or
representations with the Supreme Court, the Philippine Mediation Center,
the Department of Justice and the National Prosecution Service and other
quasi-judicial agencies to effect the grant of a like exemption from the
payment of filing, docket and other fees to the IBP Legal Aid clients as
that enjoyed by PAO clients, towards the end that IBP Legal Aid clients
be automatically exempted from the filing of the abovementioned fees;
RESOLVED FURTHER, that copies of this Resolution be furnished to
Supreme Court Chief Justice Honorable Reynato S. Puno, IBP National
President Feliciano M. Bautista, the IBP Board of Governors, Secretary of
Justice Hon. Raul M. Gonzalez, the National Supervisor of the Philippine
Mediation Center, the National Labor Relations Commission, the Civil
Service Commission and other quasi-judicial bodies and their local
offices;
! 26!
RESOLVED FINALLY to move the IBP Board of Governors and National
Officers to make the necessary representations with the National
Legislature and its members to effect the filing of a bill before the House
of Representatives and the Senate granting exemption to IBP Legal Aid
clients from the payment of docket, filing and or other fees in cases
before the courts, quasi-judicial agencies and prosecutor’s offices and the
mediation centers.
Done this 23rd day of September 2008, Cagayan De Oro City.
4
Unanimously approved upon motion severally seconded.
The Court noted Resolution No. 24, series of 2008 and required the IBP,
5
through the NCLA, to comment thereon.
6
In a comment dated December 18, 2008, the IBP, through the NCLA,
made the following comments:
7
(a) Under Section 16-D of RA 9406, clients of the Public
Attorneys’ Office (PAO) are exempt from the payment of docket
and other fees incidental to the institution of action in court and
other quasi-judicial bodies. On the other hand, clients of legal aid
offices in the various IBP chapters do not enjoy the same
exemption. IBP’s indigent clients are advised to litigate as pauper
litigants under Section 21, Rule 3 of the Rules of Court;
(b) They are further advised to submit documentary evidence to
prove compliance with the requirements under Section 21, Rule 3
of the Rules of Court, i.e., certifications from the barangay and
the Department of Social Welfare and Development. However,
not only does the process involve some expense which indigent
clients could ill-afford, clients also lack knowledge on how to go
about the tedious process of obtaining these documents;
(c) Although the IBP is given an annual legal aid subsidy, the
amount it receives from the government is barely enough to
8
cover various operating expenses;
(d) While each IBP local chapter is given a quarterly allocation
9
(from the legal aid subsidy), said allocation covers neither the
incidental expenses defrayed by legal aid lawyers in handling
legal aid cases nor the payment of docket and other fees
collected by the courts, quasi-judicial bodies and the prosecutor’s
office, as well as mediation fees and
(e) Considering the aforementioned factors, a directive may be
issued by the Supreme Court granting IBP’s indigent clients an
exemption from the payment of docket and other fees similar to
that given to PAO clients under Section 16-D of RA 9406. In this
connection, the Supreme Court previously issued a circular
exempting IBP clients from the payment of transcript of
10
stenographic notes.
At the outset, we laud the Misamis Oriental Chapter of the IBP for its
effort to help improve the administration of justice, particularly, the access
to justice by the poor. Its Resolution No. 24, series of 2008 in fact echoes
one of the noteworthy recommendations during the Forum on Increasing
Access to Justice spearheaded by the Court last year. In promulgating
Resolution No. 24, the Misamis Oriental Chapter of the IBP has
effectively performed its duty to "participate in the development of the
legal system by initiating or supporting efforts in law reform and in the
11
administration of justice."
We now move on to determine the merits of the request.
Access to Justice:
Making an Ideal a Reality
Access to justice by all, especially by the poor, is not simply an ideal in
our society. Its existence is essential in a democracy and in the rule of
law. As such, it is guaranteed by no less than the fundamental law:
Sec. 11. Free access to the courts and quasi-judicial bodies and
adequate legal assistance shall not be denied to any person by
12
reason of poverty. (emphasis supplied)
The Court recognizes the right of access to justice as the most important
pillar of legal empowerment of the marginalized sectors of our
13
society. Among others, it has exercised its power to "promulgate rules
14
concerning the protection and enforcement of constitutional rights" to
open the doors of justice to the underprivileged and to allow them to step
inside the courts to be heard of their plaints. In particular, indigent litigants
15 16
are permitted under Section 21, Rule 3 and Section 19, Rule 141 of
the Rules of Court to bring suits in forma pauperis.
The IBP, pursuant to its general objectives to "improve the administration
of justice and enable the Bar to discharge its public responsibility more
17
effectively," assists the Court in providing the poor access to justice. In
particular, it renders free legal aid under the supervision of the NCLA.
A New Rule, a New Tool
for Access to Justice
Under the IBP’s Guidelines Governing the Establishment and Operation
of Legal Aid Offices in All Chapters of the IBP (Guidelines on Legal Aid),
the combined "means and merit tests" shall be used to determine the
eligibility of an applicant for legal aid:
ARTICLE VIII
TESTS
SEC. 19. Combined tests. – The Chapter Legal Aid Committee or the
[NCLA], as the case may be, shall pass upon the request for legal aid by
the combined application of the means test and merit test, and the
consideration of other factors adverted to in the following sections.
SEC. 20. Means test. – The means test aims at determining whether the
applicant has no visible means of support or his income is otherwise
insufficient to provide the financial resources necessary to engage
competent private counsel owing to the demands for subsistence of his
! 27!
family, considering the number of his dependents and the conditions
prevailing in the locality.
The means test shall not be applicable to applicants who fall under the
Developmental Legal Aid Program such as Overseas Filipino Workers,
fishermen, farmers, women and children and other disadvantaged
groups.
SEC. 21. Merit test. – The merit test seeks to ascertain whether or not the
applicant’s cause of action or his defense is valid and chances of
establishing the same appear reasonable.
SEC. 22. Other factors. – The effect of the Legal Aid Service or of the
failure to render the same upon the Rule of Law, the proper
administration of justice, the public interest involved in given cases and
the practice of law in the locality shall likewise be considered.
SEC. 23. Private practice. – Care shall be taken that the Legal aid is not
availed of to the detriment of the private practice of law, or taken
advantage of by anyone for personal ends.
SEC. 24. Denial. – Legal aid may be denied to an applicant already
receiving adequate assistance from any source other than the Integrated
Bar.
The "means and merit tests" appear to be reasonable determinants of
eligibility for coverage under the legal aid program of the IBP.
Nonetheless, they may be improved to ensure that any exemption from
the payment of legal fees that may be granted to clients of the NCLA and
the legal aid offices of the various IBP chapters will really further the right
of access to justice by the poor. This will guarantee that the exemption
will neither be abused nor trivialized. Towards this end, the following shall
be observed by the NCLA and the legal aid offices in IBP chapters
nationwide in accepting clients and handling cases for the said clients:
A.M. No. 08-11-7-SC (IRR): Re: Rule on the Exemption From the
Payment of Legal Fees of the Clients of the National Committee on
Legal Aid and of the Legal Aid Offices in the Local Chapters of the
Integrated Bar of the Philippines
Rule on the Exemption From the Payment of Legal Fees of the
Clients of the National Committee on Legal Aid (NCLA) and of the
Legal Aid Offices in the Local Chapters of the Integrated Bar of the
Philippines (IBP)
ARTICLE I
Purpose
Section 1. Purpose. – This Rule is issued for the purpose of enforcing the
right of free access to courts by the poor guaranteed under Section 11,
Article III of the Constitution. It is intended to increase the access to
justice by the poor by exempting from the payment of legal fees incidental
to instituting an action in court, as an original proceeding or on appeal,
qualified indigent clients of the NCLA and of the legal aid offices in local
IBP chapters nationwide.
ARTICLE II
Definition of Terms
Section 1. Definition of important terms. – For purposes of this Rule and
as used herein, the following terms shall be understood to be how they
are defined under this Section:
(a) "Developmental legal aid" means the rendition of legal
services in public interest causes involving overseas workers,
fisherfolk, farmers, laborers, indigenous cultural communities,
women, children and other disadvantaged groups and
marginalized sectors;
(b) "Disinterested person" refers to the punong barangay having
jurisdiction over the place where an applicant for legal aid or
client of the NCLA or chapter legal aid office resides;
(c) "Falsity" refers to any material misrepresentation of fact or any
fraudulent, deceitful, false, wrong or misleading statement in the
application or affidavits submitted to support it or the affidavit of a
disinterested person required to be submitted annually under this
Rule which may substantially affect the determination of the
qualifications of the applicant or the client under the means and
merit tests;
(d) "Legal fees" refers to the legal fees imposed under Rule 141
of the Rules of Court as a necessary incident of instituting an
action in court either as an original proceeding or on appeal. In
particular, it includes filing or docket fees, appeal fees, fees for
issuance of provisional remedies, mediation fees, sheriff’s fees,
stenographer’s fees (that is fees for transcript of stenographic
notes) and commissioner’s fees;
(e) "Means test" refers to the set of criteria used to determine
whether the applicant is one who has no money or property
sufficient and available for food, shelter and basic necessities for
himself and his family;
(f) "Merit test" refers to the ascertainment of whether the
applicant’s cause of action or his defense is valid and whether
the chances of establishing the same appear reasonable and
(g) "Representative" refers to the person authorized to file an
application for legal aid in behalf of the applicant when the said
applicant is prevented by a compelling reason from personally
filing his application. As a rule, it refers to the immediate family
members of the applicant. However, it may include any of the
applicant’s relatives or any person or concerned citizen of
sufficient discretion who has first-hand knowledge of the personal
circumstances of the applicant as well as of the facts of the
applicant’s case.
ARTICLE III
Coverage
! 28!
Section 1. Persons qualified for exemption from payment of legal fees. –
Persons who shall enjoy the benefit of exemption from the payment of
legal fees incidental to instituting an action in court, as an original
proceeding or on appeal, granted under this Rule shall be limited only to
clients of the NCLA and the chapter legal aid offices.
The said clients shall refer to those indigents qualified to receive free
legal aid service from the NCLA and the chapter legal aid offices. Their
qualifications shall be determined based on the tests provided in this
Rule.
Section 2. Persons not covered by the Rule. – The following shall be
disqualified from the coverage of this Rule. Nor may they be accepted as
clients by the NCLA and the chapter legal aid offices.
(a) Juridical persons; except in cases covered by developmental
legal aid or public interest causes involving juridical entities which
are non-stock, non-profit organizations, non-governmental
organizations and people’s organizations whose individual
members will pass the means test provided in this Rule;
(b) Persons who do not pass the means and merit tests;
(c) Parties already represented by a counsel de parte;
(d) Owners or lessors of residential lands or buildings with
respect to the filing of collection or unlawful detainer suits against
their tenants and
(e) Persons who have been clients of the NCLA or chapter legal
aid office previously in a case where the NCLA or chapter legal
aid office withdrew its representation because of a falsity in the
application or in any of the affidavits supporting the said
application.
Section 3. Cases not covered by the Rule. – The NCLA and the chapter
legal aid offices shall not handle the following:
(a) Cases where conflicting interests will be represented by the
NCLA and the chapter legal aid offices and
(b) Prosecution of criminal cases in court.
ARTICLE IV
Tests of Indigency
Section 1. Tests for determining who may be clients of the NCLA and the
legal aid offices in local IBP chapters. – The NCLA or the chapter legal
aid committee, as the case may be, shall pass upon requests for legal aid
by the combined application of the means and merit tests and the
consideration of other relevant factors provided for in the following
sections.
Section 2. Means test; exception. – (a) This test shall be based on the
following criteria: (i) the applicant and that of his immediate family must
have a gross monthly income that does not exceed an amount double the
monthly minimum wage of an employee in the place where the applicant
resides and (ii) he does not own real property with a fair market value as
stated in the current tax declaration of more than Three Hundred
Thousand (₱300,000.00) Pesos.
In this connection, the applicant shall execute an affidavit of indigency
(printed at the back of the application form) stating that he and his
immediate family do not earn a gross income abovementioned, nor own
any real property with the fair value aforementioned, supported by an
affidavit of a disinterested person attesting to the truth of the applicant’s
affidavit. The latest income tax return and/or current tax declaration, if
any, shall be attached to the applicant’s affidavit.
(b) The means test shall not be applicable to applicants who fall under the
developmental legal aid program such as overseas workers, fisherfolk,
farmers, laborers, indigenous cultural communities, women, children and
other disadvantaged groups.
Section 3. Merit test. – A case shall be considered meritorious if an
assessment of the law and evidence at hand discloses that the legal
service will be in aid of justice or in the furtherance thereof, taking into
consideration the interests of the party and those of society. A case fails
this test if, after consideration of the law and evidence presented by the
applicant, it appears that it is intended merely to harass or injure the
opposite party or to work oppression or wrong.
Section 4. Other relevant factors that may be considered. – The effect of
legal aid or of the failure to render the same upon the rule of law, the
proper administration of justice, the public interest involved in a given
case and the practice of law in the locality shall likewise be considered.
ARTICLE V chapter board of officers.
Acceptance and Handling of Cases
Section 1. Procedure in accepting cases. – The following procedure shall
be observed in the acceptance of cases for purposes of this Rule:
(a) Filing of application – An application shall be made personally
by the applicant, unless there is a compelling reason which
prevents him from doing so, in which case his representative may
apply for him. It shall adhere substantially to the form made for
that purpose. It shall be prepared and signed by the applicant or,
in proper cases, his duly authorized representative in at least
three copies.
Applications for legal aid shall be filed with the NCLA or with the
chapter legal aid committee.
The NCLA shall, as much as possible, concentrate on cases of
paramount importance or national impact.
Requests received by the IBP National Office shall be referred by
the NCLA to the proper chapter legal aid committee of the locality
where the cases have to be filed or are pending. The chapter
president and the chairman of the chapter’s legal aid committee
shall be advised of such referral.
! 29!
(b) Interview – The applicant shall be interviewed by a member of
the chapter legal aid committee or any chapter member
authorized by the chapter legal aid committee to determine the
applicant’s qualifications based on the means and merit tests and
other relevant factors. He shall also be required to submit copies
of his latest income tax returns and/or current tax declaration, if
available, and execute an affidavit of indigency printed at the
back of the application form with the supporting affidavit of a
disinterested person attesting to the truth of the applicant’s
affidavit.
After the interview, the applicant shall be informed that he can
follow up the action on his application after five (5) working days.
(c) Action on the application – The chapter legal aid committee
shall pass upon every request for legal aid and submit its
recommendation to the chapter board of officers within three (3)
working days after the interview of the applicant. The basis of the
recommendation shall be stated.
The chapter board of officers shall review and act on the
recommendation of the chapter legal aid committee within two (2)
working days from receipt thereof; Provided, however, that in
urgent matters requiring prompt or immediate action, the
chapter’s executive director of legal aid or whoever performs his
functions may provisionally act on the application, subject to
review by the chapter legal aid committee and, thereafter, by the
The action of the chapter board of officers on the application shall
be final.
(d) Cases which may be provisionally accepted. – In the following
cases, the NCLA or the chapter legal aid office, through the
chapter’s executive director of legal aid or whoever performs his
functions may accept cases provisionally pending verification of
the applicant’s indigency and an evaluation of the merit of his
case.
(i) Where a warrant for the arrest of the applicant has been
issued;
(ii) Where a pleading has to be filed immediately to avoid adverse
effects to the applicant;
(iii) Where an appeal has to be urgently perfected or a petition for
certiorari, prohibition or mandamus filed has to be filed
immediately; and
(iv) Other similar urgent cases.
(e) Assignment of control number – Upon approval of the chapter
board of officers of a person’s application and the applicant is
found to be qualified for legal assistance, the case shall be
assigned a control number. The numbering shall be consecutive
 starting from January to December of every year. The control
number shall also indicate the region and the chapter handling
the case.
Example:
Region
18
Chapter Year Month Number
GM - Manila - 2009 - 03 - 099
(f) Issuance of a certification – After an application is approved
and a control number duly assigned, the chapter board of officers
shall issue a certification that the person (that is, the successful
applicant) is a client of the NCLA or of the chapter legal aid office.
The certification shall bear the control number of the case and
shall state the name of the client and the nature of the judicial
action subject of the legal aid of the NCLA or the legal aid office
of a local IBP chapter.
The certification shall be issued to the successful applicant free
of charge.
Section 2. Assignment of cases. – After a case is given a control number,
the chapter board of officers shall refer it back to the chapter legal aid
committee. The chapter legal aid committee shall assign the case to any
chapter member who is willing to handle the case.
In case no chapter member has signified an intention to handle the case
voluntarily, the chapter legal aid committee shall refer the matter to the
chapter board of officers together with the names of at least three
members who, in the chapter legal aid committee’s discretion, may
competently render legal aid on the matter. The chapter board of officers
shall appoint one chapter member from among the list of names
submitted by the chapter legal aid committee. The chapter member
chosen may not refuse the appointment except on the ground of conflict
of interest or other equally compelling grounds as provided in the Code of
19
Professional Responsibility, in which case the chapter board of officers
shall appoint his replacement from among the remaining names in the list
previously submitted by the chapter legal aid committee.
The chapter legal aid committee and the chapter board of officers shall
take the necessary measures to ensure that cases are well-distributed to
chapter members.
Section 3. Policies and guidelines in the acceptance and handling of
cases. – The following policies and guidelines shall be observed in the
acceptance and handling of cases:
(a) First come, first served – Where both the
complainant/plaintiff/petitioner and defendant/ respondent apply
for legal aid and both are qualified, the first to seek assistance
shall be given preference.
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(b) Avoidance of conflict of interest – Where acceptance of a
case will give rise to a conflict of interest on the part of the
chapter legal aid office, the applicant shall be duly informed and
advised to seek the services of a private counsel or another legal
aid organization.
Where handling of the case will give rise to a conflict of interest
on the part of the chapter member assigned to the case, the
client shall be duly informed and advised about it. The handling
lawyer shall also inform the chapter legal aid committee so that
another chapter member may be assigned to handle the case.
For purposes of choosing the substitute handling lawyer, the rule
in the immediately preceding section shall be observed.
(c) Legal aid is purely gratuitous and honorary – No member of
the chapter or member of the staff of the NCLA or chapter legal
aid office shall directly or indirectly demand or request from an
applicant or client any compensation, gift or present for legal aid
services being applied for or rendered.
(d) Same standard of conduct and equal treatment – A chapter
member who is tasked to handle a case accepted by the NCLA
or by the chapter legal aid office shall observe the same standard
of conduct governing his relations with paying clients. He shall
treat the client of the NCLA or of the chapter legal aid office and
the said client’s case in a manner that is equal and similar to his
treatment of a paying client and his case.
(e) Falsity in the application or in the affidavits – Any falsity in the
application or in the affidavit of indigency or in the affidavit of a
disinterested person shall be sufficient cause for the NCLA or
chapter legal aid office to withdraw or terminate the legal aid. For
this purpose, the chapter board of officers shall authorize the
handling lawyer to file the proper manifestation of withdrawal of
appearance of the chapter legal aid office in the case with a
motion for the dismissal of the complaint or action of the erring
client. The court, after hearing, shall approve the withdrawal of
appearance and grant the motion, without prejudice to whatever
criminal liability may have been incurred.
Violation of this policy shall disqualify the erring client from
availing of the benefits of this Rule in the future.
(f) Statement in the initiatory pleading – To avail of the benefits of
the Rule, the initiatory pleading shall state as an essential
preliminary allegation that (i) the party initiating the action is a
client of the NCLA or of the chapter legal aid office and therefore
entitled to exemption from the payment of legal fees under this
Rule and (ii) a certified true copy of the certification issued
pursuant to Section 1(e), of this Article is attached or annexed to
the pleading.
 Failure to make the statement shall be a ground for the dismissal
of the action without prejudice to its refiling.
The same rule shall apply in case the client, through the NCLA or
chapter legal aid office, files an appeal.
(g) Attachment of certification in initiatory pleading – A certified
true copy of the certification issued pursuant to Section 1(e), of
this Article shall be attached as an annex to the initiatory
pleading.
Failure to attach a certified true copy of the said certification shall
be a ground for the dismissal of the action without prejudice to its
refiling.
The same rule shall apply in case the client, through the NCLA or
chapter legal aid office, files an appeal.
(h) Signing of pleadings – All complaints, petitions, answers,
replies, memoranda and other important pleadings or motions to
be filed in courts shall be signed by the handling lawyer and co-
signed by the chairperson or a member of the chapter legal aid
committee, or in urgent cases, by the executive director of legal
aid or whoever performs his functions.
Ordinary motions such as motions for extension of time to file a
pleading or for postponement of hearing and manifestations may
be signed by the handling lawyer alone.
(i) Motions for extension of time or for postponement – The filing
of motions for extension of time to file a pleading or for
postponement of hearing shall be avoided as much as possible
as they cause delay to the case and prolong the proceedings.
(j) Transfer of cases – Transfer of cases from one handling
lawyer to another shall be affected only upon approval of the
chapter legal aid committee.
Section 4. Decision to appeal. – (a) All appeals must be made on the
request of the client himself. For this purpose, the client shall be made to
fill up a request to appeal.
(b) Only meritorious cases shall be appealed. If the handling lawyer, in
consultation with the chapter legal aid committee, finds that there is no
merit to the appeal, the client should be immediately informed thereof in
writing and the record of the case turned over to him, under proper
receipt. If the client insists on appealing the case, the lawyer handling the
case should perfect the appeal before turning over the records of the
case to him.
Section 5. Protection of private practice. – Utmost care shall be taken to
ensure that legal aid is neither availed of to the detriment of the private
practice of law nor taken advantage of by anyone for purely personal
ends.
ARTICLE VI
Withdrawal of Legal Aid and Termination of Exemption
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Section 1. Withdrawal of legal aid. – The NCLA or the chapter legal aid
committee may, in justifiable instances as provided in the next Section,
direct the handling lawyer to withdraw representation of a client’s cause
upon approval of the IBP Board of Governors (in the case of the NCLA)
or of the chapter board of officers (in the case of the chapter legal aid
committee) and through a proper motion filed in Court.
Section 2. Grounds for withdrawal of legal aid. – Withdrawal may be
warranted in the following situations:
(a) In a case that has been provisionally accepted, where it is
subsequently ascertained that the client is not qualified for legal
aid;
(b) Where the client’s income or resources improve and he no
longer qualifies for continued assistance based on the means
test. For this purpose, on or before January 15 every year, the
client shall submit an affidavit of a disinterested person stating
that the client and his immediate family do not earn a gross
income mentioned in Section 2, Article V, nor own any real
property with the fair market value mentioned in the same
Section;
(c) When it is shown or found that the client committed a falsity in
the application or in the affidavits submitted to support the
application;
(d) When the client subsequently engages a de parte counsel or
is provided with a de oficio counsel;
(e) When, despite proper advice from the handling lawyer, the
client cannot be refrained from doing things which the lawyer
himself ought not do under the ethics of the legal profession,
particularly with reference to their conduct towards courts, judicial
officers, witnesses and litigants, or the client insists on having
control of the trial, theory of the case, or strategy in procedure
which would tend to result in incalculable harm to the interests of
the client;
(f) When, despite notice from the handling lawyer, the client does
not cooperate or coordinate with the handling lawyer to the
prejudice of the proper and effective rendition of legal aid such as
when the client fails to provide documents necessary to support
his case or unreasonably fails to attend hearings when his
presence thereat is required; and
(g) When it becomes apparent that the representation of the
client’s cause will result in a representation of conflicting
interests, as where the adverse party had previously engaged the
services of the NCLA or of the chapter legal aid office and the
subject matter of the litigation is directly related to the services
previously rendered to the adverse party.
Section 3. Effect of withdrawal. – The court, after hearing, shall allow the
NCLA or the chapter legal aid office to withdraw if it is satisfied that the
ground for such withdrawal exists.
Except when the withdrawal is based on paragraphs (b), (d) and (g) of the
immediately preceding Section, the court shall also order the dismissal of
the case. Such dismissal is without prejudice to whatever criminal liability
may have been incurred if the withdrawal is based on paragraph (c) of the
immediately preceding Section.
ARTICLE VII
Miscellaneous Provisions
Section 1. Lien on favorable judgment. – The amount of the docket and
other lawful fees which the client was exempted from paying shall be a
lien on any judgment rendered in the case favorable to the indigent,
unless the court otherwise provides.
In case, attorney’s fees have been awarded to the client, the same shall
belong to the NCLA or to the chapter legal aid office that rendered the
legal aid, as the case may be. It shall form part of a special fund which
shall be exclusively used to support the legal aid program of the NCLA or
the chapter legal aid office. In this connection, the chapter board of
officers shall report the receipt of attorney’s fees pursuant to this Section
to the NCLA within ten (10) days from receipt thereof. The NCLA shall, in
turn, include the data on attorney’s fees received by IBP chapters
pursuant to this Section in its liquidation report for the annual subsidy for
legal aid.1awphi1
Section 2. Duty of NCLA to prepare forms. – The NCLA shall prepare the
standard forms to be used in connection with this Rule. In particular, the
NCLA shall prepare the following standard forms: the application form,
the affidavit of indigency, the supporting affidavit of a disinterested
person, the affidavit of a disinterested person required to be submitted
annually under Section 2(b), Article VI, the certification issued by the
NCLA or the chapter board of officers under Section 1(f), Article V and
the request to appeal.
The said forms, except the certification, shall be in Filipino. Within sixty
(60) days from receipt of the forms from the NCLA, the chapter legal aid
offices shall make translations of the said forms in the dominant dialect
used in their respective localities.
Section 3. Effect of Rule on right to bring suits in forma pauperis. –
Nothing in this Rule shall be considered to preclude those persons not
covered either by this Rule or by the exemption from the payment of legal
fees granted to clients of the Public Attorney’s Office under Section 16-D
of RA 9406 to litigate in forma pauperis under Section 21, Rule 3 and
Section 19 Rule 141 of the Rules of Court.
Section 4. Compliance with Rule on Mandatory Legal Aid Service. –
Legal aid service rendered by a lawyer under this Rule either as a
handling lawyer or as an interviewer of applicants under Section 1(b),
! 32!
Article IV hereof shall be credited for purposes of compliance with
the Rule on Mandatory Legal Aid Service.
The chairperson of the chapter legal aid office shall issue the certificate
similar to that issued by the Clerk of Court in Section 5(b) of the Rule on
Mandatory Legal Aid Service.
ARTICLE VIII
Effectivity
Section 1. Effectivity. – This Rule shall become effective after fifteen days
following its publication in a newspaper of general circulation.
The above rule, in conjunction with Section 21, Rule 3 and Section 19,
Rule 141 of the Rules of Court, the Rule on Mandatory Legal Aid Service
and the Rule of Procedure for Small Claims Cases, shall form a solid
base of rules upon which the right of access to courts by the poor shall be
implemented. With these rules, we equip the poor with the tools to
effectively, efficiently and easily enforce their rights in the judicial system.
A Final Word
Equity will not suffer a wrong to be without a remedy. Ubi jus ibi
remedium. Where there is a right, there must be a remedy. The remedy
must not only be effective and efficient, but also readily accessible. For a
remedy that is inaccessible is no remedy at all.
The Constitution guarantees the rights of the poor to free access to the
courts and to adequate legal assistance. The legal aid service rendered
by the NCLA and legal aid offices of IBP chapters nationwide addresses
only the right to adequate legal assistance. Recipients of the service of
the NCLA and legal aid offices of IBP chapters may enjoy free access to
courts by exempting them from the payment of fees assessed in
connection with the filing of a complaint or action in court. With these twin
initiatives, the guarantee of Section 11, Article III of Constitution is
advanced and access to justice is increased by bridging a significant gap
and removing a major roadblock.
WHEREFORE, the Misamis Oriental Chapter of the Integrated Bar of the
Philippines is hereby COMMENDED for helping increase the access to
justice by the poor. The request of the Misamis Oriental Chapter for the
exemption from the payment of filing, docket and other fees of the clients
of the legal aid offices of the various IBP chapters is GRANTED. The
Rule on the Exemption From the Payment of Legal Fees of the Clients of
the National Committee on Legal Aid (NCLA) and of the Legal Aid Offices
in the Local Chapters of the Integrated Bar of the Philippines (IBP) (which
shall be assigned the docket number A.M. No. 08-11-7-SC [IRR] provided
in this resolution is hereby APPROVED. In this connection, the Clerk of
Court is DIRECTED to cause the publication of the said rule in a
newspaper of general circulation within five days from the promulgation of
this resolution.
The Office of the Court Administrator is hereby directed to promptly issue
a circular to inform all courts in the Philippines of the import of this
resolution.
SO ORDERED.
A. M. No. 09-6-9-SC August 19, 2009
RE: Query of Mr. Roger C. Prioreschi Re Exemption from Legal and
Filing Fees of the Good Shepherd Foundation, Inc.
RESOLUTION
BERSAMIN, J.:
In his letter dated May 22, 2009 addressed to the Chief Justice, Mr.
Roger C. Prioreschi, administrator of the Good Shepherd Foundation,
Inc., wrote:
The Good Shepherd Foundation, Inc. is very grateful for your 1rst.
Indorsement to pay a nominal fee of Php 5,000.00 and the balance upon
the collection action of 10 million pesos, thus giving us access to
the Justice Systempreviously denied by an up-front excessive court fee.
The Hon. Court Administrator Jose Perez pointed out to the need of
complying with OCA Circular No. 42-2005 and Rule 141 that reserves this
"privilege" to indigent persons. While judges are appointed to interpret the
law, this type of law seems to be extremely detailed with requirements
that do not leave much room for interpretations.
In addition, this law deals mainly with "individual indigent" and it does not
include Foundations or Associations that work with and for the most
Indigent persons. As seen in our Article of Incorporation, since 1985 the
Good Shepherd Foundation, Inc. reached-out to the poorest among the
poor, to the newly born and abandoned babies, to children who never
saw the smile of their mother, to old people who cannot afford a few
pesos to pay for "common prescriptions", to broken families who returned
to a normal life. In other words, we have been working hard for the very
Filipino people, that the Government and the society cannot reach to, or
have rejected or abandoned them.
Can the Courts grant to our Foundation who works for indigent and
underprivileged people, the same option granted to indigent people?
The two Executive Judges, that we have approached, fear accusations of
favoritism or other kind of attack if they approve something which is not
clearly and specifically stated in the law or approved by your HONOR.
Can your Honor help us once more?
Grateful for your understanding, God bless you and your undertakings.
We shall be privileged if you find time to visit our orphanage – the Home
of Love – and the Spiritual Retreat Center in Antipolo City.
To answer the query of Mr. Prioreschi, the Courts cannot grant to
foundations like the Good Shepherd Foundation, Inc. the same
exemption from payment of legal fees granted to indigent litigants even if
the foundations are working for indigent and underprivileged people.
! 33!
The basis for the exemption from legal and filing fees is the free access
clause, embodied in Sec. 11, Art. III of the 1987 Constitution, thus:
Sec. 11. Free access to the courts and quasi judicial bodies and
adequate legal assistance shall not be denied to any person by reason of
poverty.
The importance of the right to free access to the courts and quasi judicial
bodies and to adequate legal assistance cannot be denied. A move to
remove the provision on free access from the Constitution on the ground
that it was already covered by the equal protection clause was defeated
by the desire to give constitutional stature to such specific protection of
1
the poor.
In implementation of the right of free access under the Constitution, the
Supreme Court promulgated rules, specifically, Sec. 21, Rule 3, Rules of
2 3
Court, and Sec. 19, Rule 141, Rules of Court, which respectively state
thus:
Sec. 21. Indigent party. — A party may be authorized to litigate his action,
claim or defense as an indigent if the court, upon an ex parte application
and hearing, is satisfied that the party is one who has no money or
property sufficient and available for food, shelter and basic necessities for
himself and his family.
Such authority shall include an exemption from payment of docket and
other lawful fees, and of transcripts of stenographic notes which the court
may order to be furnished him. The amount of the docket and other lawful
fees which the indigent was exempted from paying shall be a lien on any
judgment rendered in the case favorable to the indigent, unless the court
otherwise provides.
Any adverse party may contest the grant of such authority at any time
before judgment is rendered by the trial court. If the court should
determine after hearing that the party declared as an indigent is in fact a
person with sufficient income or property, the proper docket and other
lawful fees shall be assessed and collected by the clerk of court. If
payment is not made within the time fixed by the court, execution shall
issue for the payment thereof, without prejudice to such other sanctions
as the court may impose. (22a)1avvphi1
Sec. 19. Indigent litigants exempt from payment of legal fees.– Indigent
litigants (a) whose gross income and that of their immediate family do not
exceed an amount double the monthly minimum wage of an employee
and (b) who do not own real property with a fair market value as stated in
the current tax declaration of more than three hundred thousand
(P300,000.00) pesos shall be exempt from payment of legal fees.
The legal fees shall be a lien on any judgment rendered in the case
favorable to the indigent litigant unless the court otherwise provides.
To be entitled to the exemption herein provided, the litigant shall execute
an affidavit that he and his immediate family do not earn a gross income
abovementioned, and they do not own any real property with the fair
value aforementioned, supported by an affidavit of a disinterested person
attesting to the truth of the litigant’s affidavit. The current tax declaration,
if any, shall be attached to the litigant’s affidavit.
Any falsity in the affidavit of litigant or disinterested person shall be
sufficient cause to dismiss the complaint or action or to strike out the
pleading of that party, without prejudice to whatever criminal liability may
have been incurred.
The clear intent and precise language of the aforequoted provisions of
the Rules of Court indicate that only a natural party litigant may be
regarded as an indigent litigant. The Good Shepherd Foundation, Inc.,
being a corporation invested by the State with a juridical personality
4
separate and distinct from that of its members, is a juridical person.
Among others, it has the power to acquire and possess property of all
kinds as well as incur obligations and bring civil or criminal actions, in
5
conformity with the laws and regulations of their organization. As a
juridical person, therefore, it cannot be accorded the exemption from legal
and filing fees granted to indigent litigants.
That the Good Shepherd Foundation, Inc. is working for indigent and
underprivileged people is of no moment. Clearly, the Constitution has
explicitly premised the free access clause on a person’s poverty, a
condition that only a natural person can suffer.
There are other reasons that warrant the rejection of the request for
exemption in favor of a juridical person. For one, extending the exemption
to a juridical person on the ground that it works for indigent and
underprivileged people may be prone to abuse (even with the imposition
of rigid documentation requirements), particularly by corporations and
entities bent on circumventing the rule on payment of the fees. Also, the
scrutiny of compliance with the documentation requirements may prove
too time-consuming and wasteful for the courts.
In view of the foregoing, the Good Shepherd Foundation, Inc. cannot be
extended the exemption from legal and filing fees despite its working for
indigent and underprivileged people.
SO ORDERED.
II. Jurisdiction
BATAS PAMBANSA Blg. 129
AN ACT REORGANIZING THE JUDICIARY, APPROPRIATING FUNDS
THEREFOR, AND FOR OTHER PURPOSES
PRELIMINARY CHAPTER
Section 1. Title. – This Act shall be known as "The Judiciary
Reorganization Act of 1980."
Section 2. Scope. – The reorganization herein provided shall include the
Court of Appeals, the Court of First Instance, the Circuit Criminal Courts,
the Juvenile and Domestic Relations Courts, the Courts of Agrarian
! 34!
Relations, the City Courts, the Municipal Courts, and the Municipal Circuit
Courts.
CHAPTER I
COURT OF APPEALS
Section 3. Organization. – There is hereby created a Court of Appeals
which consists of a Presiding Justice and fifty Associate Justice who shall
be appointed by the President of the Philippines. The Presiding Justice
shall be so designated in his appointment, and the Associate Justice shall
have precedence according to the dates of their respective appointments,
or when the appointments of two or more of them shall bear the same
date, according to the order in which their appointments were issued by
the President. Any member who is reappointed to the Court after
rendering service in any other position in the government shall retain the
precedence to which he was entitled under his original appointment, and
his service in the Court shall, for all intents and purposes, be considered
as continuous and uninterrupted. (as amended by Exec. Order No. 33,,
July 28, 1986.)
Section 4. Exercise of powers and functions. – The Court Appeals shall
exercise its powers, functions, and duties, through seventeen (17)
divisions, each composed of three (3) members. The Court may sit en
banc only for the purpose of exercising administrative, ceremonial, or
other non-adjudicatory functions. (as amended by Exec. Order No. 33,.)
Section 5. Succession to Office of Presiding Justice. – In case of a
vacancy in the absence of inability to perform the powers, functions, and
duties of his office, the associate Justice who is first in precedence shall
perform his powers, functions, and duties until such disability is removed,
or another Presiding Justice is appointed and has qualified.
Section 6. Who presides over session of a division. – If the Presiding
Justice is present in any session of a division of the Court, he shall
preside. In his absence, the Associate Justice attending such session
who has precedence shall preside.
Section 7. Qualifications. – The Presiding Justice and the Associate
Justice shall have the same qualifications as those provided in
Constitution for Justice of the Supreme Court.
Section 8. Grouping of Divisions. – (Expressly repealed by Section 4,
Exec. Order No. 33, July 28, 1986.)
Section 9. Jurisdiction. – The Court of Appeals shall Exercise:
1. Original jurisdiction to issue writs
of mandamus, prohibition, certiorari, habeas corpus, and quo
warranto,and auxiliary writs or processes, whether or not in aid of
its appellate jurisdiction;
2. Exclusive original jurisdiction over actions for annulment of
judgements of Regional Trial Courts; and
3. Exclusive appellate jurisdiction over all final judgements,
resolutions, orders or awards of Regional Trial Courts and quasi-
 judicial agencies, instrumentalities, boards or commission,
including the Securities and Exchange Commission, the Social
Security Commission, the Employees Compensation
Commission and the Civil Service Commission, Except those
falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the Labor Code of the
Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph 4 of the fourth paragraph od
Section 17 of the Judiciary Act of 1948.
The court of Appeals shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to
resolve factual issues raised in cases falling within its original and
appellate jurisdiction, including the power to grant and conduct new trials
or Appeals must be continuous and must be completed within three (3)
months, unless extended by the Chief Justice. (as amended by R.A. No.
7902.)
Section 10. Place of holding sessions. – The Court of Appeals shall have
its permanent station in the City of Manila. Whenever demanded by
public interest, the Supreme Court, upon its own initiative or upon
recommendation of the Presiding Justice, may authorize a division of the
Court to hold sessions outside Manila, periodically, or for such periods
and at such places as the Supreme Court may determine, for the purpose
of hearing and deciding cases.
Section 11. Quorum – A majority of the actual members of the Court
shall constitute a quorum for its session en banc. Three members shall
constitute a quorum for the session of a division. The unanimous vote of
the three members of a division shall be necessary for the
pronouncement of a decision of final resolution, which shall be reached in
consultation before the writing of the opinion by any members of the
division. In the event that the three members do not reach a unanimous
vote, the Presiding Justice shall request the Raffle Committee of the
Court for the designation of two additional Justice to sit temporarily with
them, forming a special division of five members and the concurrence of
a majority of such division shall be necessary for the pronouncement of a
decision or final resolution. The designation of such additional Justice
shall be made strictly by raffle.
A month for reconsideration of its decision or final resolution shall be
resolved by the Court within ninety (90) days from the time it is submitted
for resolution, and no second motion for reconsideration from the same
party shall be entertainment. (as amended by Exec. Order No. 33, July
28, 1986.)
Section 12. Internal Rules. – The court en banc is authorized to
promulgate rules or orders governing the constitution of the divisions and
the assignment of Appellate Justices thereto, the distribution of cases,
! 35!
and other matters pertaining to the operations of the Court of its divisions.
Copies of such rules and orders shall be furnished by the Supreme Court,
which rules and orders shall be effective fifteen (15) days after receipt
thereof, unless directed otherwise by the Supreme Court.
CHAPTER II
REGIONAL TRIAL COURTS
Section 13. Creation of Regional Trial Courts. – There are hereby
created thirteen (13) Regional Trial Courts, one for each of the following
judicial regions:
The First Judicial Region, consisting of the provinces of Abra, Benguet,
Ilocos Norte, Ilocos Sur, La Union, Mountain Province, and Pangasinan,
and cities of Baguio, Dagupan, Laog and San Carlos;
The Second Judicial Region, consisting of the provinces of Batanes,
Cagayan, Ifugao, Kalinga-Apayao, Nueva Viscaya, and Quirino;
The Third Judicial Region, consisting of the provinces of Bataan, Bulacan
(except the municipality of valenzuela), Nueva Ecija, Pampanga, Tarlac,
and Zambales, and the cities of Angeles, Cabanatuan, Olongapo,
Palayan and San Jose;
The National Capital Judicial Region, consisting of the cities of Manila,
Quezon, Pasay, Caloocan and Mandaluyong, and the municipalities of
Navotas, Malabon, San Juan, Makati, Pasig, Pateros, Taguig, Marikina,
Parañaque, Las Piñas, Muntinlupa, and Valenzuela;
The Fourth Judicial Region, consisting of the provinces of Batangas,
Cavite, Laguna, Marinduque, Mindoro Occidental, Mindoro Oriental,
Palawan, Quezon, Rizal (except the cities and municipalities embraced
within the National Capital Judicial Region0, Romblon, and Aurora, and
the cities of Batangas, Cavite, Lipa, Lucena, Puerto Princessa, San
Pablo, Tagaytay, and Trece Martires;
The Fifth Judicial Region, consisting of the provinces of Albay, Camarines
Sur, Camarines Norte, Catanduanes, Masbate, and Sorsogon, and the
cities of Legaspi, Naga and Iriga;
The Sixth Judicial Region, consisting of the provinces of Aklan, Antique,
Capiz, Iloilo, La Calota, Roxas, San Carlos, and Silay, and the
subprovince of Guimaras;
The Seventh Judicial Region, consisting of the provinces of Bohol, Cebu,
Negros Oriental, and Siquijor, and the cities of Bais, Canlaon, Cebu,
Danao, Dumaguete, Lapu-lapu, Mandaue, Tagbilaran, and Toledo,
The Eighth Judicial Region, consisting of the provinces or Eastern Samar,
Leyte, Northern, Samar, Southern Leyte, Ormoc, and Tacloban:
The Ninth Judicial Region, consisting of the provinces of Basilan, Sulu,
Tawi-Tawi, Zamboanga del Sur, and the cities of Dapitan, Dipolog,
Pagadian, and Zamboanga;
The Tenth Judicial Region, consisting of the provinces of Agusan del
Norte, Agusan del Sur, Bukidnon, Camiguin, Misamis Occidental,
Misamis Oriental, and Surigao del Norte, and the cities of Butuan,
Cagayan de Oro, Gingoog, Ozamis, Oroquieta, Surigao, and Tangub;
The Eleventh Judicial Region, consistingnof the provinces of Davao del
Norte, Davao Oriental, Davao del Sur, South Cotabato, and Surigao del
Sur, and the cities of Davao, and General Santos; and
The Twelfth Judicial Region, consisting of the provinces of Lanao del
Norte, Lanao del Sur, Maguindanao, North Cotabato, and Sultan Kudarat,
and the cities of Cotabato, Iligan, and Marawi.
In case of transfer or redistribution of the provinces, subprovinces, cities
or municipalities comprising the regions established by law of purposes of
the administrative field organization of the various departments and
agencies of the government, the composition of the judicial regions herein
constituted shall be deemed modified accordingly.
Section 14. Regional Trial Courts.
(a) Fifty-seven Regional Trial Judges shall be commissioned for
the First Judicial Region. There shall be.
Two branches (Branches III ans II) for the province of
Abra, with seats at Bangued;
Eight branches (Branches III to X) for the province of
Benguet and the city of Baguio, Branches III to VII with
seats at Baguio City, and Branches VIII to X at La
Trinidad;
Nine branches (Branches XI to XIX) for the province of
Ilocos Norte and the city of Laoag, Branches XI to XVI
with seats at Laoag City, Branches XVII and XVIII at
Batac, and Branch XIX at Bangui;
Six branches (Braches XX to XXV) for the province of
Ilocos Sur, Branches XX and XXI with seats at Vigan,
Branch XXII at Narvacan, Branch XXIII at Candon,
Branch XXIV at Cabugao, and Branch XXV at Tagudin;
Nine branches (Branches XXVI to XXXIV) for the
province of La Union, Branches XXVI to XXX with seats
at San Fernando, Branches XXXI and XXXII at Agoo,
Branch XXXIII at Bauang, and Branch XXXIV at Balaoan;
Two branches (Branches XXXV and XXXVI) for the
province of Mountain province, with seats at Bontoc; and
Twenty-one branches (Branches XXXVII to LVII) for the
province of Pangasinan and the citie sof dagupan and
san Carlos, Branches XXXVII to XXXIX with seats at
Lingayen, Branches XL to XLIV at dagupan, Branches
XLV to XLIX at Urdaneta, Branch L at Villasis, Branches
LI and LII at Tayug, Branch LIII at Rosalaes, Branches
LIV and LV at Alaminos, and Branch LVI and LVII at san
Carlos.
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(b) Thirty-two Regional Trial Judges shall be commissioned for
the Second Judicial region. There shall be:
Twelve branches (Branches I to XII) for the province of
Cagayan, Branches I to V with seats at Tuguegarao,
Branches VI to X at Aparri, Branch XI at Tuao, and
Branch XII at Sanchez Mira;
One branch (Branch XIII) for the province of Batanes,
with seat at Basco;
Two branches (Branches XIV and XV) for the province of
Ifugao, Branch XIV with seat at Lagawe, and Branch XV
at Potia;
Nine branches (Branches XVI to XXIV) for the province
of Isabela, Branches XVI to XVIII with seats at Ilagan,
Branches XIX and XX at cauayan, Branch XXI at
Santiago, Branch XXII at Cabagan, Branch XXIII at
Roxas, and Branch XXIV at Echague;
Two branches (Branches XXV and XXVI) for the province
of kalinga-Apayao, Branch XXV with seat at Tabuk, and
Branch XXVI at Luna;
Four branches (Branches XXVII to XXX) for the province
of Nueva Vizcaya, Branches XXVII to XXIX with seats at
Bayombong, and Branch XXX at Bambang;
Two branches (Branches XXXI and XXXII) for the
province of Quirino, with seats at Cabarroguis.
(c) Seventy-five Regional Trial judges shall be commissioned for
the Third Judicial Region. There shall be:
Five branches (Branches I to V) for the province of
Bataan, Branches I to III with seats at Balanga, Branch
IV at Mariveles, and Branch V at Dinalupihan;
Seventeen branches (Branches VI to XXII) for the
province of Bulacan (except the municipality of
Valuenzuela), with seats at Malolos;
Eighteen branches (Branches XXIII to XL) for the
province of Nueva Ecija and the cities of Cabanatuan,
San Jose and Palayan, Branches XXIII to XXX with seats
at Cabanatuan City, Branches XXXI to XXXIII at Guimba,
Branches XXXIV to XXXVI at Gapan, Branch XXXVII at
Sto. Domingo, Branches XXXVIII and XXXIX at San
Jose, and Branch XL at Palayan.
Twenty-two branches (Branches XLI to LXII) for the
province of Pampanga and the city of Angeles, Branches
XLI to XLVIII with seats at San Fernando, Branches XLIX
to LIII at Guagua, Branches LIV and LV at Macabebe,
and Branches LVI to LXII at Angeles City;
 Six branches (Branches LXIII to LXVIII) for the province
of Tarlac, Branches LXVI at Capas, Branch LXVII at
Paniqui, and Branch LXVIII at Camiling; and
Seven branches (Branches LXIX to LXXV) for the
province of Zambales and the city of Olongapo,
Branches LXIX to LXXI with seats at Iba and Branches
LXXII to LXXV at Olongapo City
(d) One hundred seventy-two (172) Regional Trial Judges shall
be commissioned for the National Capital Judicial Region. There
shall be:
Fifty-five branches (Branches 1 to 55) for the City of
Manila, wit seats thereat;
Thirty-two branches (Branches 76 to 107) for Quezon
City, with seats thereat;
Twelve branches (Branches 108 to 119) for Pasay City,
with seats thereat;
Twelve branches (Branches 120 to 131) for Caloocan
City, with seats thereat;
Fifty-eight branches (Branches 56 to 74 and 132 to 170)
for the Municipalities of Navotas, Malabon, San Juan,
Madaluyong, Makati, Pasig, Pateros, Taguig, Marikina,
Parañaque, Las Piñas, and Muntinlupa; Branches 67 to
71 and 151 to 168 at Pasig; and Branches 72 to 74, 169
and 170 at Malabon; and
Three branches (Branches 75, 171 and 172) for the
municipality of Valenzuela, with seats thereat. (As
amended by EO No. 33, July 30, 1986.)
(e) Eihty-two Regional Trial Judges shall be commissioned for
the Fourth Judicial Region. There shall be:
Fourteen branches (Branches I to XIV) for the province of
Batangas and the cities of Lipa and Batangas, Branches
I to VI with seats at Batangas City, Branch V at Lemery,
Branches VI to VIII at Tanuan, Branches IX to XI at
Balayan, Branches XII and XIII at Lipa, and Branch XIV
at Nasugbu;
Nine branches (Branches XV to XXIII) for the province of
Cavite and the cities of Cavite, Tagaytay and Trece
Matires, Branch XV with seat at Naic, Branches XVII at
Cavite City, Branch XVIII at Tagayatay City, Branch XIX
at Bacoor, Branches XX to XXII at Imus, and Branch
XXIII at Trece Martires;
Fourteen branches (Branches XXIV to XXXVII) for the
province of Laguna and the city of San Pablo, Branches
XXVIII at Sta. Cruz, Branches XXIX to XXXII at San
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Pable City, Branch XXXIII at Siniloan, and Branches
XXXIV to XXXVI at Calamba;
One branch (Branch XXXVIII) for the province of
Marinduque, with seat at Boac;
Five branches (Branches XXXIX to XLIII) for the province
of Mindoro Oriental, Branches XXXIX to XL with seats at
Calapan, Branches XLI and XLII at Pinamalayan, and
Branch XLII at Roxas;
Three branches (Branches XLVII to XLVI) for the
province of Mindoro Occidental, Branch XLIV with seat at
Mamburao, and Branches XLV and XLVI at San Jose;
Six branches (Branches XLVII to LII) for the province of
Palawan and the city of Puerto Princesa, with seats at
Puerto Princesa City;
Thirteen branches (Branches LIII to LXV) for the province
of Quezon and the city of Lucena, Branches LIII to LX
with seats at Lucena City, Branches LXI and LXII at
Gumaca, Branch LXIII at Calauag, Branch LXIV at
Mauban, and Branch LXV at Infanta;
One branchj(Branch LXVI) for the province of Aurora,
with seat at Baler;
Fourteen branches (Branches LXVII to LXXX) for the
province of Rizal except the cities and municipalities
embraced within the National Capital Judicial Region,
Branches LXVII to LXX with seats at Binangonan,
Branches LXXI to LXXIV at Antipolo, Branches LXXV to
LXXVII at San Mateo, and Branches LXXVIII to LXXX at
Morong; and
Two branches (Branches LXXXI and LXXXII) for the
province of Romblon, Branch LXXXI with seat at
Romblon, and Branch LXXXII at Odiongan.
(f) Fifty-five Regional Trial Judges shall be commissioned for the
Fifth Judicial Region. There shall be:
Eighteen branches (Branches I to XVIII) for the province
of Albay and the city of Legaspi, Branches I to X with
seats at Legaspi City, Branches XI to XIV at Ligao, and
Branches XV to XVIII at Tabaco;
Nineteen branches (Branches XIX to XXXVII) for the
province of Camarines Sur and the cities of Naga and
Iriga, Branches XIX to XXVIII with seats at Naga City,
Branch XXIX at Libmanan, Branch XXX at Tigaon,
Braches XXXI to XXXIII at Pili, and Branches XXXIV to
XXXVII at Iriga City;
Four branches (Branches XXXVIII to XLII) for the
province of Camarines Norte, with seat at Daet;
 Two branches (Branches XLII and XLII) for the province
of Catanduanes, with seats at Virac;
Seven branches (Branches XLIV to L) for the province of
Masbate, Branches XLIV to XLVIII with seats at Masbate,
Branch XLIX at Cataingan, and Branch L at San Jacinto;
and
Five branches (Branches LI to LV) for the province of
Sorsogon, Branches LI to LIII with seats at Sorsogon,
Branch LVI at Gubat, and Branch LV at Irosin.
(g) Sixty-three Regional Trial Judges shall be commissioned for
the Sixth Judicial Region. There shall be:
Nine branches (Branches I to IX) for the province of
Aklan, with seats at Kalibo;
Four branches (Branches X to XIII) for the province of
Antique, Branches X to XII with seats at San Jose, and
Branch XIII and Culasi;
Eighr branches (Branches XIV to XXI) for the province of
Capiz and the city of Roxas, Branches XIV to XIX with
seats at Roxas City and Branches XX and XXI at
Mambusao;
Eighteen branches (Branches XXII to XXXIX) for the
province of Iloilo, the subprovince of Guimaras, and the
city of Iloilo, with seats at Iloilo City; and
Twenty-four branches (Branches XL to LXIII) for the
province of Negros Occidental, and the cities of
Bacolod,Bago, Cadiz, La Carlota, San Carlos and Silay,
Branch XL with seat at Silay City, Branches XLI to LIV at
Bacolod City, Branches LV and LVI at Himamaylan,
Branches LVII to LIX at Kabankalan, Branch LXII at Bago
City, and Branch LXII at La Carlota City.
(h) Forty-six Regional Trial Judges shall be commissioned for the
Seventh Judicial Region. There shall be:
Four branches (Branches I to IV) for the province of
Bohol and the city of Tagbilaran, with seats at Tagbilaran
City;
Twenty-five branches (Branches V to XXIX) for the
province of Cebu and the cities of Cebu, Danao, Lapu-
Lapu, Mandaue and Toledo, Branches V to XXIV with
seats at Cebu City, Branch XXV at Danao City, Branch
XXVI at Argao, Branch XXVII at Lapu-Lapu City, Branch
XXVIII at Mandaue City, and Branch XXIX at Toledo City;
Sixteen branches (Branches XXX to XLV) for the
province of Negros Oriental and the cities of Dumaguete,
Bais and Canlaon, Branches XXX to XLIV with seats at
Dumaguete City, and Branch XLV at Bais City; and
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One branch (Branch XLVI) for the province of Siquijor,
with seat at Larena.
(i) Thirty-three Regional Trial Judges shall be commissioned for
the Eighth Judicial Region. There shall be:
Five branches (Branches I to V) for the province of
Eastern Samar, Branches I and II with seats at
Borongan, Branch III at Guiuan, Branch IV at Dolores,
and Branch V at Oras;
Thirteen branches (Branches VI to XVIII) for the province
of Leyte, the sub-province of Biliran, and the cities of
Ormoc and Tacloban, Branches VI and IX with seats at
Tacloban City, Branch X at Abuyog, Branch XI at
Calubian, Branch XII at Ormoc City, Branch XIII at
Carigara, Branch XIV at Baybay, Branch XV at Burauen,
Branch XVI at Naval, Branch XVII at Palompon, and
Branch XVIII at Hilongos;
Five branches (Branches XIX to XXIII) for the province of
Northern Samar, Branches XIX and XX with seats at
Catarman, Branches XXI and XXII at Laoang, and
Branch XXIII at Allen;
Three branches (Branches XXIV to XXVI) for the
province of Southern Leyte, Branches XXIV and XXV
with seats at Maasin, and Branch XXVI at San Juan; and
Seven branches (Branches XXVII to XXXIII) for the
province of Samar and the city of Calbayog, Branches
XXVII to XXIX with seats at Catbalogan, Branch XXX at
Basey, Branches XXXI and XXXII at Calbayog City, and
Branch XXXIII at Calbiga.
(j) Twenty-four Regional Trial Judges shall be commissioned for
the Ninth Judicial Region. There shall be:
Two branches (Branches I and II) for the province of
Basilan, with seats at Isabela;
Two branches (Branches III and IV) for the province of
Sulu, Branch III with seat at Jolo, and Branch IV at
Parang;
One branch (Branch V) for the province of Tawi-Tawi,
with seat at Bongao;
Six branches (Branches VI to XI) for the province of
Zamboanga del Norte, and the cities of Dipolog and
Dapitan, Branches VI to X seats at Dipolog City, and
Branch XI at Sindangan; and
Thirteen branches (Branches XII to XXIV) for the
province of Zamboanga del Sur and the cities of
Pagadian and Zamboanga Branches XII to XVII with
seats at Zamboanga City, Branches, XVIII to XXII at
 Pagadian City, Branch XXIII at Molave, and Branch XXIV
at Ipil.
(k) Thirty-two Regional Trial Judges shall be commissioned for
the Tenth Judicial Region. There shall be:
Five branches (Branches I to V) for the province of
Agusan del Norte and the city of Butuan, with seats at
Butuan City;
Two branches (Branches VI and VII) for the province of
Agusan del Sur, Branches VI with seat at Prosperidad
and Branch VII with seat at Bayugan;
Four branches (Branches VIII to XI) for the province of
Bukidnon, Branches VIII to X with seats at Malaybalay
and Branch XI at Manalo Fortich;
Five branches (Branches XII to XI) for the province of
Misamis Occidental and the cities of Oroquieta, Ozamis,
and Tangub, Branches XII to XIV with seats at Oroquieta
City, Branch XV at Ozamis City, and Branch XVI at
Tangub City;
Eleven branches (Branches XVII to XXVII) for the
province of Misamis Oriental and the cities of Cagayan
de Oro and Gingoog, Branches XVII to XXV with seats at
Cagayan de Oro City, Branch XXVI at Medina, and
Branch XXVII at Gingoog City;
One branch (Branch XXVIII) for the province of
Camiguin, with seat at Mambajao; and
Four branches (Branches XXIX to XXXII) for the province
of Surigao del Norte and the City of Surigao, Branches
XXIX and XXX with seats at Surigao City, Branch XXXI
at Dapa, and Branch XXXII at Dinagat, Dinagat Island.
(l) Twenty-nine Regional Trial Judges shall be commissioned for
the Eleventh Judicial Region. There shall be
Four branches (Branches I to IV) for the province of
Davao del Norte, Branches I and II with seats at Tagum,
Branch III at Nabunturan, and Branch IV at Panabo;
Three branches (Branches V to VII) for the province of
Davao Oriental, Branches V and VI with seats at Mati
and Branch VII at Banganga;
Fourteen branches (Branches VIII to XXI) for the
province of Davao del Sur and the city of Davao,
Branches VIII to XVII with seats at Davao City, Branches
XVIII and XIX at Digos, Branch XX at Malinta, and
Branch XXI a Bansalan;
Five Branches (Branches XXII to XXVI) for the province
of South Cotabato and the city of General Santos,
Branches XXII and XXIII with seats at General Santos
! 39!
City, Branches XXIV and XXV at Koronadal, and Branch
XXVI at Surallah; and
Three branches (Branches XXVII to XXIX) for the
province of Surigao del Sur, Branch XXVII with seat at
Tandag, Branch XXVIII at Lianga, and Branch XXIX at
Bislig.
(m) Twenty Regional Trial Judges shall be commissioned for the
Twelfth Judicial Region. There shall be:
Seven branches (Branches I to VII) for the province of
Lanao del Norte and the city of Iligan, Branches I to VI
with seats at Iligan City, and Branch VII at Tubod;
Five branches (Branches VIII to XII) for the province of
Lanao del Sur and the city of Marawi, Branches VIII to X
with seats at Marawi City, and Branches XI and XII at
Malabang;
Three branches (Branches XIII to XV) for the province of
Maguindanao and the city of Cotabato, Branches XIII and
XIV with seats at Cotabato City, and Branch XV at
Maganoy;
Three branches (Branches XVI to XVIII) for the province
of North Cotabato, Branch XVI with seat at Kabacan,
Branch XVII at Kidapawan, and Branch XVIII at
Missayap; and
Two branches (Branches XIX and XX) for the province of
Sultan Kudarat, Branch XIX, with seat at Isulan, and
Branch XX at Tacurong.
Section 15. Qualifications. – No persons shall be appointed Regional
Trial Judge unless he is a natural-born citizen of the Philippines, at least
thirty-five years of age, and for at least ten years, has been engaged in
the practice of law in the Philippines or has held a public office in the
Philippines requiring admission to the practice of law as an indispensable
requisite.
Section 16. Time and duration of sessions. – The time and duration of
daily sessions of the Regional Trial Courts shall be determined by the
Supreme Court: Provided, however, That all motions, except those
requiring immediate action, shall be heard in the afternoon of every
Friday, unless it falls on a holiday, in which case, the hearing shall be
held on the afternoon of the next succeeding business day: Provided,
further, That the Supreme Court may, for good reasons, fix a different
motion day in specified areas
Section 17. Appointment and assignment of Regional Trial Judges. –
Every Regional Trial Judge shall be appointed to a region which shall be
his permanent station, and his appointment shall state the branch of the
court and the seat thereof to which he shall be originally assigned.
However, the Supreme Court may assign temporarily a Regional Trial
Judge to another region as public interest may require, provided that such
temporary assignment shall not last longer than six (6) months without
the consent of the Regional Trial Judge concerned.
A Regional Trial Judge may be assigned by the Supreme Court to any
branch or city or municipality within the same region as public interest
may require, and such assignment shall not be deemed an assignment to
another station within the meaning of this section.
Section 18. Authority to define territory appurtenant to each branch. –
The Supreme Court shall define the territory over which a branch of the
Regional Trial Court shall exercise its authority. The territory thus defined
shall be deemed to be the territorial area of the branch concerned for
purposes of determining the venue of all suits, proceedings or actions,
whether civil or criminal, as well as determining the Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts over the
said branch may exercise appellate jurisdiction. The power herein
granted shall be exercised with a view to making the courts readily
accessible to the people of the different parts of the region and making
the attendance of litigants and witnesses as inexpensive as possible.
Section 19. Jurisdiction in civil cases. – Regional Trial Courts shall
exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is
incapable of pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of,
real property, or any interest therein, where the assessed value
of the property involved exceeds Twenty thousand pesos
(P20,000.00) or for civil actions in Metro Manila, where such the
value exceeds Fifty thousand pesos (50,000.00) 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;
(3) In all actions in admiralty and maritime jurisdiction where he
demand or claim exceeds One hundred thousand pesos
(P100,000.00) or , in Metro Manila, where such demand or claim
exceeds Two hundred thousand pesos (200,000.00);
(4) In all matters of probate, both testate and intestate, where the
gross value of the estate exceeds One hundred thousand pesos
(P100,000.00) or, in probate matters in Metro Manila, where such
gross value exceeds Two hundred thousand pesos (200,000.00);
(5) In all actions involving the contract of marriage and marital
relations;
(6) In all cases not within the exclusive jurisdiction of any court,
tribunal, person or body exercising jurisdiction or any court,
tribunal, person or body exercising judicial or quasi-judicial
functions;
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(7) In all civil actions and special proceedings falling within the
exclusive original jurisdiction of a Juvenile and Domestic
Relations Court and of the Courts of Agrarian Relations as now
provided by law; and
(8) In all other cases in which the demand, exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses,
and costs or the value of the property in controversy exceeds
One hundred thousand pesos (100,000.00) or, in such other
abovementioned items exceeds Two hundred thousand pesos
(200,000.00). (as amended by R.A. No. 7691*)
Section 20. Jurisdiction in criminal cases. – Regional Trial Courts shall
exercise exclusive original jurisdiction in all criminal cases not within the
exclusive jurisdiction of any court, tribunal or body, except those now
falling under the exclusive and concurrent jurisdiction of the
Sandiganbayan which shall hereafter be exclusively taken cognizance of
by the latter.
Section 21. Original jurisdiction in other cases. – Regional Trial Courts
shall exercise original jurisdiction:
(1) In the issuance of writs of certiorari, prohibition, mandamus,
quo warranto, habeas corpus and injunction which may be
enforced in any part of their respective regions; and
(2) In actions affecting ambassadors and other public ministers
and consuls.
Section 22. Appellate jurisdiction. – Regional Trial Courts shall exercise
appellate jurisdiction over all cases decided by Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts in their
respective territorial jurisdictions. Such cases shall be decided on the
basis of the entire record of the proceedings had in the court of origin and
such memoranda and/or briefs as may be submitted by the parties or
required by the Regional Trial Courts. The decision of the Regional Trial
Courts in such cases shall be appealable by petition for review to the
Court of Appeals which may give it due course only when the petition
shows prima facie that the lower court has committed an error of fact or
law that will warrant a reversal or modification of the decision or judgment
sought to be reviewed.
Section 23. Special jurisdiction to try special cases. – The Supreme
Court may designate certain branches of the Regional Trial Courts to
handle exclusively criminal cases, juvenile and domestic relations cases,
agrarian cases, urban land reform cases which do not fall under the
jurisdiction of quasi-judicial bodies and agencies, and/or such other
special cases as the Supreme Court may determine in the interest of a
speedy and efficient administration of justice.
Section 24. Special Rules of Procedure. – Whenever a Regional Trial
Court takes cognizance of juvenile and domestic relation cases and/or
agrarian cases, the special rules of procedure applicable under present
laws to such cases shall continue to be applied, unless subsequently Two branches (Branches LXXVII and LXXVIII) for Parañaque
amended by law or by rules of court promulgated by the Supreme Court. with seats thereat;
CHAPTER III One branch (Branch LXXIX) for Las Piñas with seat thereat;
METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS, AND One branch (Branch LXXX) for Muntinlupa with seat thereat;
MUNICIPAL CIRCUIT TRIAL COURTS Two branches (Branches LXXXI and LXXXII) for Valenzuela with
Section 25. Establishment of Metropolitan Trial Courts, Municipal Trial seats thereat;
Courts and Municipal Circuit Trial Courts. – There shall be created a Section 28. Other Metropolitan Trial Courts. – The Supreme Court shall
Metropolitan Trial Court in each metropolitan area established by law, a constitute Metropolitan Trial Courts in such other metropolitan areas as
Municipal Trial Court in each of the other cities or municipalities, and a may be established by law whose territorial jurisdiction shall be co-
Municipal Circuit Trial Court in each circuit comprising such cities and/or extensive with the cities and municipalities comprising the metropolitan
municipalities as are grouped together pursuant to law. area.
Section 26. Qualifications. – No person shall be appointed judge of a Every Metropolitan Trial Judge shall be appointed to a metropolitan area
Metropolitan Trial Court, Municipal Trial Court, or Municipal Circuit Trial which shall be his permanent station and his appointment shall state
Court unless he is a natural-born citizen of the Philippines, at least 30 branch of the court and the seat thereof to which he shall be originally
years of age, and, for at least five years, has been engaged in the assigned. A Metropolitan Trial Judge may be assigned by the Supreme
practice of law in the Philippines, or has held a public office in the Court to any branch within said metropolitan area as the interest of justice
Philippines requiring admission to the practice of law as an indispensable may require, and such assignment shall not be deemed an assignment to
requisite. another station within the meaning of this section.
Section 27. Metropolitan Trial Courts of the National Capital Region. – Section 29. Municipal Trial Courts in cities. – In every city which does not
There shall be a Metropolitan Trial Court in the National Capital Region, form part of a metropolitan area, there shall be a Municipal Trial Court
to be known as the Metropolitan Trial Court of Metro Manila, which shall with one branch, except as hereunder provided:
be composed of eighty-two (82) branches. There shall be: Two branches for Laoag City;
Thirty branches (Branches I to XXX) for the city of Manila with Four branches for Baguio City;
seats thereat; Three branches for Dagupan City;
Thirteen branches (Branches XXXI to XLIII) for Quezon City with Five branches for Olongapo City;
seats thereat; Three branches for Cabanatuan City;
Five branches (Branches XLIV to XLVIII) for Pasay City with Two branches for San Jose City;
seats thereat; Three branches for Angeles City;
Five branches (Branches XLIX to LIII) for Caloocan City with Two branches for Cavite City;
seats thereat; Two branches for Batangas City;
One branch (Branch LIV) for Navotas with seat thereat; Two branches for Lucena City;
Two branches (Branches LV and LVI) for Malabon with seats Three branches for Naga City;
thereat; Two branches for Iriga City;
Two branches (Branches LVII and LVIII) for San Juan with seats Three branches for Legaspi City;
thereat; Two branches for Roxas City;
Two branches (Branches LIX and LX) for Mandaluyong with Four branches for Iloilo City;
seats thereat; Seven branches for Bacolod City;
Seven branches (Branches LXI and LXVII) for Makati with seats Two branches for Dumaguete City;
thereat; Two branches for Tacloban City;
Five branches (Branches LXVIII to LXXII) for Pasig with seats Eight branches for Cebu City;
thereat; Three branches for Mandaue City;
One branch (Branch LXXIII) for Pateros with seat thereat; Two branches for Tagbilaran City;
One branch (Branch LXXIV) for Taguig with seat thereat; Two branches for Surigao City;
Two branches (Branches LXXV and LXXVI) for Marikina with Two branches for Butuan City;
seats thereat; Five branches for Cagayan de Oro City;
! 41!
 Seven branches for Davao City;
Three branches for General Santos City;
Two branches for Oroquieta City;
Three branches for Ozamis City;
Two branches for Dipolog City;
Four branches for Zamboanga City;
Two branches for Pagadian City; and
Two branches for Iligan City.
Section 30. Municipal Trial Courts. – In each of the municipalities that are
not comprised within a metropolitan area and a municipal circuit there
shall be a Municipal Trial Court which shall have one branch, except as
hereunder provided:
Two branches for San Fernando, La Union;
Four branches for Tuguegarao;
Three branches for Lallo, and two branches for Aparri, both of
Cagayan;
Two branches for Santiago, Isabela;
Two branches each for Malolos, Meycauayan and Bulacan, all of
Bulacan Province;
Four branches for San Fernando and two branches for Guagua,
both of Pampanga;
Two branches for Tarlac, Tarlac;
Two branches for San Pedro, Laguna; and
Two branches each for Antipolo and Binangonan, both in Rizal.
Section 31. Municipal Circuit Trial Court. – There shall be a Municipal
Circuit Trial Court in each area defined as a municipal circuit, comprising
one or more cities and/or one or more municipalities. The municipalities
comprising municipal circuits as organized under Administrative Order
No. 33, issued on June 13, 1978 by the Supreme Court pursuant to
Presidential Decree No. 537, are hereby constituted as municipal circuits
for purposes of the establishment of the Municipal Circuit Trial Courts,
and the appointment thereto of Municipal Circuit Trial Judges: Provided,
however, That the Supreme Court may, as the interests of justice may
require, further reorganize the said courts taking into account workload,
geographical location, and such other factors as will contribute to a
rational allocation thereof, pursuant to the provisions of Presidential
Decree No. 537 which shall be applicable insofar as they are not
inconsistent with this Act.
Every Municipal Circuit Trial Judge shall be appointed to a municipal
circuit which shall be his official station.
The Supreme Court shall determine the city or municipality where the
Municipal Circuit Trial Court shall hold sessions.
Section 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in criminal cases. – Except in
cases falling within the exclusive original jurisdiction of Regional Trial
! 42!
Courts and of the Sandiganbayan, the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:
(1) Exclusive original jurisdiction over all violations of city or
municipal ordinances committed within their respective territorial
jurisdiction; and
(2) Exclusive original jurisdiction over all offenses punishable with
imprisonment not exceeding six (6) years irrespective of the
amount of fine, and regardless of other imposable accessory or
other penalties, including the civil liability arising from such
offenses or predicated thereon, irrespective of kind, nature,
value, or amount thereof: Provided, however, That in offenses
involving damage to property through criminal negligence they
shall have exclusive original jurisdiction thereof. (as amended by
R.A, No. 7691)
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:
(1) Exclusive original jurisdiction over civil actions and probate
proceedings, testate and intestate, including the grant of
provisional remedies in proper cases, where the value of the
personal property, estate, or amount of the demand does not
exceed One hundred thousand pesos (P100,000.00) or, in Metro
Manila where such personal property, estate, or amount of the
demand does not exceed Two hundred thousand pesos
(P200,000.00) exclusive of interest damages of whatever kind,
attorney's fees, litigation expenses, and costs, the amount of
which must be specifically alleged: Provided, That where there
are several claims or causes of action between the same or
different parties, embodied in the same complaint, the amount of
the demand shall be the totality of the claims in all the causes of
action, irrespective of whether the causes of action arose out of
the same or different transactions;
(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.
(3) Exclusive original jurisdiction in all civil actions which involve
title to, or possession of, real property, or any interest therein
where the assessed value of the property or interest therein does
not exceed Twenty thousand pesos (P20,000.00) or, in civil
actions in Metro Manila, where such assessed value does not
exceed Fifty thousand pesos (P50,000.00) exclusive of interest,
 damages of whatever kind, attorney's fees, litigation expenses
and costs: Provided, That value of such property shall be
determined by the assessed value of the adjacent lots. (as
amended by R.A. No. 7691)
Section 34. Delegated jurisdiction in cadastral and land registration
cases. – Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts may be assigned by the Supreme Court to hear and
determine cadastral or land registration cases covering lots where there
is no controversy or opposition, or contested lots the where the value of
which does not exceed One hundred thousand pesos (P100,000.00),
such value to be ascertained by the affidavit of the claimant or by
agreement of the respective claimants if there are more than one, or from
the corresponding tax declaration of the real property. Their decisions in
these cases shall be appealable in the same manner as decisions of the
Regional Trial Courts. (as amended by R.A. No. 7691)
Section 35. Special jurisdiction in certain cases. – In the absence of all
the Regional Trial Judges in a province or city, any Metropolitan Trial
Judge, Municipal Trial Judge, Municipal Circuit Trial Judge may hear and
decide petitions for a writ of habeas corpus or applications for bail in
criminal cases in the province or city where the absent Regional Trial
Judges sit.
Section 36. Summary procedures in special cases. – In Metropolitan
Trial Courts and Municipal Trial Courts with at least two branches, the
Supreme Court may designate one or more branches thereof to try
exclusively forcible entry and unlawful detainer cases, those involving
violations of traffic laws, rules and regulations, violations of the rental law,
and such other cases requiring summary disposition as the Supreme
Court may determine. The Supreme Court shall adopt special rules or
procedures applicable to such cases in order to achieve an expeditious
and inexpensive determination thereof without regard to technical rules.
Such simplified procedures may provide that affidavits and counter-
affidavits may be admitted in lieu of oral testimony and that the periods
for filing pleadings shall be non-extendible.
Section 37. Preliminary investigation. – Judges of Metropolitan Trial
Courts, except those in the National Capital Region, of Municipal Trial
Courts, and Municipal Circuit Trial Courts shall have authority to conduct
preliminary investigation of crimes alleged to have been committed within
their respective territorial jurisdictions which are cognizable by the
Regional Trial Courts.
The preliminary investigation shall be conducted in accordance with the
procedure prescribed in Section 1, paragraphs (a), (b), (c), and (d), of
Presidential Decree No. 911: Provided, however, That if after the
preliminary investigation the Judge finds a prima facie case, he shall
forward the records of the case to the Provincial/City Fiscal for the filing of
the corresponding information with the proper court.
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No warrant of arrest shall be issued by the Judge in connection with any
criminal complaint filed with him for preliminary investigation, unless after
an examination in writing and under oath or affirmation of the complainant
and his witnesses, he finds that a probable cause exists.
Any warrant of arrest issued in accordance herewith may be served
anywhere in the Philippines.
Section 38. Judgments and processes. –
(1) All judgments determining the merits of cases shall be in
writing, stating clearly the facts and the law on which they were
based, signed by the Judge and filed with the Clerk of Court.
Such judgment shall be appealable to the Regional Trial Courts
in accordance with the procedure now prescribed by law for
appeals to the Court of First Instance, by the provisions of this
Act, and by such rules as the Supreme Court may hereafter
prescribe.
(2) All processes issued by the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts, in cases
falling within their jurisdiction, may be served anywhere in the
Philippines without the necessity of certification by the Judge of
the Regional Trial Court.
CHAPTER IV
GENERAL PROVISIONS
Section 39. Appeals. – The period for appeal from final orders,
resolutions, awards, judgments, or decisions of any court in all cases
shall be fifteen (15) days counted from the notice of the final order,
resolution, award, judgment, or decision appealed from: Provided
however, That in habeas corpus cases, the period for appeal shall be
forty-eight (48) hours from the notice of the judgment appealed from.
No record on appeal shall be required to take an appeal. In lieu thereof,
the entire record shall be transmitted with all the pages prominently
numbered consecutively, together with an index of the contents thereof.
This section shall not apply in appeals in special proceedings and in other
cases wherein multiple appeals are allowed under applicable provisions
of the Rules of Court.
Section 40. Form of decision in appealed cases. – Every decision of final
resolution of a court in appealed cases shall clearly and distinctly state
the findings of fact and the conclusions of law on which it is based, which
may be contained in the decision or final resolution itself, or adopted by
reference from those set forth in the decision, order, or resolution
appealed from.
Section 41. Salaries. – Intermediate Appellate Justices, Regional Trial
Judges, Metropolitan Trial Judges, Municipal Trial Judges, and Municipal
Circuit Trial Judges shall receive such compensation and allowances as
may be authorized by the President along the guidelines set forth in
Letter of Implementation No. 93 pursuant to Presidential Decree No. 985,
as amended by Presidential Decree No. 1597.
Section 42. Longevity pay. – A monthly longevity pay equivalent to 5% of
the monthly basic pay shall be paid to the Justices and Judges of the
courts herein created for each five years of continuous, efficient, and
meritorious service rendered in the judiciary; Provided, That in no case
shall the total salary of each Justice or Judge concerned, after this
longevity pay is added, exceed the salary of the Justice or Judge next in
rank.
Section 43. Staffing pattern. – The Supreme Court shall submit to the
President, within thirty (30) days from the date of the effectivity of this Act,
a staffing pattern for all courts constituted pursuant to this Act which shall
be the basis of the implementing order to be issued by the President in
accordance with the immediately succeeding section.
Section 44. Transitory provisions. – The provisions of this Act shall be
immediately carried out in accordance with an Executive Order to be
issued by the President. The Court of Appeals, the Courts of First
Instance, the Circuit Criminal Courts, the Juvenile and Domestic
Relations Courts, the Courts of Agrarian Relations, the City Courts, the
Municipal Courts, and the Municipal Circuit Courts shall continue to
function as presently constituted and organized, until the completion of
the reorganization provided in this Act as declared by the President. Upon
such declaration, the said courts shall be deemed automatically abolished
and the incumbents thereof shall cease to hold office. The cases pending
in the old Courts shall be transferred to the appropriate Courts constituted
pursuant to this Act, together with the pertinent functions, records,
equipment, property and the necessary personnel.
The applicable appropriations shall likewise be transferred to the
appropriate courts constituted pursuant to this Act, to be augmented as
may be necessary from the funds for organizational changes as provided
in Batas Pambansa Blg. 80. Said funding shall thereafter be included in
the annual General Appropriations Act.
Section 45. Shari'a Courts. – Shari'a Courts to be constituted as provided
for in Presidential Decree No. 1083, otherwise known as the "Code of
Muslim Personal Laws of the Philippines," shall be included in the funding
appropriations so provided in this Act.
Section 46. Gratuity of judges and personnel separated from office. – All
members of the judiciary and subordinate employees who shall be
separated from office by reason of the reorganization authorized herein,
shall be granted a gratuity at a rate equivalent to one month's salary for
every year of continuous service rendered in any branch of the
government or equivalent nearest fraction thereof favorable to them on
the basis of the highest salary received: Provided, That such member of
the judiciary or employee shall have the option to retire under the
! 44!
Judiciary Retirement Law or general retirement law, if he has met or
satisfied the requirements therefor.
Section 47. Repealing clause. – The provisions of Republic Act No. 296,
otherwise known as the Judiciary Act of 1948, as amended, of Republic
Act No. 5179 as amended, of the Rules of Court, and of all other statutes,
letters of instructions and general order or parts thereof, inconsistent with
the provisions of this Act are hereby repealed or accordingly modified.
Section 48. Date of Effectivity. – This Act shall take effect immediately.
Approved: August 14, 1981
Republic Act No. 7691 March 25, 1994
AN ACT EXPANDING THE JURISDICTION OF THE METROPOLITAN
TRIAL COURTS, MUNICIPAL TRIAL COURTS, AND MUNICIPAL
CIRCUIT TRIAL COURTS, AMENDING FOR THE PURPOSE BATAS
PAMBANSA, BLG. 129, OTHERWISE KNOWN AS THE "JUDICIARY
REORGANIZATION ACT OF 1980"
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled::
Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as
the "Judiciary Reorganization Act of 1980", is hereby amended to read as
follows:
"Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts shall
exercise exclusive original jurisdiction.
"(1) In all civil actions in which the subject of the litigation
is incapable of pecuniary estimation;
"(2) In all civil actions which involve the title to, or
possession of, real property, or any interest therein,
where the assessed value of the property involved
exceeds Twenty thousand pesos (P20,000,00) or, for
civil actions in Metro Manila, where such value exceeds
Fifty thousand pesos (P50,000.00) except actions for
forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred
upon the Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts;
"(3) In all actions in admiralty and maritime jurisdiction
where the demand or claim exceeds One hundred
thousand pesos (P100,000.00) or, in Metro Manila,
where such demand or claim exceeds Two hundred
thousand pesos (P200,000.00);
"(4) In all matters of probate, both testate and intestate,
where the gross value of the estate exceeds One
hundred thousand pesos (P100,000.00) or, in probate
matters in Metro Manila, where such gross value
exceeds Two Hundred thousand pesos (P200,000.00);
 "(5) In all actions involving the contract of marriage and
marital relations;
"(6) In all cases not within the exclusive jurisdiction of any
court, tribunal, person or body exercising jurisdiction of
any court, tribunal, person or body exercising judicial or
quasi-judicial functions;
"(7) In all civil actions and special proceedings falling
within the exclusive original jurisdiction of a Juvenile and
Domestic Relations Court and of the Court of Agrarian
Relations as now provided by law; and
"(8) In all other cases in which the demand, exclusive of
interest, damages of whatever kind, attorney's fees,
litigation expenses, and costs or the value of the property
in controversy exceeds One hundred thousand pesos
(P100,000.00) or, in such other cases in Metro Manila,
where the demand exclusive of the abovementioned
items exceeds Two Hundred thousand pesos
(P200,000.00)."
Section 2. Section 32 of the same law is hereby amended to read as
follows:
"Sec. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in Criminal Cases. –
Except in cases falling within the exclusive original jurisdiction of
Regional Trial Courts and of the Sandiganbayan, the
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts shall exercise:
"(1) Exclusive original jurisdiction over all violations of city
or municipal ordinances committed within their respective
territorial jurisdiction; and
"(2) Exclusive original jurisdiction over all offenses
punishable with imprisonment not exceeding six (6) years
irrespective of the amount of fine, and regardless of other
imposable accessory or other penalties, including the
civil liability arising from such offenses or predicated
thereon, irrespective of kind, nature, value or amount
thereof: Provided, however, That in offenses involving
damage to property through criminal negligence, they
shall have exclusive original jurisdiction thereof."
Section 3. Section 33 of the same law is hereby amended to read as
follows:
"Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in Civil Cases. –
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts shall exercise:
! 45!
"(1) Exclusive original jurisdiction over civil actions and
probate proceedings, testate and intestate, including the
grant of provisional remedies in proper cases, where the
value of the personal property, estate, or amount of the
demand does not exceed One hundred thousand pesos
(P100,000.00) or, in Metro Manila where such personal
property, estate, or amount of the demand does not
exceed Two hundred thousand pesos (P200,000.00),
exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses, and costs, the
amount of which must be specifically alleged: Provided,
That interest, damages of whatever kind, attorney's fees,
litigation expenses, and costs shall be included in the
determination of the filing fees: Provided, further, That
where there are several claims or causes of actions
between the same or different parties, embodied in the
same complaint, the amount of the demand shall be the
totality of the claims in all the causes of action,
irrespective of whether the causes of action arose out of
the same or different transactions;
"(2) Exclusive original jurisdiction over cases of forcible
entry and unlawful detainer: Provided, That when, in
such cases, the defendant raises the questions 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; and
"(3) Exclusive original jurisdiction in all civil actions which
involve title to, or possession of, real property, or any
interest therein where the assessed value of the property
or interest therein does not exceed Twenty thousand
pesos (P20,000.00) or, in civil actions in Metro Manila,
where such assessed value does not exceed Fifty
thousand pesos (P50,000.00) exclusive of interest,
damages of whatever kind, attorney's fees, litigation
expenses and costs: Provided, That in cases of land not
declared for taxation purposes, the value of such
property shall be determined by the assessed value of
the adjacent lots."
Section 4. Section 34 of the same law is hereby amended to read as
follows:
"Sec. 34. Delegated Jurisdiction in Cadastral and Land
Registration Cases. – Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts may be assigned by
the Supreme Court to hear and determine cadastral or land
 registration cases covering lots where there is no controversy or
opposition, or contested lots where the value of which does not
exceed One hundred thousand pesos (P100,000.00), such value
to be ascertained by the affidavit of the claimant or by agreement
of the respective claimants if there are more than one, or from the
corresponding tax declaration of the real property. Their
decisions in these cases shall be appealable in the same manner
as decisions of the Regional Trial Courts."
Section 5. After five (5) years from the effectivity of this Act, the
jurisdictional amounts mentioned in Sec. 19(3), (4), and (8); and Sec.
33(1) of Batas Pambansa Blg. 129 as amended by this Act, shall be
adjusted to Two hundred thousand pesos (P200,000.00). Five (5) years
thereafter, such jurisdictional amounts shall be adjusted further to Three
hundred thousand pesos (P300,000.00): Provided, however, That in the
case of Metro Manila, the abovementioned jurisdictional amounts shall be
adjusted after five (5) years from the effectivity of this Act to Four hundred
thousand pesos (P400,000.00).
Section 6. All laws, decrees, and orders inconsistent with the provisions
of this Act shall be considered amended or modified accordingly.
Section 7. The provisions of this Act shall apply to all civil cases that
have not yet reached the pre-trial stage. However, by agreement of all the
parties, civil cases cognizable by municipal and metropolitan courts by
the provisions of this Act may be transferred from the Regional Trial
Courts to the latter. The executive judge of the appropriate Regional Trial
Courts shall define the administrative procedure of transferring the cases
affected by the redefinition of jurisdiction to the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts.
Section 8. This Act shall take effect fifteen (15) days following its
publication in the Official Gazette or in two (2) national newspapers of
general circulation.
Approved: March 25, 1994
CIRCULAR NO. 21-99 April 15, 1999
TO: ALL JUDGES OF THE REGIONAL TRIAL COURTS,
THE METROPOLITAN TRIAL COURTS, THE
MUNICIPAL TRIAL COURTS IN CITIES, THE
MUNICIPAL TRIAL COURTS AND THE MUNICIPAL
CIRCUIT TRIAL COURTS.
SUBJECT: EFFECTIVITY OF PROVISIONS OF
SECTION 5 REPUBLIC ACT NO. 7691 FURTHER
INCREASING THE JURISDICTIONAL AMOUNTS
PRESCRIBED BY CERTAIN PROVISIONS OF BATAS
PAMBANSA BLG. 129, AS AMENDED.
The provisions of Section 5 of Republic Act No. 7961 prescribe that "After
five years (5) from the effectivity of this Act, the jurisdictional amounts
mentioned in Sec. 19(3), 1 (4), 2 and (8), 3 and Sec. 33(1), 4 of Batas
! 46!
Pambansa Blg. 129 as amended by this Act, shall be adjusted to Two
hundred thousand pesos (P200,000.00). Five (5) years thereafter, such
jurisdictional amounts shall be adjusted further to Three hundred
thousand pesos (P300,000.00): Provided, However, That in the case of
Metro Manila, the abovementioned jurisdictional amounts shall be
adjusted after five (5) years from the effectivity of this Act to Four hundred
thousand pesos (P400,000.00)."
Section 8 of the same law states that "This Act shall take effect fifteen
(15) days following its publication in the Official Gazette or in two (2)
national newspaper of general circulation."
Republic Act No. 7691 was published simultaneously in the 30 March
1994 issues of the Philippine Journal and Malaya. The law took effect on
15 April 1994.
Considering the provisions of Section 31, 5 Chapter 8, Book I of the 1987
Administrative Code, Section 5 of R.A. No. 7691 took effect on 20 March
1999.
For information and guidance.
(Sgd.) ALFREDO L. BENIPAYO
Court Administrator
Footnotes
1 Under Section 19 (3) of R.A. No. 7691, the Regional Trail Courts shall
exercise exclusive original jurisdiction. "In all actions in admiralty and
maritime jurisdiction where the demand or claim exceeds One hundred
thousand pesos (P100,000.00) or in Metro Manila, where such demand
or claim exceeds Two hundred thousand pesos (P200,000.00)."
2 Under Section 19 (4) of R.A. No. 7691, the Regional Trail Courts shall
exercise exclusive original jurisdiction. "In all matters of probate, both
testate and intestate, where the gross value of the estate exceeds One
hundred thousand pesos (P1000,000.00) or, in probate matters in Metro
Manila, where such gross value exceeds Two hundred thousand pesos
(P200,000.00)."
3 Under Section 19 (8) of R.A. No. 7691, the Regional Trail Courts shall
exercise exclusive original jurisdiction. "In all other cases in which the
demand, exclusive of interest, damages of whatever kind, attorney's fees,
litigation expenses, and costs or the value of the property in controversy
exceeds One hundred thousand pesos (P100,000.00) or, in such other
cases in Metro Manila, where the demand, exclusive of the
abovementioned items, exceeds Two hundred thousand pesos
(P200,000.00)."
4 Under Section 33 (1) of R.A. No. 7691, the Metropolitan Trial Courts,
the Municipal Trial Courts in Cities, the Municipal Trial Courts and the
Municipal Circuit Trial Courts shall exercise "Exclusive original jurisdiction
over civil actions and probate proceedings, testate and intestate including
the grant of provisional remedies in proper cases, where the value of the
personal property, estate or amount of the demand does not exceed One
hundred thousand pesos (P100,000.00) or, in Metro Manila where such
personal property, estate, or amount of the demand does not exceed Two
hundred thousand pesos (P200,000.00), exclusive of interest, damages
or whatever kind, attorney's fees, litigation expenses, and costs, the
amount of which must be specifically alleged: Provided, That interest,
damages of whatever kind, attorney's fees, litigation expenses, and costs
shall be included in the determination of the filing fees: Provided,further,
That where there are several claims or causes of action between the
same or different parties embodied in the same complaint, the amount of
the demand shall be the totality of the claims in all the causes of action,
irrespective of whatever the cause of action arose out of the same or
different transactions."
5 Section 31 prescribes that "Year" shall be understood to be twelve
calendar months; "month" of thirty days, unless it refers to a specific
calendar month in which case it shall be computed according to the
number of days the specific month contains; "day" to a day of twenty four
hours; and night from sunset to sunrise.
REVISED RULES ON SUMMARY PROCEDURE
RESOLUTION OF THE COURT EN BANC DATED OCTOBER 15, 1991
PROVIDING FOR THE REVISED RULE ON SUMMARY PROCEDURE
FOR METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS
IN CITIES, MUNICIPAL TRIAL COURTS AND MUNICIPAL CIRCUIT
TRIAL COURTS.
Pursuant to Section 36 of the Judiciary Reorganization Act of 1980 (B.P
Blg. 129) and to achieve an expeditious and inexpensive determination of
the cases referred to herein, the Court Resolved to promulgate the
following Revised Rule on Summary Procedure:
I. Applicability
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, irrespective of the
amount of damages or unpaid rentals sought to be recovered. Where
attorney's fees are awarded, the same shall not exceed twenty thousand
pesos (P20,000.00).
(2) All other civil cases, except probate proceedings, where the total
amount of the plaintiff's claim does not exceed ten thousand pesos
(P10,000.00), exclusive of interest and costs.
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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 (P1,000.00), or both, irrespective of other imposable penalties,
accessory or otherwise, or of the civil liability arising therefrom: Provided,
however, that in offenses involving damage to property through criminal
negligence, this Rule shall govern where the imposable fine does not
exceed ten thousand pesos (P10,000.00).
This Rule shall not apply to a civil case where the plaintiffs cause of
action is pleaded in the same complaint with another cause of action
subject to the ordinary procedure; nor to a criminal case where the
offense charged is necessarily related to another criminal case subject to
the ordinary procedure.
Sec. 2. Determination of applicability. — Upon the filing of a civil or
criminal action, the court shall issue an order declaring whether or not the
case shall be governed by this Rule A patently erroneous determination
to avoid the application of the Rule on Summary Procedure is a ground
for disciplinary action.
II.
Civil Cases
Sec. 3. Pleadings. —
A. Pleadings allowed. — The only pleadings allowed to be filed are the
complaints, compulsory counterclaims and cross-claims' pleaded in the
answer, and the answers thereto.
B. Verifications. — All pleadings shall be verified.
Sec. 4. Duty of court. — After the court determines that the case falls
under summary procedure, it may, from an examination of the allegations
therein and such evidence as may be attached thereto, dismiss the case
outright on any of the grounds apparent therefrom for the dismissal of a
civil action. If no ground for dismissal is found it shall forthwith issue
summons which shall state that the summary procedure under this Rule
shall apply. d-c
Sec. 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. Affirmative and negative defenses not pleaded therein
shall be deemed waived, except for lack of jurisdiction over the subject
matter. Cross-claims and compulsory counterclaims not asserted in the
answer shall be considered barred. The answer to counterclaims or
cross-claims shall be filed and served within ten (10) days from service of
the answer in which they are pleaded.
Sec. 6. Effect of failure to answer. — Should the defendant fail to
answer the complaint within the period above provided, the court, motu
proprio, or on motion of the plaintiff, shall render judgment as may be
warranted by the facts alleged in the complaint and limited to what is
prayed for therein: Provided, however, that the court may in its discretion
reduce the amount of damages and attorney's fees claimed for being
excessive or otherwise unconscionable. This is without prejudice to the
applicability of Section 4, Rule 15 of the Rules of Court, if there are two or
more defendants.
Sec. 7. Preliminary conference; appearance of parties. — Not later than
thirty (30) days after the last answer is filed, a preliminary conference
shall be held. The rules on pre-trial in ordinary cases shall be applicable
to the preliminary conference unless inconsistent with the provisions of
this Rule.
The failure of the plaintiff to appear in the preliminary conference shall be
a cause for the dismissal of his complaint. The defendant who appears in
the absence of the plaintiff shall be entitled to judgment on his
counterclaim in accordance with Section 6 hereof. All cross-claims shall
be dismissed.
If a sole defendant shall fail to appear, the plaintiff shall be entitled to
judgment in accordance with Section 6 hereof. This Rule shall not apply
where one of two or more defendants sued under a common cause of
action who had pleaded a common defense shall appear at the
preliminary conference.
Sec. 8. Record of preliminary conference. — Within five (5) days after
the termination of the preliminary conference, the court shall issue an
order stating the matters taken up therein, including but not limited to:
(a) Whether the parties have arrived at an amicable settlement, and if so,
the terms thereof;
(b) The stipulations or admissions entered into by the parties;.
(c) Whether, on the basis of the pleadings and the stipulations and
admissions made by the parties, judgment may be rendered without the
need of further proceedings, in which event the judgment shall be
rendered within thirty (30) days from issuance of the order;
(d) A clear specification of material facts which remain controverted; and
(e) Such other matters intended to expedite the disposition of the case.
Sec. 9. Submission of affidavits and position papers. — Within ten (10)
days from receipt of the order mentioned in the next preceding section,
the parties shall submit the affidavits of their witnesses and other
evidence on the factual issues defined in the order, together with their
position papers setting forth the law and the facts relied upon by them.
Sec. 10. Rendition of judgment. — Within thirty (30) days after receipt of
the last affidavits and position papers, or the expiration of the period for
filing the same, the court shall render judgment.
! 48!
However should the court find it necessary to clarify certain material facts,
it may, during the said period, issue an order specifying the matters to be
clarified, and require the parties to submit affidavits or other evidence on
the said matters within ten (10) days from receipt of said order. Judgment
shall be rendered within fifteen (15) days after the receipt of the last
clarificatory affidavits, or the expiration of the period for filing the same.
The court shall not resort to the clarificatory procedure to gain time for the
rendition of the judgment.
III.
Criminal Cases
Sec. 11. How commenced. — The filing of criminal cases falling within
the scope of this Rule shall be either by complaint or by information:
Provided, however, that in Metropolitan Manila and in Chartered Cities.
such cases shall be commenced only by information, except when the
offense cannot be prosecuted de oficio.
The complaint or information shall be accompanied by the affidavits of the
compliant and of his witnesses in such number of copies as there are
accused plus two (2) copies for the court's files.If this requirement is not
complied with within five (5) days from date of filing, the care may be
dismissed.
Sec. 12. Duty of court. —
(a) If commenced by compliant. — On the basis of the compliant and the
affidavits and other evidence accompanying the same, the court may
dismiss the case outright for being patently without basis or merit and
order the release of the amused if in custody.
(b) If commenced by information. — When the case is commenced by
information, or is not dismissed pursuant to the next preceding
paragraph, the court shall issue an order which, together with copies of
the affidavits and other evidence submitted by the prosecution, shall
require the accused to submit his counter-affidavit and the affidavits of his
witnesses as well as any evidence in his behalf, serving copies thereof on
the complainant or prosecutor not later than ten (10) days from receipt of
said order. The prosecution may file reply affidavits within ten (10) days
after receipt of the counter-affidavits of the defense.
Sec. 13. Arraignment and trial. — Should the court, upon a
consideration of the complaint or information and the affidavits submitted
by both parties, find no cause or ground to hold the accused for trial, it
shall order the dismissal of the case; otherwise, the court shall set the
case for arraignment and trial.
If the accused is in custody for the crime charged, he shall be
immediately arraigned and if he enters a plea of guilty, he shall forthwith
be sentenced.
Sec. 14. Preliminary conference. — Before conducting the trial, the court
shall call the parties to a preliminary conference during which a stipulation
of facts may be entered into, or the propriety of allowing the accused to
enter a plea of guilty to a lesser offense may be considered, or such other
matters may be taken up to clarify the issues and to ensure a speedy
disposition of the case.However, no admission by the accused shall be
used against him unless reduced to writing and signed by the accused
and his counsel. A refusal or failure to stipulate shall not prejudice the
accused.
Sec. 15. Procedure of trial. — At the trial, the affidavits submitted by the
parties shall constitute the direct testimonies of the witnesses who
executed the same. Witnesses who testified may be subjected to cross-
examination, redirect or re-cross examination. Should the affiant fail to
testify, his affidavit shall not be considered as competent evidence for the
party presenting the affidavit, but the adverse party may utilize the same
for any admissible purpose.
Except in rebuttal or surrebuttal, no witness shall be allowed to testify
unless his affidavit was previously submitted to the court in accordance
with Section 12 hereof.
However, should a party desire to present additional affidavits or counter-
affidavits as part of his direct evidence, he shall so manifest during the
preliminary conference, stating the purpose thereof. If allowed by the
court, the additional affidavits of the prosecution or the counter-affidavits
of the defense shall be submitted to the court and served on the adverse
party not later than three (3) days after the termination of the preliminary
conference. If the additional affidavits are presented by the prosecution,
the accused may file his counter-affidavits and serve the same on the
prosecution within three (3) days from such service.
Sec. 16. Arrest of accused. — The court shall not order the arrest of the
accused except for failure to appear whenever required. Release of the
person arrested shall either be on bail or on recognizance by a
responsible citizen acceptable to the court.
Sec. 17. Judgment. — Where a trial has been conducted, the court shall
promulgate the judgment not later than thirty (30) days after the
termination of trial.
IV.
COMMON PROVISIONS
Sec. 18. Referral to Lupon. — Cases requiring referral to the Lupon for
conciliation under the provisions of Presidential Decree No. 1508 where
there is no showing of compliance with such requirement, shall be
dismissed without prejudice and may be revived only after such
requirement shall have been complied with. This provision shall not
apply to criminal cases where the accused was arrested without a
warrant. Sec. 19. Prohibited pleadings and motions. — The following
pleadings, motions or petitions shall not be allowed in the cases covered
by this Rule:
! 49!
(a) Motion to dismiss the complaint or to quash the complaint or
information except on the ground of lack of jurisdiction over the subject
matter, or failure to comply with the preceding section;
(b) Motion for a bill of particulars;
(c) Motion for new trial, or for reconsideration of a judgment, or for
opening of trial;
(d) Petition for relief from judgment;
(e) Motion for extension of time to file pleadings, affidavits or any other
paper;
(f) Memoranda;
(g) Petition for certiorari, mandamus, or prohibition against any
interlocutory order issued by the court;
(h) Motion to declare the defendant in default;
(i) Dilatory motions for postponement;
(j) Reply;
(k) Third party complaints;
(l) Interventions.
Sec. 20. Affidavits. — The affidavits required to be submitted under this
Rule shall state only facts of direct personal knowledge of the affiants
which are admissible in evidence, and shall show their competence to
testify to the matters stated therein.
A violation of this requirement may subject the party or the counsel who
submits the same to disciplinary action, and shall be cause to expunge
the inadmissible affidavit or portion thereof from the record.
Sec. 21. Appeal. — The judgment or final order shall be appealable to
the appropriate regional trial court which shall decide the same in
accordance with Section 22 of Batas Pambansa Blg. 129. The decision of
the regional trial court in civil cases governed by this Rule, including
forcible entry and unlawful detainer, shall be immediately executory,
without prejudice to a further appeal that may be taken therefrom.
Section 10 of Rule 70 shall be deemed repealed.
Sec. 22. Applicability of the regular rules. — The regular procedure
prescribed in the Rules of Court shall apply to the special cases herein
provided for in a suppletory capacity insofar as they are not inconsistent
herewith.
Sec. 23. Effectivity. — This revised Rule on Summary Procedure shall
be effective on November 15, 1991.
A. M. No. 08-8-7-SC : February 16, 2010
(Re: RULE OF PROCEDURE FOR SMALL CLAIMS CASES.)
The Court Resolved, upon the recommendation of the Technical Working
Group on the Small Claims Courts Pilot Project, to APPROVE the -
RESOLUTION
(a) Amendment of Section 8(d), Rule 141 of the Revised Rules of
Court, with the addition of the following provision as regards filing
fees for frequent filers in small claims cases:
 For small claims cases, only those fees set forth in this
Rule, as amended, shall be collected. If more than ten
(10) small claims are filed by one party in the court
station within the calendar year, an additional filing fee
of P500.00 shall be paid for every claim filed after the
tenth (10th) claim, and an additional P100.00 or a total
of P600.00 for every claim filed after the twentieth (20th)
claim, and another P100.00 or a total of P700.00 for
every claim filed after the thirtieth (30th) claim, and
another P100.00 for every tenth additional case
thereafter, progressively and cumulatively, but the total
filing fees shall not exceed P20, 000.00. In no case shall
a party pay filing fees of more than P20, 000.00 per claim
in a calendar year.
Each party filing a claim shall declare in the Statement of
Claim the number of small claims cases that party filed in
the court station within the calendar year.
(b) Addition of the following statement in the Statement of Claim
(Form SCC),particularly between Nos. 6 and 7 thereof:
6-A. In this court station, how many small claims cases
have you filed within this year prior to this present cases?
_________________
(Sa court station na ito, pang ilang kaso na itong
isinampa mo sa loob ng kasalukuyang taon?
_________________ )
(c) Two (2) Forms on Information for the Plaintiff (Form I-SCC-
Info and Information for the Defendant (Form 3-SCC-Info), to wit:
INFORMATION FOR THE PALINTIFF
(the person filing the claim)
(Kaalaman para sa Naghahabla)
1. "SMALL CLAIMS RULE" - is a special procedure where
money claims for P100,00.00 or less are heard. The
process is quick and inexpensive; the procedure is
simple and informal.
(TUNTUNIN SA PAGSINGIL NG MALILIIT NA HALAGA
- ay natatanging pamamaraan sa pagdinig kung saan
ang halagang salapi na sinisingil ay P100,000.00 o mas
mababa. Ang proseso ay simple at hindi pormal.)
2. You are the plaintiff. The person you are filing the case
against is the defendant.
(Ikaw ang Naghahabla. Ang taong siyang sinampahan ng
kaso ang Hinabla.
! 50!
3. Before you fill up this Form, read these Instructions to
know your rights. Or, you may inquire about your rights
and the Small Claims Procedure with the Office of the
Clerk of Court (OCC) of the place where you intend to file
your claim.
(Bago mo sagutin ang form na ito basahin muna ang
mga tagubilin upang malaman ang iyong mga karapatan.
Maari ka ring magtanong, tungkol sa iyong mga
karapatan sa Office of the Clerk of Court [OCC] ng lugar
kung saan mo nais maghain ng reklamo ukol sa pagsingil
ng maliit na hlaga.)
4. If your case falls under the Small Claims Rule, theses are
the things you can do at home or in the barangay:
(Kung ang iyong kaso ay nasasaklaw ng Tuntunin sa
Pagsingil ng Maliliit ng Halaga, ang mga bagay na ito
ang maaari mong gawin sa bahay o sa barangay:)
a. GATHER ALL DOCUMENTS AND EVIDENCE PERTINENT
TO THE CLAIM.
(TIPUNIN ANG LAHAT NG DOKUMENTO AT MGA
KATIBAYANG SSUSUPORTA SA IYONG PAGSINGIL.)
Examples are: (Mga Halimbawa nito:)
- Contract/Agreement
(kontrata/Kasunduan)
- Promissory Note / Receipts / Affidavit of
Witness/es /Other Important documents such as
Check/s or Picture/s
(Katibayan ng Pagkakautang / Resibo /
Sinumpaang Salaysay ng mga Saksi / Testigo /
iba pang dokumento tulad ng Tseke at larawan.)
b. LATEST DEMAND LETTER (if ANY). ITS PROOF OF
SERVICE AND PROOF OF RECEIPT
(PINAKAHULING LIHAM NG PANININGIL [KUNG MERON],
KATIBAYAN NG PAGPADALA AT PAGKATANGGAP NITO.)
c. CERTIFICATE TO FILE ACTION FROM THE BARANGAY, IF
NECESSARY
(KATUNAYAN NG PAGSASAMPA NG KASO SA HUKUMAN
GALING SA BARANGAY, KUNG KINAKAILANGAN.)
d. SPECIAL POWER OF ATTORNEY IN CASE PALINTIFF
HEARING.
(NATATANGING GAWAD-KAPANGYARIHAN o "SPECIAL
POWER OF ATTORNEY" KUNG ANG NAGHAHABLA AY HINDI
MAKADALO SA PAGDINIG.)
e. SECRETARY'S CERTIFICATE OR BOARD RESOLUTION
AUTHORIZING YOU TO FILE THE CASE, IF YOU ARE
 REPRESENTING A CORPORATION, PARTNERSHIP,
COOPERATIVE OR ASSOCIATION.
(PATUNAY NG KALIHIM O RESOLUSYON NG LUPON NA
NAGPAPAHINTULOT SA IYONG KUMATAWAN SA LUPON SA
PAG SAMPA NG KASO.)
f. if you are unable to pay the filing fees because you have no
adequate financial means, you may file the case as an indigent
by getting FORM 6-SCC AND ATTACHING THE FOLLOWING
DOCUMENTS:chanrobles virtual law library
Affidavit of indigency
Barangay Certificate of indigency
City or Municipal Assessor's Certificate
City or Municipal Treasurer's Office Certificate
Affidavit of 2 disinterested persons
(Kung hindi mo mabayaran ang filing fees dahil wala kang sapat
na kakayahang pinansyal, maari kang magsampa ng kaso bilang
isang taong walang sapat na kabuhayan sa pamamagitan ng
pagsagot ng Form 6-SCC KALAKIPANG MGA SUMUSUNOD
NA DOKUMENTO:
Sinumpaang Salaysay na Walang Sapat ng Kabuhayan
Patunay ng Barangay na Walang Sapat na Kabuhayan
Patunay ng Panglungsod na Tagatasa (assessor)
Patunay ng Tanggapan ng Panglungsod na Ingat-Yaman
Sinumpaang Salaysay ng 2 Taong Hindi Interesado)
· Fill up Form 1-SCC. Attach to the Form your supporting documents and
affidavits of witnesses.
(Punuan ang Form 1-SCC. Ilakip sa Form ang iyong mga dokumento at
sinumpaang salaysay ng mga testigo / saksi.)
o Make copies of ALL pages of this form and your supporting
documents (file the original in court, make a copy for each
plaintiff or defendant named in the case and an extra copy for
yourself).
(Gumawa nng lahat ng pahina ng Form na ito at ng iyong mga
dokumento [ihain ang orihinal sa hukuman, gumawa ng kopya
para sa bawat Naghahabla o Hinahabla sa kaso at karagdagang
kopya para sa iyo.])
o If the original documents consist of records that could not be
separated, you can photocopy the pertinent document and have
it certified by the Clerk of Court in the OCC as a faithful
reproduction of the original.
(Kung ang orihinal na dokumento ay di maihiwalay, maari mong
ipakopya ito at ipacertify sa Clerk of Court ng OCC na ang
dokumento ay totoo at tapat na kopya ng orihinal)
· Have the form and all your supporting documents, especially the
Verification form, notarized by the Clerk of Court in the OCC.
! 51!
(Kailangan ang Form at lahat ng kalakip na dokumento, lalong higit ang
Form ng Patotoo ay pinatunayan / ninotaryo ng Clerk of Court [OCC] o
Branch Clerk of Court.)
· Pay the filing fee. (except if your motion to sue as an indigent has been
granted)
(Magbayad ng bayarin sa pagtala [maliban kung ang iyong kahilingan na
makapagsampa ng kaso bilang isang taong walang sapat na kabuhayan
ay napagtibay na.])
· Get the date and time of your hearing from the court to which your case
was assigned.
[Alamin ang araw at oras ng pagdinig sa hukuman kung saan ang iyong
kaso ay nakahabilin.]
· GO TO THE COURT ON YOUR HEARING DATE. Bring the originals of
all certified documentary evidence attached to your Form 1-SCC to prove
your case.
[PUMUNTA SA HUKUMAN SA PETSA AT ARAW NG PAGDINIG. Dalhin
ang mga orihinal ng lahat ng dokumento ng katibayan, higit lalo yaong
kalakip sa iyong Form 1-SCC para patunayan ang iyong kaso.]
· YOU CANNOT HAVE A LAWYER AT THE HEARING. You may consult
a lawyer before or after the hearing but the lawyer cannot appear for or
with you at the hearing.
(HUWAG KANG MAGSAMA NG ABOGADO SA PAGDINIG. Maari kang
makipag-usap o kumonsulta sa abogado bago o pagkatapos ng pagdinig
pero ang abogado ay hindi pinahihintulutang dumalo para sa iyo sa
pagdinig.)
o If you are representing a corporation, partnership, cooperative or
association, you must bring your original written authority to
appear at the hearing and to enter into an amicable settlement, to
submit to alternative modes of dispute resolution, and to enter
into stipulations or admissions of facts and of documents.
(Kung iyong kinakatawan ay korporasyon, bakasan, kooperatiba
o asosayon / Samahan, kinakailangang magdala ka ng orihinal
na gawad-kapangyarihan na dumalo sa pagdinig at para sa
mapayapang pag-aayos, sumailalim sa alternatibong paraan ng
pag-aayos o gumawa ng pag-amin o makipagyari sa mga
pangyayari at dokumento.)
· You must be aware that upon the filing of this case, the judge may
dismiss your claim if she or he finds legal grounds for dismissal such as
lack of jurisdiction over the subject matter, improper venue, etc. as
enumerated in Section 1 of Rule 16 of the 1997 Rules of Civil Procedure.
(Binibigyan ka ng babala na sa pagsampa ng kaso, maaring
maipawalang-saysay ng hukuman ang iyong kaso kung nakita niya na
mayroong legal na batayan para maipawalang-saysay ito, tulad ng
kawalan ng kapangyarihan sa bagay ng kaso, hindi wasto ang lugar na
pinagsampahan ng kaso, etc. na isinasaad sa Section 1, Rule 16, 1997 The judge will speak in Filipino or the local dialect. A court-
Rules of Civil Procedure.) provided interpreter shall also be available on the hearing day.
(Ang hukom ay magsasalita sa Filipino o sa lokal na diyalekto.
Ang panghukumang tagasalin ay maaaring magamit sa araw ng
INFORMATION FOR THE DEFENDANT pagdinig.)
(the person against whom the case is filed) 8. How do I get ready for court?
(Kaalaman para sa Hinahabla) (Paano ako makapaghahanda sa hukuman?)
1. "SMALL CLAIMS RULE" - is a special procedure where money Fill up the form entitled "Response" and file it in court within ten
claims for P100,000.00 or less are heard. The process is quick (10) calendar days from your receipt of the form. If you have
and inexpensive; the procedure is simple & informal. questions regarding the Form, you can inquire with the court that
(TUNTUNIN SA PAGSINGIL NG MALILIIT NA HALAGA - ay served you the summons & the Response. The telephone no. of
natatanging pamamaraan sa pagdinig kung saan ang halaga ng the court is written on the Summons.
salapi na sinisingil ay P100,000.00 o mas mababa. Ang proseso (Punuan ang Form na "Sagot" at ihain ito sa hukuman sa loob ng
ay simple at hindi pormal) sampung (10) araw simula sa pagtanggap ng Form. Kung ikaw
2. You are the defendant - the person against whom the case is ay mayroong mga tanong tungkol sa Form, maaari kang
filed. The person who is filing the case is the plaintiff. magtanong sa korte na nagpadala ng Patawag at ng Sagot. Ang
(Ikaw ang Hinahabla, ang taong sinampahan ng kaso. Ang taong numero ng telepono ng hukuman ay nakasulat sa Patawag.)
nagsampa ng kaso ay ang Naghahabla.) 9. What happen if I don't file the Response and appear at the
3. Read this form & all pages attached to understand the claim hearing?
against you & to protect your rights. (Anong mangyayari kung hindi ako naghain ng Sagot at
(Basahin ang Form na ito at ang lahat ng pahina na kalakip hindi dumalo sa pagdinig?)
upang maunawaan ang kaso laban sa iyo at upang The court shall proceed with the hearing and, if you are absent,
mapangalagaan ang iyong mga karapatan.) the court shall make a judgment as may be warranted by the
4. You must file your Response & attend the hearing on the date facts.
indicated in the Notice of Hearing. If you do not go to court, you (Ang korte ay magpapatuloy sa pagdinig at, kung ikaw ay hindi
may lose the case. dumalo, ay magpapasiya at magbibigay ng desisyon ayon sa
(Ikaw ay kinakailangang magsumite ng iyong Sagot at pumunta nararapat.)
sa korte sa petsa ng pagdinig na nakasulat sa Abiso sa Pagdinig. 10. What happens at the hearing?
Kung hindi ka makakapunta sa korte maari kang matalo sa kaso.) (Anong mangyayari sa pagdinig?)
5. Make copies of the Response & all its pages & attached If you & the plaintiff will appear at the hearing, the judge will listen
documents (file the original in court & serve one copy on each to both of you. The judge shall conduct mediation and encourage
plaintiff & keep an extra copy for yourself) you & the plaintiff to settle your case. If you don't settle, the judge
(Gumawa ng mga kopya ng Sagot at lahat ng mga pahina nito at shall render a decision on the day of hearing itself. You cannot
ilakip ang mga dokumento [ihain ang orihinal sa hukuman at appeal this decision.
bigyan ng kopya ang Naghahabla at mag-iwan ng kopya para sa (Kung ikaw at ang naghahabla ay dadalo sa pagdinig, ang hukom
iyo]). ay makikinig sa inyong dalawa. Ang hukom ay hihikayat sa
6. Do I need a lawyer? inyong magka-ayos at magkasundo at lutasin ang inyong di
(Kailangan ko ba ang abogado?) pagkakaunawaan. Kung hindi kayo magkakasundo, ang hukom
You may consult a lawyer but YOU CANNOT HAVE A LAWYER ay gagawa ng desisyon sa araw mismo ng pagdinig. Hindi ka na
WITH YOU AT THE HEARING. maaaring mag-apela sa desisyon ng korte.)
(Maaari kang komunsulta sa abogado pero HINDI KA 11. Do I have options?
MAAARING MAGSAMA NG ABOGADO SA PAGDINIG.) (Meron ba akong pagpipilian?)
7. What if I don't speak English well? Yes. If you are the defendant, you can do any of the following:
(Paano kung hindi ako makagsalitang mabuti ng Ingles?) (Oo. Kung ikaw ang Hinahabla, maaari mong gawin ang alinman
sa mga sumusunod.)
! 52!
 o Settle your case before the hearing. If you and the
plaintiff agree on how to settle the case, both of you must
notify the court. Ask the OCC or Branch Clerk of Court
for help.
(Ayusin mo ang usapin bago pa dumating ang pagdinig.
Kung ikaw at ang Naghahabla ay nagkaayos kung paano
pagkasunduan ang kaso, pareho ninyong ipaalam sa
hukuman. Humingi ng tulong sa Office of the Clerk of
Court (OCC) o sa Branch Clerk of Court.)
o File the Response. Appear at the hearing. Bring the
affidavits of witnesses, receipts and any evidence you
need to prove your case.
(Maghain ng Sagot. Dumalo sa pagdinig. Dalhin ang mga
sinumpaang salaysay ng mga testigo, mga resibo at
anumang katibayang iyong kailangan upang patunayan
ang iyong usapin.)
o Agree with the plaintiff's claim & pay the money. Or, if
you can't pay the money now go to the hearing and say
you want to make payments by installment.
(Sumang-ayon sa halagang sinisingil ng Naghahabla at
bayaran ito. O, kung hindi mabayaran ang sinisingil
ngayon, dumalo ka sa pagdinig at sabihin sa korte na
gusto mong magbayad ng hulugan.)
o Let the case proceed without you. If you don't settle & do
not go to the hearing, the judge may give the plaintiff
what he or she is asking for plus court costs. If this
happens, the court may order that your money or
property be taken to pay the judgment.
(Magpapatuloy ang kaso kahit wala ka. Kung hindi ka
nakipag-ayos at hindi ka dumalo sa pagdinig, maaaring
ipagkaloob ng hukom ang anumang hinihingi ng
Naghahabla, pati na ang gastos sa paghain ng kasong
ito. Kung ito ay mangyari, ang korte ay maaaring mag-
utos na ang iyong pera o ari-arian ay kuhanin para
bayaran ang nakasaad sa desisyon ng korte.)
(c) Administrative Guidelines for (a) Judges and (b)
Executive Judges, Clerk of Courts in multi-sala stations
and in single-sala stations and Branch Clerks of Courts,
to wit:
ADMINISTRATIVE GUIDELINES
To aid in achieving a uniform and systematic implementation of the Rule
by all courts concerned, the TWG recommends the issuance of
Administrative Guidelines specifically addressing the concerns of not only
! 53!
the Judges, but also of the court personnel involved in the application of
the Rule on Small Claims.
A. Guidelines for Judges
1. Upon receipt of a case, determine if it is a small claim.
1.1. It must involve a pure money claim the principal
amount of which does not exceed P100,000.00.
1.2. If the principal claim exceeds P100,000.00, there
must be a waiver of the excess embodied in the
Statement of Claim.
1.3. With regard to B.P. Blg. 22 cases, the court may only
entertain the civil aspect as a small claim if no complaint
for the offense has yet been filed before the Office of the
Prosecutor. This fact must be stated under oath by the
plaintiff in the Statement of Claim, and there should be
an express waiver of such criminal action in the
Verification and Certification of Non-Forum Shopping.
1.4. If a case is determined by a judge to be not a "small
claim" within the meaning of the Rule, but it still falls
within the jurisdiction of the First Level Courts, the case
should not be dismissed, and the judge should instead
declare it governed by the appropriate procedure
(Regular Procedure or Summary Procedure). The case
should then be re-docketed but no re-assignment (by
raffle in a multi-sala court) is necessary. This will prevent
the forfeiture of the filing fees already paid by the party,
and the case can be immediately acted upon by the
same court.
2. Determine if there is a ground for outright dismissal.
The submission of a Certificate to File Action from the
barangay is a pre-requisite in Small Claims covered by
the barangay justice system.
Under Rule 16 par. (j) of the 1997 Rules of Civil
Procedure, non-compliance with a condition precedent is
a ground for dismissal of a complaint. Chapter VII
(Section 399-422) of R.A. No. 7160, the Local
Government Code, now embodies the rules for
mandatory conciliation proceedings before the barangay
in covered cases. Although the Rule on Small Claims
Cases does not expressly refer to such requirement, it is
still mandatory as it is required by law. Non-compliance,
therefore, with the barangay requirement is still a ground
for dismissal pursuant to Rule 16 of the regular rules,
which apply suppletorily according to Section 25 of the
Rule.
 3. If there is no ground for outright dismissal, issue summons AND
notice hearing
3.1. The summons and notice of hearing, which are
required to be issued "within the same day of receipt of
the Statement of Claim" under Section 10, must be
issued within 24 hors from such receipt, the phrase
"same day" to be construed as "within one day".
3.2. Do not wait for summons to be served before setting
the case for hearing.
3.3. The hearing should be set within thirty (30) days
from receipt of the case. In case the defendant resides
outside the judicial region, the hearing may be set not
later than 60 days from date of receipt of the case.
3.4. Failure of the plaintiff to cause service of summons
within two (2) months from receipt of Sheriff's Return
shall cause the dismissal of the claim for failure to
prosecute (Rule 17, Section 3, Rules of Court). This is
not a ground to archive the case.
3.5. Any party who appears at any time after the Court's
receipt of the case should be notified immediately of the
date set for hearing.
3.6. There should be, at least, one (1) hearing day every
week devoted to Small Claims, with a minimum of five (5)
cases scheduled per hearing day. Cases with the same
party-plaintiff may all be set on the same date for facility
in the preparation of notices and judgments. The Court
should post a notice of its small claims hearing day
conspicuously at the Branch and at the Office of the
Clerk Court.
3.7. Judges must approve an Estimate of Expenses
submitted by their Sheriff/Process Server within 24 hours
from filing before any release from the STF is allowed.
4. On the date of the hearing
4.1. Make an opening statement (Section 20; see also
Form 6A-SCC) explaining to the parties the object of the
Rule and the procedure for hearing the case. Ensure that
the parties understand the proceedings and actively
participate therein.
4.2. Conduct settlement discussions in strict
confidentiality. Try to explain to the parties why an
amicable settlement will be mutually beneficial.
4.3. The drafting of a comprise agreement should be part
of the hearing conducted by the judge. This will ensure
that an agreement will be forged within the day of the
hearing to pave the way for its approval by way of the
! 54!
required judgment, to be issued also within the same
day. It will also reduce the incidence of inclusion of terms
which are contrary to law, morals, good customs, public
policy and public order.
4.4. Have a template of a Compromise Agreement ready.
The parties may be referred to the Branch Clerk of Court
or the Clerk-in-Charge for assistance in filing up the
template, whether before or after the case is called in
open court.
4.5. In all instances, review the terms of the Compromise
Agreement submitted by the parties. Do not approve
terms which are unconscionable and excessive,
especially those relating to interest rates and surcharges.
In the latter instance, in your judgment approve the
agreement in part, substitute and impose a provision
which is reasonable, to replace those you have
disapproved for being excessive and unconscionable.
4.6. In case a non-answering defendant appears at the
hearing, recognize his appearance only if he is willing to
enter into discussions of settlement, but guard against
coercing the defendant to enter into one.
4.7. If a non-answering defendant appears at the hearing
and agrees to discuss a settlement but pleads partial
payments, which the plaintiff admits, but no settlement is
ultimately reached, render judgment based on the
Statement of Claim. If the plaintiff waives in writing (even
in the Minutes of Hearing only) the confidentiality of the
settlement discussion, you may consider the admission
of partial payments in rendering your decision.
4.8. If at anytime before or at the hearing, a Compromise
Agreement is submitted signed by both parties but only
one or neither party appears to confirm it, issue an order
to the non-appearing party to confirm it within 3 days,
otherwise it shall be deemed confirmed. Then issue a
judgment based on the agreement.
4.9. If no settlement is reached and the parties do not
wish to have another judge hear the case, proceed to the
hearing proper in an informal manner and terminate and
decide it within the same day.
5. Decision and execution
5.1. Whether based on an amicable settlement or on the
merits, judgment must be issued on the same date of the
hearing, except when there is a motion by any party
under Section 22 to have another judge hear the case.
 5.2. Upon issuance of the decision, have copies served
on all parties present to avoid mailing them.
5.3. A decision under the Rule is immediately final and
executor. It must be recorded in the Book of Judgments
on the same date it is rendered.
5.4. There is no appeal and, hence, no period to appeal
to wait for.
5.5. On the same day the decision is rendered, the
winning party may move for its execution.
B. Guidelines for Executive Judges, Clerks of Courts (COCs) in multi
sala stations and in single sala stations and Branch Clerks of Court
(BCCs)
1. The Clerks of Court and the Branch Clerks of Court (even non-
lawyers) may administer the oath to litigants for the forms to be
used under the Rule. No fee shall be collected for this purpose.
2. The Clerks of Court should not accept mere photocopies of
documentary annexes submitted by the parties but should
monitor strict compliance with Sections 5 and 11 of the Rule.
3. The Clerks of Court should have a separate docket for Small
Claims Cases with independent numbering. Should a case,
originally docketed as a Small Claim, be ordered re-docketed,
i.e., it is governed by the Rule on Summary Procedure or regular
procedure, this should be recorded in the appropriate docket and
a new number given to the case. However, the case should not
be re-raffled but should immediately be sent back to the original
court after re-docketing.
4. The Clerks of Court should only ask for 2 copies of the pleadings
and all their annexes: 1 for the court and 1 for the defendant. If
there is more than 1 defendant, that is the only time the OCC
may require additional copies, 1 for each additional defendant.
5. The Clerks of Court can only certify photocopies of documents if
the originals are presented to them by the party who does not
want to leave the same with the court. In that instance, the COC
can certify that the document is a faithful reproduction of the
original exhibited by the party. No fee shall be charged for this
certification.
6. If, despite advice to the contrary, a litigant insists on the filing of a
vase as a Small Claim, the COC should reiterate the previous
advice given in a respectful manner and then docket the case.
7. Even despite insistence, COCs should not accept a Statement of
Claim signed by a lawyer unless the lawyer himself is the plaintiff,
not even if he signs it as an attorney-in-fact of the named plaintiff.
8. Requests for advances for transportation expenses from the
Sheriff's Trust Fund should be acted upon within 24 hours from
receipt of the approved Statement of Estimated Expenses.
! 55!
9. The Clerks of Court should ensure that the full names and
addresses of the parties are indicated in the Statement of Claim,
as well as alternative contact information (such as telephone
numbers), when possible.
10. The Monthly Docket Inventory Report should reflect the date
when a case is decided or disposed of vis-à-vis the date of filing
so that the timeless of court action may be assessed. The date
when summons was issued and the date of hearing should also
be indicated. Finally, the execution and satisfaction of judgments
rendered under the Rule should also be part of the Monthly
1
Report to determine the Rule's efficacy.
11. The rule on inhibition in regular cases shall apply to Small Claims
Courts.
12. An additional fee of P500.00 should be assessed any litigant for
the 10th small claim filed, and for every 5th additional case
thereafter. The fee is justified by the service availed of which
requires extra time and effort on the part of the courts. The
volume of cases filed evidences the capacity of the litigant to pay
the fees.
13. On the same day of filing/raffling of the Statement of Claim, the
Clerk of Court shall transmit the record of the case to the branch
assigned. The Branch Clerk of Court (BCOC) shall forthwith
inform the plaintiff of the date of hearing of the case.
14. Upon receipt of a newly filed/raffled small claim, in case the
Presiding Judge is on leave, the BCOC shall immediately refer
the case to the Pairing Judge for appropriate action in
accordance with existing Rules.
15. Sheriffs and Process Servers shall serve the summons and
notice of hearing within 5 days from issuance, unless the
distance justifies a longer period, but in no case shall service be
effected beyond 30 days from date of issuance. Within 5 days
from such service, the Officer's Return shall be filed with the
court with a copy furnished to the plaintiff at the given address/es
of record.
and
(d) Nationwide implementation/roll-out of the Rule on Procedure for Small
Claims Cases, as amended, to all first level courts, except the Shari'a
Circuit Court, effective thirty (30) days from date hereof.
Let this resolution be published in a newspaper of general circulation."
(adv102)
G.R. No. 184203 November 26, 2014
CITY OF LAPU-LAPU, Petitioner,
vs.
PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
x-----------------------x
G.R. No. 187583
PROVINCE OF BATAAN, represented by GOVERNOR ENRIQUE T.
GARCIA, JR., and EMERLINDA S. TALENTO, in her capacity as
Provincial Treasurer of Bataan, Petitioners,
vs.
PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
DECISION
LEONEN, J.:
The Philippine Economic Zone Authority is exempt from payment of real
property taxes.
1
These are consolidated petitions for review on certiorari the City of Lapu-
Lapu and the Province of Bataan separately filed against the Philippine
Economic Zone Authority (PEZA).
In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of
2 3
Appeals’ decision dated January 11, 2008 and resolution dated August
6, 2008, dismissing the City’s appeal for being the wrong mode of appeal.
The City appealed the Regional Trial Court,Branch 111, Pasay City’s
decision finding the PEZA exempt from payment of real property taxes.
In G.R. No. 187583, the Province of Bataan (the Province) assails the
4 5
Court of Appeals’ decision dated August 27, 2008 and resolution dated
April 16, 2009, granting the PEZA’s petition for certiorari. The Court of
Appeals ruled that the Regional Trial Court, Branch 115, Pasay City
gravely abused its discretion in finding the PEZA liable for real property
taxes to the Province of Bataan.
Facts common to the consolidated petitions
6
In the exercise of his legislative powers, President Ferdinand E. Marcos
issued Presidential Decree No. 66 in 1972, declaring as government
policy the establishment of export processing zones in strategic locations
in the Philippines. Presidential Decree No. 66 aimed "to encourage and
promote foreign commerce as a means of making the Philippines a
center of international trade, of strengthening our export trade and foreign
exchange position, of hastening industrialization,of reducing domestic
7 19
unemployment, and of accelerating the development of the country."
To carry out this policy, the Export Processing Zone Authority (EPZA)
was created to operate, administer, and manage the export processing
8
zones established in the Port of Mariveles, Bataan and such other export
9 21
processing zones that may be created by virtue of the decree.
10
The decree declared the EPZA non-profit in character with all its
revenues devoted to its development, improvement, and
11
maintenance. To maintain this non-profit character, the EPZA was
declared exempt from all taxes that may be due to the Republic of the
Philippines, its provinces, cities, municipalities, and other government
12
agencies and instrumentalities. Specifically, Section 21 of Presidential
Decree No. 66 declared the EPZA exempt from payment of real property
taxes:
! 56!
Section 21. Non-profit Character of the Authority; Exemption from Taxes.
The Authority shall be non-profit and shall devote and use all its returns
from its capital investment, as well as excess revenues from its
operations, for the development, improvement and maintenance and
other related expenditures of the Authority to pay its indebtedness and
obligations and in furtherance and effective implementation of the policy
enunciated in Section 1 of this Decree. In consonance therewith, the
Authority is hereby declared exempt:
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds
of taxes and licenses to be paid to the National Government, its
provinces, cities, municipalities and other government agenciesand
instrumentalities[.]
In 1979, President Marcos issued Proclamation No. 1811, establishing
the Mactan Export Processing Zone. Certain parcels of land of the public
domain located in the City of Lapu-Lapuin Mactan, Cebu were reserved
to serve as site of the Mactan Export Processing Zone.
In 1995, the PEZA was created by virtue of Republic Act No. 7916 or "the
13
Special Economic Zone Act of 1995" to operate, administer, manage,
14
and develop economic zones in the country. The PEZA was granted the
power to register, regulate, and supervise the enterprises located in the
15
economic zones. By virtue of the law, the export processing zone in
16
Mariveles, Bataan became the Bataan Economic Zone and the Mactan
17
Export Processing Zone the Mactan Economic Zone.
As for the EPZA, the law required it to "evolve into the PEZA in
accordance with the guidelines and regulations set forth in an executive
18
order issued for [the] purpose."
On October 30, 1995, President Fidel V. Ramos issued Executive Order
No. 282, directing the PEZA to assume and exercise all of the EPZA’s
powers, functions, and responsibilities "as provided in Presidential
Decree No. 66, as amended, insofar as they are not inconsistent with the
powers, functions, and responsibilities of the PEZA, as mandated under
[the Special Economic Zone Act of 1995]." All of EPZA’s properties,
equipment, and assets, among others, were ordered transferred to the
20
PEZA.
Facts of G.R. No. 184203
In the letter dated March 25, 1998, the City of Lapu-Lapu, through the
Office of the Treasurer, demanded from the PEZA 32,912,350.08 in real
property taxes for the period from 1992 to 1998 on the PEZA’s properties
located in the Mactan Economic Zone.
22
The City reiterated its demand in the letter dated May 21, 1998. It cited
Sections 193 and 234 of the Local Government Code of 1991 that
withdrew the real property tax exemptions previously granted to or
presently enjoyed by all persons. The City pointed out that no provision in
the Special Economic Zone Act of 1995 specifically exempted the PEZA
from payment of real property taxes, unlike Section 21 of Presidential
Decree No. 66 that explicitly provided for EPZA’s exemption. Since no
legal provision explicitly exempted the PEZA from payment of real
property taxes, the City argued that it can tax the PEZA.
23
The City made subsequent demands on the PEZA. In its last
24
reminder dated May 13, 2002, the City assessed the PEZA
86,843,503.48 as real property taxes for the period from 1992 to 2002.
On September 11, 2002, the PEZAfiled a petition for declaratory
25
Relief with the Regional Trial Court of Pasay City, praying that the trial
court declare it exempt from payment ofreal property taxes. The case was
raffled to Branch 111.
26
The City answered the petition, maintaining that the PEZA is liable for
real property taxes. To support its argument, the City cited a legal opinion
27
dated September 6, 1999 issued by the Department of Justice, which
stated that the PEZA is not exempt from payment of real property taxes.
The Department of Justice based its opinion on Sections 193 and 234 of
the Local Government Code that withdrew the tax exemptions, including
real property tax exemptions, previously granted to all persons.
28 29
A reply was filed by the PEZA to which the City filed a rejoinder.
30
Pursuant to Rule 63, Section 3 of Rules of Court, the Office of the
31
Solicitor General filed a comment on the PEZA’s petition for declaratory
relief. It agreed that the PEZA is exempt from payment of real property
taxes, citing Sections 24 and 51 of the Special Economic Zone Act of
1995.
The trial court agreed with the Solicitor General. Section 24 of the Special
Economic Zone Act of 1995 provides:
SEC. 24. Exemption from National and Local Taxes. – Except for real
property taxes on land owned by developers, no taxes, local and national,
shall be imposed on business establishments operating within the
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned
by all business enterprises within the ECOZONE shall be paid and
remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the
business establishments to the treasurer’s office of the
municipality or city where the enterprise is located.
Section 51 of the law, on the other hand, provides:
SEC. 51. Ipso-Facto Clause. – All privileges, benefits, advantages or
exemptions granted to special economic zones under Republic Act No.
7227, shall ipso-facto be accorded to special economic zones already
created or to be created under this Act. The free port status shall not be
vested upon new special economic zones.
Based on Section 51, the trial court held that all privileges, benefits,
advantages, or exemptions granted tospecial economic zones created
under the Bases Conversion and Development Act of 1992 apply to
! 57!
special economic zones created under the Special Economic ZoneAct of
1995.
Since these benefits include exemption from payment of national or local
taxes, these benefits apply to special economic zones owned by the
PEZA.
According to the trial court, the PEZA remained tax-exempt regardless of
Section 24 of the Special Economic Zone Act of 1995. It ruled that
Section 24, which taxes real property owned by developers of economic
zones, only applies to private developers of economic zones, not to public
developers like the PEZA. The PEZA, therefore, is not liable for real
property taxes on the land it owns.
Characterizing the PEZA as an agency of the National Government, the
trial court ruled that the City had no authority to tax the PEZA under
Sections 133(o) and 234(a) of the Local Government Code of 1991.
32
In the resolution dated June 14, 2006, the trial court granted the PEZA’s
petition for declaratory relief and declared it exempt from payment of real
property taxes.
33
The City filed a motion for reconsideration, which the trial court denied
34
in its resolution dated September 26, 2006.
35
The City then appealed to the Court of Appeals.
The Court of Appeals noted the following issues the City raised in its
appellant’s brief: (1) whether the trial court had jurisdiction over the
PEZA’s petition for declaratory relief; (2) whether the PEZA is a
government agency performing governmental functions; and (3) whether
the PEZA is exempt from payment of real property taxes.
The issues presented by the City, according to the Court of Appeals, are
pure questions of law which should have been raised in a petition for
review on certiorari directly filed before this court. Since the City availed
itself of the wrong mode of appeal, the Court of Appeals dismissed the
36
City’s appeal in the decision dated January 11, 2008.
The City filed a motion for extension of time to file a motion for
37
reconsideration, which the Court of Appeals denied in the
38
resolution dated April 11, 2008.
Despite the denial of its motion for extension, the City filed a motion for
39 40
reconsideration. In the resolution dated August 6, 2008, the Court of
Appeals denied that motion.
41
In its petition for review on certiorari with this court, the City argues that
42
the Court of Appeals "hid under the skirts of technical rules" in resolving
its appeal. The City maintains that its appeal involved mixed questions of
fact and law. According to the City, whether the PEZA performed
governmental functions "cannot completely be addressed by law but [by]
43
the factual and actual activities [the PEZA is] carrying out."
Even assuming that the petition involves pure questions of law, the City
contends that the subject matter of the case "is of extreme importance
with [far-reaching] consequence that [its magnitude] would surely shape
 44
and determine the course ofour nation’s future." The Court of Appeals,
the City argues, should have resolved the case on the merits.
The City insists that the trial court had no jurisdiction to hear the PEZA’s
petition for declaratory relief. According to the City, the case involves real
property located in the City of Lapu-Lapu. The petition for declaratory
relief should have been filed before the Regional Trial Court of the City of
45
Lapu-Lapu.
Moreover, the Province of Bataan, the City of Baguio, and the Province of
Cavite allegedly demanded real property taxes from the PEZA. The City
argues that the PEZA should have likewise impleaded these local
government units as respondents in its petition for declaratory relief. For
its failure to do so, the PEZA violated Rule 63, Section 2 of the Rules of
46
Court, and the trial court should have dismissed the petition.
This court ordered the PEZA to comment on the City’s petition for review
47
on certiorari.
At the outset of its comment, the PEZA argues that the Court of Appeals’
decision dated January 11, 2008 had become final and executory. After
the Court of Appeals had denied the City’s appeal, the City filed a motion
for extension of time to file a motion for reconsideration. Arguing that the
time to file a motion for reconsideration is not extendible, the PEZA filed
its motion for reconsideration out of time. The Cityhas no more right to
48
appeal to this court.
The PEZA maintains that the City availed itself of the wrong mode of
appeal before the Court of Appeals. Since the City raised pure questions
of law in its appeal, the PEZA argues that the proper remedy is a petition
for review on certiorari with this court, not an ordinary appeal before the
appellate court. The Court of Appeals, therefore, correctly dismissed
outright the City’s appeal under Rule 50, Section 2 of the Rules of
49
Court.
On the merits, the PEZA argues that it is an agency and instrumentality of
the National Government. It is therefore exempt from payment of real
property taxes under Sections 133(o) and 234(a) of the Local
50
Government Code. It adds that the tax privileges under Sections 24 and
51
51 of the Special Economic Zone Act of 1995 applied to it.
Considering that the site of the Mactan Economic Zoneis a reserved land
under Proclamation No. 1811, the PEZA claims that the properties sought
to be taxed are lands of public dominion exempt from real property
52
taxes.
As to the jurisdiction issue, the PEZA counters that the Regional Trial
Court of Pasay had jurisdiction to hear its petition for declaratory relief
under Rule 63, Section 1 of the Rules of Court.[53]] It also argued that it
need not implead the Province of Bataan, the City of Baguio, and the
Province of Cavite as respondents considering that their demands came
54
after the PEZA had already filed the petition in court.
Facts of G.R. No. 187583
! 58!
After the City of Lapu-Lapu had demanded payment of real property
taxes from the PEZA, the Province of Bataan followed suit. In its
55
letter dated May 29, 2003, the Province, through the Office of the
Provincial Treasurer, informed the PEZA that it would be sending a real
property tax billing to the PEZA. Arguing that the PEZA is a developer of
economic zones, the Province claimed that the PEZA is liable for real
property taxes under Section 24 of the Special Economic Zone Act of
1995.
56
In its reply letter dated June 18, 2003, the PEZA requested the Province
to suspend the service of the real property tax billing. It cited its petition
for declaratory relief against the City of Lapu-Lapu pending before the
Regional Trial Court, Branch 111, Pasay City as basis.
The Province argued that serving a real property tax billing on the PEZA
"would not in any way affect [its] petition for declaratory relief before [the
57 58
Regional Trial Court] of Pasay City." Thus, in its letter dated June 27,
2003, the Province notified the PEZAof its real property tax liabilities for
June 1, 1995 to December 31, 2002 totalling ₱110,549,032.55.
After having been served a tax billing, the PEZA again requested the
Province to suspend collecting its alleged real property tax liabilities until
the Regional Trial Court of Pasay Cityresolves its petition for declaratory
59
relief.
The Province ignored the PEZA’s request. On January 20, 2004, the
Province served on the PEZA a statement of unpaid real property tax for
60
the period from June 1995 to December 2004.
The PEZA again requested the Province to suspend collecting its alleged
61 62
real property taxes. The Province denied the request in its letter dated
63
January 29, 2004, then servedon the PEZA a warrant of levy covering
the PEZA’s real properties located in Mariveles, Bataan.
64
The PEZA’s subsequent requests for suspension of collection were all
65
denied by the Province. The Province then served on the PEZA a notice
66
of delinquency in the payment of real property taxes and a notice of sale
67
of real property for unpaid real property tax. The Province finally sent
the PEZA a notice of public auction of the latter’s properties in Mariveles,
68
Bataan.
69
On June 14, 2004, the PEZA filed a petition for injunction with prayer for
issuance of a temporary restraining order and/or writ of preliminary
injunction before the Regional Trial Court of Pasay City, arguing that it is
exempt from payment ofreal property taxes. It added that the notice of
sale issued by the Province was void because it was not published in a
newspaper ofgeneral circulation asrequired by Section 260 of the Local
70
Government Code.
The case was raffled to Branch 115.
71
In its order dated June 18, 2004, the trial court issued a temporary
restraining order against the Province. After the PEZA had filed a
72
₱100,000.00 bond, the trial court issued a writ of preliminary
 73
injunction, enjoining the Province from selling the PEZA’s real
properties at public auction.
On March 3, 2006, the PEZA and Province both manifested that each
would file a memorandum after which the case would be deemed
submitted for decision. The parties then filed their respective
74
memoranda.
75
In the order dated January 31, 2007, the trial court denied the PEZA’s
petition for injunction. The trial court ruled that the PEZA is not exempt
from payment of real property taxes. According to the trial court, Sections
193 and 234 of the Local Government Code had withdrawn the real
property tax exemptions previously granted to all persons, whether
76
natural or juridical. As to the tax exemptions under Section 51 of the
Special Economic Zone Act of 1995, the trial court ruled that the provision
only applies to businesses operating within the economic zones, not to
77
the PEZA.
78
The PEZA filed before the Court of Appeals a petition for certiorari with
prayer for issuance of a temporary restraining order.
The Court of Appeals issued a temporary restraining order, enjoining the
Province and its Provincial Treasurer from selling PEZA's properties at
79
public auction scheduled on October 17, 2007. It also ordered the
Province to comment on the PEZA’s petition.
80
In its comment, the Province alleged that it received a copy of the
temporary restraining order only on October 18, 2007 when it had already
sold the PEZA’s properties at public auction. Arguing that the act sought
to be enjoined was already fait accompli, the Province prayed for the
dismissal of the petition for certiorari.
The PEZA then filed a supplemental petition for certiorari, prohibition, and
81
mandamus against the Province, arguing that the Provincial Treasurer
of Bataan acted with grave abuse of discretion in issuing the notice of
delinquency and notice of sale. It maintained that it is exempt from
payment of real property taxes because it is a government
instrumentality. It added that its lands are property of public dominion
which cannot be sold at public auction.
82
The PEZA also filed a motion for issuance of an order affirming the
temporary restraining order and a writ of preliminary injunction to enjoin
the Province from consolidating title over the PEZA’s properties.
83
In its resolution dated January 16, 2008,the Court of Appeals admitted
the supplemental petition for certiorari, prohibition, and mandamus. It
required the Province to comment on the supplemental petition and to file
a memorandum on the PEZA’s prayer for issuance of temporary
restraining order.
84
The Province commented on the PEZA’s supplemental petition, to
85
which the PEZA replied.
86
The Province then filed a motion for leave to admit attached rejoinder
87
with motion to dismiss. In the rejoinder with motion to dismiss, the
! 59!
Province argued for the first time that the Court of Appeals had no
jurisdiction over the subject matter of the action.
According to the Province, the PEZA erred in filing a petition for certiorari.
Arguing that the PEZA sought to reverse a Regional Trial Court decision
in a local tax case, the Province claimed that the court with appellate
jurisdiction over the action is the Court of Tax Appeals. The PEZA then
prayed that the Court of Appeals dismiss the petition for certiorari for lack
of jurisdiction over the subject matter of the action.
The Court of Appeals held that the issue before it was whether the trial
court judge gravely abused his discretion in dismissing the PEZA’s
petition for prohibition. This issue, according to the Court of Appeals, is
properly addressed in a petition for certiorari over which it has jurisdiction
to resolve. It, therefore, maintained jurisdiction to resolve the PEZA’s
88
petition for certiorari.
Although it admitted that appeal, not certiorari, was the PEZA’s proper
89
remedy to reverse the trial court’s decision, the Court of Appeals
proceeded to decide the petition for certiorari in "the broader interest of
90
justice."
The Court of Appeals ruled that the trial court judge gravely abused his
discretion in dismissing the PEZA’s petition for prohibition. It held that
Section 21 of Presidential Decree No. 66 and Section 51 of the Special
Economic Zone Act of 1995 granted the PEZA exemption from payment
91
of real property taxes. Based on the criteria set in Manila International
92
Airport Authority v. Court of Appeals, the Court of Appeals found that
the PEZA is an instrumentality of the national government. No taxes,
93
therefore, could be levied on it by local government units.
94
In the decision dated August 27, 2008, the Court of Appeals granted the
PEZA’s petition for certiorari. It set aside the trial court’s decision and
nullified all the Province’s proceedings with respect to the collection of
real property taxes from the PEZA.
95
The Province filed a motion for reconsideration, which the Court of
96
Appeals denied in the resolution dated April 16, 2009 for lack of merit.
97
In its petition for review on certiorari with this court, the Province of
Bataan insists that the Court of Appeals had no jurisdiction to take
cognizance of the PEZA’s petition for certiorari. The Province maintains
that the Court of Tax Appeals had jurisdiction to hear the PEZA’s petition
98
since it involved a local tax case decided by a Regional Trial Court.
The Province reiterates that the PEZA is not exempt from payment of real
property taxes. The Province points out that the EPZA, the PEZA’s
predecessor, had to be categorically exempted from payment of real
property taxes. The EPZA, therefore, was not inherently exempt from
payment of real property taxes and so is the PEZA. Since Congress
omitted from the Special Economic Zone Act of 1995 a provision
specifically exempting the PEZA from payment of real property taxes, the
Province argues that the PEZA is a taxable entity. It cited the rule in
statutory construction that provisions omitted in revised statutes are
99
deemed repealed.
With respect to Sections 24 and 51 of the Special Economic Zone Act of
1995 granting tax exemptions and benefits, the Province argues that
these provisions only apply to business establishments operating within
100
special economic zones, not to the PEZA.
This court ordered the PEZA tocomment on the Province’s petition for
101 102
review on certiorari. In its comment, the PEZA argues that the Court
of Appeals had jurisdiction to hear its petition for certiorari since the issue
was whether the trial court committed grave abuse of discretion in
denying its petition for injunction. The PEZA maintains thatit is exempt
from payment of real property taxes under Section 21 of Presidential
Decree No. 66 and Section 51 of the Special Economic Zone Act of 1995.
103
The Province filed its reply, reiterating its arguments in its petition for
104
review on certiorari. On the PEZA’s motion, this court consolidated the
105
petitions filed by the City of Lapu-Lapu and the Province of Bataan.
The issues for our resolution are the following:
I. Whether the Court of Appeals erred in dismissing the City of
Lapu-Lapu’s appeal for raising pure questions of law;
II. Whether the Regional Trial Court, Branch 111, Pasay City had
jurisdiction to hear, try, and decide the City of Lapu-Lapu’s
petition for declaratory relief;
III. Whether the petition for injunction filed before the Regional
Trial Court, Branch 115, Pasay City, is a local tax case
appealable to the Court of Tax Appeals; and
IV. Whether the PEZA is exempt from payment of real property
taxes.
We deny the consolidated petitions.
I.
The Court of Appeals did not err in
dismissing the City of Lapu-Lapu’s
appeal for raising pure questions of law
Under the Rules of Court, there are three modes of appeal from Regional
Trial Court decisions. The first mode is through an ordinary appeal before
the Court of Appeals where the decision assailed was rendered in the
exercise of the Regional Trial Court’s original jurisdiction. Ordinary
appeals are governed by Rule 41, Sections 3 to 13 of the Rules of Court.
In ordinary appeals, questions of fact or mixed questions of fact and law
106
may be raised.
The second mode is through a petition for review before the Court of
Appeals where the decision assailed was rendered by the Regional Trial
Court in the exercise of its appellate jurisdiction. Rule 42 of the Rules of
Court governs petitions for review before the Court of Appeals. In
petitions for review under Rule 42, questions of fact, of law, or mixed
107
questions of fact and law may be raised.
! 60!
The third mode is through an appealby certiorari before this court under
108
Rule 45 where only questions of law shall be raised.
A question of fact exists when there is doubt as to the truth or falsity of
109
the alleged facts. On the other hand, there is a question of law if the
110
appeal raises doubt as to the applicable law on a certain set of facts.
Under Rule 50, Section 2, an improper appeal before the Court of
Appeals is dismissed outright and shall not be referred to the proper
court:
SEC. 2. Dismissal of improper appeal to the Court of Appeals. – An
appeal under Rule 41 taken from the Regional Trial Court to the Court of
Appeals raising only questions of law shall be dismissed, issues purely of
law not being reviewable by said court. Similarly, an appeal by notice of
appeal instead of by petition for review from the appellate judgment of a
Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be
transferred to the appropriate court but shall be dismissed outright.
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of
Court, which provided that improper appeals to the Court of Appeals shall
not be dismissed but shall be certified to the proper court for resolution:
Sec. 3. Where appealed case erroneously, brought. — Where the
appealed case has been erroneously brought to the Court of Appeals, it
shall not dismiss the appeal, but shall certify the case to the proper court,
with a specific and clear statement of the grounds therefor.
With respect to appeals by certiorari directly filed before this court but
which raise questions of fact, paragraph 4(b) of Circular No. 2-90 dated
March 9, 1990 states that this court "retains the option, in the exercise of
its sound discretion and considering the attendant circumstances, either
itself to take cognizance of and decide such issues or to refer them to the
Court of Appeals for determination." In Indoyon, Jr. v. Court of
111
Appeals, we said that this court "cannot tolerate ignorance of the law
112
on appeals." It is not this court’s task to determine for litigants their
113
proper remedies under the Rules.
We agree that the City availed itself of the wrong mode of appeal before
the Court of Appeals. The City raised pure questions of law in its appeal.
The issue of whether the Regional Trial Court of Pasay had jurisdiction
over the PEZA’s petition for declaratory relief is a question of law,
114
jurisdiction being a matter of law. The issue of whether the PEZA is a
government instrumentality exempt from payment of real property taxes is
likewise a question of law since this question is resolved by examining
the provisions of the PEZA’s charter as well as other laws relating to the
115
PEZA.
The Court of Appeals, therefore, did not err in dismissing the City’s
appeal pursuant to Rule 50, Section 2 of the Rules of Court.
Nevertheless, considering the important questions involved in this case,
we take cognizance of the City’s petition for review on certiorari in the
interest of justice.
116
In Municipality of Pateros v. The Honorable Court of Appeals, the
Municipality of Pateros filed an appeal under Rule 42 before the Court of
Appeals, which the Court of Appeals denied outright for raising pure
questions of law. This court agreed that the Municipality of Pateros
117
"committed a procedural infraction" and should have directly filed a
petition for review on certiorari before this court. Nevertheless, "in the
118
interest of justice and in order to write finisto [the] controversy," this
119
court "opt[ed] to relax the rules" and proceeded to decide the case.
This court said:
While it is true that rules of procedure are intended to promote rather than
frustrate the ends of justice, and while the swift unclogging of the dockets
of the courts is a laudable objective, it nevertheless must not be met at
the expense of substantial justice.
The Court has allowed some meritorious cases to proceed despite
inherent procedural defects and lapses. Thisis in keeping with the
principle that rules of procedure are mere tools designed to facilitate the
attainment of justice, and that strict and rigid application ofrules which
should result in technicalities that tend to frustrate rather than promote
substantial justice must always be avoided. It is a far better and more
prudent cause of action for the court to excuse a technical lapse and
afford the parties a review of the case to attain the ends of justice, rather
than dispose of the case on technicality and cause grave injustice to the
parties, giving a false impression of speedy disposal of cases while
120
actually resulting in more delay, if not a miscarriage of justice.
Similar to Municipality of Pateros, we opt to relax the rules in this case.
The PEZA operates or otherwise administers special economic zones all
over the country. Resolving the substantive issue of whether the PEZA is
taxable for real property taxes will clarify the taxing powers of all local
government units where special economic zones are operated. This case,
therefore, should be decided on the merits.
II.
The Regional Trial Court of Pasay had no
jurisdiction to hear, try, and decide the
PEZA’s petition for declaratory relief
against the City of Lapu-Lapu
Rule 63 of the Rules of Court governs actions for declaratory relief.
Section 1 of Rule 63 provides:
SECTION 1. Who may file petition. – Any person interested under a
deed, will, contract or other written instrument, or whose rights are
affected by a statute, executive order or regulation, ordinance, or any
other governmental regulation may, before breach or violation, thereof,
bring an action in the appropriate Regional Trial Court to determine any
! 61!
question of construction or validity arising, and for a declaration of his
rights or duties, thereunder.
An action for reformation of an instrument, to quiet title to real property or
remove clouds therefrom, or to consolidate ownership under Article 1607
of the Civil Code, may be brought under this Rule.
The court with jurisdiction over petitions for declaratory relief is the
Regional Trial Court, the subject matter of litigation in an action for
121
declaratory relief being incapable of pecuniary estimation. Section 19
of the Judiciary Reorganization Act of 1980 provides:
SEC. 19. Jurisdiction in Civil Cases. – Regional Trial Courts shall
exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of litigation is incapable of
pecuniary estimation[.]
Consistent with the law, the Rules state that a petition for declaratory
122
relief is filed "in the appropriate Regional Trial Court."
A special civil action for declaratory relief is filed for a judicial
determination of any question of construction or validity arising from, and
for a declaration of rights and duties, under any of the following subject
matters: a deed, will, contract or other written instrument, statute,
executive order or regulation, ordinance, orany other governmental
123
regulation. However, a declaratory judgment may issue only if there
124
has been "no breach of the documents in question." If the contract or
statute subject matter of the action has already been breached, the
125
appropriate ordinary civil action must be filed. If adequate relief is
available through another form of action or proceeding, the other action
126
must be preferred over an action for declaratory relief.
127
In Ollada v. Central Bank of the Philippines, the Central Bank issued
CB-IED Form No. 5 requiring certified public accountants to submit an
accreditation under oath before they were allowed to certify financial
statements submitted to the bank. Among those financial statements the
Central Bank disallowed were those certified by accountant Felipe B.
128
Ollada. Claiming that the requirement "restrained the legitimate pursuit
129
of one’s trade,"
Ollada filed a petition for declaratory relief against the Central Bank.
This court ordered the dismissal of Ollada’s petition "without prejudice to
130
[his] seeking relief in another appropriate action." According to this
court, Ollada’s right had already been violated when the Central Bank
refused to accept the financial statements he prepared. Since there was
already a breach, a petition for declaratory relief was not proper. Ollada
131
must pursue the "appropriate ordinary civil action or proceeding." This
court explained:
Petitioner commenced this action as, and clearly intended it to be one for
Declaratory Relief under the provisions of Rule 66 of the Rules of Court.
On the question of when a special civil action of this nature would
prosper, we have already held that the complaint for declaratory relief will
not prosper if filed after a contract, statute or right has been breached or
violated. In the present case such is precisely the situation arising from
the facts alleged in the petition for declaratory relief. As vigorously
claimed by petitioner himself, respondent had already invaded or violated
his right and caused him injury — all these giving him a complete cause
of action enforceable in an appropriate ordinary civil action or proceeding.
The dismissal of the action was, therefore, proper in the lightof our ruling
in De Borja vs. Villadolid, 47 O.G. (5) p. 2315, and Samson vs. Andal,
G.R. No. L-3439, July 31, 1951, where we held that an action for
declaratory relief should be filed before there has been a breach of a
contract, statutes or right, and that it is sufficient tobar such action, that
there had been a breach — which would constitute actionable violation.
The rule is that an action for Declaratory Relief is proper only if adequate
relief is not available through the means of other existing forms of action
132
or proceeding (1 C.J.S. 1027-1028).
It is also required that the parties to the action for declaratory relief be
those whose rights or interests are affected by the contract or statute in
133
question. "There must be an actual justiciable controversy or the
134
‘ripening seeds’ of one" between the parties. The issue between the
135
parties "must be ripe for judicial determination." An action for
declaratory relief based on theoreticalor hypothetical questions cannot be
136
filed for our courts are not advisory courts.
137
In Republic v. Roque, this court dismissed respondents’ petition for
declaratory relief for lack of justiciable controversy. According to this
court, "[the respondents’] fear of prospective prosecution [under the
Human Security Act] was solely based on remarks of certain government
138
officials which were addressed to the general public."
139
In Velarde v. Social Justice Society, this court refused to resolve the
issue of "whether or not [a religious leader’s endorsement] of a candidate
for elective office or in urging or requiring the members of his flock to vote
for a specific candidate is violative [of the separation
140
clause]." According to the court, there was no justiciable controversy
and ordered the dismissal of the Social Justice Society’s petition for
declaratory relief. This court explained: Indeed, SJS merely speculated or
anticipated without factual moorings that, as religious leaders, the
petitioner and his co-respondents below had endorsed or threatened to
endorse a candidate or candidates for elective offices; and that such
actual or threatened endorsement "will enable [them] to elect men to
public office who [would] in turn be forever beholden to their leaders,
enabling them to control the government"[;] and "pos[ing] a clear and
present danger ofserious erosion of the people’s faith in the electoral
process[;] and reinforc[ing] their belief that religious leaders determine the
ultimate result of elections," which would then be violative of the
separation clause.
! 62!
Such premise is highly speculative and merely theoretical, to say the
least. Clearly, it does not suffice to constitute a justiciable controversy.
The Petition does not even allege any indication or manifest intent on the
part of any of the respondents below to champion an electoral candidate,
or to urge their so-called flock to vote for, or not to vote for, a particular
candidate. It is a time-honored rule that sheer speculation does not give
rise to an actionable right.
Obviously, there is no factual allegation that SJS’ rights are being
subjected to any threatened, imminent and inevitable violation that should
be prevented by the declaratory relief sought. The judicial power and duty
of the courts to settle actual controversies involving rights that are legally
demandable and enforceable cannot be exercised when there is no
actual or threatened violation of a legal right.
All that the 5-page SJS Petition prayed for was "that the question raised
in paragraph 9 hereof be resolved." In other words, it merely sought an
opinion of the trial court on whether the speculated acts of religious
leaders endorsing elective candidates for political offices violated the
constitutional principle on the separation of church and state. SJS did not
ask for a declaration of its rights and duties; neither did it pray for the
stoppage of any threatened violation of its declared rights. Courts,
141
however, are proscribed from rendering an advisory opinion. In sum, a
petition for declaratory relief must satisfy six requisites:
[F]irst, the subject matter of the controversy must be a deed, will, contract
or other written instrument, statute, executive order or regulation, or
ordinance; second, the terms of said documents and the validity thereof
are doubtful and require judicial construction; third, there must have been
no breach of the documents in question; fourth, there must be an actual
justiciable controversy or the "ripening seeds" of one between persons
whose interests are adverse; fifth, the issue must be ripe for judicial
determination; and sixth, adequate relief is not available through other
142
means or other forms of action or proceeding. (Emphases omitted)
We rule that the PEZA erred in availing itself of a petition for declaratory
relief against the City. The City had already issued demand letters and
real property tax assessment against the PEZA, in violation of the PEZA’s
alleged tax-exempt status under its charter. The Special Economic Zone
Act of 1995, the subject matter of PEZA’s petition for declaratory relief,
had already been breached. The trial court, therefore, had no jurisdiction
over the petition for declaratory relief. There are several aspects of
143
jurisdiction. Jurisdiction over the subject matter is "the power to hear
and determine cases of the general class to which the proceedings in
144
question belong." It is conferred by law, which may either be the
145
Constitution or a statute. Jurisdiction over the subject matter means
146
"the nature of the cause of action and the relief sought." Thus, the
cause of action and character of the relief sought as alleged in the
complaint are examinedto determine whether a court had jurisdiction over
 147
the subject matter. Any decision rendered by a court without
148
jurisdiction over the subjectmatter of the action is void.
Another aspect of jurisdiction is jurisdiction over the person. It is "the
power of [a] court to render a personal judgment or to subject the parties
in a particular action to the judgment and other rulings rendered in the
149
action." A court automatically acquires jurisdiction over the person of
150
the plaintiff upon the filing of the initiatory pleading. With respect to the
defendant, voluntary appearance in court or a valid service of summons
vests the court with jurisdiction over the defendant’s
151
person. Jurisdiction over the person of the defendant is indispensable
in actions in personamor those actions based on a party’s personal
152
liability. The proceedings in an action in personamare void if the court
153
had no jurisdiction over the person of the defendant.
Jurisdiction over the resor the thing under litigation is acquired either "by
the seizure of the property under legal process, whereby it is brought into
actual custody of the law; or asa result of the institution of legal
proceedings, in which the power of the court is recognized and made
154
effective." Jurisdiction over the res is necessary in actions in remor
those actions "directed against the thing or property or status of a person
and seek judgments with respect thereto as against the whole
155
world." The proceedings in an action in rem are void if the court had no
156
jurisdiction over the thing under litigation.
In the present case, the Regional Trial Court had no jurisdiction over the
subject matter of the action, specifically, over the remedy sought. As this
157
court explained in Malana v. Tappa:
. . . an action for declaratory relief presupposes that there has been no
actual breach of the instruments involved or of rights arising thereunder.
Since the purpose of an action for declaratory relief is to secure an
authoritative statement of the rights and obligations of the parties under a
statute, deed, or contract for their guidance in the enforcement thereof, or
compliance therewith, and not to settle issues arising from an alleged
breach thereof, it may be entertained only before the breach or violation
of the statute, deed, or contract to which it refers. A petition for
declaratory relief gives a practical remedy for ending controversies that
have not reached the state where another relief is immediately available;
and supplies the need for a form of action that will set controversies at
rest before they lead to a repudiation of obligations, an invasion of rights,
and a commission of wrongs.
Where the law or contract has already been contravened prior to the filing
of an action for declaratory relief, the courts can no longer assume
jurisdiction over the action. In other words, a court has no more
jurisdiction over an action for declaratory relief if its subject has already
been infringed or transgressed before the institution of the
158
action. (Emphasis supplied)
! 63!
The trial court should have dismissed the PEZA’s petition for declaratory
relief for lack of jurisdiction.
Once an assessment has already been issued by the assessor, the
proper remedy of a taxpayer depends on whether the assessment was
erroneous or illegal.
An erroneous assessment "presupposes that the taxpayer is subject to
159
the tax but is disputing the correctness of the amount assessed." With
an erroneous assessment, the taxpayer claims that the local assessor
erred in determining any of the items for computing the real property tax,
i.e., the value of the real property or the portion thereof subject to tax and
the proper assessment levels. In case of an erroneous assessment, the
taxpayer must exhaust the administrative remedies provided under the
Local Government Code before resorting to judicial action.
The taxpayer must first pay the realproperty tax under protest. Section
252 of the Local Government Code provides:
SECTION 252. Payment Under Protest. -(a) No protest shall be
entertained unless the taxpayer first paysthe tax. There shall be
annotated on the tax receipts the words "paid under protest". The protest
in writing must be filed within thirty (30) days from payment of the tax to
the provincial, city treasurer or municipal treasurer, in the case of a
municipality within Metropolitan Manila Area, who shall decide the protest
within sixty (60) days from receipt.
(b) The tax or a portion thereof paidunder protest, shall be held in
trust by the treasurer concerned.
(c) In the event that the protest is finally decided in favor of the
taxpayer, the amount or portion of the tax protested shall be
refunded to the protestant, or applied as tax credit against his
existing or future tax liability.
(d) In the event that the protest is denied or upon the lapse of the
sixty day period prescribed in subparagraph (a), the taxpayer
may avail of the remedies as provided for in Chapter 3, Title II,
Book II of this Code.
Should the taxpayer find the action on the protest unsatisfactory, the
taxpayer may appeal with the Local Board of Assessment Appeals within
60 days from receipt of the decision on the protest:
SECTION 226. Local Board of Assessment Appeals. - Any owner or
person having legal interest in the property who is not satisfied with the
action of the provincial, city or municipal assessor in the assessment of
his property may, within sixty (60) days from the date of receipt of the
written notice of assessment, appeal to the Board of Assessment Appeals
of the provincial or city by filing a petition under oath in the form
prescribed for the purpose, together with copies of the tax declarations
and such affidavits or documents submitted in support of the appeal.
Payment under protest and appeal to the Local Board of Assessment
Appeals are "successive administrative remedies to a taxpayer who
 160
questions the correctness of an assessment." The Local Board
Assessment Appeals shall not entertain an appeal "without the action of
161
the local assessor" on the protest.
If the taxpayer is still unsatisfied after appealing with the Local Board of
Assessment Appeals, the taxpayer may appeal with the Central Board of
Assessment Appeals within 30 days from receipt of the Local Board’s
decision:
SECTION 229. Action by the Local Board of Assessment Appeals. - (a)
The Board shall decide the appeal within one hundred twenty (120) days
from the date of receipt of such appeal. The Board, after hearing, shall
render its decision based on substantial evidence or such relevant
evidence on record as a reasonable mind might accept as adequate to
support the conclusion. (b) In the exercise ofits appellate jurisdiction, the
Board shall have the power to summon witnesses, administer oaths,
conduct ocular inspection, take depositions, and issue subpoena and
subpoena duces tecum. The proceedings of the Board shall be
conducted solely for the purpose of ascertaining the facts without
necessarily adhering to technical rules applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or
the person having legal interest therein and the provincial or city assessor
with a copy of the decision of the Board. In case the provincial or city
assessor concurs in the revision or the assessment, it shall be his duty to
notify the owner of the property or the person having legal interest therein
of such factusing the form prescribed for the purpose. The owner of the
property or the person having legal interest therein or the assessor who is
not satisfied with the decision of the Board, may, within thirty (30) days
after receipt of the decision of said Board, appeal to the Central Board of
Assessment Appeals, as herein provided. The decision of the Central
Board shall be final and executory. (Emphasis supplied)
On the other hand, an assessment is illegal if it was made without
162
authority under the law. In case of an illegal assessment, the taxpayer
may directly resort to judicial action without paying under protest the
assessed tax and filing an appeal with the Local and Central Board of
Assessment Appeals.
163
In Ty v. Trampe, the Municipal Assessor of Pasig sent Alejandro B. Ty
a notice of assessment with respect to Ty’s real properties in Pasig.
Without resorting to the administrative remedies under the Local
Government Code, Ty filed before the Regional Trial Court a petition,
praying that the trial court nullify the notice of assessment. In assessing
the real property taxes due, the Municipal Assessor used a schedule of
market values solely prepared by him. This, Ty argued, was void for
being contrary to the Local Government Code requiring that the schedule
of market values be jointly prepared by the provincial, city, and municipal
assessors of the municipalities within the Metropolitan Manila Area.
! 64!
This court ruled that the assessmentwas illegal for having been issued
without authority of the Municipal Assessor. Reconciling provisions of the
Real Property Tax Code and the Local Government Code, this court held
that the schedule of market valuesmust be jointly prepared by the
provincial, city, and municipal assessors of the municipalities within the
Metropolitan Manila Area.
As to the issue of exhaustion of administrative remedies, this court held
that Ty did not err in directly resorting to judicial action. According to this
court, payment under protest is required only "where there is a question
164
as to the reasonableness of the amount assessed." As to appeals
before the Local and Central Board of Assessment Appeals, they are
165
"fruitful only where questions of fact are involved."
Ty raised the issue of the legality of the notice of assessment, an issue
that did not go into the reasonableness of the amount assessed. Neither
did the issue involve a question of fact. Ty raised a question of law and,
therefore, need not resort to the administrative remedies provided under
the Local Government Code.
In the present case, the PEZA did not avail itself of any of the remedies
against a notice of assessment. A petition for declaratory relief is not the
proper remedy once a notice of assessment was already issued.
Instead of a petition for declaratory relief, the PEZA should have directly
resorted to a judicial action. The PEZA should have filed a complaint for
166
injunction, the "appropriate ordinary civil action" to enjoin the City from
enforcing its demand and collecting the assessed taxes from the PEZA.
After all, a declaratory judgment as to the PEZA’s tax-exempt status is
useless unless the City isenjoined from enforcing its demand.
Injunction "is a judicial writ, process or proceeding whereby a party is
167
ordered to do or refrain from doing a certain act." "It may be the main
action or merely a provisional remedy for and as incident in the main
168
action." The essential requisites of a writ of injunction are: "(1) there
must be a right in esseor the existence of a right to be protected; and (2)
the act against which the injunction is directed to constitute a violation of
169
such right."
We note, however, that the City confused the concepts of jurisdiction and
venue in contending that the Regional Trial Court of Pasay had no
jurisdiction because the real properties involved in this case are located in
the City of Lapu-Lapu.
On the one hand, jurisdiction is "the power to hear and determine cases
of the general class to which the proceedings in question
170 171
belong." Jurisdiction is a matter of substantive law. Thus, an action
may be filed only with the court or tribunal where the Constitution or a
172
statute says it can be brought. Objections to jurisdiction cannot be
waived and may be brought at any stage of the proceedings, even on
173
appeal. When a case is filed with a court which has no jurisdiction over
174
the action, the court shall motu propriodismiss the case.

On the other hand, venue is "the place of trial or geographical location in
which an action or proceeding should be brought." 175 In civil cases,
176
venue is a matter of procedural law. A party’s objections to venue must
be brought at the earliest opportunity either in a motion to dismiss or in
177
the answer; otherwise the objection shall be deemed waived. When the
venue of a civil action is improperly laid, the court cannot motu
178
propriodismiss the case.
The venue of an action depends on whether the action is a real or
personal action. Should the action affect title to or possession of real
property, or interest therein, it is a real action. The action should be filed
in the proper court which has jurisdiction over the area wherein the real
179
property involved, or a portion thereof, is situated. If the action is a
personal action, the action shall be filed with the proper court 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
180
defendant where he may be found, at the election of the plaintiff.
The City was objecting to the venue of the action, not to the jurisdiction of
the Regional Trial Court of Pasay. In essence, the City was contending
that the PEZA’s petition is a real action as it affects title to or possession
of real property, and, therefore, the PEZA should have filed the petition
with the Regional Trial Court of Lapu-Lapu City where the real properties
are located. However, whatever objections the City has against the venue
of the PEZA’s action for declaratory relief are already deemed waived.
Objections to venue must be raised at the earliest possible
181
opportunity. The City did not file a motion to dismiss the petition on the
ground that the venue was improperly laid. Neither did the City raise this
objection in its answer.
In any event, the law sought to be judicially interpreted in this case had
already been breached. The Regional Trial Court of Pasay, therefore, had
no jurisdiction over the PEZA’s petition for declaratory relief against the
City.
III.
The Court of Appeals had no jurisdiction
over the PEZA’s petition for certiorari
against the Province of Bataan
Appeal is the remedy "to obtain a reversal or modification of a judgment
182
on the merits." A judgment on the merits is one which "determines the
rights and liabilities of the parties based on the disclosed facts,
183
irrespective of the formal, technical or dilatory objections." It is not even
184
necessary that the case proceeded to trial. So long as the "judgment is
185
general" and "the parties had a full legal opportunity to be heard on
186
their respective claims and contentions," the judgment is on the merits.
On the other hand, certiorari is a special civil action filed to annul or
modify a proceeding of a tribunal, board, or officer exercising judicial or
187
quasi-judicial functions. Certiorari, which in Latin means "to be more
! 65!
188
fully informed," was originally a remedy in the common law. This court
discussed the history of the remedy of certiorari in Spouses Delos Santos
189
v. Metropolitan Bank and Trust Company:
In the common law, from which the remedy of certiorari evolved, the writ
of certiorari was issued out of Chancery, or the King’s Bench,
commanding agents or officers of the inferior courts to return the record
of a cause pending before them, so as to give the party more sure and
speedy justice, for the writ would enable the superior court to determine
froman inspection of the record whether the inferior court’s judgment was
rendered without authority. The errors were of such a nature that, if
allowed to stand, they would result in a substantial injury to the petitioner
to whom no other remedy was available. If the inferior court acted without
authority, the record was then revised and corrected in matters of law.
The writ of certiorari was limited to cases in which the inferior court was
said to be exceeding its jurisdiction or was not proceeding according to
essential requirements of law and would lie only to review judicial or
190
quasi-judicial acts.
In our jurisdiction, the term "certiorari" is used in two ways. An appeal
before this court raising pure questions of law is commenced by filing a
petition for reviewon certiorari under Rule 45 of the Rules of Court. An
appeal by certiorari, which continues the proceedings commenced before
191
the lower courts, is filed to reverse or modify judgments or final
192
orders. Under the Rules, an appeal by certiorarimust be filed within 15
days from notice of the judgment or final order, or of the denial of the
193
appellant’s motion for new trial or reconsideration.
A petition for certiorari under Rule 65, on the other hand, is an
independent and original action filed to set aside proceedings conducted
without or in excess of jurisdiction or with grave abuse of discretion
194
amounting to lack or excess of jurisdiction. Under the Rules, a petition
for certiorari may only be filed if there is no appeal or any plain, speedy,
195
or adequate remedy in the ordinary course of law. The petition must be
196
filed within 60 days from notice of the judgment, order, or resolution.
Because of the longer period to file a petition for certiorari, some litigants
attempt to file petitions for certiorari as substitutes for lost appeals by
certiorari. However, Rule 65 is clear that a petition for certiorari will not
prosper if appeal is available. Appealis the proper remedy even if the
error, or one of the errors, raised is grave abuse of discretion on the part
197
of the court rendering judgment. If appeal is available, a petition for
certiorari cannot be filed.
In this case, the trial court’s decision dated January 31, 2007 is a
judgment on the merits. Based on the facts disclosed by the parties, the
trial court declared the PEZA liable to the Province of Bataan for real
property taxes. The PEZA’s proper remedy against the trial court’s
decision, therefore, is appeal.
Since the PEZA filed a petition for certiorari against the trial court’s
decision, it availed itself of the wrong remedy. As the Province of Bataan
contended, the trial court’s decision dated January 31, 2007 "is only an
error of judgment appealable to the higher level court and may not be
198
corrected by filing a petition for certiorari." That the trial court judge
allegedly committed grave abuse of discretion does not make the petition
for certiorari the correct remedy. The PEZA should haveraised this
ground in an appeal filed within 15 days from notice of the assailed
resolution.
This court, "in the liberal spirit pervading the Rules of Court and in the
199
interest of substantial justice," has treated petitions for certiorari as an
appeal: "(1) if the petition for certiorari was filed within the reglementary
period within which to file a petition for review on certiorari; (2) when
errors of judgment are averred; and (3) when there is sufficient reason to
200
justify the relaxation of the rules." Considering that "the nature of an
action is determined by the allegationsof the complaint or the petition and
201
the character of the relief sought," a petition which "actually avers
202
errors of judgment rather than errors than that of jurisdiction" may be
considered a petition for review.
However, suspending the application of the Rules has its disadvantages.
Relaxing procedural rules may reduce the "effective enforcement of
203
substantive rights," leading to "arbitrariness, caprice, despotism, or
204
whimsicality in the settlement of disputes." Therefore, for this court to
suspend the application of the Rules, the accomplishment of substantial
justice must outweigh the importance of predictability of court procedures.
The PEZA’s petition for certiorari may be treated as an appeal. First, the
petition for certiorari was filed withinthe 15-day reglementary period for
filing an appeal. The PEZA filed its petition for certiorari before the Court
205
of Appeals on October 15, 2007, which was 12 days from October 3,
206
2007 when the PEZA had notice of the trial court’s order denying the
motion for reconsideration.
Second, the petition for certiorari raised errors of judgment. The PEZA
argued that the trial court erred in ruling that it is not exempt from
payment of real property taxes given Section 21 of Presidential Decree
No. 66 and Sections 11 and 51 of the Special Economic Zone Act of
207
1995.
Third, there is sufficient reason to relax the rules given the importance of
the substantive issue presented in this case.
However, the PEZA’s petition for certiorari was filed before the wrong
court. The PEZA should have filed its petition before the Court of Tax
Appeals.
The Court of Tax Appeals has the exclusive appellate jurisdiction over
local tax cases decided by Regional Trial Courts. Section 7, paragraph
(a)(3) of Republic Act No. 1125, as amended by Republic Act No. 9282,
provides:
! 66!
Sec. 7. Jurisdiction. – The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein
provided:
....
3. Decisions, orders or resolutions of the Regional Trial Courts in
local tax cases originally decided or resolved by them in the
exercise of their original or appellate jurisdiction[.]
The local tax cases referred to in Section 7, paragraph (a)(3) of Republic
Act No. 1125, as amended, include cases involving real property taxes.
Real property taxation is governed by Book II of the Local Government
Code on "Local Taxation and Fiscal Matters." Real property taxes are
208
collected by the Local Treasurer, not by the Bureau of Internal
Revenue in charge of collecting national internal revenue taxes, fees, and
209
charges.
Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by
Republic Act No. 9282, separately provides for the exclusive appellate
jurisdiction of the Court of Tax Appeals over decisions of the Central
Board of Assessment Appeals involving the assessment or collection of
real property taxes:
Sec. 7. Jurisdiction. – The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
5. Decisions of the Central Board of Assessment Appeals in the exercise
of its appellate jurisdiction over cases involving the assessment and
taxation of real property originally decided by the provincial or city board
of assessment appeals[.]
This separate provision, nevertheless, does not bar the Court of Tax
Appeals from taking cognizance of trial court decisions involving the
210 211
collection of real property tax cases. Sections 256 and 266 of the
Local Government Code expressly allow localgovernment units to file "in
any court of competent jurisdiction" civil actions to collect basic real
property taxes. Should the trial court rule against them, local government
units cannot be barred from appealing before the Court of Tax Appeals –
the "highly specialized body specifically created for the purpose of
212
reviewing tax cases."
We have also ruled that the Court of Tax Appeals, not the Court of
Appeals, has the exclusive original jurisdiction over petitions for certiorari
assailing interlocutory orders issued by Regional Trial Courts in a local
tax case. We explained in The City of Manila v. Hon. Grecia-
213
Cuerdo that while the Court of Tax Appeals has no express grant of
214
power to issue writs of certiorari under Republic Act No. 1125, as
amended, the tax court’s judicial power as defined in the
215
Constitution includes the power to determine "whether or not there has
been grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of the [Regional Trial Court] in issuing an interlocutory order of
jurisdiction in cases falling within the exclusive appellate jurisdiction of the interlocutory order, of the Regional Trial Court, the PEZA’s proper remedy
216
tax court." We further elaborated: was an appeal to the Court of Tax Appeals.
Indeed, in order for any appellate court to effectively exercise its appellate Considering that the appellate jurisdiction of the Court of Tax Appeals is
jurisdiction, it must have the authority to issue, among others, a writ of to the exclusion of all other courts, the Court of Appeals had no
certiorari. In transferring exclusive jurisdiction over appealed tax cases to jurisdiction to take cognizance of the PEZA’s petition. The Court of
the CTA, it can reasonably be assumed that the law intended to transfer Appeals acted without jurisdiction in rendering the decision in CA-G.R.
218
also such power as is deemed necessary, if not indispensable, in aid of SP No. 100984. Its decision in CA-G.R. SP No. 100984 is void.
such appellate jurisdiction. There is no perceivable reason why the The filing of appeal in the wrong court does not toll the period to appeal.
transfer should only be considered as partial, not total. Consequently, the decision of the Regional Trial Court, Branch 115,
.... Pasay City, became final and executory after the lapse of the 15th day
219
If this Court were to sustain petitioners' contention that jurisdiction over from the PEZA’s receipt of the trial court’s decision. The denial of the
their certiorari petition lies with the CA, this Court would be confirming the petition for injunction became final and executory.
exercise by two judicial bodies, the CA and the CTA, of jurisdiction over IV.
basically the same subject matter – precisely the split-jurisdiction situation The remedy of a taxpayer depends on the
which is anathema to the orderly administration of justice.The Court stage in which the local government unit
cannot accept that such was the legislative motive, especially considering is enforcing its authority to impose real
that the law expressly confers on the CTA, the tribunal with the property taxes
specialized competence over tax and tariff matters, the role of judicial The proper remedy of a taxpayer depends on the stage in which the local
review over local tax cases without mention of any other court that may government unit is enforcing its authority to collect real property taxes.
exercise such power. Thus, the Court agrees with the ruling of the CA For the guidance of the members of the bench and the bar, we reiterate
that since appellate jurisdiction over private respondents' complaint for the taxpayer’s remedies against the erroneous or illegal assessment of
tax refund is vested in the CTA, it follows that a petition for certiorari real property taxes.
seeking nullification of an interlocutory order issued in the said case Exhaustion of administrative remedies under the Local Government Code
should, likewise, be filed with the same court. To rule otherwise would is necessary in cases of erroneous assessments where the correctness
lead to an absurd situation where one court decides an appeal in the of the amount assessed is assailed. The taxpayer must first pay the tax
main case while another court rules on an incident in the very same case. then file a protest with the Local Treasurer within 30 days from date of
220
Stated differently, it would be somewhat incongruent with the pronounced payment of tax. If protest is denied or upon the lapse of the 60-day
judicial abhorrence to split jurisdiction to conclude that the intention of the period to decide the protest, the taxpayer may appeal to the Local Board
law is to divide the authority over a local tax case filed with the RTC by of Assessment Appeals within 60 days from the denial of the protest or
221
giving to the CA or this Court jurisdiction to issue a writ of certiorari the lapse of the 60-day period to decide the protest. The Local Board
222
against interlocutory orders of the RTC but giving to the CTA the of Assessment Appeals has 120 days to decide the appeal.
jurisdiction over the appeal from the decision of the trial court in the same If the taxpayer is unsatisfied withthe Local Board’s decision, the taxpayer
case. It is more in consonance with logic and legal soundness to may appeal before the Central Board of Assessment Appeals within 30
223
conclude that the grant of appellate jurisdiction to the CTA over tax cases days from receipt of the Local Board’s decision.
filed in and decided by the RTC carries withit the power to issue a writ of The decision of the Central Board of Assessment Appeals is appealable
224
certiorari when necessary in aid of such appellate jurisdiction. The before the Court of Tax Appeals En Banc. The appeal before the Court
supervisory power or jurisdiction of the CTA to issue a writ of certiorari in of Tax Appeals shall be filed following the procedure under Rule 43 of the
225
aid of its appellate jurisdiction should co-exist with, and be a complement Rules of Court.
to, its appellate jurisdiction to review, by appeal, the final orders and The Court of Tax Appeals’ decision may then be appealed before this
decisionsof the RTC, in order to have complete supervision over the acts court through a petition for review on certiorari under Rule 45 of the Rules
217 226
of the latter. (Citations omitted) of Court raising pure questions of law.
In this case, the petition for injunction filed before the Regional Trial Court In case of an illegal assessment where the assessment was issued
of Pasay was a local tax case originally decided by the trial court in its without authority, exhaustion of administrative remedies is not necessary
227
original jurisdiction. Since the PEZA assailed a judgment, not an and the taxpayer may directly resort to judicial action. The taxpayer

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 228
shall file a complaint for injunction before the Regional Trial Court to
enjoin the local government unit from collecting real property taxes.
The party unsatisfied with the decision of the Regional Trial Court shall
file an appeal, not a petition for certiorari, before the Court of Tax
Appeals, the complaint being a local tax case decided by the Regional
229
Trial Court. The appeal shall be filed within fifteen (15) days from
notice of the trial court’s decision.
The Court of Tax Appeals’ decision may then be appealed before this
court through a petition for review on certiorari under Rule 45 of the Rules
230
of Court raising pure questions of law.
In case the local government unit has issued a notice of delinquency, the
taxpayer may file a complaint for injunction to enjoin the impending sale
of the real property at public auction. In case the local government unit
has already sold the property at public auction, the taxpayer must first
deposit with the court the amount for which the real property was sold,
together with interest of 2% per month from the date ofsale to the time of
the institution of action. The taxpayer may then file a complaint to assail
231
the validity of the public auction. The decisions of the Regional Trial
Court in these cases shall be appealable before the Court of Tax
232
Appeals, and the latter’s decisions appealable before this court through
233
a petition for review on certiorari under Rule 45 of the Rules of Court.
V.
The PEZA is exempt from payment
real property taxes
The jurisdictional errors in this case render these consolidated petitions
moot. We do not review void decisions rendered without jurisdiction.
However, the PEZA alleged that several local government units, including
the City of Baguio and the Province of Cavite, have issued their
respective real property tax assessments against the PEZA. Other local
government units will likely follow suit, and either the PEZA or the local
government units taxing the PEZA may file their respective actions
against each other.
234
In the interest of judicial economy and avoidance of conflicting
235
decisions involving the same issues, we resolve the substantive issue
of whether the PEZA is exempt from payment of real property taxes.
Real property taxes are annual taxes levied on real property such as
lands, buildings, machinery, and other improvements not otherwise
236
specifically exempted under the Local Government Code. Real
property taxes are ad valorem, with the amount charged based on a fixed
237
proportion of the value of the property. Under the law, provinces, cities,
and municipalities within the Metropolitan Manila Area have the power to
238
levy real property taxes within their respective territories.
The general rule is that real properties are subject to real property taxes.
This is true especially since the Local Government Code has withdrawn
! 68!
exemptions from real property taxes of all persons, whether natural or
juridical:
SEC. 234. Exemptions from Real Property Tax. – The following are
exempted from payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any
of its political subdivisions except when the beneficial use thereof
has been granted, for consideration or otherwise, to a taxable
person;
(b) Charitable institutions, churches, parsonages or convents
appurtenant thereto, mosques, nonprofit or religious cemeteries
and all lands, buildings, and improvements actually, directly, and
exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned
or – controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of
electric power;
(d) All real property owned by duly registered cooperatives as
provided under R.A. No. 6938; and
(e) Machinery and equipment usedfor pollution control and
environmental protection.
Except as provided herein, any exemption from payment of real property
of taxes previously granted to, or presently enjoyed by, all persons, whether
natural or juridical, including government-owned or -controlled
corporations are hereby withdrawn upon the effectivity of this Code.
(Emphasis supplied)
The person liable for real property taxes is the "taxable person who had
actual or beneficial use and possession [of the real property for the
taxable period,] whether or not [the person owned the property for the
239
period he or she is being taxed]."
The exceptions to the rule are provided in the Local Government Code.
Under Section 133(o), local government units have no power to levy
taxes of any kind on the national government, its agencies and
instrumentalities and local government units:
SEC. 133. Common Limitations on the Taxing Powers of Local
Government Units. – Unless otherwise provided herein, the exercise of
taxing powers of provinces, cities, municipalities, and barangays shall not
extend to the levy of the following:
....
(o) Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities and local government units.
Specifically on real property taxes, Section 234 enumerates the persons
and real property exempt from real property taxes:
SEC. 234. Exemptions from Real Property Tax. – The following are
exempted from payment of real property tax:
 (a) Real property owned by the Republic of the Philippines or any
of its political subdivisions except when the beneficial use thereof
has been granted, for consideration or otherwise, to a taxable
person;
(b) Charitable institutions, churches, parsonages or convents
appurtenant thereto, mosques, nonprofitor religious cemeteries
and all lands, buildings, and improvements actually, directly, and
exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned
or – controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of
electric power;
(d) All real property owned by duly registered cooperatives as
provided under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemption from payment of real property
tax previously granted to, or presently enjoyed by, all persons, whether
natural or juridical, including all government-owned or -controlled
corporations are hereby withdrawn upon the effectivity of this Code.
(Emphasis supplied)
For persons granted tax exemptions or incentives before the effectivity of
the Local Government Code, Section 193 withdrew these tax exemption
privileges. These persons consist of both natural and juridical persons,
including government-owned or controlled corporations:
SEC. 193. Withdrawal of Tax Exemption Privileges. – Unless otherwise
provided in this code, tax exemptions or incentives granted to or presently
enjoyed by all persons, whether natural or juridical, including government-
owned or controlled corporations, except local water districts,
cooperatives duly registered under R.A. 6938, non stock and non profit
hospitals and educational institutions, are hereby withdrawn upon
effectivity of this Code.
As discussed, Section 234 withdrew all tax privileges with respect to real
property taxes. Nevertheless, local government units may grant tax
exemptions under such terms and conditions asthey may deem
necessary:
SEC. 192. Authority to Grant Tax Exemption Privileges. – Local
government units may, through ordinances duly approved, grant tax
exemptions, incentives or reliefs under such terms and conditions as they
may deem necessary.
240
In Mactan Cebu International Airport Authority v. Hon. Marcos, this
court classified the exemptions from real property taxes into ownership,
character, and usage exemptions. Ownership exemptions are exemptions
based on the ownership of the real property. The exemptions of real
! 69!
property owned by the Republic of the Philippines, provinces, cities,
municipalities, barangays, and registered cooperatives fall under this
241
classification. Character exemptions are exemptions based on the
character of the real property. Thus, no real property taxes may be levied
on charitable institutions, houses and temples of prayer like churches,
parsonages, or convents appurtenant thereto, mosques, and non profitor
242
religious cemeteries.
Usage exemptions are exemptions based on the use of the real property.
Thus, no real property taxes may be levied on real property such as: (1)
lands and buildings actually, directly, and exclusively used for religious,
charitable or educational purpose; (2) machineries and equipment
actually, directly and exclusively used by local water districts or by
government-owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power;
and (3) machinery and equipment used for pollution control and
243
environmental protection.
Persons may likewise be exempt from payment of real properties if their
charters, which were enacted or reenacted after the effectivity of the
244
Local Government Code, exempt them payment of real property taxes.
V.
(A) The PEZA is an instrumentality of the national government
An instrumentality is "any agency of the National Government, not
integrated within the department framework, vested with special functions
or jurisdiction by law, endowed with some if not all corporate powers,
administering special funds, and enjoying operational autonomy, usually
245
through a charter."
Examples of instrumentalities of the national government are the Manila
246
International Airport Authority, the Philippine Fisheries Development
247 248
Authority, the Government Service Insurance System, and the
249
Philippine Reclamation Authority. These entities are not integrated
within the department framework but are nevertheless vested with special
functions to carry out a declared policy of the national government.
Similarly, the PEZA is an instrumentality of the national government. It is
not integrated within the department framework but is an agency attached
250
to the Department of Trade and Industry. Book IV, Chapter 7, Section
38(3)(a) of the Administrative Code of 1987 defines "attachment": SEC.
38. Definition of Administrative Relationship.– Unless otherwise expressly
stated in the Code or in other laws defining the special relationships of
particular agencies, administrative relationships shall be categorized and
defined as follows:
....
(3) Attachment.– (a) This refers to the lateral relationship between the
department or its equivalent and the attached agency or corporation for
purposes of policy and program coordination. The coordination may be
accomplished by having the department represented in the governing
board of the attached agency or corporation, either as chairman or as a
member, with or without voting rights, if this is permitted by the charter;
having the attached corporation or agency comply with a system of
periodic reporting which shall reflect the progress of the programs and
projects; and having the department or its equivalent provide general
policies through its representative in the board, which shall serve as the
framework for the internal policies of the attached corporation or agency[.]
Attachment, which enjoys "a larger measure of
251
independence" compared with other administrative relationships such
as supervision and control, is further explained in Beja, Sr. v. Court of
252
Appeals:
An attached agency has a larger measure of independence from the
Department to which it is attached than one which is under departmental
supervision and control or administrative supervision. This is borne out by
the "lateral relationship" between the Department and the attached
agency. The attachment is merely for "policy and program coordination."
With respect to administrative matters, the independence of an attached
agency from Departmental control and supervision is further reinforced by
the fact that even an agency under a Department’s administrative
supervision is free from Departmental interference with respect to
appointments and other personnel actions "in accordance with the
decentralization of personnel functions" under the Administrative Code of
1987. Moreover, the Administrative Code explicitly provides that Chapter
8 of Book IV on supervision and control shall not apply to chartered
253
institutions attached to a Department.
With the PEZA as an attached agency to the Department of Trade and
Industry, the 13-person PEZA Board is chaired by the Department
254
Secretary. Among the powers and functions of the PEZA is its ability to
coordinate with the Department of Trade and Industry for policy and
255
program formulation and implementation. In strategizing and prioritizing
the development of special economic zones, the PEZA coordinates with
256
the Department of Trade and Industry.
The PEZA also administers its own funds and operates autonomously,
with the PEZA Board formulating and approving the PEZA’s annual
257
budget. Appointments and other personnel actions in the PEZA are
also free from departmental interference, with the PEZA Board having the
exclusive and final authority to promote, transfer, assign and reassign
258
officers of the PEZA.
As an instrumentality of the national government, the PEZA is vested with
special functions or jurisdiction by law. Congress created the PEZA to
operate, administer, manage and develop special economic zones in the
259
Philippines. Special economic zones are areas with highly developed
or which have the potential to be developed into agro-industrial, industrial
tourist/recreational, commercial, banking, investment and financial
260
centers. By operating, administering, managing, and developing
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special economic zones which attract investments and promote use of
domestic labor, the PEZA carries out the following policy of the
Government: SECTION 2. Declaration of Policy. — It is the declared
policy of the government to translate into practical realities the following
State policies and mandates in the 1987 Constitution, namely:
(a) "The State recognizes the indispensable role of the private
sector, encourages private enterprise, and provides incentives to
needed investments." (Sec. 20, Art. II)
(b) "The State shall promote the preferential use of Filipino labor,
domestic materials and locally produced goods, and adopt
measures that help make them competitive." (Sec. 12, Art. XII) In
pursuance of these policies, the government shall actively
encourage, promote, induce and accelerate a sound and
balanced industrial, economic and social development of the
country in order to provide jobs to the people especially those in
the rural areas, increase their productivity and their individual and
family income, and thereby improve the level and quality of their
living condition through the establishment, among others, of
special economic zones in suitable and strategic locations in the
country and through measures that shall effectively attract
261
legitimate and productive foreign investments.
Being an instrumentality of the national government, the PEZA cannot be
taxed by local government units.
262
Although a body corporate vested with some corporate powers, the
PEZA is not a government-owned or controlled corporation taxable for
real property taxes.
Section 2(13) of the Introductory Provisions of the Administrative Code of
1987 defines the term "government-owned or controlled corporation":
SEC. 2. General Terms Defined. – Unless the specific words of the text,
or the context as a whole, or a particular statute, shall require a different
meaning:
....
(13) Government-owned or controlled corporation refers to any agency
organized as a stock or non-stock corporation, vested with functions
relating to public needs whether governmental or proprietary in nature,
and owned by the Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of stock corporations, to
the extent of at least fifty-one (51) per cent of its capital stock: Provided,
That government owned or controlled corporations may be further
categorized by the Department of the Budget, the Civil Service
Commission, and the Commission on Audit for purposes of the exercise
and discharge of their respective powers, functions and responsibilities
with respect to such corporations.
Government entities are created by law, specifically, by the Constitution
or by statute. In the case of government-owned or controlled
 263
corporations, they are incorporated by virtue of special charters to
participate in the market for special reasons which may be related to
dysfunctions or inefficiencies of the market structure. This is to adjust
reality as against the concept of full competition where all market players
are price takers. Thus, under the Constitution, government-owned or
controlled corporations are created in the interest of the common good
264
and should satisfy the test of economic viability. Article XII, Section 16
of the Constitution provides:
Section 16. The Congress shall not, except by general law, provide for
the formation, organization, or regulation of private corporations.
Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good and
subject to the test of economic viability.
Economic viability is "the capacity to function efficiently in
265
business." To be economically viable, the entity "should not go into
266
activities which the private sector can do better."
To be considered a government-owned or controlled corporation, the
267
entity must have been organized as a stock or non-stock corporation.
Government instrumentalities, on the other hand, are also created by law
but partake of sovereign functions. When a government entity performs
sovereign functions, it need not meet the test of economic viability. In
268
Manila International Airport Authority v. Court of Appeals, this court
explained:
In contrast, government instrumentalities vested with corporate powers
and performing governmental orpublic functions need not meet the test of
economic viability. These instrumentalities perform essential public
services for the common good, services that every modern State must
provide its citizens. These instrumentalities need not be economically
viable since the government may even subsidize their entire operations.
These instrumentalities are not the "government-owned or controlled
corporations" referred to in Section 16, Article XII of the 1987
Constitution.
Thus, the Constitution imposes no limitation when the legislature creates
government instrumentalities vested with corporate powers but
performing essential governmental or public functions. Congress has
plenary authority to create government instrumentalities vested with
corporate powers provided these instrumentalities perform essential
government functions or public services. However, when the legislature
creates through special charters corporations that perform economic or
commercial activities, such entities — known as "government-owned or
controlled corporations" — must meetthe test of economic viability
because they compete in the market place.
....
! 71!
Commissioner Blas F. Ople, proponent of the test of economic viability,
explained to the Constitutional Commission the purpose of this test, as
follows:
MR. OPLE: Madam President, the reason for this concern is really that
when the government creates a corporation, there is a sense in which this
corporation becomes exempt from the test of economic performance. We
know what happened in the past. If a government corporation loses, then
it makes its claim upon the taxpayers' money through new equity
infusions from the government and what is always invoked is the common
good. That is the reason why this year, out of a budget of ₱115 billion for
the entire government, about ₱28 billion of this will go into equity
infusions to support a few government financial institutions. And this is all
taxpayers' money which could have been relocated to agrarian reform, to
social services like health and education, to augment the salaries of
grossly underpaid public employees. And yet this is all going down the
drain.
Therefore, when we insert the phrase "ECONOMIC VIABILITY" together
with the "common good," this becomes a restraint on future enthusiasts
for state capitalism to excuse themselves from the responsibility of
meeting the market test so that they become viable. And so, Madam
President, I reiterate, for the committee's consideration and I am glad that
I am joined in this proposal by Commissioner Foz, the insertion of the
standard of "ECONOMIC VIABILITY OR THE ECONOMIC TEST,"
together with the common good.
....
Clearly, the test of economic viability does not apply to government
entities vested with corporate powers and performing essential public
services. The State is obligated to render essential public services
regardless of the economic viability of providing such service. The
noneconomic viability of rendering such essential public service does not
excuse the State from withholding such essential services from the
269
public. (Emphases and citations omitted)
The law created the PEZA’s charter. Under the Special Economic Zone
Act of 1995, the PEZA was established primarily to perform the
governmental function of operating,administering, managing, and
developing special economic zones to attract investments and provide
opportunities for preferential use of Filipino labor.
Under its charter, the PEZA was created a body corporate endowed with
270
some corporate powers. However, it was not organized as a stock or
271
non-stock corporation. Nothing in the PEZA’s charter provides that the
272
PEZA’s capital is divided into shares. The PEZA also has no members
who shall share in the PEZA’s profits.
The PEZA does not compete with other economic zone authorities in the
country. The government may even subsidize the PEZA’s operations.
Under Section 47 of the Special Economic Zone Act of 1995, "any sum
necessary to augment [the PEZA’s] capital outlay shall be included in the
General Appropriations Act to be treated as an equity of the national
273
government."
The PEZA, therefore, need not be economically viable. It is not a
government-owned or controlled corporation liable for real property taxes.
V. (B)
The PEZA assumed the non-profit character, including the tax exempt
status, of the EPZA
The PEZA’s predecessor, the EPZA, was declared non-profit in character
with all its revenues devoted for its development, improvement, and
maintenance. Consistent with this non-profit character, the EPZA was
explicitly declared exempt from real property taxes under its charter.
Section 21 of Presidential Decree No. 66 provides:
Section 21. Non-profit Character of the Authority; Exemption from Taxes.
The Authority shall be non-profit and shall devote and use all its returns
from its capital investment, as well as excess revenues from its
operations, for the development, improvement and maintenance and
other related expenditures of the Authority to pay its indebtedness and
obligations and in furtherance and effective implementation of the policy
enunciated in Section 1 of this Decree. In consonance therewith, the
Authority is hereby declared exempt:
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds
of taxes and licenses to be paid to the National Government, its
provinces, cities, municipalities and other government agencies and
instrumentalities[.]
The Special Economic Zone Act of 1995, on the other hand, does not
specifically exempt the PEZA from payment of real property taxes.
Nevertheless, we rule that the PEZA is exempt from real property taxes
by virtue of its charter. A provision in the Special Economic Zone Act of
1995 explicitly exempting the PEZA is unnecessary. The PEZA assumed
the real property exemption of the EPZA under Presidential Decree No.
66.
Section 11 of the Special Economic Zone Act of 1995 mandated the
EPZA "to evolve into the PEZA in accordance with the guidelines and
regulations set forth in an executive order issued for this purpose."
President Ramos then issued Executive Order No. 282 in 1995, ordering
the PEZA to assume the EPZA’s powers, functions, and responsibilities
under Presidential Decree No. 66 not inconsistent with the Special
Economic Zone Act of 1995:
SECTION 1. Assumption of EPZA’s Powers and Functions by PEZA. All
the powers, functions and responsibilities of EPZA as provided under its
Charter, Presidential Decree No. 66, as amended, insofar as they are not
inconsistent with the powers,functions and responsibilities of the PEZA,
as mandated under Republic Act No. 7916, shall hereafter be assumed
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and exercised by the PEZA. Henceforth, the EPZA shall be referred to as
the PEZA.
The following sections of the Special Economic Zone Act of 1995 provide
for the PEZA’s powers,functions, and responsibilities:
SEC. 5. Establishment of ECOZONES. – To ensure the viability and
geographical dispersal of ECOZONES through a system of prioritization,
the following areas are initially identified as ECOZONES, subject to the
criteria specified in Section 6:
....
The metes and bounds of each ECOZONE are to be delineated and more
particularly described in a proclamation to be issued by the President of
the Philippines, upon the recommendation of the Philippine Economic
Zone Authority (PEZA), which shall be established under this Act, in
coordination with the municipal and / or city council, National Land Use
Coordinating Committee and / or the Regional Land Use Committee.
SEC. 6. Criteria for the Establishment of Other ECOZONES. – In addition
to the ECOZONES identified in Section 5 of this Act, other areas may be
established as ECOZONES in a proclamation to be issued by the
President of the Philippines subject to the evaluation and
recommendation of the PEZA, based on a detailed feasibility and
engineering study which must conform to the following criteria:
(a) The proposed area must be identified as a regional growth
center in the Medium-Term Philippine Development Plan or by
the Regional Development Council;
(b) The existence of required infrastructure in the proposed
ECOZONE, such as roads, railways, telephones, ports, airports,
etc., and the suitability and capacity of the proposed site to
absorb such improvements;
(c) The availability of water source and electric power supply for
use of the ECOZONE;
(d) The extent of vacant lands available for industrial and
commercial development and future expansion of the ECOZONE
as well as of lands adjacent to the ECOZONE available for
development of residential areas for the ECOZONE workers;
(e) The availability of skilled, semi-skilled and non-skilled
trainable labor force in and around the ECOZONE;
(f) The area must have a significant incremental advantage over
the existing economic zones and its potential profitability can be
established;
(g) The area must be strategically located; and
(h) The area must be situated where controls can easily be
established to curtail smuggling activities.
Other areas which do not meet the foregoing criteria may be established
as ECOZONES: Provided, That the said area shall be developed only
through local government and/or private sector initiative under any of the
schemes allowed in Republic Act No. 6957 (the build-operate-transfer
law), and without any financial exposure on the part of the national
government: Provided, further, That the area can be easily secured to
curtail smuggling activities: Provided, finally, That after five (5) years the
area must have attained a substantial degree of development, the
indicators of which shall be formulated by the PEZA.
SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial,
Commercial / Trading, Tourist, Investment and Financial Community. -
Within the framework of the Constitution, the interest of national
sovereignty and territorial integrity of the Republic, ECOZONE shall be
developed, as much as possible, into a decentralized, self-reliant and
self-sustaining industrial, commercial/trading, agro-industrial, tourist,
banking, financial and investment center with minimum government
intervention. Each ECOZONE shall be provided with transportation,
telecommunications, and other facilities needed to generate linkage with
industries and employment opportunitiesfor its own inhabitants and those
of nearby towns and cities.
The ECOZONE shall administer itself on economic, financial, industrial,
tourism development and such other matters within the exclusive
competence of the national government.
The ECOZONE may establish mutually beneficial economic relations with
other entities within the country, or, subject to the administrative guidance
of the Department of Foreign Affairs and/or the Department of Trade and
Industry, with foreign entities or enterprises.
Foreign citizens and companies owned by non-Filipinos in whatever
proportion may set up enterprises in the ECOZONE, either by themselves
or in joint venture with Filipinos in any sector of industry, international
trade and commerce within the ECOZONE. Their assets, profits and
other legitimate interests shall be protected: Provided, That the
ECOZONE through the PEZA may require a minimum investment for any
ECOZONE enterprises in freely convertible currencies: Provided, further,
That the new investment shall fall under the priorities, thrusts and limits
provided for in the Act.
SEC. 8. ECOZONE to be Operated and Managed as Separate Customs
Territory. – The ECOZONE shall be managed and operated by the PEZA
as separate customs territory.
The PEZA is hereby vested with the authority to issue certificate of origin
for products manufactured or processed in each ECOZONE in
accordance with the prevailing rules or origin, and the pertinent
regulations of the Department of Trade and Industry and/or the
Department of Finance.
SEC. 9. Defense and Security. – The defense of the ECOZONE and the
security of its perimeter fence shall be the responsibility of the national
government in coordination with the PEZA. Military forces sent by the
national government for the purpose of defense shall not interfere in the
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internal affairs of any of the ECOZONE and expenditure for these military
forces shall be borne by the national government. The PEZA may provide
and establish the ECOZONES’ internal security and firefighting forces.
SEC. 10. Immigration. – Any investor within the ECOZONE whose initial
investment shall not be less than One Hundred Fifty Thousand Dollars
($150,000.00), his/her spouse and dependent children under twenty-one
(21) years of age shall be granted permanent resident status within the
ECOZONE. They shall have freedom of ingress and egress to and from
the ECOZONE without any need of special authorization from the Bureau
of Immigration.
The PEZA shall issue working visas renewable every two (2) years to
foreign executives and other aliens, processing highly-technical skills
which no Filipino within the ECOZONE possesses, as certified by the
Department of Labor and Employment. The names of aliens granted
permanent resident status and working visas by the PEZA shall be
reported to the Bureau of Immigration within thirty (30) days after
issuance thereof.
SEC. 13. General Powers and Functions of the Authority. – The PEZA
shall have the following powers and functions:
(a) To operate, administer, manage and develop the ECOZONE
according to the principles and provisions set forth in this Act;
(b) To register, regulate and supervise the enterprises in the
ECOZONE in an efficient and decentralized manner;
(c) To coordinate with local government units and exercise
general supervision over the development, plans, activities and
operations of the ECOZONES, industrial estates, export
processing zones, free trade zones, and the like;
(d) In coordination with local government units concerned and
appropriate agencies, to construct,acquire, own, lease, operate
and maintain on its own or through contract, franchise, license,
bulk purchase from the private sector and build-operate-transfer
scheme or joint venture, adequate facilities and infrastructure,
such as light and power systems, water supply and distribution
systems, telecommunication and transportation, buildings,
structures, warehouses, roads, bridges, ports and other facilities
for the operation and development of the ECOZONE;
(e) To create, operate and/or contractto operate such agencies
and functional units or offices of the authority as it may deem
necessary;
(f) To adopt, alter and use a corporate seal; make contracts,
lease, own or otherwise dispose of personal or real property; sue
and be sued; and otherwise carry out its duties and functions as
provided for in this Act;
(g) To coordinate the formulation and preparation of the
development plans of the different entities mentioned above;
 (h) To coordinate with the National Economic Development
Authority (NEDA), the Department of Trade and Industry (DTI),
the Department of Science and Technology (DOST), and the
local government units and appropriate government agencies for
policy and program formulation and implementation; and
(i) To monitor and evaluate the development and requirements of
entities in subsection (a) and recommend to the local government
units or other appropriate authorities the location, incentives,
basic services, utilities and infrastructure required or to be made
available for said entities.
SEC. 17. Investigation and Inquiries. – Upon a written formal complaint
made under oath, which on its face provides reasonable basis to believe
that some anomaly or irregularity might have been committed, the PEZA
or the administrator of the ECOZONE concerned, shall have the power to
inquire into the conduct of firms or employees of the ECOZONE and to
conduct investigations, and for that purpose may subpoena witnesses,
administer oaths, and compel the production of books, papers, and other
evidences: Provided, That to arrive at the truth, the investigator(s) may
grant immunity from prosecution to any person whose testimony or
whose possessions of documents or other evidence is necessary or
convenient to determine the truth in any investigation conducted by him
or under the authority of the PEZA or the administrator of the ECOZONE
concerned.
SEC. 21. Development Strategy of the ECOZONE. - The strategy and
priority of development of each ECOZONE established pursuant to this
Act shall be formulated by the PEZA, in coordination with the Department
of Trade and Industry and the National Economic and Development
Authority; Provided, That such development strategy is consistent with
the priorities of the national government as outlined in the medium-term
Philippine development plan. It shall be the policy of the government and
the PEZA to encourage and provide Incentives and facilitate private
sector participation in the construction and operation of public utilities and
infrastructure in the ECOZONE, using any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law).
SEC. 22. Survey of Resources. The PEZA shall, in coordination with
appropriate authorities and neighboring cities and municipalities,
immediately conduct a survey of the physical, natural assets and
potentialities of the ECOZONE areas under its jurisdiction.
SEC. 26. Domestic Sales. – Goods manufactured by an ECOZONE
enterprise shall be made available for immediate retail sales in the
domestic market, subject to payment of corresponding taxes on the raw
materials and other regulations that may be adopted by the Board of the
PEZA. However, in order to protect the domestic industry, there shall be a
negative list of Industries that willbe drawn up by the PEZA. Enterprises
engaged in the industries included in the negative list shall not be allowed
! 74!
to sell their products locally. Said negative list shall be regularly updated
by the PEZA.
The PEZA, in coordination with the Department of Trade and Industry and
the Bureau of Customs, shall jointly issue the necessary implementing
rules and guidelines for the effective Implementation of this section.
SEC. 29. Eminent Domain. – The areas comprising an ECOZONE may
be expanded or reduced when necessary. For this purpose, the
government shall have the power to acquire, either by purchase,
negotiation or condemnation proceedings, any private lands within or
adjacent to the ECOZONE for:
a. Consolidation of lands for zone development purposes;
b. Acquisition of right of way to the ECOZONE; and
c. The protection of watershed areas and natural assets valuable
to the prosperity of the ECOZONE.
If in the establishment of a publicly-owned ECOZONE, any person or
group of persons who has been occupying a parcel of land within the
Zone has to be evicted, the PEZA shall provide the person or group of
persons concerned with proper disturbance compensation: Provided,
however, That in the case of displaced agrarian reform beneficiaries, they
shall be entitled to the benefits under the Comprehensive Agrarian
Reform Law, including but not limited to Section 36 of Republic Act No.
3844, in addition to a homelot in the relocation site and preferential
employment in the project being undertaken.
SEC. 32. Shipping and Shipping Register. – Private shipping and related
business including private container terminals may operate freely in the
ECOZONE, subject only to such minimum reasonable regulations of local
application which the PEZA may prescribe.
The PEZA shall, in coordination with the Department of Transportation
and Communications, maintain a shipping register for each ECOZONE as
a business register of convenience for ocean-going vessels and issue
related certification.
Ships of all sizes, descriptions and nationalities shall enjoy access to the
ports of the ECOZONE, subject only to such reasonable requirement as
may be prescribed by the PEZA In coordination with the appropriate
agencies of the national government.
SEC. 33. Protection of Environment. - The PEZA, in coordination with the
appropriate agencies, shall take concrete and appropriate steps and
enact the proper measure for the protection of the local environment.
SEC. 34. Termination of Business. - Investors In the ECOZONE who
desire to terminate business or operations shall comply with such
requirements and procedures which the PEZA shall set, particularly those
relating to the clearing of debts. The assets of the closed enterprise can
be transferred and the funds con be remitted out of the ECOZONE
subject to the rules, guidelines and procedures prescribed jointly by the
Bangko Sentral ng Pilipinas, the Department of Finance and the PEZA.
SEC. 35. Registration of Business Enterprises. - Business enterprises
within a designated ECOZONE shall register with the PEZA to avail of all
incentives and benefits provided for in this Act.
SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop
shop center for the purpose of facilitating the registration of new
enterprises in the ECOZONE. Thus, all appropriate government agencies
that are Involved In registering, licensing or issuing permits to investors
shall assign their representatives to the ECOZONE to attend to Investor’s
requirements.
SEC. 39. Master Employment Contracts. - The PEZA, in coordination with
the Department of Tabor and Employment, shall prescribe a master
employment contract for all ECOZONE enterprise staff members and
workers, the terms of which provide salaries and benefits not less than
those provided under this Act, the Philippine Labor Code, as amended,
and other relevant issuances of the national government.
SEC. 41. Migrant Worker. - The PEZA, in coordination with the
Department of Labor and Employment, shall promulgate appropriate
measures and programs leading to the expansion of the services of the
ECOZONE to help the local governments of nearby areas meet the
needs of the migrant workers.
SEC. 42. Incentive Scheme. - An additional deduction equivalent to one-
half (1/2) of the value of training expenses incurred in developing skilled
or unskilled labor or for managerial or other management development
programs incurred by enterprises in the ECOZONE can be deducted from
the national government's share of three percent (3%) as provided In
Section 24.
The PEZA, the Department of Labor and Employment, and the
Department of Finance shall jointly make a review of the incentive
scheme provided In this section every two (2) years or when
circumstances so warrant.
SEC. 43. Relationship with the Regional Development Council. - The
PEZA shall determine the development goals for the ECOZONE within
the framework of national development plans, policies and goals, and the
administrator shall, upon approval by the PEZA Board, submit the
ECOZONE plans, programs and projects to the regional development
council for inclusion in and as inputs to the overall regional development
plan.
SEC. 44. Relationship with the Local Government Units. - Except as
herein provided, the local government units comprising the ECOZONE
shall retain their basic autonomy and identity. The cities shall be
governed by their respective charters and the municipalities shall operate
and function In accordance with Republic Act No. 7160, otherwise known
as the Local Government Code of 1991.
SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. –
Privately-owned industrial estates shall retain their autonomy and
! 75!
independence and shall be monitored by the PEZA for the
implementation of incentives.
SEC. 46. Transfer of Resources. - The relevant functions of the Board of
Investments over industrial estates and agri-export processing estates
shall be transferred to the PEZA. The resources of government owned
Industrial estates and similar bodies except the Bases Conversion
Development Authority and those areas identified under Republic Act No.
7227, are hereby transferred to the PEZA as the holding agency. They
are hereby detached from their mother agencies and attached to the
PEZA for policy, program and operational supervision.
The Boards of the affected government-owned industrial estates shall be
phased out and only the management level and an appropriate number of
personnel shall be retained.
Government personnel whose services are not retained by the PEZA or
any government office within the ECOZONE shall be entitled to
separation pay and such retirement and other benefits theyare entitled to
under the laws then in force at the time of their separation: Provided, That
in no case shall the separation pay be less than one and one-fourth (1
1/4) month of every year of service.
The non-profit character of the EPZA under Presidential Decree No. 66 is
not inconsistent with any of the powers, functions, and responsibilities of
the PEZA. The EPZA’s non-profit character, including the EPZA’s
exemption from real property taxes, must be deemed assumed by the
PEZA.
In addition, the Local Government Code exempting instrumentalities of
the national government from real property taxes was already in
274
force when the PEZA’s charter was enacted in 1995. It would have
been redundant to provide for the PEZA’s exemption in its charter
considering that the PEZA is already exempt by virtue of Section 133(o)
of the Local Government Code.
As for the EPZA, Commonwealth Act No. 470 or the Assessment Law
was in force when the EPZA’s charter was enacted. Unlike the Local
Government Code, Commonwealth Act No. 470 does not contain a
provision specifically exempting instrumentalities of the national
275
government from payment of real property taxes. It was necessary to
put an exempting provision in the EPZA’s charter.
Contrary to the PEZA’s claim, however, Section 24 of the Special
Economic Zone Act of 1995 is not a basis for the PEZA’s exemption.
Section 24 of the Special Economic Zone Act of 1995 provides:
Sec. 24. Exemption from National and Local Taxes. — Except for real
property taxes on land owned by developers, no taxes, local and national,
shall be imposed on business establishments operating within the
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned
by all business enterprises within the ECOZONEshall be paid and
remitted as follows:
 (a) Three percent (3%) to the National Government;
(b) Two percent (2%) which shall be directly remitted by the
business establishments to the treasurer's office of the
municipality or city where the enterprise is located. (Emphasis
supplied)
Tax exemptions provided under Section 24 apply only to business
establishments operating within economic zones. Considering that the
PEZA is not a business establishment but an instrumentality performing
governmental functions, Section 24 is inapplicable to the PEZA. Also,
contrary to the PEZA’s claim, developers ofeconomic zones, whether
public or private developers, are liable for real property taxes on lands
they own. Section 24 does not distinguish between a public and private
276
developer. Thus, courts cannot distinguish. Unless the public
developer is exempt under the Local Government Code or under its
charter enacted after the Local Government Code’s effectivity, the public
developer must pay real property taxes on their land.
At any rate, the PEZA cannot be taxed for real property taxes even if it
acts as a developer or operator of special economic zones. The PEZA is
an instrumentality of the national government exempt from payment of
real property taxes under Section 133(o) of the Local Government Code.
As this court said in Manila International Airport Authority, "there must be
express language in the law empowering local governments to tax
national government instrumentalities. Any doubt whether such power
277
exists is resolved against local governments."
V. (C)
Real properties under the PEZA’s title are owned by the Republic of the
Philippines
Under Section 234(a) of the LocalGovernment Code, real properties
owned by the Republic of the Philippines are exempt from real property
taxes:
SEC. 234. Exemptions from Real Property Tax. – The following are
exempted from payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof has been
granted, for consideration or otherwise, to a taxable person[.]
Properties owned by the state are either property of public dominion or
patrimonial property. Article 420 of the Civil Code of the Philippines
enumerates property of public dominion:
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks,
shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without belonging for public
use, and are intended for some public service or for the
development of the national wealth.
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Properties of public dominion are outside the commerce of man. These
properties are exempt from "levy, encumbrance or disposition through
278
public or private sale." As this court explained in Manila International
Airport Authority:
Properties of public dominion, being for public use, are not subject to
levy, encumbrance or disposition through public or private sale. Any
encumbrance, levy on execution or auction sale of any property of public
dominion is void for being contrary to public policy. Essential public
services will stop if properties of public dominion are subject to
279
encumbrances, foreclosures and auction sale[.]
On the other hand, all other properties of the state that are not intended
for public use or are not intended for some public service or for the
development of the national wealth are patrimonial properties. Article 421
of the Civil Code of the Philippines provides:
Art. 421. All other property of the State, which is not of the character
stated in the preceding article, is patrimonial property.
Patrimonial properties are also properties of the state, but the state may
dispose of its patrimonial property similar to private persons disposing of
their property. Patrimonial properties are within the commerce of man and
280
are susceptible to prescription, unless otherwise provided.
In this case, the properties sought to be taxed are located in publicly
owned economic zones. These economic zones are property of public
dominion. The City seeks to tax properties located within the Mactan
281
Economic Zone, the site of which was reserved by President Marcos
under Proclamation No. 1811, Series of 1979. Reserved lands are lands
of the public domain set aside for settlement or public use, and for
specific public purposes by virtue of a presidential
282
proclamation. Reserved lands are inalienable and outside the
283
commerce of man, and remain property of the Republic until withdrawn
284
from publicuse either by law or presidential proclamation. Since no law
or presidential proclamation has been issued withdrawing the site of the
Mactan Economic Zone from public use, the property remains reserved
land.
As for the Bataan Economic Zone, the law consistently characterized the
property as a port. Under Republic Act No. 5490, Congress declared
285
Mariveles, Bataan "a principal port of entry" to serve as site of a foreign
trade zone where foreign and domestic merchandise may be brought in
without being subject to customs and internal revenue laws and
286
regulations of the Philippines.
Section 4 of Republic Act No. 5490 provided that the foreign trade zone in
Mariveles, Bataan "shall at all times remain to be owned by the
Government":
SEC. 4. Powers and Duties.– The Foreign Trade Zone Authority shall
have the following powers and duties:
a. To fix and delimit the site of the Zone which at all times remain to be
owned by the Government, and which shall have a contiguous and
adequate area with well defined and policed boundaries, with adequate
enclosures to segregate the Zone from the customs territory for protection
of revenues, together with suitable provisions for ingress and egress of
persons, conveyance, vessels and merchandise sufficient for the purpose
of this Act[.] (Emphasis supplied)
The port in Mariveles, Bataan then became the Bataan Economic Zone
287
under the Special Economic Zone Act of 1995. Republic Act No. 9728
then converted the Bataan Economic Zone into the Freeport Area of
288
Bataan.
A port of entry, where imported goods are unloaded then introduced in
the market for public consumption, is considered property for public use.
Thus, Article 420 of the Civil Code classifies a port as property of public
dominion. The Freeport Area of Bataan, where the government allows tax
289
and duty-free importation of goods, is considered property of public
dominion. The Freeport Area of Bataan is owned by the state and cannot
be taxed under Section 234(a) of the Local Government Code.
Properties of public dominion, even if titled in the name of an
instrumentality as in this case, remain owned by the Republic of the
Philippines. If property registered in the name of an instrumentality is
conveyed to another person,the property is considered conveyed on
behalf of the Republic of the Philippines. Book I, Chapter 12, Section 48
of the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. – Whenever real
property of the government is authorized by law to be conveyed, the deed
of conveyance shall be executed in behalf of the government by the
following:
....
(2) For property belonging to the Republic of the Philippines, but titled in
the name of any political subdivision orof any corporate agency or
instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)
In Manila International Airport Authority, this court explained:
[The exemption under Section 234(a) of the Local Government Code]
should be read in relation with Section 133(o) of the same Code, which
prohibits local governments from imposing "[t]axes, fess or charges of
any kind on the National Government, its agencies and instrumentalitiesx
x x." The real properties owned by the Republic are titled either in the
name of the Republic itself or in the name of agencies or instrumentalities
of the National Government.The Administrative Code allows real property
owned by the Republic to be titled in the name of agencies or
instrumentalities of the national government. Such real properties
remained owned by the Republic of the Philippines and continue to be
exempt from real estate tax.
! 77!
The Republic may grant the beneficialuse of its real property to an
agency or instrumentality of the national government. This happens when
title of the real property is transferred to an agency or instrumentality
even as the Republic remains the owner of the real property. Such
arrangement does not result in the loss of the tax exemption/ Section
234(a) of the Local Government Code states that real property owned by
the Republic loses its tax exemption only if the "beneficial use thereof has
been granted, for consideration or otherwise, to a taxable person." . .
290
. (Emphasis in the original; italics supplied)
Even the PEZA’s lands and buildings whose beneficial use have been
granted to other persons may not be taxed with real property taxes. The
PEZA may only lease its lands and buildings to PEZA-registered
291
economic zone enterprises and entities. These PEZA-registered
enterprises and entities, which operate within economic zones, are not
subject to real property taxes. Under Section 24 of the Special Economic
Zone Act of 1995, no taxes, whether local or national, shall be imposed
on all business establishments operating within the economic zones:
SEC. 24. Exemption from National and Local Taxes. – Except for real
property on land owned by developers, no taxes, local and national, shall
be imposed on business establishments operating within the ECOZONE.
In lieu thereof, five percent (5%) of the gross income earned by all
business enterprises within the ECOZONE shall be paid and remitted as
follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business
establishments to the treasurer’s office of the municipality or city where
292
the enterprise is located. (Emphasis supplied)
In lieu of revenues from real property taxes, the City of Lapu-Lapu
collects two-fifths of 5% final tax on gross income paid by all business
establishments operating withinthe Mactan Economic Zone:
SEC. 24. Exemption from National and Local Taxes. – Except for real
property on land owned by developers, no taxes, local and national, shall
be imposed on business establishments operating within the ECOZONE.
In lieu thereof, five percent (5%) of the gross income earned by all
business enterprises within the ECOZONE shall be paid and remitted as
follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the
business establishments to the treasurer’s office of the
293
municipality or city where the enterprise is located. (Emphasis
supplied)
For its part, the Province of Bataan collects a fifth of the 5% final tax on
gross income paid by all business establishments operating within the
Freeport Area of Bataan:
Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross
Income Earned. - No taxes, local and national, shall be imposed on
business establishments operating withinthe FAB. In lieu thereof, said
business establishments shall pay a five percent (5%) final tax on their
gross income earned in the following percentages:
(a) One per centum (1%) to the National Government;
(b) One per centum (1%) to the Province of Bataan;
(c) One per centum (1%) to the treasurer's office of the
Municipality of Mariveles; and
(d) Two per centum (2%) to the Authority of the Freeport of Area
294
of Bataan. (Emphasis supplied)
Petitioners, therefore, are not deprived of revenues from the operations of
economic zones within their respective territorial jurisdictions.
The national government ensured that loeal government units comprising
295
economic zones shall retain their basic autonomy and identity.
All told, the PEZA is an instrumentality of the national
government.1âwphi1 Furthermore, the lands owned by the PEZA are real
properties owned by the Republic of the Philippines. The City of Lapu-
Lapu and the Province of Bataan cannot collect real property taxes from
the PEZA.
WHEREFORE, the consolidated petitions are DENIED.
SO ORDERED.
G.R. No. 125078 May 30, 2011
BERNABE L. NAVIDA, JOSE P. ABANGAN, JR., CEFERINO P.
ABARQUEZ, ORLANDITO A. ABISON, FELIPE ADAYA, ALBERTO R.
AFRICA, BENJAMIN M. ALBAO, FELIPE ALCANTARA, NUMERIANO
S. ALCARIA, FERNANDO C. ALEJADO, LEOPOLDO N. ALFONSO,
FLORO I. ALMODIEL, ANTONIO B. ALVARADO, ELEANOR
AMOLATA, RODOLFO P. ANCORDA, TRIFINO F. ANDRADA, BERT
B. ANOCHE, RAMON E. ANTECRISTO, ISAGANI D. ANTINO,
DOMINGO ANTOPINA, MANSUETO M. APARICIO, HERMINIGILDO
AQUINO, MARCELO S. AQUINO, JR., FELIPE P. ARANIA, ULYSES M.
ARAS, ARSENIO ARCE, RUPERTO G. ARINZOL, MIGUEL G.
ARINZOL, EDGARADO P. ARONG, RODRIGO D.R. ASTRALABIO,
RONNIE BACAYO, SOFRONIO BALINGIT, NELSON M. BALLENA,
EMNIANO BALMONTE, MAXIMO M. BANGI, SALVADOR M. BANGI,
HERMOGENES T. BARBECHO, ARSENIO B. BARBERO, DIOSDADO
BARREDO, VIRGILIO BASAS, ALEJANDRO G. BATULAN, DOMINGO
A. BAUTISTA, VICTOR BAYANI, BENIGNO BESARES, RUFINO
BETITO, GERARDO A. BONIAO, CARLO B. BUBUNGAN, FERNANDO
B. BUENAVISTA, ALEJANDRINO H. BUENO, TOMAS P. BUENO,
LEONARDO M. BURDEOS, VICENTE P. BURGOS, MARCELINO J.
CABALUNA, DIOSDADO CABILING, EMETRIO C. CACHUELA,
BRAULIO B. CADIVIDA, JR., SAMSON C. CAEL, DANIEL B.
CAJURAO, REY A. CALISO, NORBERTO F. CALUMPAG,
! 78!
CELESTINO CALUMPAG, LORETO CAMACHO, VICTORIANO
CANETE, DOMINADOR P. CANTILLO, FRUCTUSO P. CARBAJOSA,
VICTORINO S. CARLOS, VICTOR CARLOS, GEORGE M. CASSION,
JAIME S. CASTAÑARES, FLAVIANO C. CASTAÑARES, ELPIDIO
CATUBAY, NATHANIEL B. CAUSANG, BEOFIL B. CAUSING,
ADRIANO R. CEJAS, CIRILO G. CERERA, SR., CRISTITUTO M.
CEREZO, DANTE V. CONCHA, ALBERT CORNELIO, CESAR
CORTES, NOEL Y. CORTEZ, SERNUE CREDO, CORNELIO A.
CRESENCIO, ALEX CRUZ, ROGER CRUZ, RANSAM CRUZ, CANUTO
M. DADULA, ROMEO L. DALDE, ZACARIAS DAMBAAN, ELISEO
DAPROZA, VIRGILIO P. DAWAL, TESIFREDO I. DE TOMAS,
GAMALLER P. DEANG, CARMELINO P. DEANG, DIOSDADO P.
DEANG, DOMINGO A. DEANG, FELIPE R. DEANG, JR., JULIETO S.
DELA CRUZ, ELIEZER R. DELA TORRE, JEFFREY R. DELA TORRE,
RAUL DEMONTEVERDE, FELIPE P. DENOLAN, RUBENCIO P.
DENOY, RODRIGO M. DERMIL, ROLANDO B. DIAZ, LORENZO
DIEGO, JOVENCIO DIEGO, SATURNINO DIEGO, GREGORIO DIONG,
AMADO R. DIZON, FE DIZON, VIRGILO M. DOMANTAY, LEO S.
DONATO, DOMINADOR L. DOSADO, NESTOR DUMALAG, FREDDIE
DURAN, SR., MARIO C. ECHIVERE, AQUILLO M. EMBRADORA,
MIGUEL EMNACE, RIO T. EMPAS, EFRAIM ENGLIS, ANICETO
ENOPIA, DIOCENE ENTECOSA, RUBENTITO D. ENTECOSA,
AVELINO C. ENTERO, FORTUNATA ENTRADA, ROGELIO P. EROY,
RODOLFO M. ESCAMILLA, SERGIO C. ESCANTILLA, LAZARO A.
ESPAÑOLA, EULOGIO M. ETURMA, PRIMO P. FERNANDEZ,
EDILBERTO D. FERNANDO, GREGORIO S. FERNANDO, VICENTE P.
FERRER, MARCELO T. FLOR, ANTONIO M. FLORES, REDENTOR T.
FLOREZA, NORBERTO J. FUENTES, RICARDO C. GABUTAN,
PEDRO D.V. GALEOS, ARNULFO F. GALEOS, EDGARDO V.
GARCESA, BERNARDO P. GENTOBA, EDUARDO P. GENTOBA,
VICTORIO B. GIDO, ROLANDO V. GIMENA, EARLWIN L. GINGOYO,
ERNESTO GOLEZ, JUANITO G. GONZAGA, ONOFRE GONZALES,
AMADO J. GUMERE, LEONARDO M. GUSTO, ALEJANDRO G.
HALILI, NOEL H. HERCEDA, EMILIO V. HERMONDO, CLAUDIO
HIPOLITO, TORIBIO S ILLUSORIO, TEODURO G. IMPANG, JR., GIL
A. JALBUNA, HERMIE L. JALICO, ARMANDO B. JAMERLAN,
NARCISO JAPAY, LIBURO C. JAVINAS, ALEJANDO S. JIMENEZ,
FEDERICO T. JUCAR, NAPOLEON T. JUMALON, OSCAR JUNSAY,
ANASTACIO D. LABANA, CARLOS C. LABAY, AVELINO L.
LAFORTEZA, LOE LAGUMBAY, NORBETO D. LAMPERNIS,
ROLANDO J. LAS PEÑAS, ISMAEL LASDOCE, RENOLO L.
LEBRILLA, CAMILO G. LEDRES, ANASTACIO LLANOS, ARMANDO
A. LLIDO, CARLITO LOPEZ, ARISTON LOS BAÑEZ, CONCISO L.
LOVITOS, ARQUILLANO M. LOZADA, RODOLFO C. LUMAKIN,
PRIMITIVO LUNTAO, JR., EMILIO S. MABASA, JR., JUANITO A.
MACALISANG, TEOTIMO L. MADULIN, JOSEPH D. MAGALLON,
PEDRO P. MAGLASANG, MARIO G. MALAGAMBA, JAIME B.
MAMARADLO, PANFILO A. MANADA, SR., RICARDO S. MANDANI,
CONCHITA MANDANI, ALBERTO T. MANGGA, ALEJANDRO A.
MANSANES, RUFINO T. MANSANES, EUTIQUIO P. MANSANES,
ALCIO P. MARATAS, AGAPITO D. MARQUEZ, RICARDO R.
MASIGLAT, DENDERIA MATABANG, ARNELO N. MATILLANO,
HERNANI C. MEJORADA, ROSITA MENDOZA, GREGORIO R. MESA,
RENATO N. MILLADO, ANTONIO L. MOCORRO, ALBERTO M.
MOLINA, JR., DOMINGO P. MONDIA, JUANITO P. MONDIA,
RICARDO MONTAÑO, RAUL T. MONTEJO, ROGELIO MUNAR,
RODOLFO E. MUÑEZ, CRESENCIO NARCISO, PANFILO C.
NARCISO, BRICS P. NECOR, MOISES P. NICOLAS, NEMESIO G.
NICOLAS, ALFREDO NOFIEL, FELIX T. NOVENA, MARCELO P.
OBTIAL, SR., TEODORO B. OCRETO, BIBIANO C. ODI, ALFREDO M.
OPERIO, TEOTISTO B. OPON, IZRO M. ORACION, ALAN E.
ORANAS, ELPEDIO T. OSIAS, ERNESTO M. PABIONA, NARCISO J.
PADILLA, NELSON G. PADIOS, SR., FRNACISCO G. PAGUNTALAN,
RENE B. PALENCIA, MICHAEL P. PALOMAR, VIRGILIO E.
PANILAGAO, NOLITO C. PANULIN, ROMEO PARAGUAS, NESTOR
B. PASTERA, VICENTE Q. PEDAZO, EDGAR M. PEÑARANDA,
ILUMINIDO B. PERACULLO, ANTONIO C. PEREZ, DOMINGO PEREZ,
OSCAR C. PLEÑOS, ANTONIETO POLANCOS, SERAFIN G. PRIETO,
ZENAIDA PROVIDO, FERNANDO Y. PROVIDO, ERNESTO QUERO,
ELEAZAR QUIJARDO, WILLIAM U. QUINTOY, LAURO QUISTADIO,
ROGELIO RABADON, MARCELINO M. RELIZAN, RAUL A. REYES,
OCTAVIO F. REYES, EDDIE M. RINCOR, EMMANUEL RIVAS,
RODULFO RIVAS, BIENVENIDO C. ROMANCA, JACINTO ROMOC,
ROMEO S. ROMUALDO, ALBERTO ROSARIO, ROMEO L. SABIDO,
SIMON SAGNIP, TIMOTEO SALIG, ROMAN G. SALIGONAN,
VICTORINO SALOMON, GENEROSO J. SALONGKONG, RODOLFO
E. SALVANI, JIMMY A. SAMELIN, EDUARDO A. SAMELIN, ANDRES
A. SAMELIN, GEORGE SAMELIN, ROMEO A. SARAOSOS,
RUDIGELIO S. SARMIENTO, CIRILO SAYAANG, JARLO SAYSON,
LEONCIO SERDONCILLO, RODOLFO C. SERRANO, NESTOR G.
SEVILLA, SIMEON F. SIMBA, CATALINO S. SIMTIM, SERAFIN T.
SINSUANGCO, EDUARDO A. SOLA, VICTORINO M. SOLOMON,
JAIME B. SUFICIENCIA, LYNDON SUMAJIT, ALFREDO P. SUMAJIT,
ALFREDO L. SUMAJIT, PEDRO A. SUMARAGO, ERNESTO SUMILE,
NESTOR S. SUMOG-OY, MANUEL T. SUPAS, WILFREDO A.
TABAQUE, CONSTANCIO L. TACULAD, EUFROCINO A. TAGOTO,
JR., SERAPIO TAHITIT, PANTALEON T. TAMASE, ERNESTO TARRE,
MAGNO E. TATOY, AVELINO TAYAPAD, SAMUEL S. TERRADO,
APOLINARIO B. TICO, ORLANDO TINACO, ALBERT G. TINAY,
ANTONIO TOLEDO, ANTONIO M. TORREGOSA, ISABELO TORRES,
! 79!
JIMMY C. TORRIBIO, EDUARDO Y. TUCLAOD, JACINTO UDAL,
RICARDO M. URBANO, ERNESTO G. VAFLOR, FILOMENO E.
VALENZUELA, SALORIANO VELASCO, RODOLFO VIDAL, WALTER
VILLAFAÑE, DANTE VILLALVA, PERIGRINO P. VILLARAN, JESUS L.
VILLARBA, ELEAZAR D. VILLARBA, JENNY T. VILLAVA, HENRY C.
VILLEGAS, DELFIN C. WALOG, RODOLFO YAMBAO, EDGAR A.
YARE, MANSUETO M. YBERA, EDUARDO G. YUMANG, HENRY R.
YUNGOT, ROMEO P. YUSON, ARSENIA ZABALA, FELIX N. ZABALA
and GRACIANO ZAMORA, Petitioners,
vs.
HON. TEODORO A. DIZON, JR., Presiding Judge, Regional Trial
Court, Branch 37, General Santos City, SHELL OIL CO., DOW
CHEMICAL CO., OCCIDENTAL CHEMICAL CORP., STANDARD
FRUIT CO., STANDARD FRUIT & STEAMSHIP CO., DOLE FOOD CO.,
INC., DOLE FRESH FRUIT CO., DEL MONTE FRESH PRODUCE N.A.,
DEL MONTE TROPICAL FRUIT CO., CHIQUITA BRANDS
INTERNATIONAL, INC. and CHIQUITA BRANDS, INC., Respondents.
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G.R. No. 125598
THE DOW CHEMICAL COMPANY and OCCIDENTAL CHEMICAL
CORPORATION, Petitioners,
vs.
BERNABE L. NAVIDA, JOSE P. ABANGAN, JR., CEFERINO P.
ABARQUEZ, ORLANDITO A. ABISON, FELIPE ADAYA, ALBERTO R.
AFRICA, BENJAMIN M. ALBAO, FELIPE ALCANTARA, NUMERIANO
S. ALCARIA, FERNANDO C. ALEJADO, LEOPOLDO N. ALFONSO,
FLORO I. ALMODIEL, ANTONIO B. ALVARADO, ELEANOR
AMOLATA, RODOLFO P. ANCORDA, TRIFINO F. ANDRADA, BERT
B. ANOCHE, RAMON E. ANTECRISTO, ISAGANI D. ANTINO,
DOMINGO ANTOPINA, MANSUETO M. APARICIO, HERMINIGILDO
AQUINO, MARCELO S. AQUINO, JR., FELIPE P. ARANIA, ULYSES M.
ARAS, ARSENIO ARCE, RUPERTO G. ARINZOL, MIGUEL G.
ARINZOL, EDGARADO P. ARONG, RODRIGO D.R. ASTRALABIO,
RONNIE BACAYO, SOFRONIO BALINGIT, NELSON M. BALLENA,
EMNIANO BALMONTE, MAXIMO M. BANGI, SALVADOR M. BANGI,
HERMOGENES T. BARBECHO, ARSENIO B. BARBERO, DIOSDADO
BARREDO, VIRGILIO BASAS, ALEJANDRO G. BATULAN, DOMINGO
A. BAUTISTA, VICTOR BAYANI, BENIGNO BESARES, RUFINO
BETITO, GERARDO A. BONIAO, CARLO B. BUBUNGAN, FERNANDO
B. BUENAVISTA, ALEJANDRINO H. BUENO, TOMAS P. BUENO,
LEONARDO M. BURDEOS, VICENTE P. BURGOS, MARCELINO J.
CABALUNA, DIOSDADO CABILING, EMETRIO C. CACHUELA,
BRAULIO B. CADIVIDA, JR., SAMSON C. CAEL, DANIEL B.
CAJURAO, REY A. CALISO, NORBERTO F. CALUMPAG,
CELESTINO CALUMPAG, LORETO CAMACHO, VICTORIANO
CANETE, DOMINADOR P. CANTILLO, FRUCTUSO P. CARBAJOSA,
VICTORINO S. CARLOS, VICTOR CARLOS, GEORGE M. CASSION,
JAIME S. CASTAÑARES, FLAVIANO C. CASTAÑARES, ELPIDIO
CATUBAY, NATHANIEL B. CAUSANG, BEOFIL B. CAUSING,
ADRIANO R. CEJAS, CIRILO G. CERERA, SR., CRISTITUTO M.
CEREZO, DANTE V. CONCHA, ALBERT CORNELIO, CESAR
CORTES, NOEL Y. CORTEZ, SERNUE CREDO, CORNELIO A.
CRESENCIO, ALEX CRUZ, ROGER CRUZ, RANSAM CRUZ, CANUTO
M. DADULA, ROMEO L. DALDE, ZACARIAS DAMBAAN, ELISEO
DAPROZA, VIRGILIO P. DAWAL, TESIFREDO I. DE TOMAS,
GAMALLER P. DEANG, CARMELINO P. DEANG, DIOSDADO P.
DEANG, DOMINGO A. DEANG, FELIPE R. DEANG, JR., JULIETO S.
DELA CRUZ, ELIEZER R. DELA TORRE, JEFFREY R. DELA TORRE,
RAUL DEMONTEVERDE, FELIPE P. DENOLAN, RUBENCIO P.
DENOY, RODRIGO M. DERMIL, ROLANDO B. DIAZ, LORENZO
DIEGO, JOVENCIO DIEGO, SATURNINO DIEGO, GREGORIO DIONG,
AMADO R. DIZON, FE DIZON, VIRGILO M. DOMANTAY, LEO S.
DONATO, DOMINADOR L. DOSADO, NESTOR DUMALAG, FREDDIE
DURAN, SR., MARIO C. ECHIVERE, AQUILLO M. EMBRADORA,
MIGUEL EMNACE, RIO T. EMPAS, EFRAIM ENGLIS, ANICETO
ENOPIA, DIOCENE ENTECOSA, RUBENTITO D. ENTECOSA,
AVELINO C. ENTERO, FORTUNATA ENTRADA, ROGELIO P. EROY,
RODOLFO M. ESCAMILLA, SERGIO C. ESCANTILLA, LAZARO A.
ESPAÑOLA, EULOGIO M. ETURMA, PRIMO P. FERNANDEZ,
EDILBERTO D. FERNANDO, GREGORIO S. FERNANDO, VICENTE P.
FERRER, MARCELO T. FLOR, ANTONIO M. FLORES, REDENTOR T.
FLOREZA, NORBERTO J. FUENTES, RICARDO C. GABUTAN,
PEDRO D.V. GALEOS, ARNULFO F. GALEOS, EDGARDO V.
GARCESA, BERNARDO P. GENTOBA, EDUARDO P. GENTOBA,
VICTORIO B. GIDO, ROLANDO V. GIMENA, EARLWIN L. GINGOYO,
ERNESTO GOLEZ, JUANITO G. GONZAGA, ONOFRE GONZALES,
AMADO J. GUMERE, LEONARDO M. GUSTO, ALEJANDRO G.
HALILI, NOEL H. HERCEDA, EMILIO V. HERMONDO, CLAUDIO
HIPOLITO, TORIBIO S ILLUSORIO, TEODURO G. IMPANG, JR., GIL
A. JALBUNA, HERMIE L. JALICO, ARMANDO B. JAMERLAN,
NARCISO JAPAY, LIBURO C. JAVINAS, ALEJANDO S. JIMENEZ,
FEDERICO T. JUCAR, NAPOLEON T. JUMALON, OSCAR JUNSAY,
ANASTACIO D. LABANA, CARLOS C. LABAY, AVELINO L.
LAFORTEZA, LOE LAGUMBAY, NORBETO D. LAMPERNIS,
ROLANDO J. LAS PEÑAS, ISMAEL LASDOCE, RENOLO L.
LEBRILLA, CAMILO G. LEDRES, ANASTACIO LLANOS, ARMANDO
A. LLIDO, CARLITO LOPEZ, ARISTON LOS BAÑEZ, CONCISO L.
LOVITOS, ARQUILLANO M. LOZADA, RODOLFO C. LUMAKIN,
PRIMITIVO LUNTAO, JR., EMILIO S. MABASA, JR., JUANITO A.
MACALISANG, TEOTIMO L. MADULIN, JOSEPH D. MAGALLON,
! 80!
PEDRO P. MAGLASANG, MARIO G. MALAGAMBA, JAIME B.
MAMARADLO, PANFILO A. MANADA, SR., RICARDO S. MANDANI,
CONCHITA MANDANI, ALBERTO T. MANGGA, ALEJANDRO A.
MANSANES, RUFINO T. MANSANES, EUTIQUIO P. MANSANES,
ALCIO P. MARATAS, AGAPITO D. MARQUEZ, RICARDO R.
MASIGLAT, DENDERIA MATABANG, ARNELO N. MATILLANO,
HERNANI C. MEJORADA, ROSITA MENDOZA, GREGORIO R. MESA,
RENATO N. MILLADO, ANTONIO L. MOCORRO, ALBERTO M.
MOLINA, JR., DOMINGO P. MONDIA, JUANITO P. MONDIA,
RICARDO MONTAÑO, RAUL T. MONTEJO, ROGELIO MUNAR,
RODOLFO E. MUÑEZ, CRESENCIO NARCISO, PANFILO C.
NARCISO, BRICS P. NECOR, MOISES P. NICOLAS, NEMESIO G.
NICOLAS, ALFREDO NOFIEL, FELIX T. NOVENA, MARCELO P.
OBTIAL, SR., TEODORO B. OCRETO, BIBIANO C. ODI, ALFREDO M.
OPERIO, TEOTISTO B. OPON, IZRO M. ORACION, ALAN E.
ORANAS, ELPEDIO T. OSIAS, ERNESTO M. PABIONA, NARCISO J.
PADILLA, NELSON G. PADIOS, SR., FRANCISCO G. PAGUNTALAN,
RENE B. PALENCIA, MICHAEL P. PALOMAR, VIRGILIO E.
PANILAGAO, NOLITO C. PANULIN, ROMEO PARAGUAS, NESTOR
B. PASTERA, VICENTE Q. PEDAZO, EDGAR M. PEÑARANDA,
ILUMINIDO B. PERACULLO, ANTONIO C. PEREZ, DOMINGO PEREZ,
OSCAR C. PLEÑOS, ANTONIETO POLANCOS, SERAFIN G. PRIETO,
ZENAIDA PROVIDO, FERNANDO Y. PROVIDO, ERNESTO QUERO,
ELEAZAR QUIJARDO, WILLIAM U. QUINTOY, LAURO QUISTADIO,
ROGELIO RABADON, MARCELINO M. RELIZAN, RAUL A. REYES,
OCTAVIO F. REYES, EDDIE M. RINCOR, EMMANUEL RIVAS,
RODULFO RIVAS, BIENVENIDO C. ROMANCA, JACINTO ROMOC,
ROMEO S. ROMUALDO, ALBERTO ROSARIO, ROMEO L. SABIDO,
SIMON SAGNIP, TIMOTEO SALIG, ROMAN B. SALIGONAN,
VICTORINO SALOMON, GENEROSO M. SALONGKONG, RODOLFO
E. SALVANI, JIMMY A. SAMELIN, EDUARDO A. SAMELIN, ANDRES
A. SAMELIN, GEORGE SAMELIN, ROMEO A. SARAOSOS,
RUDIGELIO S. SARMIENTO, CIRILO SAYAANG, JARLO SAYSON,
LEONCIO SERDONCILLO, RODOLFO C. SERRANO, NESTOR G.
SEVILLA, SIMEON F. SIMBA, CATALINO S. SIMTIM, SERAFIN T.
SINSUANGCO, EDUARDO A. SOLA, VICTORINO M. SOLOMON,
JAIME B. SUFICIENCIA, LYNDON SUMAJIT, ALFREDO P. SUMAJIT,
ALFREDO L. SUMAJIT, PEDRO A. SUMARAGO, ERNESTO SUMILE,
NESTOR S. SUMOG-OY, MANUEL T. SUPAS, WILFREDO A.
TABAQUE, CONSTANCIO L. TACULAD, EUFROCINO A. TAGOTO,
JR., SERAPIO TAHITIT, PANTALEON T. TAMASE, ERNESTO TARRE,
MAGNO E. TATOY, AVELINO TAYAPAD, SAMUEL S. TERRADO,
APOLINARIO B. TICO, ORLANDO TINACO, ALBERT G. TINAY,
ANTONIO TOLEDO, ANTONIO M. TORREGOSA, ISABELO TORRES,
JIMMY C. TORRIBIO, EDUARDO Y. TUCLAOD, JACINTO UDAL,
RICARDO M. URBANO, ERNESTO G. VAFLOR, FILOMENO E.
VALENZUELA, SALORIANO VELASCO, RODOLFO VIDAL, WALTER
VILLAFAÑE, DANTE VILLALVA, PERIGRINO P. VILLARAN, JESUS L.
VILLARBA, ELEAZAR D. VILLARBA, JENNY T. VILLAVA, HENRY C.
VILLEGAS, DELFIN C. WALOG, RODOLFO YAMBAO, EDGAR A.
YARE, MANSUETO M. YBERA, EDUARDO G. YUMANG, HENRY R.
YUNGOT, ROMEO P. YUSON, ARSENIA ZABALA, FELIX N. ZABALA,
and GRACIANO ZAMORA, Respondents.
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G.R. No. 126654
CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO
ALDEPOLIA, ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO
ALONZO, CORNELIO AMORA, FELIPE G. AMORA, LEOPOLDO
AMORADO, MARCELINO ANDIMAT, JORGE ANDOY, MARGARITO
R. ANGELIA, GREGOTIO APRIANO, ALFREDO A. ARARAO,
BONIFACIO L. ARTIGAS, JERSON ASUAL, SERAFIN AZUCENA,
FELIX M. BADOY, JULIAN J. BAHALLA, REYNALDO BAHAYA,
ANTONIO L. BALDAGO, CESAR N. BALTAZAR, DOMINADO A.
BARING, ANTIPAS A. BATINGAL, MARCIANO NATINGAL, MARINO
BIBANCO, LEANDRO BILIRAN, MARGARITO BLANCO, CATALINO
BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO BRINA,
LUIS BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA,
RPDITO CABAGTE, RICARADO C. CABALLES, CARLITO A.
CAINDOC, CANDIDO CALO, JR., PEDRITO CAMPAS, FERNANDO R.
CAPAROSO, DANILO CARILLO, BONIFACIO M. CATCHA, FRANKLIN
CLARAS, JOSE F. COLLAMAT, BERNARDO M. COMPENDIO,
CORNELIO COSTILLAS, ENERIO R. DAGAME, FELIMON DEBUMA,
JR., RICADO C. DEIPARIME, GREGORIO S. DE LA PENA, JOSE G.
DELUAO, JR., ELPEDIO A. DIAZ, QUINTINO DISIPULO, JR., CESAR
G. DONAYRE, JOSE DULABAY, JAIRO DUQUIZA, ANTONIO
ENGBINO, ALFREDO ESPINOSA, ALONZO FAILOG, JAIME
FEROLINO, RODOLFO L. GABITO, PEDRO G. GEMENTIZA,
RICARDO A. GEROLAGA, RODULFO G. GEROY, ROGELIO
GONZAGA, ROLANDO GONZALES, MODESTO M. GODELOSAO,
HECTOR GUMBAN, CAMILO HINAG, LECERIO IGBALIC, SILVERIO
E. IGCALINOS, ALFREDO INTOD, OLEGARIO IYUMA, DOMINGO B.
JAGMOC, JR., EDUARDO JARGUE, ROLANDO A. LABASON,
ROLANDO LACNO, VIRGILIO A. LADURA, CONSTANCIO M.
LAGURA, FRANCISCO LAMBAN, ENRIQUE LAQUERO, LUCIO B.
LASACA, SISINO LAURDEN, VIVENCIO LAWANGON, ANECITO
LAYAN, FERNANDO P. LAYAO, MARDENIO LAYAO, NEMENCIO C.
LINAO, PEDRO LOCION, ENERIO LOOD, DIOSDADO MADATE,
RAMON MAGDOSA, NILO MAGLINTE, MARINO G. MALINAO,
CARLITO MANACAP, AURELIO A. MARO, CRISOSTOMO R.
MIJARES, CESAR MONAPCO, SILVANO MONCANO, EMILIO
! 81!
MONTAJES, CESAR B. MONTERO, CLEMENTE NAKANO, RODRIGO
H. NALAS, EMELIANO C. NAPITAN, JUANITO B. NARON, JR., LUCIO
NASAKA, TEOFILO NUNEZ, JORGE M. OLORVIDA, CANULO P.
OLOY, DOROTEO S. OMBRETE, TEOFILIO OMOSURA, MIGUEL
ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA, ALFREDO
P. PALASPAS, CATALINO C. PANA, ERNESTO M. PASCUAL,
BIENVENIDO PAYAG, RESURRECCION PENOS, PEDRO PILAGO,
ROMEO PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL, JESUS
D. QUIBOL, MAGNO QUIZON, DIONISIO RAMOS, MAMERTO
RANISES, NESTOR B. REBUYA, RODRIGO REQUILMEN, ISIDRO
RETANAL, CARLITO ROBLE, GLICERIO V. ROSETE, TINOY G.
SABINO, MELCHOR SALIGUMBA, SILVERIO SILANGAN, ROBERTO
SIVA, PACITA SUYMAN, CANILO TAJON, AVELINO TATAPOD,
ROMEO TAYCO, RENATO TAYCO, CONRADO TECSON, AGAPITO
TECSON, ROMAN. E. TEJERO, ALFREDO TILANDOCA, CARLOS B.
TIMA, HERMONEGES TIRADOR, JOSELITO TIRO, PASTOR T.
TUNGKO, LEANDRO B. TURCAL, VICENTE URQUIZA, VICENTE
VILLA, ANTONIO P. VILLARAIZ, LEOPOLDO VILLAVITO and
SAMUEL M. VILLEGAS, Petitioners,
vs.
THE HON. ROMEO D. MARASIGAN, Presiding Judge of Regional
Trial Court, Branch 16, Davao City, SHELL OIL CO., DOW CHEMICAL
CO., OCCIDENTAL CHEMICAL CORP., STANDARD FRUIT CO.,
STANDARD FRUIT & STEAMSHIP CO., DOLE FOOD CO., INC., DOLE
FRESH FRUIT CO., DEL MONTE FRESH PRODUCE N.A., DEL
MONTE TROPICAL FRUIT CO., CHIQUITA BRANDS
INTERNATIONAL, INC. and CHIQUITA BRANDS, INC., Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 127856
DEL MONTE FRESH PRODUCE N.A. and DEL MONTE TROPICAL
FRUIT CO., Petitioners,
vs.
THE REGIONAL TRIAL COURT OF DAVAO CITY, BRANCHES 16
AND 13, CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO
ALDEPOLIA, ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO
ALONZO, CORNELIO AMORA, FELIPE G. AMORA, LEOPOLDO
AMORADO, MARCELINO ANDIMAT, JORGE ANDOY, MARGARITO
R. ANGELIA, GREGOTIO APRIANO, ALFREDO A. ARARAO,
BONIFACIO L. ARTIGAS, JERSON ASUAL, SERAFIN AZUCENA,
FELIX M. BADOY, JULIAN J. BAHALLA, REYNALDO BAHAYA,
ANTONIO L. BALDAGO, CESAR N. BALTAZAR, DOMINADO A.
BARING, ANTIPAS A. BATINGAL, MARCIANO NATINGAL, MARINO
BIBANCO, LEANDRO BILIRAN, MARGARITO BLANCO, CATALINO
BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO BRINA,
LUIS BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA,
RPDITO CABAGTE, RICARADO C. CABALLES, CARLITO A.
CAINDOC, CANDIDO CALO, JR., PEDRITO CAMPAS, FERNANDO R.
CAPAROSO, DANILO CARILLO, BONIFACIO M. CATCHA, FRANKLIN
CLARAS, JOSE F. COLLAMAT, BERNARDO M. COMPENDIO,
CORNELIO COSTILLAS, ENERIO R. DAGAME, FELIMON DEBUMA,
JR., RICADO C. DEIPARIME, GREGORIO S. DE LA PENA, JOSE G.
DELUAO, JR., ELPEDIO A. DIAZ, QUINTINO DISIPULO, JR., CESAR
G. DONAYRE, JOSE DULABAY, JAIRO DUQUIZA, ANTONIO
ENGBINO, ALFREDO ESPINOSA, ALONZO FAILOG, JAIME
FEROLINO, RODOLFO L. GABITO, PEDRO G. GEMENTIZA,
RICARDO A. GEROLAGA, RODULFO G. GEROY, ROGELIO
GONZAGA, ROLANDO GONZALES, MODESTO M. GODELOSAO,
HECTOR GUMBAN, CAMILO HINAG, LECERIO IGBALIC, SILVERIO
E. IGCALINOS, ALFREDO INTOD, OLEGARIO IYUMA, DOMINGO B.
JAGMOC, JR., EDUARDO JARGUE, ROLANDO A. LABASON,
ROLANDO LACNO, VIRGILIO A. LADURA, CONSTANCIO M.
LAGURA, FRANCISCO LAMBAN, ENRIQUE LAQUERO, LUCIO B.
LASACA, SISINO LAURDEN, VIVENCIO LAWANGON, ANECITO
LAYAN, FERNANDO P. LAYAO, MARDENIO LAYAO, NEMENCIO C.
LINAO, PEDRO LOCION, ENERIO LOOD, DIOSDADO MADATE,
RAMON MAGDOSA, NILO MAGLINTE, MARINO G. MALINAO,
CARLITO MANACAP, AURELIO A. MARO, CRISOSTOMO R.
MIJARES, CESAR MONAPCO, SILVANO MONCANO, EMILIO
MONTAJES, CESAR B. MONTERO, CLEMENTE NAKANO, RODRIGO
H. NALAS, EMELIANO C. NAPITAN, JUANITO B. NARON, JR., LUCIO
NASAKA, TEOFILO NUNEZ, JORGE M. OLORVIDA, CANULO P.
OLOY, DOROTEO S. OMBRETE, TEOFILIO OMOSURA, MIGUEL
ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA, ALFREDO
P. PALASPAS, CATALINO C. PANA, ERNESTO M. PASCUAL,
BIENVENIDO PAYAG, RESURRECCION PENOS, PEDRO PILAGO,
ROMEO PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL, JESUS
D. QUIBOL, MAGNO QUIZON, DIONISIO RAMOS, MAMERTO
RANISES, NESTOR B. REBUYA, RODRIGO REQUILMEN, ISIDRO
RETANAL, CARLITO ROBLE, GLICERIO V. ROSETE, TINOY G.
SABINO, MELCHOR SALIGUMBA, SILVERIO SILANGAN, ROBERTO
SIVA, PACITA SUYMAN, CANILO TAJON, AVELINO TATAPOD,
ROMEO TAYCO, RENATO TAYCO, CONRADO TECSON, AGAPITO
TECSON, ROMAN. E. TEJERO, ALFREDO TILANDOCA, CARLOS B.
TIMA, HERMONEGES TIRADOR, JOSELITO TIRO, PASTOR T.
TUNGKO, LEANDRO B. TURCAL, VICENTE URQUIZA, VICENTE
VILLA, ANTONIO P. VILLARAIZ, LEOPOLDO VILLAVITO and
SAMUEL M. VILLEGAS, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 128398
! 82!
CHIQUITA BRANDS, INC., and CHIQUITA BRANDS
INTERNATIONAL, INC., Petitioners,
vs.
HON. ANITA ALFELOR-ALAGABAN, in her capacity as Presiding
Judge of the Regional Trial Court, Davao City, Branch 13,
CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO
ALDEPOLIA, ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO
ALONZO, CORNELIO AMORA, FELIPE G. AMORA, LEOPOLDO
AMORADO, MARCELINO ANDIMAT, JORGE ANDOY, MARGARITO
R. ANGELIA, GREGOTIO APRIANO, ALFREDO A. ARARAO,
BONIFACIO L. ARTIGAS, JERSON ASUAL, SERAFIN AZUCENA,
FELIX M. BADOY, JULIAN J. BAHALLA, REYNALDO BAHAYA,
ANTONIO L. BALDAGO, CESAR N. BALTAZAR, DOMINADO A.
BARING, ANTIPAS A. BATINGAL, MARCIANO NATINGAL, MARINO
BIBANCO, LEANDRO BILIRAN, MARGARITO BLANCO, CATALINO
BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO BRINA,
LUIS BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA,
RPDITO CABAGTE, RICARADO C. CABALLES, CARLITO A.
CAINDOC, CANDIDO CALO, JR., PEDRITO CAMPAS, FERNANDO R.
CAPAROSO, DANILO CARILLO, BONIFACIO M. CATCHA, FRANKLIN
CLARAS, JOSE F. COLLAMAT, BERNARDO M. COMPENDIO,
CORNELIO COSTILLAS, ENERIO R. DAGAME, FELIMON DEBUMA,
JR., RICADO C. DEIPARIME, GREGORIO S. DE LA PENA, JOSE G.
DELUAO, JR., ELPEDIO A. DIAZ, QUINTINO DISIPULO, JR., CESAR
G. DONAYRE, JOSE DULABAY, JAIRO DUQUIZA, ANTONIO
ENGBINO, ALFREDO ESPINOSA, ALONZO FAILOG, JAIME
FEROLINO, RODOLFO L. GABITO, PEDRO G. GEMENTIZA,
RICARDO A. GEROLAGA, RODULFO G. GEROY, ROGELIO
GONZAGA, ROLANDO GONZALES, MODESTO M. GODELOSAO,
HECTOR GUMBAN, CAMILO HINAG, LECERIO IGBALIC, SILVERIO
E. IGCALINOS, ALFREDO INTOD, OLEGARIO IYUMA, DOMINGO B.
JAGMOC, JR., EDUARDO JARGUE, ROLANDO A. LABASON,
ROLANDO LACNO, VIRGILIO A. LADURA, CONSTANCIO M.
LAGURA, FRANCISCO LAMBAN, ENRIQUE LAQUERO, LUCIO B.
LASACA, SISINO LAURDEN, VIVENCIO LAWANGON, ANECITO
LAYAN, FERNANDO P. LAYAO, MARDENIO LAYAO, NEMENCIO C.
LINAO, PEDRO LOCION, ENERIO LOOD, DIOSDADO MADATE,
RAMON MAGDOSA, NILO MAGLINTE, MARINO G. MALINAO,
CARLITO MANACAP, AURELIO A. MARO, CRISOSTOMO R.
MIJARES, CESAR MONAPCO, SILVANO MONCANO, EMILIO
MONTAJES, CESAR B. MONTERO, CLEMENTE NAKANO, RODRIGO
H. NALAS, EMELIANO C. NAPITAN, JUANITO B. NARON, JR., LUCIO
NASAKA, TEOFILO NUNEZ, JORGE M. OLORVIDA, CANULO P.
OLOY, DOROTEO S. OMBRETE, TEOFILIO OMOSURA, MIGUEL
ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA, ALFREDO
P. PALASPAS, CATALINO C. PANA, ERNESTO M. PASCUAL,
BIENVENIDO PAYAG, RESURRECCION PENOS, PEDRO PILAGO,
ROMEO PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL, JESUS
D. QUIBOL, MAGNO QUIZON, DIONISIO RAMOS, MAMERTO
RANISES, NESTOR B. REBUYA, RODRIGO REQUILMEN, ISIDRO
RETANAL, CARLITO ROBLE, GLICERIO V. ROSETE, TINOY G.
SABINO, MELCHOR SALIGUMBA, SILVERIO SILANGAN, ROBERTO
SIVA, PACITA SUYMAN, CANILO TAJON, AVELINO TATAPOD,
ROMEO TAYCO, RENATO TAYCO, CONRADO TECSON, AGAPITO
TECSON, ROMAN. E. TEJERO, ALFREDO TILANDOCA, CARLOS B.
TIMA, HERMONEGES TIRADOR, JOSELITO TIRO, PASTOR T.
TUNGKO, LEANDRO B. TURCAL, VICENTE URQUIZA, VICENTE
VILLA, ANTONIO P. VILLARAIZ, LEOPOLDO VILLAVITO and
SAMUEL M. VILLEGAS, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court are consolidated Petitions for Review on Certiorari
under Rule 45 of the Rules of Court, which arose out of two civil cases
that were filed in different courts but whose factual background and
issues are closely intertwined.
1 2
The petitions in G.R. Nos. 125078 and 125598 both assail the
3
Order dated May 20, 1996 of the Regional Trial Court (RTC) of General
Santos City, Branch 37, in Civil Case No. 5617. The said Order decreed
the dismissal of the case in view of the perceived lack of jurisdiction of the
RTC over the subject matter of the complaint. The petition in G.R. No.
4
125598 also challenges the Orders dated June 4, 1996 and July 9,
5
1996, which held that the RTC of General Santos City no longer had
jurisdiction to proceed with Civil Case No. 5617.
6 7
On the other hand, the petitions in G.R. Nos. 126654, 127856, and
8 9
128398 seek the reversal of the Order dated October 1, 1996 of the
RTC of Davao City, Branch 16, in Civil Case No. 24,251-96, which also
dismissed the case on the ground of lack of jurisdiction.
G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were
10
consolidated in the Resolutions dated February 10, 1997, April 28,
11 12
1997 and March 10, 1999.
The factual antecedents of the petitions are as follows:
Proceedings before the Texas Courts
Beginning 1993, a number of personal injury suits were filed in different
Texas state courts by citizens of twelve foreign countries, including the
Philippines. The thousands of plaintiffs sought damages for injuries they
allegedly sustained from their exposure to dibromochloropropane
(DBCP), a chemical used to kill nematodes (worms), while working on
farms in 23 foreign countries. The cases were eventually transferred to,
and consolidated in, the Federal District Court for the Southern District of
Texas, Houston Division. The cases therein that involved plaintiffs from
! 83!
the Philippines were "Jorge Colindres Carcamo, et al. v. Shell Oil Co., et
al.," which was docketed as Civil Action No. H-94-1359, and "Juan
Ramon Valdez, et al. v. Shell Oil Co., et al.," which was docketed as Civil
Action No. H-95-1356. The defendants in the consolidated cases prayed
for the dismissal of all the actions under the doctrine of forum non
conveniens.
In a Memorandum and Order dated July 11, 1995, the Federal District
Court conditionally granted the defendants’ motion to dismiss. Pertinently,
the court ordered that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90
days after the entry of this Memorandum and Order provided that
defendants and third- and fourth-party defendants have:
(1) participated in expedited discovery in the United States xxx;
(2) either waived or accepted service of process and waived any
other jurisdictional defense within 40 days after the entry of this
Memorandum and Order in any action commenced by a plaintiff
in these actions in his home country or the country in which his
injury occurred. Any plaintiff desiring to bring such an action will
do so within 30 days after the entry of this Memorandum and
Order;
(3) waived within 40 days after the entry of this Memorandum and
Order any limitations-based defense that has matured since the
commencement of these actions in the courts of Texas;
(4) stipulated within 40 days after the entry of this Memorandum
and Order that any discovery conducted during the pendency of
these actions may be used in any foreign proceeding to the same
extent as if it had been conducted in proceedings initiated there;
and
(5) submitted within 40 days after the entry of this Memorandum
and Order an agreement binding them to satisfy any final
judgment rendered in favor of plaintiffs by a foreign court.
xxxx
Notwithstanding the dismissals that may result from this Memorandum
and Order, in the event that the highest court of any foreign country finally
affirms the dismissal for lack of jurisdiction of an action commenced by a
plaintiff in these actions in his home country or the country in which he
was injured, that plaintiff may return to this court and, upon proper
motion, the court will resume jurisdiction over the action as if the case
13
had never been dismissed for [forum non conveniens].
Civil Case No. 5617 before the RTC of General Santos City and G.R.
Nos. 125078 and 125598
In accordance with the above Memorandum and Order, a total of 336
plaintiffs from General Santos City (the petitioners in G.R. No. 125078,
14
hereinafter referred to as NAVIDA, et al.) filed a Joint Complaint in the
RTC of General Santos City on August 10, 1995. The case was docketed
as Civil Case No. 5617. Named as defendants therein were: Shell Oil Co.
(SHELL); Dow Chemical Co. (DOW); Occidental Chemical Corp.
(OCCIDENTAL); Dole Food Co., Inc., Dole Fresh Fruit Co., Standard
Fruit Co., Standard Fruit and Steamship Co. (hereinafter collectively
referred to as DOLE); Chiquita Brands, Inc. and Chiquita Brands
International, Inc. (CHIQUITA); Del Monte Fresh Produce N.A. and Del
Monte Tropical Fruit Co. (hereinafter collectively referred to as DEL
MONTE); Dead Sea Bromine Co., Ltd.; Ameribrom, Inc.; Bromine
Compounds, Ltd.; and Amvac Chemical Corp. (The aforementioned
defendants are hereinafter collectively referred to as defendant
companies.)
Navida, et al., prayed for the payment of damages in view of the illnesses
and injuries to the reproductive systems which they allegedly suffered
because of their exposure to DBCP. They claimed, among others, that
they were exposed to this chemical during the early 1970’s up to the early
1980’s when they used the same in the banana plantations where they
worked at; and/or when they resided within the agricultural area where
such chemical was used. Navida, et al., claimed that their illnesses and
injuries were due to the fault or negligence of each of the defendant
companies in that they produced, sold and/or otherwise put into the
stream of commerce DBCP-containing products. According to NAVIDA,
et al., they were allowed to be exposed to the said products, which the
defendant companies knew, or ought to have known, were highly
injurious to the former’s health and well-being.
Instead of answering the complaint, most of the defendant companies
15
respectively filed their Motions for Bill of Particulars. During the
pendency of the motions, on March 13, 1996, NAVIDA, et al., filed an
16
Amended Joint Complaint, excluding Dead Sea Bromine Co., Ltd.,
Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac Chemical Corp.
as party defendants.
Again, the remaining defendant companies filed their various Motions for
17
Bill of Particulars. On May 15, 1996, DOW filed an Answer with
18
Counterclaim.
On May 20, 1996, without resolving the motions filed by the parties, the
RTC of General Santos City issued an Order dismissing the complaint.
First, the trial court determined that it did not have jurisdiction to hear the
case, to wit:
THE COMPLAINT FOR DAMAGES FILED WITH THE REGIONAL TRIAL
COURT SHOULD BE DISMISSED FOR LACK OF JURISDICTION
xxxx
The substance of the cause of action as stated in the complaint against
the defendant foreign companies cites activity on their part which took
place abroad and had occurred outside and beyond the territorial domain
of the Philippines. These acts of defendants cited in the complaint
included the manufacture of pesticides, their packaging in containers,
! 84!
their distribution through sale or other disposition, resulting in their
becoming part of the stream of commerce.
Accordingly, the subject matter stated in the complaint and which is
uniquely particular to the present case, consisted of activity or course of
conduct engaged in by foreign defendants outside Philippine territory,
hence, outside and beyond the jurisdiction of Philippine Courts, including
19
the present Regional Trial Court.
Second, the RTC of General Santos City declared that the tort alleged by
Navida, et al., in their complaint is a tort category that is not recognized in
Philippine laws. Said the trial court:
THE TORT ASSERTED IN THE PRESENT COMPLAINT AGAINST
DEFENDANT FOREIGN COMPANIES IS NOT WITHIN THE SUBJECT
MATTER JURISDICTION OF THE REGIONAL TRIAL COURT,
BECAUSE IT IS NOT A TORT CATEGORY WITHIN THE PURVIEW OF
THE PHILIPPINE LAW
The specific tort asserted against defendant foreign companies in the
present complaint is product liability tort. When the averments in the
present complaint are examined in terms of the particular categories of
tort recognized in the Philippine Civil Code, it becomes stark clear that
such averments describe and identify the category of specific tort known
as product liability tort. This is necessarily so, because it is
the product manufactured by defendant foreign companies, which is
asserted to be the proximate cause of the damages sustained by the
plaintiff workers, and the liability of the defendant foreign companies, is
premised on being the manufacturer of the pesticides.
It is clear, therefore, that the Regional Trial Court has jurisdiction over the
present case, if and only if the Civil Code of the Philippines, or a
suppletory special law prescribes a product liability tort, inclusive of and
comprehending the specific tort described in the complaint of the plaintiff
20
workers.
Third, the RTC of General Santos City adjudged that Navida, et al., were
coerced into submitting their case to the Philippine courts, viz:
FILING OF CASES IN THE PHILIPPINES - COERCED AND
ANOMALOUS
The Court views that the plaintiffs did not freely choose to file the instant
action, but rather were coerced to do so, merely to comply with the U.S.
District Court’s Order dated July 11, 1995, and in order to keep open to
21
the plaintiffs the opportunity to return to the U.S. District Court.
Fourth, the trial court ascribed little significance to the voluntary
appearance of the defendant companies therein, thus:
THE DEFENDANTS’ SUBMISSION TO JURISDICTION IS
CONDITIONAL AS IT IS ILLUSORY
Defendants have appointed their agents authorized to accept service of
summons/processes in the Philippines pursuant to the agreement in the
U.S. court that defendants will voluntarily submit to the jurisdiction of this
court. While it is true that this court acquires jurisdiction over persons of
the defendants through their voluntary appearance, it appears that such
voluntary appearance of the defendants in this case is conditional. Thus
in the "Defendants’ Amended Agreement Regarding Conditions of
Dismissal for Forum Non Conveniens" (Annex to the Complaint) filed with
the U.S. District Court, defendants declared that "(t)he authority of each
designated representative to accept service of process will become
effective upon final dismissal of these actions by the Court". The decision
of the U.S. District Court dismissing the case is not yet final and
executory since both the plaintiffs and defendants appealed therefrom
(par. 3(h), 3(i), Amended Complaint). Consequently, since the authority of
the agent of the defendants in the Philippines is conditioned on the final
adjudication of the case pending with the U.S. courts, the acquisition of
jurisdiction by this court over the persons of the defendants is also
conditional. x x x.
The appointment of agents by the defendants, being subject to a
suspensive condition, thus produces no legal effect and is ineffective at
22
the moment.
Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al.,
of filing the case in the Philippine courts violated the rules on forum
shopping and litis pendencia. The trial court expounded:
THE JURISDICTION FROWNS UPON AND PROHIBITS FORUM
SHOPPING
This court frowns upon the fact that the parties herein are both vigorously
pursuing their appeal of the decision of the U.S. District court dismissing
the case filed thereat. To allow the parties to litigate in this court when
they are actively pursuing the same cases in another forum, violates the
rule on ‘forum shopping’ so abhorred in this jurisdiction. x x x.
xxxx
THE FILING OF THE CASE IN U.S. DIVESTED THIS COURT OF ITS
OWN JURISDICTION
Moreover, the filing of the case in the U.S. courts divested this court of its
own jurisdiction. This court takes note that the U.S. District Court did not
decline jurisdiction over the cause of action. The case was dismissed on
the ground of forum non conveniens, which is really a matter of venue. By
taking cognizance of the case, the U.S. District Court has, in essence,
concurrent jurisdiction with this court over the subject matter of this case.
It is settled that initial acquisition of jurisdiction divests another of its own
jurisdiction. x x x.
xxxx
THIS CASE IS BARRED BY THE RULE OF "LITIS PENDENCIA"
Furthermore, the case filed in the U.S. court involves the same parties,
same rights and interests, as in this case. There exists litis pendencia
since there are two cases involving the same parties and interests. The
court would like to emphasize that in accordance with the rule on litis
! 85!
pendencia x x x; the subsequent case must be dismissed. Applying the
foregoing [precept] to the case-at-bar, this court concludes that since the
case between the parties in the U.S. is still pending, then this case is
23
barred by the rule on "litis pendencia."
In fine, the trial court held that:
It behooves this Court, then to dismiss this case. For to continue with
these proceedings, would be violative of the constitutional provision on
the Bill of Rights guaranteeing speedy disposition of cases (Ref. Sec. 16,
Article III, Constitution). The court has no other choice. To insist on
further proceedings with this case, as it is now presented, might accord
this court a charming appearance. But the same insistence would actually
thwart the very ends of justice which it seeks to achieve.
This evaluation and action is made not on account of but rather with due
consideration to the fact that the dismissal of this case does not
necessarily deprive the parties – especially the plaintiffs – of their
possible remedies. The court is cognizant that the Federal Court may
resume proceedings of that earlier case between the herein parties
involving the same acts or omissions as in this case.
WHEREFORE, in view of the foregoing considerations, this case is now
24
considered DISMISSED.
On June 4, 1996, the RTC of General Santos City likewise issued an
25
Order, dismissing DOW’s Answer with Counterclaim.
CHIQUITA, DEL MONTE and SHELL each filed a motion for
26
reconsideration of the RTC Order dated May 20, 1996, while DOW filed
27
a motion for reconsideration of the RTC Order dated June 4, 1996.
Subsequently, DOW and OCCIDENTAL also filed a Joint Motion for
28
Reconsideration of the RTC Order dated May 20, 1996.
29
In an Order dated July 9, 1996, the RTC of General Santos City
declared that it had already lost its jurisdiction over the case as it took into
consideration the Manifestation of the counsel of NAVIDA, et al., which
stated that the latter had already filed a petition for review on certiorari
before this Court.
30
CHIQUITA and SHELL filed their motions for reconsideration of the
above order.
On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari
in order to assail the RTC Order dated May 20, 1996, which was
docketed as G.R. No. 125078.
31
The RTC of General Santos City then issued an Order dated August 14,
1996, which merely noted the incidents still pending in Civil Case No.
5617 and reiterated that it no longer had any jurisdiction over the case.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition for
32
Review on Certiorari, challenging the orders of the RTC of General
Santos City dated May 20, 1996, June 4, 1996 and July 9, 1996. Their
petition was docketed as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the RTC of General
Santos City erred in ruling that it has no jurisdiction over the subject
matter of the case as well as the persons of the defendant companies.
33
In a Resolution dated October 7, 1996, this Court resolved to
consolidate G.R. No. 125598 with G.R. No. 125078.
34
CHIQUITA filed a Petition for Review on Certiorari, which sought the
reversal of the RTC Orders dated May 20, 1996, July 9, 1996 and August
14, 1996. The petition was docketed as G.R. No. 126018. In a
35
Resolution dated November 13, 1996, the Court dismissed the
aforesaid petition for failure of CHIQUITA to show that the RTC
committed grave abuse of discretion. CHIQUITA filed a Motion for
36 37
Reconsideration, but the same was denied through a Resolution dated
January 27, 1997.
Civil Case No. 24,251-96 before the RTC of Davao City and G.R. Nos.
126654, 127856, and 128398
Another joint complaint for damages against SHELL, DOW,
OCCIDENTAL, DOLE, DEL MONTE, and CHIQUITA was filed before
Branch 16 of the RTC of Davao City by 155 plaintiffs from Davao City.
This case was docketed as Civil Case No. 24,251-96. These plaintiffs
(the petitioners in G.R. No. 126654, hereinafter referred to as ABELLA, et
38
al.) amended their Joint-Complaint on May 21, 1996.
Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as
workers in the banana plantation and/or as residents near the said
plantation, they were made to use and/or were exposed to nematocides,
which contained the chemical DBCP. According to ABELLA, et al., such
exposure resulted in "serious and permanent injuries to their health,
including, but not limited to, sterility and severe injuries to their
39
reproductive capacities." ABELLA, et al., claimed that the defendant
companies manufactured, produced, sold, distributed, used, and/or made
available in commerce, DBCP without warning the users of its hazardous
effects on health, and without providing instructions on its proper use and
application, which the defendant companies knew or ought to have
known, had they exercised ordinary care and prudence.
Except for DOW, the other defendant companies filed their respective
motions for bill of particulars to which ABELLA, et al., filed their
opposition. DOW and DEL MONTE filed their respective Answers dated
May 17, 1996 and June 24, 1996.
The RTC of Davao City, however, junked Civil Case No. 24,251-96 in its
Order dated October 1, 1996, which, in its entirety, reads:
Upon a thorough review of the Complaint and Amended Complaint For:
Damages filed by the plaintiffs against the defendants Shell Oil Company,
DOW Chemicals Company, Occidental Chemical Corporation, Standard
Fruit Company, Standard Fruit and Steamship, DOLE Food Company,
DOLE Fresh Fruit Company, Chiquita Brands, Inc., Chiquita Brands
International, Del Monte Fresh Produce, N.A. and Del Monte Tropical
! 86!
Fruits Co., all foreign corporations with Philippine Representatives, the
Court, as correctly pointed out by one of the defendants, is convinced that
plaintiffs "would have this Honorable Court dismiss the case to pave the
way for their getting an affirmance by the Supreme Court" (#10 of
Defendants’ Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruit
Co., Reply to Opposition dated July 22, 1996). Consider these:
1) In the original Joint Complaint, plaintiffs state that: defendants have no
properties in the Philippines; they have no agents as well (par. 18);
plaintiffs are suing the defendants for tortuous acts committed by these
foreign corporations on their respective countries, as plaintiffs, after
having elected to sue in the place of defendants’ residence, are now
compelled by a decision of a Texas District Court to file cases under torts
in this jurisdiction for causes of actions which occurred abroad (par. 19); a
petition was filed by same plaintiffs against same defendants in the
Courts of Texas, USA, plaintiffs seeking for payment of damages based
on negligence, strict liability, conspiracy and international tort theories
(par. 27); upon defendants’ Motion to Dismiss on Forum non
[conveniens], said petition was provisionally dismissed on condition that
these cases be filed in the Philippines or before 11 August 1995
(Philippine date; Should the Philippine Courts refuse or deny jurisdiction,
the U. S. Courts will reassume jurisdiction.)
11. In the Amended Joint Complaint, plaintiffs aver that: on 11 July 1995,
the Federal District Court issued a Memorandum and Order conditionally
dismissing several of the consolidated actions including those filed by the
Filipino complainants. One of the conditions imposed was for the plaintiffs
to file actions in their home countries or the countries in which they were
injured x x x. Notwithstanding, the Memorandum and [O]rder further
provided that should the highest court of any foreign country affirm the
dismissal for lack of jurisdictions over these actions filed by the plaintiffs
in their home countries [or] the countries where they were injured, the
said plaintiffs may return to that court and, upon proper motion, the Court
will resume jurisdiction as if the case had never been dismissed for forum
non conveniens.
The Court however is constrained to dismiss the case at bar not solely on
the basis of the above but because it shares the opinion of legal experts
given in the interview made by the Inquirer in its Special report "Pesticide
Cause Mass Sterility," to wit:
1. Former Justice Secretary Demetrio Demetria in a May 1995
opinion said: The Philippines should be an inconvenient forum to
file this kind of damage suit against foreign companies since the
causes of action alleged in the petition do not exist under
Philippine laws. There has been no decided case in Philippine
Jurisprudence awarding to those adversely affected by DBCP.
This means there is no available evidence which will prove and
disprove the relation between sterility and DBCP.

2. Retired Supreme Court Justice Abraham Sarmiento opined
that while a class suit is allowed in the Philippines the device has
been employed strictly. Mass sterility will not qualify as a class
suit injury within the contemplation of Philippine statute.
3. Retired High Court Justice Rodolfo Nocom stated that there is
simply an absence of doctrine here that permits these causes to
be heard. No product liability ever filed or tried here.
40
Case ordered dismissed.
Docketed as G.R. No. 126654, the petition for review, filed on November
12, 1996 by ABELLA, et al., assails before this Court the above-quoted
order of the RTC of Davao City.
ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil
Case No. 24,251-96 on the ground of lack of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has jurisdiction over
the subject matter of the case since Articles 2176 and 2187 of the Civil
Code are broad enough to cover the acts complained of and to support
their claims for damages.
ABELLA, et al., further aver that the dismissal of the case, based on the
opinions of legal luminaries reported in a newspaper, by the RTC of
Davao City is bereft of basis. According to them, their cause of action is
based on quasi-delict under Article 2176 of the Civil Code. They also
maintain that the absence of jurisprudence regarding the award of
damages in favor of those adversely affected by the DBCP does not
preclude them from presenting evidence to prove their allegations that
their exposure to DBCP caused their sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for
reconsideration of the Order dated October 1, 1996 of the RTC of Davao
City. DEL MONTE also filed its motion for reconsideration, which
contained an additional motion for the inhibition of the presiding judge.
41
The presiding judge of Branch 16 then issued an Order dated
December 2, 1996, voluntarily inhibiting himself from trying the case.
Thus, the case was re-raffled to Branch 13 of the RTC of Davao City.
42
In an Order dated December 16, 1996, the RTC of Davao City affirmed
the Order dated October 1, 1996, and denied the respective motions for
reconsideration filed by defendant companies.
Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997,
questioning the Orders dated October 1, 1996 and December 16, 1996 of
the RTC of Davao City. This case was docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City erred in
dismissing the case motu proprio as it acquired jurisdiction over the
subject matter of the case as well as over the persons of the defendant
companies which voluntarily appeared before it. CHIQUITA also claims
that the RTC of Davao City cannot dismiss the case simply on the basis
of opinions of alleged legal experts appearing in a newspaper article.
! 87!
43
Initially, this Court in its Resolution dated July 28, 1997, dismissed the
petition filed by CHIQUITA for submitting a defective certificate against
forum shopping. CHIQUITA, however, filed a motion for reconsideration,
44
which was granted by this Court in the Resolution dated October 8,
1997.
On March 7, 1997, DEL MONTE also filed its petition for review on
certiorari before this Court assailing the above-mentioned orders of the
RTC of Davao City. Its petition was docketed as G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil
Case No. 24,251-96, as defined under the law and that the said court
already obtained jurisdiction over its person by its voluntary appearance
and the filing of a motion for bill of particulars and, later, an answer to the
complaint. According to DEL MONTE, the RTC of Davao City, therefore,
acted beyond its authority when it dismissed the case motu proprio or
without any motion to dismiss from any of the parties to the case.
In the Resolutions dated February 10, 1997, April 28, 1997, and March
10, 1999, this Court consolidated G.R. Nos. 125078, 125598, 126654,
127856, and 128398.
The Consolidated Motion to Drop DOW, OCCIDENTAL, and SHELL as
Party-Respondents filed by NAVIDA, et al. and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before
45
this Court a Consolidated Motion (to Drop Party-Respondents). The
plaintiff claimants alleged that they had amicably settled their cases with
DOW, OCCIDENTAL, and SHELL sometime in July 1997. This
settlement agreement was evidenced by facsimiles of the "Compromise
Settlement, Indemnity, and Hold Harmless Agreement," which were
attached to the said motion. Pursuant to said agreement, the plaintiff
claimants sought to withdraw their petitions as against DOW,
OCCIDENTAL, and SHELL.
DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as
well as the settlement entered into between the plaintiff claimants and
DOW, OCCIDENTAL, and SHELL.
The Memoranda of the Parties
Considering the allegations, issues, and arguments adduced by the
46
parties, this Court, in a Resolution dated June 22, 1998, required all the
parties to submit their respective memoranda.
47
CHIQUITA filed its Memorandum on August 28, 1998; SHELL asked to
be excused from the filing of a memorandum alleging that it had already
48
executed a compromise agreement with the plaintiff claimants. DOLE
49
filed its Memorandum on October 12, 1998 while DEL MONTE filed on
50
October 13, 1998. NAVIDA, et al., and ABELLA, et al., filed their
51
Consolidated Memorandum on February 3, 1999; and DOW and
52
OCCIDENTAL jointly filed a Memorandum on December 23, 1999.
The Motion to Withdraw Petition for Review in G.R. No. 125598
On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw
53
Petition for Review in G.R. No. 125598, explaining that the said petition
"is already moot and academic and no longer presents a justiciable
controversy" since they have already entered into an amicable settlement
with NAVIDA, et al. DOW and OCCIDENTAL added that they have fully
complied with their obligations set forth in the 1997 Compromise
Agreements.
54
DOLE filed its Manifestation dated September 6, 2004, interposing no
objection to the withdrawal of the petition, and further stating that they
maintain their position that DOW and OCCIDENTAL, as well as other
settling defendant companies, should be retained as defendants for
purposes of prosecuting the cross-claims of DOLE, in the event that the
complaint below is reinstated.
NAVIDA, et al., also filed their Comment dated September 14,
55
2004, stating that they agree with the view of DOW and OCCIDENTAL
that the petition in G.R. No. 125598 has become moot and academic
because Civil Case No. 5617 had already been amicably settled by the
parties in 1997.
On September 27, 2004, DEL MONTE filed its Comment on Motion to
Withdraw Petition for Review Filed by Petitioners in G.R. No.
56
125598, stating that it has no objections to the withdrawal of the petition
filed by DOW and OCCIDENTAL in G.R. No. 125598.
57
In a Resolution dated October 11, 2004, this Court granted, among
others, the motion to withdraw petition for review filed by DOW and
OCCIDENTAL.
THE ISSUES
In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et al.,
presented the following issues for our consideration:
IN REFUTATION
I. THE COURT DISMISSED THE CASE DUE TO LACK OF
JURISDICTION.
a) The court did not simply dismiss the case because it
was filed in bad faith with petitioners intending to have
the same dismissed and returned to the Texas court.
b) The court dismissed the case because it was
convinced that it did not have jurisdiction.
IN SUPPORT OF THE PETITION
II. THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT
MATTER OF THE CASE.
a. The acts complained of occurred within Philippine
territory.
b. Art. 2176 of the Civil Code of the Philippines is broad
enough to cover the acts complained of.
! 88!
c. Assumption of jurisdiction by the U.S. District Court
over petitioner[s’] claims did not divest Philippine [c]ourts
of jurisdiction over the same.
d. The Compromise Agreement and the subsequent
Consolidated Motion to Drop Party Respondents Dow,
Occidental and Shell does not unjustifiably prejudice
58
remaining respondents Dole, Del Monte and Chiquita.
DISCUSSION
On the issue of jurisdiction
Essentially, the crux of the controversy in the petitions at bar is whether
the RTC of General Santos City and the RTC of Davao City erred in
dismissing Civil Case Nos. 5617 and 24,251-96, respectively, for lack of
jurisdiction.
Remarkably, none of the parties to this case claims that the courts a quo
are bereft of jurisdiction to determine and resolve the above-stated cases.
All parties contend that the RTC of General Santos City and the RTC of
Davao City have jurisdiction over the action for damages, specifically for
approximately ₱2.7 million for each of the plaintiff claimants.
NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious acts
and/or omissions of defendant companies occurred within Philippine
territory. Specifically, the use of and exposure to DBCP that was
manufactured, distributed or otherwise put into the stream of commerce
by defendant companies happened in the Philippines. Said fact allegedly
constitutes reasonable basis for our courts to assume jurisdiction over the
case. Furthermore, NAVIDA, et al., and ABELLA, et al., assert that the
provisions of Chapter 2 of the Preliminary Title of the Civil Code, as well
as Article 2176 thereof, are broad enough to cover their claim for
damages. Thus, NAVIDA, et al., and ABELLA, et al., pray that the
respective rulings of the RTC of General Santos City and the RTC of
Davao City in Civil Case Nos. 5617 and 24,251-96 be reversed and that
the said cases be remanded to the courts a quo for further proceedings.
DOLE similarly maintains that the acts attributed to defendant companies
constitute a quasi-delict, which falls under Article 2176 of the Civil Code.
In addition, DOLE states that if there were no actionable wrongs
committed under Philippine law, the courts a quo should have dismissed
the civil cases on the ground that the Amended Joint-Complaints of
NAVIDA, et al., and ABELLA, et al., stated no cause of action against the
defendant companies. DOLE also argues that if indeed there is no
positive law defining the alleged acts of defendant companies as
actionable wrong, Article 9 of the Civil Code dictates that a judge may not
refuse to render a decision on the ground of insufficiency of the law. The
court may still resolve the case, applying the customs of the place and, in
the absence thereof, the general principles of law. DOLE posits that the
Philippines is the situs of the tortious acts allegedly committed by
defendant companies as NAVIDA, et al., and ABELLA, et al., point to
their alleged exposure to DBCP which occurred in the Philippines, as the
cause of the sterility and other reproductive system problems that they
allegedly suffered. Finally, DOLE adds that the RTC of Davao City
gravely erred in relying upon newspaper reports in dismissing Civil Case
No. 24,251-96 given that newspaper articles are hearsay and without any
evidentiary value. Likewise, the alleged legal opinions cited in the
newspaper reports were taken judicial notice of, without any notice to the
parties. DOLE, however, opines that the dismissal of Civil Case Nos.
5617 and 24,251-96 was proper, given that plaintiff claimants merely
prosecuted the cases with the sole intent of securing a dismissal of the
actions for the purpose of convincing the U.S. Federal District Court to re-
assume jurisdiction over the cases.
In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction
over the subject matter of the cases filed before them. The Amended
Joint-Complaints sought approximately ₱2.7 million in damages for each
plaintiff claimant, which amount falls within the jurisdiction of the RTC.
CHIQUITA avers that the pertinent matter is the place of the alleged
exposure to DBCP, not the place of manufacture, packaging, distribution,
sale, etc., of the said chemical. This is in consonance with the lex loci
delicti commisi theory in determining the situs of a tort, which states that
the law of the place where the alleged wrong was committed will govern
the action. CHIQUITA and the other defendant companies also submitted
themselves to the jurisdiction of the RTC by making voluntary
appearances and seeking for affirmative reliefs during the course of the
proceedings. None of the defendant companies ever objected to the
exercise of jurisdiction by the courts a quo over their persons. CHIQUITA,
thus, prays for the remand of Civil Case Nos. 5617 and 24,251-96 to the
RTC of General Santos City and the RTC of Davao City, respectively.
The RTC of General Santos City and the RTC of Davao City have
jurisdiction over Civil Case Nos. 5617 and 24,251-96, respectively
The rule is settled that jurisdiction over the subject matter of a case is
conferred by law and is determined by the allegations in the complaint
and the character of the relief sought, irrespective of whether the plaintiffs
59
are entitled to all or some of the claims asserted therein. Once vested
by law, on a particular court or body, the jurisdiction over the subject
matter or nature of the action cannot be dislodged by anybody other than
by the legislature through the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of the RTC in
civil cases under Batas Pambansa Blg. 129, as amended by Republic Act
No. 7691, was:
SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise
exclusive original jurisdiction:
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages
of whatever kind, attorney’s fees, litigation expenses, and costs or the
! 89!
value of the property in controversy exceeds One hundred thousand
pesos (₱100,000.00) or, in such other cases in Metro Manila, where the
demand, exclusive of the abovementioned items exceeds Two hundred
60
thousand pesos (₱200,000.00).
Corollary thereto, Supreme Court Administrative Circular No. 09-94,
states:
2. The exclusion of the term "damages of whatever kind" in determining
the jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P.
Blg. 129, as amended by R.A. No. 7691, applies to cases where the
damages are merely incidental to or a consequence of the main cause of
action. However, in cases where the claim for damages is the main cause
of action, or one of the causes of action, the amount of such claim shall
be considered in determining the jurisdiction of the court.
Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded
Amended Joint-Complaints filed before the courts a quo, the following
prayer:
PRAYER
WHEREFORE, premises considered, it is most respectfully prayed that
after hearing, judgment be rendered in favor of the plaintiffs ordering the
defendants:
a) TO PAY EACH PLAINTIFF moral damages in the amount of
One Million Five Hundred Thousand Pesos (₱1,500,00.00);
b) TO PAY EACH PLAINTIFF nominal damages in the amount of
Four Hundred Thousand Pesos (₱400,000.00) each;
c) TO PAY EACH PLAINTIFF exemplary damages in the amount
of Six Hundred Thousand Pesos (₱600,000.00);
d) TO PAY EACH PLAINTIFF attorneys fees of Two Hundred
Thousand Pesos (₱200,000.00); and
61
e) TO PAY THE COSTS of the suit.
From the foregoing, it is clear that the claim for damages is the main
cause of action and that the total amount sought in the complaints is
approximately ₱2.7 million for each of the plaintiff claimants. The RTCs
unmistakably have jurisdiction over the cases filed in General Santos City
and Davao City, as both claims by NAVIDA, et al., and ABELLA, et al.,
fall within the purview of the definition of the jurisdiction of the RTC under
Batas Pambansa Blg. 129.
Moreover, the allegations in both Amended Joint-Complaints narrate that:
THE CAUSES OF ACTION
4. The Defendants manufactured, sold, distributed, used, AND/OR MADE
AVAILABLE IN COMMERCE nematocides containing the chemical
dibromochloropropane, commonly known as DBCP. THE CHEMICAL
WAS USED AGAINST the parasite known as the nematode, which
plagued banana plantations, INCLUDING THOSE in the Philippines. AS
IT TURNED OUT, DBCP not only destroyed nematodes. IT ALSO
CAUSED ILL-EFFECTS ON THE HEALTH OF PERSONS EXPOSED TO
IT AFFECTING the human reproductive system as well.
5. The plaintiffs were exposed to DBCP in the 1970s up to the early
1980s WHILE (a) they used this product in the banana plantations
WHERE they were employed, and/or (b) they resided within the
agricultural area WHERE IT WAS USED. As a result of such exposure,
the plaintiffs suffered serious and permanent injuries TO THEIR HEALTH,
including, but not limited to, STERILITY and severe injuries to their
reproductive capacities.
6. THE DEFENDANTS WERE AT FAULT OR WERE NEGLIGENT IN
THAT THEY MANUFACTURED, produced, sold, and/or USED DBCP
and/or otherwise, PUT THE SAME into the stream of commerce,
WITHOUT INFORMING THE USERS OF ITS HAZARDOUS EFFECTS
ON HEALTH AND/OR WITHOUT INSTRUCTIONS ON ITS PROPER
USE AND APPLICATION. THEY allowed Plaintiffs to be exposed to,
DBCP-containing materials which THEY knew, or in the exercise of
ordinary care and prudence ought to have known, were highly harmful
and injurious to the Plaintiffs’ health and well-being.
7. The Defendants WHO MANUFACTURED, PRODUCED, SOLD,
DISTRIBUTED, MADE AVAILABLE OR PUT DBCP INTO THE STREAM
OF COMMERCE were negligent OR AT FAULT in that they, AMONG
OTHERS:
a. Failed to adequately warn Plaintiffs of the dangerous
characteristics of DBCP, or to cause their subsidiaries or
affiliates to so warn plaintiffs;
b. Failed to provide plaintiffs with information as to what
should be reasonably safe and sufficient clothing and
proper protective equipment and appliances, if any, to
protect plaintiffs from the harmful effects of exposure to
DBCP, or to cause their subsidiaries or affiliates to do so;
c. Failed to place adequate warnings, in a language
understandable to the worker, on containers of DBCP-
containing materials to warn of the dangers to health of
coming into contact with DBCP, or to cause their
subsidiaries or affiliates to do so;
d. Failed to take reasonable precaution or to exercise
reasonable care to publish, adopt and enforce a safety
plan and a safe method of handling and applying DBCP,
or to cause their subsidiaries or affiliates to do so;
e. Failed to test DBCP prior to releasing these products
for sale, or to cause their subsidiaries or affiliates to do
so; and
f. Failed to reveal the results of tests conducted on DBCP
to each plaintiff, governmental agencies and the public,
or to cause their subsidiaries or affiliate to do so.
! 90!
8. The illnesses and injuries of each plaintiff are also due to the FAULT or
negligence of defendants Standard Fruit Company, Dole Fresh Fruit
Company, Dole Food Company, Inc., Chiquita Brands, Inc. and Chiquita
Brands International, Inc. in that they failed to exercise reasonable care to
prevent each plaintiff’s harmful exposure to DBCP-containing products
which defendants knew or should have known were hazardous to each
plaintiff in that they, AMONG OTHERS:
a. Failed to adequately supervise and instruct Plaintiffs in
the safe and proper application of DBCP-containing
products;
b. Failed to implement proper methods and techniques of
application of said products, or to cause such to be
implemented;
c. Failed to warn Plaintiffs of the hazards of exposure to
said products or to cause them to be so warned;
d. Failed to test said products for adverse health effects,
or to cause said products to be tested;
e. Concealed from Plaintiffs information concerning the
observed effects of said products on Plaintiffs;
f. Failed to monitor the health of plaintiffs exposed to said
products;
g. Failed to place adequate labels on containers of said
products to warn them of the damages of said products;
and
h. Failed to use substitute nematocides for said products
62
or to cause such substitutes to [be] used. (Emphasis
supplied and words in brackets ours.)
Quite evidently, the allegations in the Amended Joint-Complaints of
NAVIDA, et al., and ABELLA, et al., attribute to defendant companies
certain acts and/or omissions which led to their exposure to nematocides
containing the chemical DBCP. According to NAVIDA, et al., and
ABELLA, et al., such exposure to the said chemical caused ill effects,
injuries and illnesses, specifically to their reproductive system.
Thus, these allegations in the complaints constitute the cause of action of
plaintiff claimants – a quasi-delict, which under the Civil Code is defined
as an act, or omission which causes damage to another, there being fault
or negligence. To be precise, Article 2176 of the Civil Code provides:
Article 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.
As specifically enumerated in the amended complaints, NAVIDA, et al.,
and ABELLA, et al., point to the acts and/or omissions of the defendant
companies in manufacturing, producing, selling, using, and/or otherwise
putting into the stream of commerce, nematocides which contain DBCP,
"without informing the users of its hazardous effects on health and/or
63
without instructions on its proper use and application."
64
Verily, in Citibank, N.A. v. Court of Appeals, this Court has always
reminded that jurisdiction of the court over the subject matter of the action
is determined by the allegations of the complaint, irrespective of whether
or not the plaintiffs are entitled to recover upon all or some of the claims
asserted therein. The jurisdiction of the court cannot be made to depend
upon the defenses set up in the answer or upon the motion to dismiss, for
otherwise, the question of jurisdiction would almost entirely depend upon
the defendants. What determines the jurisdiction of the court is the nature
of the action pleaded as appearing from the allegations in the complaint.
The averments therein and the character of the relief sought are the ones
to be consulted.
Clearly then, the acts and/or omissions attributed to the defendant
companies constitute a quasi-delict which is the basis for the claim for
damages filed by NAVIDA, et al., and ABELLA, et al., with individual
claims of approximately ₱2.7 million for each plaintiff claimant, which
obviously falls within the purview of the civil action jurisdiction of the
RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA,
et al., allegedly suffered resulted from their exposure to DBCP while they
were employed in the banana plantations located in the Philippines or
while they were residing within the agricultural areas also located in the
Philippines. The factual allegations in the Amended Joint-Complaints all
point to their cause of action, which undeniably occurred in the
Philippines. The RTC of General Santos City and the RTC of Davao City
obviously have reasonable basis to assume jurisdiction over the cases.
It is, therefore, error on the part of the courts a quo when they dismissed
the cases on the ground of lack of jurisdiction on the mistaken
assumption that the cause of action narrated by NAVIDA, et al., and
ABELLA, et al., took place abroad and had occurred outside and beyond
the territorial boundaries of the Philippines, i.e., "the manufacture of the
pesticides, their packaging in containers, their distribution through sale or
other disposition, resulting in their becoming part of the stream of
65
commerce," and, hence, outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or
the situs of the act complained of, would be determinative of jurisdiction
and venue for trial of cases. In personal civil actions, such as claims for
payment of damages, the Rules of Court allow the action to be
commenced and tried in the appropriate court, where any of the plaintiffs
or defendants resides, or in the case of a non-resident defendant, where
66
he may be found, at the election of the plaintiff.
In a very real sense, most of the evidence required to prove the claims of
NAVIDA, et al., and ABELLA, et al., are available only in the Philippines.
! 91!
First, plaintiff claimants are all residents of the Philippines, either in
General Santos City or in Davao City. Second, the specific areas where
they were allegedly exposed to the chemical DBCP are within the
territorial jurisdiction of the courts a quo wherein NAVIDA, et al., and
ABELLA, et al., initially filed their claims for damages. Third, the
testimonial and documentary evidence from important witnesses, such as
doctors, co-workers, family members and other members of the
community, would be easier to gather in the Philippines. Considering the
great number of plaintiff claimants involved in this case, it is not far-
fetched to assume that voluminous records are involved in the
presentation of evidence to support the claim of plaintiff claimants. Thus,
these additional factors, coupled with the fact that the alleged cause of
action of NAVIDA, et al., and ABELLA, et al., against the defendant
companies for damages occurred in the Philippines, demonstrate that,
apart from the RTC of General Santos City and the RTC of Davao City
having jurisdiction over the subject matter in the instant civil cases, they
67
are, indeed, the convenient fora for trying these cases.
The RTC of General Santos City and the RTC of Davao City validly
acquired jurisdiction over the persons of all the defendant companies
It is well to stress again that none of the parties claims that the courts a
quo lack jurisdiction over the cases filed before them. All parties are one
in asserting that the RTC of General Santos City and the RTC of Davao
City have validly acquired jurisdiction over the persons of the defendant
companies in the action below. All parties voluntarily, unconditionally and
knowingly appeared and submitted themselves to the jurisdiction of the
courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that
"[t]he defendant’s voluntary appearance in the action shall be equivalent
to service of summons." In this connection, all the defendant companies
designated and authorized representatives to receive summons and to
represent them in the proceedings before the courts a quo. All the
defendant companies submitted themselves to the jurisdiction of the
courts a quo by making several voluntary appearances, by praying for
various affirmative reliefs, and by actively participating during the course
of the proceedings below.
In line herewith, this Court, in Meat Packing Corporation of the Philippines
68
v. Sandiganbayan, held that jurisdiction over the person of the
defendant in civil cases is acquired either by his voluntary appearance in
court and his submission to its authority or by service of summons.
Furthermore, the active participation of a party in the proceedings is
tantamount to an invocation of the court’s jurisdiction and a willingness to
abide by the resolution of the case, and will bar said party from later on
69
impugning the court or body’s jurisdiction.
Thus, the RTC of General Santos City and the RTC of Davao City have
validly acquired jurisdiction over the persons of the defendant companies,
as well as over the subject matter of the instant case. What is more, this
jurisdiction, which has been acquired and has been vested on the courts
a quo, continues until the termination of the proceedings.
It may also be pertinently stressed that "jurisdiction" is different from the
"exercise of jurisdiction." Jurisdiction refers to the authority to decide a
case, not the orders or the decision rendered therein. Accordingly, where
a court has jurisdiction over the persons of the defendants and the
subject matter, as in the case of the courts a quo, the decision on all
questions arising therefrom is but an exercise of such jurisdiction. Any
error that the court may commit in the exercise of its jurisdiction is merely
an error of judgment, which does not affect its authority to decide the
70
case, much less divest the court of the jurisdiction over the case.
Plaintiffs’ purported bad faith in filing the subject civil cases in Philippine
courts
Anent the insinuation by DOLE that the plaintiff claimants filed their cases
in bad faith merely to procure a dismissal of the same and to allow them
to return to the forum of their choice, this Court finds such argument
much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that
are unsupported by evidence on record. This Court does not rule on
allegations which are manifestly conjectural, as these may not exist at all.
This Court deals with facts, not fancies; on realities, not appearances.
When this Court acts on appearances instead of realities, justice and law
71
will be short-lived. This is especially true with respect to allegations of
bad faith, in line with the basic rule that good faith is always presumed
72
and bad faith must be proved.
In sum, considering the fact that the RTC of General Santos City and the
RTC of Davao City have jurisdiction over the subject matter of the
amended complaints filed by NAVIDA, et al., and ABELLA, et al., and that
the courts a quo have also acquired jurisdiction over the persons of all the
defendant companies, it therefore, behooves this Court to order the
remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of General
Santos City and the RTC of Davao City, respectively.
On the issue of the dropping of DOW, OCCIDENTAL and SHELL as
respondents in view of their amicable settlement with NAVIDA, et al., and
ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying that DOW,
OCCIDENTAL and SHELL be dropped as respondents in G.R. Nos.
125078 and 126654, as well as in Civil Case Nos. 5617 and 24,251-96.
The non-settling defendants allegedly manifested that they intended to
file their cross-claims against their co-defendants who entered into
compromise agreements. NAVIDA, et al., and ABELLA, et al., argue that
the non-settling defendants did not aver any cross-claim in their answers
to the complaint and that they subsequently sought to amend their
answers to plead their cross-claims only after the settlement between the
! 92!
plaintiff claimants and DOW, OCCIDENTAL, and SHELL were executed.
NAVIDA, et al., and ABELLA, et al., therefore, assert that the cross-
claims are already barred.
In their Memoranda, CHIQUITA and DOLE are opposing the above
motion of NAVIDA, et al., and ABELLA, et al., since the latter’s Amended
Complaints cited several instances of tortious conduct that were allegedly
committed jointly and severally by the defendant companies. This solidary
obligation on the part of all the defendants allegedly gives any co-
defendant the statutory right to proceed against the other co-defendants
for the payment of their respective shares. Should the subject motion of
NAVIDA, et al., and ABELLA, et al., be granted, and the Court
subsequently orders the remand of the action to the trial court for
continuance, CHIQUITA and DOLE would allegedly be deprived of their
right to prosecute their cross-claims against their other co-defendants.
Moreover, a third party complaint or a separate trial, according to
CHIQUITA, would only unduly delay and complicate the proceedings.
CHIQUITA and DOLE similarly insist that the motion of NAVIDA, et al.,
and ABELLA, et al., to drop DOW, SHELL and OCCIDENTAL as
respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case
Nos. 5617 and 24,251-96, be denied.
Incidentally, on April 2, 2007, after the parties have submitted their
respective memoranda, DEL MONTE filed a Manifestation and
73
Motion before the Court, stating that similar settlement agreements
were allegedly executed by the plaintiff claimants with DEL MONTE and
CHIQUITA sometime in 1999. Purportedly included in the agreements
were Civil Case Nos. 5617 and 24,251-96. Attached to the said
manifestation were copies of the Compromise Settlement, Indemnity, and
Hold Harmless Agreement between DEL MONTE and the settling
74
plaintiffs, as well as the Release in Full executed by the latter. DEL
MONTE specified therein that there were "only four (4) plaintiffs in Civil
75
Case No. 5617 who are claiming against the Del Monte parties" and
that the latter have executed amicable settlements which completely
satisfied any claims against DEL MONTE. In accordance with the alleged
compromise agreements with the four plaintiffs in Civil Case No. 5617,
DEL MONTE sought the dismissal of the Amended Joint-Complaint in the
said civil case. Furthermore, in view of the above settlement agreements
with ABELLA, et al., in Civil Case No. 24,251-96, DEL MONTE stated that
it no longer wished to pursue its petition in G.R. No. 127856 and
accordingly prayed that it be allowed to withdraw the same.
Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be
remanded to the RTC of General Santos City and the RTC of Davao City,
respectively, the Court deems that the Consolidated Motions (to Drop
Party-Respondents) filed by NAVIDA, et al., and ABELLA, et al., should
likewise be referred to the said trial courts for appropriate disposition.
Under Article 2028 of the Civil Code, "[a] compromise is a contract
whereby the parties, by making reciprocal concessions, avoid a litigation
or put an end to one already commenced." Like any other contract, an
extrajudicial compromise agreement is not excepted from rules and
principles of a contract. It is a consensual contract, perfected by mere
consent, the latter being manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the
76 77
contract. Judicial approval is not required for its perfection. A
compromise has upon the parties the effect and authority of res
78
judicata and this holds true even if the agreement has not been
79
judicially approved. In addition, as a binding contract, a compromise
80
agreement determines the rights and obligations of only the parties to it.
In light of the foregoing legal precepts, the RTC of General Santos City
and the RTC of Davao City should first receive in evidence and examine
all of the alleged compromise settlements involved in the cases at bar to
determine the propriety of dropping any party as a defendant therefrom.
The Court notes that the Consolidated Motions (to Drop Party-
Respondents) that was filed by NAVIDA, et al., and ABELLA, et al., only
pertained to DOW, OCCIDENTAL and SHELL in view of the latter
companies’ alleged compromise agreements with the plaintiff claimants.
However, in subsequent developments, DEL MONTE and CHIQUITA
supposedly reached their own amicable settlements with the plaintiff
claimants, but DEL MONTE qualified that it entered into a settlement
agreement with only four of the plaintiff claimants in Civil Case No. 5617.
These four plaintiff claimants were allegedly the only ones who were
asserting claims against DEL MONTE. However, the said allegation of
DEL MONTE was simply stipulated in their Compromise Settlement,
Indemnity, and Hold Harmless Agreement and its truth could not be
verified with certainty based on the records elevated to this Court.
Significantly, the 336 plaintiff claimants in Civil Case No. 5617 jointly filed
a complaint without individually specifying their claims against DEL
MONTE or any of the other defendant companies. Furthermore, not one
plaintiff claimant filed a motion for the removal of either DEL MONTE or
CHIQUITA as defendants in Civil Case Nos. 5617 and 24,251-96.
There is, thus, a primary need to establish who the specific parties to the
alleged compromise agreements are, as well as their corresponding
rights and obligations therein. For this purpose, the courts a quo may
require the presentation of additional evidence from the parties.
Thereafter, on the basis of the records of the cases at bar and the
additional evidence submitted by the parties, if any, the trial courts can
then determine who among the defendants may be dropped from the said
cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of
two or more persons who are liable for the same quasi-delict is solidary.
A solidary obligation is one in which each of the debtors is liable for the
! 93!
entire obligation, and each of the creditors is entitled to demand the
81
satisfaction of the whole obligation from any or all of the debtors.
In solidary obligations, the paying debtor’s right of reimbursement is
provided for under Article 1217 of the Civil Code, to wit:
Art. 1217. Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept.
He who made the payment may claim from his co-debtors only the share
which corresponds to each, with the interest for the payment already
made. If the payment is made before the debt is due, no interest for the
intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency,
reimburse his share to the debtor paying the obligation, such share shall
be borne by all his co-debtors, in proportion to the debt of each.1avvphil
The above right of reimbursement of a paying debtor, and the
corresponding liability of the co-debtors to reimburse, will only arise,
however, if a solidary debtor who is made to answer for an obligation
actually delivers payment to the creditor. As succinctly held in Lapanday
82
Agricultural Development Corporation v. Court of Appeals, "[p]ayment,
which means not only the delivery of money but also the performance, in
any other manner, of the obligation, is the operative fact which will entitle
either of the solidary debtors to seek reimbursement for the share which
83
corresponds to each of the [other] debtors."
In the cases at bar, there is no right of reimbursement to speak of as yet.
A trial on the merits must necessarily be conducted first in order to
establish whether or not defendant companies are liable for the claims for
damages filed by the plaintiff claimants, which would necessarily give rise
to an obligation to pay on the part of the defendants.
At the point in time where the proceedings below were prematurely
halted, no cross-claims have been interposed by any defendant against
another defendant. If and when such a cross-claim is made by a non-
settling defendant against a settling defendant, it is within the discretion of
the trial court to determine the propriety of allowing such a cross-claim
and if the settling defendant must remain a party to the case purely in
relation to the cross claim.
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v.
84
Court of Appeals, the Court had the occasion to state that "where there
are, along with the parties to the compromise, other persons involved in
the litigation who have not taken part in concluding the compromise
agreement but are adversely affected or feel prejudiced thereby, should
not be precluded from invoking in the same proceedings an adequate
85
relief therefor."
86
Relevantly, in Philippine International Surety Co., Inc. v. Gonzales, the
Court upheld the ruling of the trial court that, in a joint and solidary

obligation, the paying debtor may file a third-party complaint and/or a
cross-claim to enforce his right to seek contribution from his co-debtors.
Hence, the right of the remaining defendant(s) to seek reimbursement in
the above situation, if proper, is not affected by the compromise
agreements allegedly entered into by NAVIDA, et al., and ABELLA, et al.,
with some of the defendant companies.
WHEREFORE, the Court hereby GRANTS the petitions for review on
certiorari in G.R. Nos. 125078, 126654, and 128398. We REVERSE and
SET ASIDE the Order dated May 20, 1996 of the Regional Trial Court of
General Santos City, Branch 37, in Civil Case No. 5617, and the Order
dated October 1, 1996 of the Regional Trial Court of Davao City, Branch
16, and its subsequent Order dated December 16, 1996 denying
reconsideration in Civil Case No. 24,251-96, and REMAND the records of
this case to the respective Regional Trial Courts of origin for further and
appropriate proceedings in line with the ruling herein that said courts
have jurisdiction over the subject matter of the amended complaints in
Civil Case Nos. 5617 and 24,251-96.
The Court likewise GRANTS the motion filed by Del Monte to withdraw its
petition in G.R. No. 127856. In view of the previous grant of the motion to
withdraw the petition in G.R. No. 125598, both G.R. Nos. 127856 and
125598 are considered CLOSED AND TERMINATED.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 174908 June 17, 2013
DARMA MASLAG, Petitioner,
vs.
ELIZABETH MONZON, WILLIAM GESTON, and REGISTRY OF
DEEDS OF BENGUET, Respondents.
DECISION
DEL CASTILLO, J.:
"It is incumbent upon x x x appellants to utilize the correct mode of appeal
of the decisions of trial courts to the appellate courts. In the mistaken
1 proceedings to determine whether [Maslag] is entitled to the remedies
choice of their remedy, they can blame no one but themselves."
2 afforded by law to a builder in good faith for the improvements she
This is a Petition for Review on Certiorari of the May 31, 2006
3 constructed thereon.
Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 83365,
which dismissed petitioner Darma Maslag's (petitioner) ordinary appeal to
it for being an improper remedy. The Resolution disposed of the case as
follows:
WHEREFORE, the Motion to Dismiss is GRANTED, and the Appeal is
hereby DISMISSED.
4 16
SO ORDERED.
The Petition also assails the CA’s September 22, 2006
5 6
Resolution denying petitioner’s Motion for Reconsideration.
Factual Antecedents
! 94!
7
In 1998, petitioner filed a Complaint for reconveyance of real property
with declaration of nullity of original certificate of title (OCT) against
respondents Elizabeth Monzon (Monzon), William Geston and the
Registry of Deeds of La Trinidad, Benguet. The Complaint was filed
before the Municipal Trial Court (MTC) of La Trinidad, Benguet.
After trial, the MTC found respondent Monzon guilty of fraud in obtaining
8
an OCT over petitioner’s property. It ordered her to reconvey the said
9
property to petitioner, and to pay damages and costs of suit.
Respondents appealed to the Regional Trial Court (RTC) of La Trinidad,
Benguet.
After going over the MTC records and the parties’ respective memoranda,
the RTC of La Trinidad, Benguet, Branch 10, through Acting Presiding
Judge Fernando P. Cabato (Judge Cabato), issued its October 22, 2003
10
Order, declaring the MTC without jurisdiction over petitioner’s cause of
action. It further held that it will take cognizance of the case pursuant to
Section 8, Rule 40 of the Rules of Court, which reads:
SECTION 8. Appeal from orders dismissing case without trial; lack of
jurisdiction. – x x x
If the case was tried on the merits by the lower court without jurisdiction
over the subject matter, the Regional Trial Court on appeal shall not
dismiss the case if it has original jurisdiction thereof, but shall decide the
case in accordance with the preceding section, without prejudice to the
admission of amended pleadings and additional evidence in the interest
of justice. Both parties acknowledged receipt of the October 22, 2003
11
Order, but neither presented additional evidence before the new judge,
12
Edgardo B. Diaz De Rivera, Jr. (Judge Diaz De Rivera).
13
On May 4, 2004, Judge Diaz De Rivera issued a Resolution reversing
the MTC Decision. The fallo reads as follows:
WHEREFORE, the Judgment appealed from the Municipal Trial Court of
La Trinidad, Benguet is set aside. [Petitioner] is ordered to turn over the
possession of the 4,415 square meter land she presently occupies to
[Monzon]. This case is remanded to the court a quo for further
No pronouncement as to damages and costs.
14
SO ORDERED.
15
Petitioner filed a Notice of Appeal from the RTC’s May 4, 2004
Resolution.
Petitioner assailed the RTC’s May 4, 2004 Resolution for reversing the
MTC’s factual findings and prayed that the MTC Decision be adopted.
Her prayer before the CA reads:
WHEREFORE, premises considered, it is most respectfully prayed that
the decision of the Regional Trial Court, Branch 10 of La Trinidad,
Benguet, appealed from be reversed in toto and that the Honorable Court
adopt the decision of the Municipal Trial Court. Further reliefs just and
17
equitable under the premises are prayed for.
Respondents moved to dismiss petitioner’s ordinary appeal for being the
improper remedy. They asserted that the proper mode of appeal is a
Petition for Review under Rule 42 because the RTC rendered its May 4,
18
2004 Resolution in its appellate jurisdiction.
Ruling of the Court of Appeals
The CA dismissed petitioner’s appeal. It observed that the RTC’s May 4,
2004 Resolution (the subject matter of the appeal before the CA) set
aside an MTC Judgment; hence, the proper remedy is a Petition for
19
Review under Rule 42, and not an ordinary appeal.
20
Petitioner sought reconsideration. She argued, for the first time, that the
RTC rendered its May 4, 2004 Resolution in its original jurisdiction. She
cited the earlier October 22, 2003 Order of the RTC declaring the MTC
without jurisdiction over the case.
The CA denied petitioner’s Motion for Reconsideration in its September
21
22, 2006 Resolution:
A perusal of the May 4, 2004 Resolution of the RTC, which is the subject
matter of the appeal, clearly reveals that it took cognizance of the MTC
case in the exercise of its appellate jurisdiction. Consequently, as We
have previously enunciated, the proper remedy, is a petition for review
under Rule 42 and not an ordinary appeal under Rule 41.
WHEREFORE, premises considered, the instant Motion for
Reconsideration is DENIED. The May 31, 2006 Resolution of this Court is
hereby AFFIRMED in toto.
22
SO ORDERED.
Hence this Petition wherein petitioner prays that the CA be ordered to
23
take cognizance of her appeal.
Issues
Petitioner set forth the following issues in her Petition:
WHETHER X X X THE COURT OF APPEALS WAS CORRECT IN
DISMISSING THE APPEAL FILED BY THE PETITIONER,
CONSIDERING THAT THE REGIONAL TRIAL COURT, BRANCH 10 OF
LA TRINIDAD, BENGUET HELD THAT THE ORIGINAL COMPLAINT AS
FILED BEFORE THE MUNICIPAL TRIAL COURT OF LA TRINIDAD,
BENGUET WAS DECIDED BY THE LATTER WITHOUT ANY
JURISDICTION AND, IN ORDERING THAT THE CASE SHALL BE
DECIDED PURSUANT TO THE PROVISION OF SECTION 8 OF RULE
40 OF THE RULES OF COURT, IT DECIDED THE CASE NOT ON ITS
APPELLATE JURISDICTION BUT ON ITS ORIGINAL JURISDICTION
WHAT WILL BE THE EFFECT OF THE DECISION OF THE REGIONAL
TRIAL COURT, BRANCH 10 OF LA TRINIDAD, BENGUET, WHEN IT
DECIDED A CASE APPEALED BEFORE IT UNDER THE PROVISION
OF SECTION 8, RULE 40 OF THE RULES OF COURT OF THE
PHILIPPINES, AS TO THE COURSE OF REMEDY THAT MAY BE
! 95!
AVAILED OF BY THE PETITIONER – A PETITION FOR
REVIEWUNDER RULE 42 OR AN ORDINARY APPEAL UNDER RULE
24
41.
Our Ruling
In its October 22, 2003 Order, the RTC declared that the MTC has no
jurisdiction over the subject matter of the case based on the supposition
that the same is incapable of pecuniary estimation. Thus, following
Section 8, Rule 40 of the Rules of Court, it took cognizance of the case
and directed the parties to adduce further evidence if they so desire. The
parties bowed to this ruling of the RTC and, eventually, submitted the
case for its decision after they had submitted their respective
memoranda.
We cannot, however, gloss over this jurisdictional faux pas of the RTC.
Since it involves a question of jurisdiction, we may motu proprio review
25
and pass upon the same even at this late stage of the proceedings.
26
In her Complaint for reconveyance of real property with declaration of
nullity of OCT, petitioner claimed that she and her father had been in
open, continuous, notorious and exclusive possession of the disputed
property since the 1940’s. She averred:
7. Sometime in the year 1987, Elizabeth Monzon, the owner of
the adjacent parcel of land being occupied by plaintiff [Maslag],
informed the plaintiff that the respective parcels of land being
claimed by them can now be titled. A suggestion was, thereafter
made, that those who were interested to have their lands titled,
will contribute to a common fund for the surveying and
subsequent titling of the land;
8. Since plaintiff had, for so long, yearned for a title to the land
she occupies, she contributed to the amount being requested by
Elizabeth Monzon;
9. A subdivision survey was made and in the survey, the
respective areas of the plaintiff and the defendants were defined
and delimited – all for purposes of titling. x x x
10. But alas, despite the assurance of subdivided titles, when the
title was finally issued by the Registry of Deeds, the same was
only in the name of Elizabeth Monzon and WILLIAM GESTON.
The name of Darma Maslag was fraudulently, deliberately and in
bad faith omitted. Thus, the title to the property, to the extent of
18,295 square meters, was titled solely in the name of
ELIZABETH MONZON.
As a relief, petitioner prayed that Monzon be ordered to reconvey the
portion of the property which she claimed was fraudulently included in
Monzon’s title. Her primary relief was to recover ownership of real
property. Indubitably, petitioner’s complaint involves title to real property.
An action "involving title to real property," on the other hand, was defined
as an action where "the plaintiff’s cause of action is based on a claim that
she owns such property or that she has the legal rights to have exclusive
27
control, possession, enjoyment, or disposition of the same."
Under the present state of the law, in cases involving title to real property,
original and exclusive jurisdiction belongs to either the RTC or the MTC,
28
depending on the assessed value of the subject property. Pertinent
29
provisions of Batas Pambansa Blg. (BP) 129, as amended by Republic
30
Act (RA) No. 7691, provides:
Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise
exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is
incapable of pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of,
real property, or any interest therein, where the assessed value
of the property involved exceeds Twenty thousand pesos
(₱20,000.00) or for civil actions in Metro Manila, where x x x the
assessed value of the property exceeds Fifty thousand pesos
([P]50,000.00) 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;
xxxx
SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts
and Municipal Circuit Trial Courts in Civil Cases. — Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall
exercise:
xxxx
(3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed
value of the property or interest therein does not exceed Twenty
thousand pesos (₱20,000.00) or, in civil actions in Metro Manila, where
such assessed value does not exceed Fifty thousand pesos (₱50,000.00)
x x x.
In the case at bench, annexed to the Complaint is a Declaration of Real
31
Property dated November 12, 1991, which was later marked as
32
petitioner’s Exhibit "A", showing that the disputed property has an
33
assessed value of ₱12,400 only. Such assessed value of the property is
well within the jurisdiction of the MTC. In fine, the RTC, thru Judge
Cabato, erred in applying Section 19(1) of BP 129 in determining which
court has jurisdiction over the case and in pronouncing that the MTC is
divested of original and exclusive jurisdiction.
This brings to fore the next issue of whether the CA was correct in
dismissing petitioner’s appeal.
Section 2, Rule 50 of the Rules of Court provides for the dismissal of an
improper appeal:
! 96!
SECTION 2. Dismissal of improper appeal to the Court of Appeals. – An
appeal under Rule 41 taken from the Regional Trial Court to the Court of
Appeals raising only questions of law shall be dismissed, issues purely of
law not being reviewable by said court. Similarly, an appeal by notice of
appeal instead of by petition for review from the appellate judgment of a
Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be
transferred to the appropriate court but shall be dismissed
outright.1âwphi1 (Emphasis supplied)
There are two modes of appealing an RTC decision or resolution on
34
issues of fact and law. The first mode is an ordinary appeal under Rule
41 in cases where the RTC exercised its original jurisdiction. It is done by
filing a Notice of Appeal with the RTC. The second mode is a petition for
review under Rule 42 in cases where the RTC exercised its appellate
jurisdiction over MTC decisions. It is done by filing a Petition for Review
with the CA. Simply put, the distinction between these two modes of
appeal lies in the type of jurisdiction exercised by the RTC in the Order or
Decision being appealed.
As discussed above, the MTC has original and exclusive jurisdiction over
the subject matter of the case; hence, there is no other way the RTC
could have taken cognizance of the case and review the court a quo’s
Judgment except in the exercise of its appellate jurisdiction. Besides, the
new RTC Judge who penned the May 4, 2004 Resolution, Judge Diaz de
Rivera, actually treated the case as an appeal despite the October 22,
2003 Order. He started his Resolution by stating, "This is an appeal from
the Judgment rendered by the Municipal Trial Court (MTC) of La Trinidad
35
Benguet" and then proceeded to discuss the merits of the "appeal." In
the dispositive portion of said Resolution, he reversed the MTC’s findings
and conclusions and remanded residual issues for trial with the MTC.
Thus, in fact and in law, the RTC Resolution was a continuation of the
proceedings that originated from the MTC. It was a judgment issued by
the RTC in the exercise of its appellate jurisdiction. With regard to the
RTC’s earlier October 22, 2003 Order, the same should be disregarded
for it produces no effect (other than to confuse the parties whether the
RTC was invested with original or appellate jurisdiction). It cannot be
overemphasized that jurisdiction over the subject matter is conferred only
by law and it is "not within the courts, let alone the parties, to themselves
37
determine or conveniently set aside." Neither would the active
participation of the parties nor estoppel operate to confer original and
exclusive jurisdiction where the court or tribunal only wields appellate
38
jurisdiction over the case. Thus, the CA is correct in holding that the
proper mode of appeal should have been a Petition for Review under
Rule 42 of the Rules of Court, and not an ordinary appeal under Rule 41.
Seeing the futility of arguing against what the RTC actually did, petitioner
resorts to arguing for what the RTC should have done. She maintains that
the RTC should have issued its May 4, 2004 Resolution in its original
jurisdiction because it had earlier ruled that the MTC had no jurisdiction
over the cause of action.
Petitioner’s argument lacks merit. To reiterate, only statutes can confer
jurisdiction. Court issuances cannot seize or appropriate jurisdiction. It
has been repeatedly held that "any judgment, order or resolution issued
39
without jurisdiction is void and cannot be given any effect." By parity of
reasoning, an order issued by a court declaring that it has original and
exclusive jurisdiction over the subject matter of the case when under the
law it has none cannot likewise be given effect. It amounts to usurpation
of jurisdiction which cannot be countenanced. Since BP 129 already
apportioned the jurisdiction of the MTC and the RTC in cases involving
title to property, neither the courts nor the petitioner could alter or
disregard the same. Besides, in determining the proper mode of appeal
from an RTC Decision or Resolution, the determinative factor is the type
of jurisdiction actually exercised by the RTC in rendering its Decision or
Resolution. Was it rendered by the RTC in the exercise of its original
jurisdiction, or in the exercise of its appellate jurisdiction? In short, we
look at what type of jurisdiction was actually exercised by the RTC. We
do not look into what type of jurisdiction the RTC should have exercised.
This is but logical. Inquiring into what the RTC should have done in
disposing of the case is a question which already involves the merits of
the appeal, but we obviously cannot go into that where the mode of
appeal was improper to begin with.
WHEREFORE, premises considered, the Petition for Review is DENIED
for lack of merit. The assailed May 31, 2006 and September 22, 2006
Resolutions of the Court of Appeals in CA-G.R. CV No. 83365 are
AFFIRMED.
SO ORDERED.
G.R. No. 161771 February 15, 2012
BANK OF THE PHILIPPINE ISLANDS, as successor-in-interest of Far
East Bank and Trust Company,Petitioner,
vs.
EDUARDO HONG, doing business under the name and style
"SUPER LINE PRINTING PRESS" and the COURT OF
APPEALS, Respondents.
DECISION
VILLARAMA, JR., J.:
This petition for review on certiorari under Rule 45 assails the
1 2
Decision dated September 27, 2002 and Resolution dated January 12,
2004 of the Court of Appeals (CA) in CA-G.R. SP No. 64166.
On September 16, 1997, the EYCO Group of Companies ("EYCO") filed
a petition for suspension of payments and rehabilitation before the
Securities and Exchange Commission (SEC), docketed as SEC Case No.
09-97-5764. A stay order was issued on September 19, 1997 enjoining
! 97!
the disposition in any manner except in the ordinary course of business
and payment outside of legitimate business expenses during the
pendency of the proceedings, and suspending all actions, claims and
3
proceedings against EYCO until further orders from the SEC. On
December 18, 1998, the hearing panel approved the proposed
rehabilitation plan prepared by EYCO despite the recommendation of the
management committee for the adoption of the rehabilitation plan
prepared and submitted by the steering committee of the Consortium of
4
Creditor Banks which appealed the order to the Commission. On
September 14, 1999, the SEC rendered its decision disapproving the
petition for suspension of payments, terminating EYCO’s proposed
rehabilitation plan and ordering the dissolution and liquidation of the
petitioning corporation. The case was remanded to the hearing panel for
5
liquidation proceedings. On appeal by EYCO, (CA-G.R. SP No. 55208)
the CA upheld the SEC ruling. EYCO then filed a petition for certiorari
before this Court, docketed as G.R. No. 145977,which case was
eventually dismissed under Resolution dated May 3, 2005 upon joint
6
manifestation and motion to dismiss filed by the parties. Said resolution
7
had become final and executory on June 16, 2005.
Sometime in November 2000 while the case was still pending with the
CA, petitioner Bank of the Philippine Islands (BPI), filed with the Office of
the Clerk of Court, Regional Trial Court of Valenzuela City, a petition for
extra-judicial foreclosure of real properties mortgaged to it by Eyco
Properties, Inc. and Blue Star Mahogany, Inc. Public auction of the
8
mortgaged properties was scheduled on December 19, 2000.
Claiming that the foreclosure proceedings initiated by petitioner was
illegal, respondent Eduardo Hong, an unsecured creditor of Nikon
Industrial Corporation, one of the companies of EYCO, filed an action for
injunction and damages against the petitioner in the same court (RTC of
Valenzuela City). On its principal cause of action, the complaint alleged
that:
18. The ex-officio sheriff has no authority to sell the mortgaged
properties. Upon his appointment as liquidator, Edgardo Tarriela
was empowered by the SEC to receive and preserve all assets,
and cause their valuation (SEC Rules on Corporate Recovery,
Rule VI, Section 6-4). Therefore, the SEC retains jurisdiction over
the mortgaged properties of EYCO Properties, Inc. To allow the
ex-officio sheriff to take possession of the mortgaged properties
and sell the same in a foreclosure sale would be in derogation of
said jurisdiction.
19. All the assets of the EYCO Group should thus be surrendered
for collation to the liquidator and all claims against the EYCO
Group should be filed with the liquidator in the liquidation
proceedings with the SEC. The SEC, at which the liquidation is
pending, has jurisdiction over the mortgaged properties to the
 exclusion of any other court. Consequently, the ex-officio sheriff
has absolutely no jurisdiction to issue the notice of sheriff’s sale
and to sell the mortgaged properties on 19 December 2000.
20. Moreover, the sale of the mortgaged properties on 19
December 2000 would give undue preference to defendant
FEBTC to the detriment of other creditors, particularly plaintiff.
This was specifically proscribed by the Supreme Court stating in
the case of Bank of the Philippine Islands v. Court of Appeals that
whenever a distressed corporation asks SEC for rehabilitation
and suspension of payments, preferred creditors may no longer
assert such preference, but shall stand on equal footing with
other creditors. Consequently, foreclosure should be disallowed
so as not to prejudice other creditors or cause discrimination
9
among them. (Emphasis supplied.)
After hearing, the trial court issued a temporary restraining order (TRO).
10
Petitioner filed a motion to dismiss arguing that by plaintiff’s own
allegations in the complaint, jurisdiction over the reliefs prayed for
belongs to the SEC, and that plaintiff is actually resorting to forum
shopping since he has filed a claim with the SEC and the designated
Liquidator in the ongoing liquidation of the EYCO Group of Companies. In
11
his Opposition, plaintiff (respondent) asserted that the RTC has
jurisdiction on the issue of propriety and validity of the foreclosure by
petitioner, in accordance with Section 1, Rule 4 of the 1997 Rules of Civil
Procedure, as amended, the suit being in the nature of a real action.
On January 17, 2001, the trial court denied the motion to
12
dismiss. Petitioner’s motion for reconsideration was likewise
13
denied. Petitioner challenged the validity of the trial court’s ruling before
the CA via a petition for certiorari under Rule 65.
The CA affirmed the trial court’s denial of petitioner’s motion to dismiss. It
held that questions relating to the validity or legality of the foreclosure
proceedings, including an action to enjoin the same, must necessarily be
cognizable by the RTC, notwithstanding that the SEC likewise possesses
the power to issue injunction in all cases in which it has jurisdiction as
provided in Sec. 6 (a) of Presidential Decree (P.D.) No. 902-A. Further,
the CA stated that an action for foreclosure of mortgage and all incidents
relative thereto including its validity or invalidity is within the jurisdiction of
the RTC and is not among those cases over which the SEC exercises
exclusive and original jurisdiction under Sec. 5 of P.D. No. 902-A.
Consequently, no grave abuse of discretion was committed by the trial
court in issuing the assailed orders.
With the CA’s denial of its motion for reconsideration, petitioner is now
before this Court raising the sole issue of whether the RTC can take
cognizance of the injunction suit despite the pendency of SEC Case No.
09-97-5764.
The petition has no merit.
! 98!
Jurisdiction is defined as the power and authority of a court to hear and
14
decide a case. A court’s jurisdiction over the subject matter of the action
15
is conferred only by the Constitution or by statute. The nature of an
action and the subject matter thereof, as well as which court or agency of
the government has jurisdiction over the same, are determined by the
material allegations of the complaint in relation to the law involved and
the character of the reliefs prayed for, whether or not the
16
complainant/plaintiff is entitled to any or all of such reliefs. And
jurisdiction being a matter of substantive law, the established rule is that
the statute in force at the time of the commencement of the action
17
determines the jurisdiction of the court.
Perusal of the complaint reveals that respondent does not ask the trial
court to rule on its interest or claim -- as an unsecured creditor of two
companies under EYCO -- against the latter’s properties mortgaged to
petitioner. The complaint principally seeks to enjoin the foreclosure
proceedings initiated by petitioner over those properties on the ground
that such properties are held in trust and placed under the jurisdiction of
the appointed Liquidator in SEC Case No. 09-97-5764. Thus, Civil Case
No. 349-V-00 is one for injunction with prayer for damages.
An action for injunction is a suit which has for its purpose the enjoinment
of the defendant, perpetually or for a particular time, from the commission
or continuance of a specific act, or his compulsion to continue
performance of a particular act. It has an independent existence, and is
distinct from the ancillary remedy of preliminary injunction which cannot
exist except only as a part or an incident of an independent action or
proceeding. In an action for injunction, the auxiliary remedy of preliminary
18
injunction, prohibitory or mandatory, may issue.
As a rule, actions for injunction and damages lie within the jurisdiction of
the RTC pursuant to Section 19 of Batas Pambansa Blg. 129, otherwise
known as the "Judiciary Reorganization Act of 1980," as amended by
Republic Act (R.A.) No. 7691.
Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise
exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigations is incapable of
pecuniary estimation;
xxxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal,
person or body exercising x x x judicial or quasi-judicial functions;
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages
of whatever kind, attorney’s fees, litigation expenses, and costs or the
value of the property in controversy exceeds Three hundred thousand
pesos (₱300,000.00) or, in such other cases in Metro Manila, where the
demand exclusive of the above-mentioned items exceeds Four hundred
thousand pesos (₱400,000.00). (Italics supplied.)
On the other hand, Sec. 6 (a) of P.D. No. 902-A empowered the SEC to
"issue preliminary or permanent injunctions, whether prohibitory or
mandatory, in all cases in which it has jurisdiction." Such cases in which
the SEC exercises original and exclusive jurisdiction are the following:
(a) Devices or schemes employed by or any acts, of the board of
directors, business associates, its officers or partnership,
amounting to fraud and misrepresentation which may be
detrimental to the interest of the public and/or of the stockholder,
partners, members of associations or organizations registered
with the Commission;
(b) Controversies arising out of intra-corporate or partnership
relations, between and among stockholders, members or
associates; between any or all of them and the corporation,
partnership or association of which they are stockholders,
members or associates, respectively; and between such
corporation, partnership or association and the state insofar as it
concerns their individual franchise or right to exist as such entity;
and
(c) Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnerships
19
or associations.
Previously, under the Rules of Procedure on Corporate Recovery, the
SEC upon termination of cases involving petitions for suspension of
payments or rehabilitation may, motu proprio, or on motion by any
interested party, or on the basis of the findings and recommendation of
the Management Committee that the continuance in business of the
debtor is no longer feasible or profitable, or no longer works to the best
interest of the stockholders, parties-litigants, creditors, or the general
public, order the dissolution of the debtor and the liquidation of its
20
remaining assets appointing a Liquidator for the purpose. The debtor’s
properties are then deemed to have been conveyed to the Liquidator in
trust for the benefit of creditors, stockholders and other persons in
interest. This notwithstanding, any lien or preference to any property shall
be recognized by the Liquidator in favor of the security or lienholder, to
21
the extent allowed by law, in the implementation of the liquidation plan.
However, R.A. No. 8799, which took effect on August 8, 2000, transferred
to the appropriate regional trial courts the SEC’s jurisdiction over those
cases enumerated in Sec. 5 of P.D. No. 902-A. Section 5.2 of R.A. No.
8799 provides:
SEC. 5.2 The Commission’s jurisdiction over all cases enumerated under
Section 5 of Presidential Decree No. 902-A is hereby transferred to the
Courts of general jurisdiction or the appropriate Regional Trial
Court: Provided, that the Supreme Court in the exercise of its authority
may designate the Regional Trial Court branches that shall exercise
jurisdiction over these cases. The Commission shall retain jurisdiction
! 99!
over pending cases involving intra-corporate disputes submitted for final
resolution which should be resolved within one (1) year from the
enactment of this Code. The Commission shall retain jurisdiction over
pending suspension of payments/rehabilitation cases filed as of 30
June 2000 until finally disposed. (Emphasis supplied.)
Upon the effectivity of R.A. No. 8799, SEC Case No. 09-97-5764 was no
longer pending.1âwphi1 The SEC finally disposed of said case when it
rendered on September 14, 1999 the decision disapproving the petition
for suspension of payments, terminating the proposed rehabilitation plan,
and ordering the dissolution and liquidation of the petitioning corporation.
With the enactment of the new law, jurisdiction over the liquidation
proceedings ordered in SEC Case No. 09-97-5764 was transferred to the
RTC branch designated by the Supreme Court to exercise jurisdiction
over cases formerly cognizable by the SEC. As this Court held in
22
Consuelo Metal Corporation v. Planters Development Bank :
The SEC assumed jurisdiction over CMC’s petition for suspension of
payment and issued a suspension order on 2 April 1996 after it found
CMC’s petition to be sufficient in form and substance. While CMC’s
petition was still pending with the SEC as of 30 June 2000, it was finally
disposed of on 29 November 2000 when the SEC issued its Omnibus
Order directing the dissolution of CMC and the transfer of the liquidation
proceedings before the appropriate trial court. The SEC finally disposed
of CMC’s petition for suspension of payment when it determined that
CMC could no longer be successfully rehabilitated.
However, the SEC’s jurisdiction does not extend to the liquidation of a
corporation. While the SEC has jurisdiction to order the dissolution of a
corporation, jurisdiction over the liquidation of the corporation now
pertains to the appropriate regional trial courts. This is the reason why the
SEC, in its 29 November 2000 Omnibus Order, directed that "the
proceedings on and implementation of the order of liquidation be
commenced at the Regional Trial Court to which this case shall be
transferred." This is the correct procedure because the liquidation of a
corporation requires the settlement of claims for and against the
corporation, which clearly falls under the jurisdiction of the regular courts.
The trial court is in the best position to convene all the creditors of the
corporation, ascertain their claims, and determine their
23
preferences. (Emphasis supplied.)
There is no showing in the records that SEC Case No. 09-97-5764 had
been transferred to the appropriate RTC designated as Special
Commercial Court at the time of the commencement of the injunction suit
on December 18, 2000. Given the urgency of the situation and the
proximity of the scheduled public auction of the mortgaged properties as
per the Notice of Sheriff’s Sale, respondent was constrained to seek relief
from the same court having jurisdiction over the foreclosure proceedings
– RTC of Valenzuela City. Respondent thus filed Civil Case No. 349-V-00
in the RTC of Valenzuela City on December 18, 2000 questioning the
validity of and enjoining the extrajudicial foreclosure initiated by petitioner.
Pursuant to its original jurisdiction over suits for injunction and damages,
the RTC of Valenzuela City, Branch 75 properly took cognizance of the
injunction case filed by the respondent. No reversible error was therefore
committed by the CA when it ruled that the RTC of Valenzuela City,
Branch 75 had jurisdiction to hear and decide respondent’s complaint for
injunction and damages.
Lastly, it may be mentioned that while the Consortium of Creditor Banks
had agreed to end their opposition to the liquidation proceedings upon
24
the execution of the Agreement dated February 10, 2003, on the basis
of which the parties moved for the dismissal of G.R. No. 145977, it is to
be noted that petitioner is not a party to the said agreement. Thus, even
assuming that the SEC retained jurisdiction over SEC Case No. 09-97-
5764, petitioner was not bound by the terms and conditions of the
Agreement relative to the foreclosure of those mortgaged properties
belonging to EYCO and/or other accommodation mortgagors.
WHEREFORE, the petition for review on certiorari is DENIED. The
Decision dated September 27, 2002 and Resolution dated January 12,
2004 of the Court of Appeals in CA-G.R. SP No. 64166 are AFFIRMED.
With costs against the petitioner.
SO ORDERED.
G.R. No. 168785 February 5, 2010
HERALD BLACK DACASIN, Petitioner,
vs.
SHARON DEL MUNDO DACASIN, Respondent.
DECISION
CARPIO, J.:
The Case
1 2
For review is a dismissal of a suit to enforce a post-foreign divorce child
custody agreement for lack of jurisdiction.
The Facts
Petitioner Herald Dacasin (petitioner), American, and respondent Sharon
Del Mundo Dacasin (respondent), Filipino, were married in Manila in April
1994. They have one daughter, Stephanie, born on 21 September 1995.
In June 1999, respondent sought and obtained from the Circuit Court,
19th Judicial Circuit, Lake County, Illinois (Illinois court) a divorce decree
3
against petitioner. In its ruling, the Illinois court dissolved the marriage of
petitioner and respondent, awarded to respondent sole custody of
Stephanie and retained jurisdiction over the case for enforcement
purposes.
On 28 January 2002, petitioner and respondent executed in Manila a
4
contract (Agreement ) for the joint custody of Stephanie. The parties
chose Philippine courts as exclusive forum to adjudicate disputes arising
! 100!
from the Agreement. Respondent undertook to obtain from the Illinois
court an order "relinquishing" jurisdiction to Philippine courts.
In 2004, petitioner sued respondent in the Regional Trial Court of Makati
City, Branch 60 (trial court) to enforce the Agreement. Petitioner alleged
that in violation of the Agreement, respondent exercised sole custody
over Stephanie.
Respondent sought the dismissal of the complaint for, among others, lack
of jurisdiction because of the Illinois court’s retention of jurisdiction to
enforce the divorce decree.
The Ruling of the Trial Court
In its Order dated 1 March 2005, the trial court sustained respondent’s
motion and dismissed the case for lack of jurisdiction. The trial court held
that: (1) it is precluded from taking cognizance over the suit considering
the Illinois court’s retention of jurisdiction to enforce its divorce decree,
including its order awarding sole custody of Stephanie to respondent; (2)
the divorce decree is binding on petitioner following the "nationality rule"
5
prevailing in this jurisdiction; and (3) the Agreement is void for
6
contravening Article 2035, paragraph 5 of the Civil Code prohibiting
7
compromise agreements on jurisdiction.
Petitioner sought reconsideration, raising the new argument that the
divorce decree obtained by respondent is void. Thus, the divorce decree
is no bar to the trial court’s exercise of jurisdiction over the case.
In its Order dated 23 June 2005, the trial court denied reconsideration,
holding that unlike in the case of respondent, the divorce decree is
binding on petitioner under the laws of his nationality.
Hence, this petition.
Petitioner submits the following alternative theories for the validity of the
Agreement to justify its enforcement by the trial court: (1) the Agreement
novated the valid divorce decree, modifying the terms of child custody
8
from sole (maternal) to joint; or (2) the Agreement is independent of the
divorce decree obtained by respondent.
The Issue
The question is whether the trial court has jurisdiction to take cognizance
of petitioner’s suit and enforce the Agreement on the joint custody of the
parties’ child.
The Ruling of the Court
The trial court has jurisdiction to entertain petitioner’s suit but not to
enforce the Agreement which is void. However, factual and equity
considerations militate against the dismissal of petitioner’s suit and call
for the remand of the case to settle the question of Stephanie’s custody.
Regional Trial Courts Vested With Jurisdiction
to Enforce Contracts
Subject matter jurisdiction is conferred by law. At the time petitioner filed
his suit in the trial court, statutory law vests on Regional Trial Courts
exclusive original jurisdiction over civil actions incapable of pecuniary
 9
estimation. An action for specific performance, such as petitioner’s suit
to enforce the Agreement on joint child custody, belongs to this species of
10
actions. Thus, jurisdiction-wise, petitioner went to the right court.
Indeed, the trial court’s refusal to entertain petitioner’s suit was grounded
not on its lack of power to do so but on its thinking that the Illinois court’s
divorce decree stripped it of jurisdiction. This conclusion is unfounded.
What the Illinois court retained was "jurisdiction x x x for the purpose of
enforcing all and sundry the various provisions of [its] Judgment for
11
Dissolution." Petitioner’s suit seeks the enforcement not of the "various
provisions" of the divorce decree but of the post-divorce Agreement on
joint child custody. Thus, the action lies beyond the zone of the Illinois
court’s so-called "retained jurisdiction."
Petitioner’s Suit Lacks Cause of Action
The foregoing notwithstanding, the trial court cannot enforce the
Agreement which is contrary to law.
In this jurisdiction, parties to a contract are free to stipulate the terms of
agreement subject to the minimum ban on stipulations contrary to law,
12
morals, good customs, public order, or public policy. Otherwise, the
contract is denied legal existence, deemed "inexistent and void from the
13
beginning." For lack of relevant stipulation in the Agreement, these and
other ancillary Philippine substantive law serve as default parameters to
14
test the validity of the Agreement’s joint child custody stipulations.
At the time the parties executed the Agreement on 28 January 2002, two
facts are undisputed: (1) Stephanie was under seven years old (having
been born on 21 September 1995); and (2) petitioner and respondent
were no longer married under the laws of the United States because of
the divorce decree. The relevant Philippine law on child custody for
15
spouses separated in fact or in law (under the second paragraph of
Article 213 of the Family Code) is also undisputed: "no child under seven
16
years of age shall be separated from the mother x x x." (This statutory
17
awarding of sole parental custody to the mother is
18 19
mandatory, grounded on sound policy consideration, subject only to a
20
narrow exception not alleged to obtain here. ) Clearly then, the
Agreement’s object to establish a post-divorce joint custody regime
between respondent and petitioner over their child under seven years old
contravenes Philippine law.
The Agreement is not only void ab initio for being contrary to law, it has
also been repudiated by the mother when she refused to allow joint
custody by the father. The Agreement would be valid if the spouses have
not divorced or separated because the law provides for joint parental
21
authority when spouses live together. However, upon separation of the
spouses, the mother takes sole custody under the law if the child is below
seven years old and any agreement to the contrary is void. Thus, the law
suspends the joint custody regime for (1) children under seven of (2)
separated or divorced spouses. Simply put, for a child within this age
! 101!
bracket (and for commonsensical reasons), the law decides for the
separated or divorced parents how best to take care of the child and that
is to give custody to the separated mother. Indeed, the separated parents
cannot contract away the provision in the Family Code on the maternal
custody of children below seven years anymore than they can privately
agree that a mother who is unemployed, immoral, habitually drunk, drug
addict, insane or afflicted with a communicable disease will have sole
custody of a child under seven as these are reasons deemed compelling
to preclude the application of the exclusive maternal custody regime
22
under the second paragraph of Article 213.
It will not do to argue that the second paragraph of Article 213 of the
Family Code applies only to judicial custodial agreements based on its
text that "No child under seven years of age shall be separated from the
mother, unless the court finds compelling reasons to order otherwise." To
limit this provision’s enforceability to court sanctioned agreements while
placing private agreements beyond its reach is to sanction a double
standard in custody regulation of children under seven years old of
separated parents. This effectively empowers separated parents, by the
simple expedient of avoiding the courts, to subvert a legislative policy
vesting to the separated mother sole custody of her children under seven
years of age "to avoid a tragedy where a mother has seen her baby torn
23
away from her." This ignores the legislative basis that "[n]o man can
sound the deep sorrows of a mother who is deprived of her child of tender
24
age."
It could very well be that Article 213’s bias favoring one separated parent
(mother) over the other (father) encourages paternal neglect, presumes
incapacity for joint parental custody, robs the parents of custodial options,
25
or hijacks decision-making between the separated parents. However,
these are objections which question the law’s wisdom not its validity or
uniform enforceability. The forum to air and remedy these grievances is
the legislature, not this Court. At any rate, the rule’s seeming harshness
or undesirability is tempered by ancillary agreements the separated
parents may wish to enter such as granting the father visitation and other
privileges. These arrangements are not inconsistent with the regime of
sole maternal custody under the second paragraph of Article 213 which
merely grants to the mother final authority on the care and custody of the
minor under seven years of age, in case of disagreements.1avvphi1
Further, the imposed custodial regime under the second paragraph of
Article 213 is limited in duration, lasting only until the child’s seventh year.
From the eighth year until the child’s emancipation, the law gives the
separated parents freedom, subject to the usual contractual limitations, to
agree on custody regimes they see fit to adopt. Lastly, even supposing
that petitioner and respondent are not barred from entering into the
Agreement for the joint custody of Stephanie, respondent repudiated the
Agreement by asserting sole custody over Stephanie. Respondent’s act
effectively brought the parties back to ambit of the default custodial The Facts of the Case and Nature of Proceeding
regime in the second paragraph of Article 213 of the Family Code vesting Justify Remand
on respondent sole custody of Stephanie. Instead of ordering the dismissal of petitioner’s suit, the logical end to its
Nor can petitioner rely on the divorce decree’s alleged invalidity - not lack of cause of action, we remand the case for the trial court to settle the
because the Illinois court lacked jurisdiction or that the divorce decree question of Stephanie’s custody. Stephanie is now nearly 15 years old,
violated Illinois law, but because the divorce was obtained by his Filipino thus removing the case outside of the ambit of the mandatory maternal
26
spouse - to support the Agreement’s enforceability. The argument that custody regime under Article 213 and bringing it within coverage of the
foreigners in this jurisdiction are not bound by foreign divorce decrees is default standard on child custody proceedings – the best interest of the
27 30
hardly novel. Van Dorn v. Romillo settled the matter by holding that an child. As the question of custody is already before the trial court and the
alien spouse of a Filipino is bound by a divorce decree obtained child’s parents, by executing the Agreement, initially showed inclination to
28
abroad. There, we dismissed the alien divorcee’s Philippine suit for share custody, it is in the interest of swift and efficient rendition of justice
accounting of alleged post-divorce conjugal property and rejected his to allow the parties to take advantage of the court’s jurisdiction, submit
submission that the foreign divorce (obtained by the Filipino spouse) is evidence on the custodial arrangement best serving Stephanie’s interest,
not valid in this jurisdiction in this wise: and let the trial court render judgment. This disposition is consistent with
There can be no question as to the validity of that Nevada divorce in any the settled doctrine that in child custody proceedings, equity may be
31
of the States of the United States. The decree is binding on private invoked to serve the child’s best interest.
respondent as an American citizen. For instance, private respondent WHEREFORE, we REVERSE the Orders dated 1 March 2005 and 23
cannot sue petitioner, as her husband, in any State of the Union. What he June 2005 of the Regional Trial Court of Makati City, Branch 60. The
is contending in this case is that the divorce is not valid and binding in this case is REMANDED for further proceedings consistent with this ruling.
jurisdiction, the same being contrary to local law and public policy. SO ORDERED.
It is true that owing to the nationality principle embodied in Article 15 of G.R. No. 163878 December 12, 2006
the Civil Code, only Philippine nationals are covered by the policy against FAR EAST BANK AND TRUST COMPANY, petitioner,
absolute divorces the same being considered contrary to our concept of vs.
public policy and morality. However, aliens may obtain divorces abroad, SHEMBERG MARKETING CORPORATION, MACKIE INDUSTRIES
which may be recognized in the Philippines, provided they are valid CORPORATION, BENSON INDUSTRIES, INC., KAMARO
according to their national law. In this case, the divorce in Nevada ENTERPRISES CORP., POLYSACCHARIDE CORP., PRIME CRAFTS,
released private respondent from the marriage from the standards of INC., CEBU UNITED POLYMER CORP., SHEMBERG NATURES
1
American law, under which divorce dissolves the marriage. CRAFT INC., MARY U. DACAY , HENRY U. DACAY, BENSON U.
xxxx DACAY, RAMON U. DACAY AND ERNESTO U. DACAY,
Thus, pursuant to his national law, private respondent is no longer the JR., respondents.
husband of petitioner. He would have no standing to sue in the case
below as petitioner’s husband entitled to exercise control over conjugal
assets. As he is bound by the Decision of his own country’s Court, which DECISION
validly exercised jurisdiction over him, and whose decision he does not
repudiate, he is estopped by his own representation before said Court
from asserting his right over the alleged conjugal property. (Emphasis SANDOVAL-GUTIERREZ, J.:
2
supplied) Before us is a petition for review on certiorari assailing the Decision
29 3
We reiterated Van Dorn in Pilapil v. Ibay-Somera to dismiss criminal and Resolution of the Court of Appeals dated February 16, 2004 and
complaints for adultery filed by the alien divorcee (who obtained the May 28, 2004 in CA-G.R. SP No. 67270.
foreign divorce decree) against his former Filipino spouse because he no Far East Bank & Trust Company (FEBTC), petitioner, is a domestic
longer qualified as "offended spouse" entitled to file the complaints under banking corporation organized and existing under Philippine laws. It is
Philippine procedural rules. Thus, it should be clear by now that a foreign now managed and operated by the Bank of the Philippine Islands with
divorce decree carries as much validity against the alien divorcee in this main office in Makati City.
jurisdiction as it does in the jurisdiction of the alien’s nationality, Shemberg Marketing Corporation, Mackie Industries Corporation, Benson
irrespective of who obtained the divorce. Industries Incorporated, Kamaro Enterprises Corporation, Polysaccharide
! 102!
Corporation, Prime Crafts Incorporated, Cebu United Polymer August 14, 1984 Shemberg Ernesto Dacay, Jr., P10,000,00
Corporation, Shemberg Natures Craft Inc., respondents herein, are all Marketing Benson Dacay, Ramon
duly registered domestic corporations based in Pakna-an, Mandaue City. Corporation Dacay, Mary Dacay,
The individual respondents, all surnamed Dacay, are directors and Ernesto Dacay, Sr., and
corporate officers of the said corporations. Henry U, Dacay
Respondents are the registered owners of several realties located in
Mandaue City described as follows: May 7, 1990 Shemberg Benson Dakay P3.976.000
Marketing Corp,
LOT NOS. AREA REGISTERED TRANSFER
(in square OWNER(S) CERTIFICATES
May 10, 1990
OF Shemberg Henry Dakay, Benson P1,565,000
meters) TITLE (TCT) NOS. Marketing Corp. & Dakay, Rosemary Tan
2209-A 6,384 Henry Dakay, Benson 14231 Mackie Industries Dakay, Ernesto Dakay, Jr.,
Dakay, Ernesto Dakay, Jr., Corp. and Ramon Dakay
Ramon Dakay
September 25, Mackie Industries Henry Dakay, Benson P1,927,500
2230 6,677 Mackie Industries Corp. (19073)-5795-
1991 Corp., Henry Dakay, Ernesto Dakay,
2231 5,563 Mackie Industries Corp. (T-21005)-6216 Dakay, Benson and Ramon Dakay,
2232 16,139 Mackie Industries Corp. (T-19451)-5929 Dakay, Ernesto
Dakay, Ramon
2207 8,847 Mackie Industries Corp. (T-19208)-5857 Dakay, and Mario
3 11,224 Shemberg Marketing Corp. 26079 Dakay
2266-A 3,112 Shemberg Marketing Corp. 19942 July 27, 1992 Mackie Industries Henry Dakay, Benson P227,313.0
7 1,322 Shemberg Marketing Corp. 26938 Corp. & Shemberg Dakay, Rosemary Tan
4 3,685 Shemberg Marketing Corp. 26080 Marketing Corp. Dakay, Ernesto Dakay,
Jr., Ramon Dakay, and
Prior to 1998, respondents entered into several credit transactions with
Mario Dakay
petitioner secured by several real estate mortgages, thus:
DATES OF MORTGAGORS SIGNATORIES AMOUNTS November 23,
Mackie Industries Henry Dakay, Benson P13,040,00
MORTGAGE 1995 Corp. & Shemberg Dakay, Ernesto Dakay, Jr.,
Marketing Corp, and Ramon Dakay
December 6, Mackie Industries Mary U. Dacay P3,000,000.00 Henry Dakay,
1977 Corp. Ramon Dakay, and
February 21, Mackie Industries Ernesto Dakay, Sr., and P500,000.00 Mario Dakay
1979 Corp. Mary U. Dakay In their respective mortgage contracts, duly annotated on respondents’
titles, the parties stipulated that upon failure or refusal of the mortgagor to
March 21, 1979 Mackie Industries Ernesto Dakay, Sr., and P1,000,000.00
pay the obligations when due, the entire principal, interest, penalties and
Corp. Mary U. Dacay other charges shall be immediately demandable and payable without
June 25, 1982 Mackie Industries Mary U. Dacay need of notice or demand; and the mortgagee shall have the absolute
P292,000.00
Corp. discretion to foreclose the mortgage extrajudicially pursuant to Act No.
3135, as amended.
October 27, Shemberg Mary U. Dacay P3,708,000.00
Pursuant to the parties’ agreements, petitioner released to respondents
1982 Marketing Corp. the principal amounts of the loans as evidenced by various promissory
notes, thus:
Note Nos. Dates Amounts Sig
TLC-2-060-970509 April 8, 1997 P4,700,000.00 Ma

! 103!
 TLC-2-060-970518 July 31, 1997 P3,500,000.00 (REM), Chattel
Mary U. Dacay Mortgages (CM), Trust Receipts (TR), Surety Agreements
(JSS) and other bank forms and documents." Respondents complied
TLC-2-060-970115 September 8, 1997 P11,000,000.00 Mary
since theyU. trusted
Dacay petitioner. However, it tuned out that petitioner’s
TLC-2-060-970153 December 4, 1997 P5,000,000.00 employees filled the blanks with "false and inaccurate entries."
Mary U. Dacay
Respondents deny and dispute the genuineness and due execution of
TLC-2-060-970155 December 15, 1997 P10,000,000.00 Mary U. Dacay
the documents and pray for the following reliefs:
TLC-2-060-970156 December 15, 1997 P10,000,000.00 Mary1.U.Immediately
Dacay upon filing, to issue ex parte a 72-hour temporary
restraining order and thereafter upon summary hearing, to issue
TLC-2-060-970157 December 15, 1997 P5,000,000.00 Mary U. Dacay
a temporary restraining order for a maximum period of twenty
TLC-2-060-985002 January 12, 1998 P13,290,000.00 Mary(20)
U. Dacay
days restraining and enjoining defendants, their agents,
TLC-1-060-98512 February 6, 1998 P8,270,000.00 representatives
Mary U. Dacay or any other persons acting on their behalf from
doing or proceeding with the following:
TLC-2-060-98563 February 27, 1998 P9,342,899.00 Mary U. Dacay a) proceeding with the auction sale of the properties
TLC-2-060-985640 March 20, 1998 P6,632,500.00 Mary U. under Dacaythe REMs,
Henry U. Dacay b) execution of Certificate of Sale;
c) registering Certificate of Sale with the Registry of
TLC 2-060-986024 April 27, 1998 P19,450,000.00 Mary U. Dacay
Deeds;
TLC 2-060-986025 April 27, 1998 P13,968,990.00 Mary U. Dacay d) execution of the Deed of Final Sale and other
consolidation documents;
TLC 2-060-986026 April 27, 1998 P8,558,000.00 Mary U. Dacay
e) publication of Notices of Sale;
TLC 2-060-986029 April 28, 1998 P7,216,000.00 Mary U. Dacay f) posting of Notices of Sale;
TLC 2-060-986030 April 28, 1998 P37,600,000.00 Mary U. Dacay g) using the questioned documents, like the TRs, to seek
administrative, civil, or criminal remedies;
TLC 2-060-986031 April 28, 1998 P16,436,000.00 Mary U. Dacay h) disturbing the status quo prior to the litigation.
TLC 2-060-986032 April 28, 1998 P20,658,860.00 Mary2.U.After
Dacay due notice and hearing, a Preliminary Injunction be
issued upon posting of a bond enjoining defendant, its
TLC-2-060-986297 July 20, 1998 P13,691,490.00 Maryemployees,
U. Dacay agents, representatives, or any other persons acting
TLC-2-060-986298 July 20, 1998 P14,511,807.04 MaryonU.itsDacay
behalf from doing the above acts complained against;
3. After trial, it is prayed that judgment be rendered in favor of
TLC-2-060-986299 July 20, 1998 P74,109,900.00 Mary U. Dacay
plaintiffs and against defendant as follows:
TLC-2-060-986300 July 20, 1998 P98,094,243.30 Mary U. Dacay a) Declaring null and void the CLA, REMs, CMs, PNs,
TLC-2-060-970161 December 29, 1998 P5,239,000.00 Ernesto Dacay, JSS,Jr.TRs, and other related documents, the notices of
Mary U. Dacay sale, the entire foreclosure proceedings, including the
auction sale, the amount claimed by the bank to be the
However, respondents failed to pay the loans which matured on February outstanding account, the amount claimed by the bank to
14, 2001. Thus, petitioner sought to foreclose the mortgages be the principal, the interest unilaterally imposed by the
extrajudicially. bank, the penalties imposed by the bank and the PNs
On February 28, 2001, respondents filed with the Regional Trial Court, made basis for default and foreclosure;
4
Branch 56, Mandaue City, a Complaint for Declaratory Relief, Injunction, b) Declaring the CLA, REMs, CMs, PNs, JSS, TRs, and
Damages, Annulment of Promissory Notes, Documents, and Contracts other related documents as without consideration,
against petitioner, docketed as Civil Case No. MAN-4045. The complaint invalid, inoperative, ineffective, unenforceable, null and
alleges that prior to 1998, respondents obtained credit accommodations void and to cancel the same;
from petitioner. The latter required respondents’ representatives to sign c) To make the injunction permanent;
"standard pre-printed bank forms in fine print, such as Credit Line d) To order the bank to comply with its commitments,
Agreements (CLA), Promissory Notes (PN), Real Estate Mortgages assurances and representations to help in the
! 104!

rehabilitation of the Dacay Group and the restructuring of
its obligations, if any;
e) To award to plaintiffs moral damages of P300,000.00,
exemplary damages of P200,000.00, attorney’s fees
of P200,000.00 plus P1,000.00 per billable hour, and
litigation expenses of P300,000.00;
f) Declaring that the defendant cannot validly do, perform
or suffer to be done the acts complained of.
5
On March 9, 2001, the trial court issued an Order granting respondents’
prayer for the issuance of a temporary restraining order (TRO), thus:
In resolving the petition for the issuance of a TRO the court,
without going into the merits of the case has taken into
consideration:
a) the fact that petitioners/plaintiffs are presently in the process of
rehabilitating their business concerns and for which purpose, a
consortium of banks/creditors has been put into existence and
that Far East Bank and Trust Company (FEBTC) even had
initially approved and led such effort as indicated by the
participation of one of its Senior Vice Presidents Ricardo G.
Lazatin;
b) the admission by respondent/defendant, in open court, that it
has already initiated foreclosure proceedings against
petitioners/plaintiffs and that it has in fact scheduled on March 30,
2001 the auction sale of petitioners’ properties subject matter of
the foreclosure proceedings, as well as the consequent damage
resultant thereto;
c) the purpose of a temporary restraining order (TRO) which is
merely to suspend proceedings until there may be an opportunity
to inquire whether any injunction should be granted.
WHEREFORE, foregoing premises considered and in the interest
of substantial justice, the defendant is hereby ordered to cease
and desist and/or its agents, representatives or any other person
acting in its behalf to immediately stop foreclosure proceedings of
plaintiffs’ properties subject matter of the said foreclosure
proceedings, including but not being limited to publication for
foreclosure and subsequent auction sale of the said properties.
SO ORDERED.
Petitioner filed its Answer with Affirmative Defenses, Counterclaim, and
Vigorous Opposition to the Order directing the issuance of a TRO and/or
preliminary mandatory injunction. Likewise, petitioner filed a Motion to
Dismiss Based On Affirmative Defenses alleging that: (1) the venue is
improperly laid; (2) the trial court did not acquire jurisdiction over the case
for non-payment of proper docket fees; (3) there is non-joinder of
indispensable parties; and (4) the trial court has no jurisdiction to enjoin
the foreclosure proceedings.
! 105!
6
On March 27, 2001, the trial court issued an Order denying petitioner’s
motion to dismiss, thus:
This resolves defendant’s Motion to Dismiss.
Defendant in his motion insists that the case should be dismissed
on the following affirmative defenses: (a) venue is improperly laid;
(b) lack of jurisdiction considering the non-payment of docketing
fees; (c) non-joinder of indispensable parties and (d) lack of
jurisdiction or authority to enjoin foreclosure proceedings.
VENUE
Records show that the office address of plaintiffs is in Mandaue
City. In fact, defendant’s annexes to its answer (Annex "I" and
"L") admit that plaintiffs’ business address and principal place of
business are at Pakna-an, Mandaue City. Likewise similarly
situated are the properties sought to be foreclosed. Apparently,
foregoing considered, venue has been properly laid.
JURISDICTION
It is to be noted that the question of jurisdiction has not been
raised by defendant except with the cause of action regarding
annulment of mortgages on defendant’s insistence that the tax
declaration attached is not the latest. Considering however that
annulment of mortgage is incapable of pecuniary estimation the
court feels that jurisdiction is proper.
What determines the nature of an action and the court
which has jurisdiction over it are the allegations made by
the plaintiff. Sandel v. Court of Appeals, 262 SCRA 101,
A court’s jurisdiction cannot be made to depend upon
defenses set up in the answer or in a motion to dismiss
but upon the allegations of the complaint. Sandel v. Court
of Appeals, 262 SCRA 101,
INDISPENSABLE PARTY
Evidence has not been introduced, to the satisfaction of the court
that indeed Far East Bank and Trust Company (FEBTC) no
longer exists and BPI has taken over its assets and liabilities.
Besides, the commercial linkage was between FEBTC and
Shemberg as records show.
AUTHORITY
It is an inherent power of the court concomitant to its very
existence to issue provisional remedies, like injunction, to protect
the rights and interest of parties pending litigation.
Premises considered, the court feels and finds no basis to grant
defendant’s motion. Accordingly, the Motion to Dismiss is, as it is
hereby, DENIED.
SO ORDERED.
Likewise on the same day, March 27, 2001, the trial court issued another
7
Order directing the issuance of a writ of preliminary injunction in favor of
respondents, thus:
WHEREFORE, let a writ of injunction issue enjoining defendant,
its employees, agents or representatives, and all those who may
be acting in their behalf, from:
(1) Taking further actions to foreclose the real estate and chattel
mortgage collaterals of plaintiffs;
(2) To maintain the status quo during the pendency of the
proceedings and to refrain from performing the acts complained
of including but not being limited to the publication and notice of
sale, conducting any foreclosure auction sale and other similar
acts which will violate the status quo.
The Clerk of Court is hereby directed to issue the writ prayed for.
Plaintiffs are ordered to put a bond of One Million Pesos
(P1,000,000.00)
SO ORDERED.
Petitioner then filed with the trial court the following: (a) Motion to Resolve
the Motion to Dismiss; (b) Motion to Dissolve Preliminary Mandatory
Injunction; (c) Motion for Reconsideration of the Order Dated March 27,
2001; and (d) Opposition to the Sufficiency of Bond.
8
On August 16, 2001, the trial court issued the following Order:
For consideration by the court are the defendant’s (1) Motion for
Reconsideration of the Denial of the Motion to Dismiss and (2)
the Motion for Reconsideration of the Grant of Preliminary
Mandatory Injunction.
After a careful and exhaustive consideration of the arguments
adduced in Movant’s Motion for Reconsideration of the Denial of
its Motion to Dismiss, the court finds that the arguments
advanced for consideration had already been treated and passed
upon by this court.
The same finding also holds true with respect to defendant’s
Motion for Reconsideration of the Grant of Preliminary Mandatory
Injunction.
Accordingly, both motions are hereby DENIED.
SO ORDERED.
Petitioner then filed with the Court of Appeals a petition for certiorari,
prohibition, and mandamus, docketed as CA-G.R. SP No. 67270,
contending that the trial court acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing the following: (1)
Order dated March 9, 2001 granting respondents’ prayer for a TRO; (2)
Order dated March 27, 2001 ordering the issuance of a writ of preliminary
injunction; (3) Order also dated March 27, 2001 denying its motion to
dismiss; and (4) Order dated August 16, 2001 denying its motion for
reconsideration of the Order denying its motion to dismiss and motion for
! 106!
reconsideration of the Order granting respondents’ application for a
preliminary injunction.
On February 16, 2004, the Court of Appeals promulgated its Decision
dismissing the petition for certiorari.
The appellate court held that as the trial court has jurisdiction over the
case, its orders or decisions upon all questions therein, cannot be
corrected by the extraordinary writ of certiorari.
Petitioner filed a motion for reconsideration but it was denied by the Court
of Appeals in its Resolution of May 28, 2004.
Hence, the instant petition raising the following issues: (a) whether the
trial court has jurisdiction over Civil Case No. MAN-4045; and (b) whether
petitioner bank is entitled to the writs of certiorari, prohibition, and
mandamus.
On the first issue, petitioner contends that in real actions, the assessed
value of the property or if there is none, the estimated value thereof, must
be alleged in the complaint, and shall serve as the basis for computing
the fees. Nowhere in the complaint in Civil Case No. MAN-4045 did
respondents allege the assessed values of their realties. Hence, there is
no adequate basis for computing the proper filing fees. It necessarily
follows that the fees paid are deficient. The trial court, therefore, did not
acquire jurisdiction over the case.
Respondents counter that a perusal of the complaint in Civil Case No.
MAN-4045 shows that the suit primarily involves cancellation of
mortgages, an action incapable of pecuniary estimation. Consequently,
petitioner’s contention that there is a deficiency in the payment of docket
fees is without merit.
A court acquires jurisdiction over a case only upon the payment of the
9
prescribed fees. The importance of filing fees cannot be gainsaid for
these are intended to take care of court expenses in the handling of
cases in terms of costs of supplies, use of equipment, salaries and fringe
benefits of personnel, and others, computed as to man-hours used in the
10
handling of each case. Hence, the non-payment or insufficient payment
of docket fees can entail tremendous losses to the government in general
and to the judiciary in particular.
Is an action for cancellation of mortgage incapable of pecuniary
estimation?
Under Section 19 (1) of Batas Pambansa Blg. 180, as amended by
Republic Act No. 7691, Regional Trial Courts have sole, exclusive, and
original jurisdiction to hear, try, and decide "all civil actions in which the
subject of the litigation is incapable of pecuniary estimation."
11
In Singsong v. Isabela Sawmill, this Court laid the test for determining
whether the subject matter of an action is incapable of pecuniary
estimation, thus: Ascertain the nature of the principal action or remedy
sought. If the action is primarily for recovery of a sum of money, the claim
is considered capable of pecuniary estimation. Whether the trial court has
jurisdiction would depend upon the amount of the claim. However, where
the basic issue is something other than the right to recover a sum of
money, where the money claim is only incidental or a consequence
of the principal relief sought, the action is incapable of pecuniary
estimation.
Here, the primary reliefs prayed for by respondents in Civil Case No.
MAN-4045 is the cancellation of the real estate and chattel mortgages for
12
want of consideration. In Bumayog v. Tumas, this Court ruled that
where the issue involves the validity of a mortgage, the action is one
incapable of pecuniary estimation. In the more recent case of Russell v.
13 14
Vestil, this Court, citing Bumayog, held that an action questioning the
validity of a mortgage is one incapable of pecuniary estimation. Petitioner
has not shown adequate reasons for this Court to
revisit Bumayog and Russell. Hence, petitioner’s contention can not be
sustained. Since respondents paid the docket fees, as computed by the
clerk of court, consequently, the trial court acquired jurisdiction over Civil
Case No. MAN-4045.
Concerning to the second issue, it should be noted that CA-G.R. SP No.
67270 is a petition for certiorari, prohibition, and mandamus alleging that
the trial court acted with grave abuse of discretion amounting to lack or
excess of jurisdiction in issuing the following Orders: (1) Order dated
March 9, 2001 granting respondents’ prayer for a TRO; (2) Order dated
March 27, 2001, directing the issuance of a writ of preliminary injunction;
(3) Order also dated March 27, 2001 denying petitioner’s motion to
dismiss; and (4) Order dated August 16, 2001 denying petitioner’s motion
for reconsideration of the denial of the motion to dismiss and motion for
reconsideration of the grant of preliminary injunction.
This Court holds that the Court of Appeals did not commit grave abuse of
discretion in issuing the questioned Orders.
There is grave abuse of discretion where the acts complained of amount
to an evasion of positive duty or a virtual refusal to perform a duty
enjoined by law, or to act at all in contemplation of law, as where the
power is exercised in an arbitrary and despotic manner by reasons of
15
passion or personal hostility. It is such whimsical and capricious
exercise of judgment as is equivalent to lack of jurisdiction.
The Court of Appeals found that the trial court acted in fair, reasonable,
and expeditious manner, thus:
th
Thus, on the 6 of March 2001, His Honor held a hearing on the
application for temporary restraining order. He conducted at least
th th rd
three trial-type hearings on the 19 , 20 , and 23 of March 2001,
complete with direct examination, cross-examination, re-direct
examination, re-cross examination and marking and offer of
exhibits vis-à-vis the application for the issuance of a writ of
preliminary injunction. Four witnesses testified during the
! 107!
hearings – two for the Dacay Group and two for the bank. Both
parties were even required to submit memoranda.
Indeed, the records are bereft of any indication that the trial court
committed grave abuse of discretion in issuing the challenged Orders.
Verily, the Court of Appeals correctly held that certiorari will not lie, the
sole office of the writ being to correct grave abuse of discretion. Where a
court has jurisdiction over the person and the subject matter of the action,
as in the instant case, its decisions on all questions arising from the case
16
are but exercises of such jurisdiction. If its findings are not correct,
these would at best be questions of law, not abuse of discretion
17
correctible by the extraordinary remedy of certiorari.
WHEREFORE, this Court DENIES the petition. The assailed Decision
and Resolution of the Court of Appeals in CA-G.R. SP No. 67270
are AFFIRMED. Costs against petitioner, now the Bank of the Philippine
Islands.
SO ORDERED
G.R. No. 173616 June 25, 2014
AIR TRANSPORTATION OFFICE (ATO), Petitioner,
vs.
HON. COURT OF APPEALS (NINETEENTH DIVISION) and BERNIE G.
MIAQUE, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This petition for certiorari and prohibition of the Air Transportation Office
1
(ATO) seeks the nullification of the Court of Appeals' Resolution dated
2
March 29, 2006 and Resolution dated May 30, 2006 in CA-G.R. CEB-SP
No. 01603. The Resolution dated March 29, 2006 granted the application
for temporary restraining order (TRO) of Bernie G. Miaque, while the
Resolution dated May 30, 2006 issued a writ of preliminary injunction
enjoining the implementation of the writ of execution issued by the
Regional Trial Court (RTC) of Iloilo despite Miaque's alleged continued
failure and refusal to make current the supersedeas bond and to pay to
the A TO the rental and concession privilege fees.
The proceedings on the main case of ejectment
MTCC of Iloilo City: Civil Case No. 01 (38)
In May 2001, the ATO filed a complaint for unlawful detainer against
Miaque in the Municipal Trial Court in Cities (MTCC) of Iloilo City, Branch
3. It was docketed as Civil Case No. 01 (38). The ATO sought the
following, among others:
(1) That Miaque be ordered to permanently vacate and peacefully
return to the ATO possession of:
(a) the 800-square meter Refreshment Parlor fronting the
New Terminal Building-Iloilo Airport;
(b) the 310-square meter Restaurant/Gift Shop inside the
Iloilo Airport Terminal; and