G.R. No.

L-45828 June 1, 1992

DIRECTOR OF LANDS, petitioner, vs. THE HONORABLE COURT OF APPEALS, SILVESTRE
MANLAPAZ and NATIVIDAD PIZARRO, respondents.

This is a petition for review on certiorari seeking the reversal of the Decision 1 rendered by respondent
Court of Appeals in CA-G.R. No. 56788-B, dated March 7, 1977, affirming the Decision 2 of the then Court
of First Instance of Bataan, dated April 6, 1974, in Land Registration Case No. N-235, adjudicating in favor
of herein private respondents the subject two (2) parcels of land.

The undisputed facts of the case are as follows:

On January 29, 1973, spouses Silvestre Manlapaz and Natividad Pizarro (herein private respondents) filed
an application before the Court of First Instance of Bataan, seeking the registration and confirmation of
titles to two (2) parcels of land, under Act 496 in relation to Sec. 48 (B) of C.A. No. 141, designated as Lot
No. 2855 and Lot No. 2856. The parcels of land applied for are portions of Lot 2749 of Orion Cadastre
covered by plans Sgs-4600-D and Sgs-4601-D, situated at Barrio Damulog, Municipality of Orion, Province
of Bataan, containing an area of 49,954 sq. meters and 54,052 sq. meters, respectively. 3

Prior to the initial hearing of the case, the trial court in its Order dated April 5, 1973, directed the Land
Registration Commissioner to submit his report on whether or not the parcels of land in question had been
issued patents or whether the same are subject of pending decrees. 4 In compliance with this directive,
Acting Geodetic Engineer (Chief Surveyor) Amado Masicampo, on behalf of the Commissioner of Land
Registration, filed a manifestation dated April 26, 1973 stating that the subject parcels of land described
on Plans Sgs-4600-D and Sgs-4601-D are portions of Lot 2749, Cad. 241, Orion Cadastre and that the
same have been the subject of registration proceedings in Court Cadastral Case No. 15, LRC (GLRO)
Cadastral Record No. 1021 wherein a decision has been rendered although there is no existing record of
the same on file because it was among those records lost or destroyed due to the ravages of the last
global war. The record also disclosed that Plans Sgs-4600-D and Sgs-4601-D, when plotted in the
Municipal Index Map through their respective lines conflict with Lot 1, Sgs-2806 which has been issued
Sales Patent No. 5819. 5

The Director of Lands seasonably filed an opposition on the ground that neither the applicants nor their
predecessor-in-interest possess sufficient title to acquire ownership in fee simple of the parcels of land
applied for; that they have not been in open, continuous, exclusive and notorious possession and
occupation of the land in question for at least thirthy (30) years immediately preceding the filing of the
present application; and that these parcels of land are portions of the public domain belonging to the
Republic of the Philippines, and therefore, not subject to appropriation. 6

At the hearing on August 21, 1973, the Court issued an order of special default with the exception of the
Director of Lands. 7 As prayed for by private respondents' counsel, the parties were allowed to present
evidence before the Clerk of Court who was commissioned to receive the same and to submit his findings
after the termination of the reception of evidence. 8

In order to establish thirty (30) years of open and continuous possession over the subject property,
private respondents presented Crisanto Angeles and Monico Balila, Crisanto Angeles claimed that he first
took possession of these two (2) parcels of land in the year 1931 while he was still twenty (20) years old.
He cleared the land and planted different kinds of fruit-bearing trees such as mango, star apple and
bananas, as well as seasonal crops thereon. He likewise converted 5,000 sq. meters thereof into a ricefield
which was enlarged to one hectare. 9 These parcels of land were declared for taxation purposes only in
1966. 10 Meanwhile, in the year 1938, he sold the parcel containing an area of about five (5) hectares to
Pablito Punay, who immediately took possession of the same, cultivated it and introduced several
improvements thereon. 11 In September 1972, after he had already cleared the whole tract of the second
parcel of land, he sold the same to private respondents. 12 Pablito Punay also sold the first parcel of land
he acquired from Crisanto to them. 13Angeles further stated that he knew all the owners of the adjoining
parcels of land but, on cross-examination, was unable to remember their names. 14 Witness Monico Balila
testified that he is the owner of the parcel of land adjoining private respondent's property. He had seen
Angeles clear the same and plant different fruit trees. On cross-examination, he said that he was twelve
(12) years old when he first lived at Bilolo, Orion, Bataan in 1938. His land holding was five kilometers
away from private respondents' land and it was his uncle who was then in possession of the land he
presently owns. 15

Private respondent Silvestre Manlapaz also testified that upon their acquisition of the two (2) parcels of
land designated as Lots 2855 and 2856, they immediately took possession of the same, planted coconuts,
camotes and other vegetables and expanded the portion planted to palay. Some portions were converted
into two (2) residential lots, one with an area of 276 sq. meters and the other, 105 sq. meters. They then
declared those properties in their names and paid the corresponding land taxes. 16

The Director of Lands, on the other hand, did not present any evidence to support his opposition.
On April 6, 1974, the lower court rendered its decision, the dispositive part of which reads as follows:

WHEREFORE, the title to two parcels of land Identified and shown in plans Sgs-4600-D and 4601-
D, situated at Barrio Damulog, Municipality of Orion, Province of Bataan, containing an area of
49,954 square meters and 54,052 square meters, respectively, is ordered confirmed in the name of
the spouses Silvestre Manlapaz and Natividad Pizarro, both of legal age, Filipino citizens and
residents of Pilar, Bataan.

After this decision shall have become final, let an order issue for a decree of registration in favor of
the applicants. SO ORDERED. 17

From said judgment, the Director of Lands interposed an appeal to the Court of Appeals which
promulgated its decision 18 on May 7, 1977, affirming the decision of the lower court. It found that the
defense of res judicata was belatedly raised on appeal. The omission to include the same in the answer as
one of the affirmative defenses constitutes a waiver of said defense. The manifestation of Mr. Masicampo
stating that the two (2) parcels of land have been the subject of registration proceedings was not enough
to support res judicata. It concluded that the 30-year period of continuous possession of private
respondents' predecessors-in-interest has been satisfactorily proved, the Director of Lands not having
presented any evidence to contradict, impugn or impeach the facts established by private respondents.

Hence, this petition which assigns the following errors:

I Respondent Court erred in ruling that petitioner failed to raise the defense of res judicata in the
trial court and, hence, waived the same.

II Respondent Court erred in ruling that petitioner failed to prove res judicata by competent
evidence.

III Respondent Court erred in ruling that after the cadastral proceedings and the declaration of the
subject parcels of land as public land therein, the same may be the subject of judicial confirmation
of imperfect title or claim based on adverse and continuous possession of at least thirty (30)
years, citing the case of Mindanao v. Director of Lands, et al., G.R. No. L-19535, July 10, 1967. 19

The Court of Appeals committed no error in disregarding res judicata. In the case of Director of Lands v.
Court of Appeals, 20 this Court had addressed a similar contention in this manner:

WE find no legal basis to uphold the foregoing contentions of Petitioner. It is clear from the
evidence on record that in the proceedings had before the Court of First Instance of Batangas,
acting as a land registration court, the oppositor Director of Lands. petitioner herein, did not
interpose any objection nor set up the defense of res judicata with respect to the lots in question.
Such failure on the part of oppositor Director of Lands. to OUR mind, is a procedural infirmity which
cannot be cured on appeal. Section 2, Rule 9, Revised Rules of Court of 1964, in no uncertain
language, provides that:

SEC. 2. Defenses and obligations not pleaded deemed waived. — Defenses and objections
not pleaded either in a motion to dismiss or in the answer are deemed waived; . . .

All defenses therefore not interposed in a motion to dismiss or in an answer are deemed waived.
(Santiago, et al. v. Ramirez, et al.; L-15237, May 31, 1963, 8 SCRA 157, 162; Torrada v.
Bonearos, L-39832, January 30, 1976, 69 SCRA 247, 253).

Thus, the defense of res adjudicata when not set up either in a motion to dismiss or in answer, is
deemed waived. It cannot be pleaded for the first time at the trial or on appeal. (Phil. Coal Miners'
Union v. CEPOC, et al., L-19007, April 30, 1964, 10 SCRA 784, 789). (Emphasis supplied)

Furthermore, petitioner advanced the view that it is the intendment of the law that a person who fails to
prove his title to a parcel of land which is the object of cadastral proceedings or one who does not file his
claim therein is forever barred from doing so in a subsequent proceeding. Judgment in a cadastral
proceeding which is a proceeding in rem constitutes res judicata even against a person who did not take
part in the proceedings as claimant.

We disagree. The above-cited case likewise settled this contention. It said:

But granting for a moment, that the defenses of res adjudicata was properly raised by petitioner
herein, WE still hold that, factually, there is no prior final judgment all to speak of. The decision in
Cadastral Case No. 41 does not constitute a bar to the application of respondent Manuela Pastor;
because a decision in a cadastral proceeding declaring a lot public land is not the final decree
contemplated in Section 38 and 40 of the Land Registration Act.
 A Judicial declaration that a parcel of land is public, does not preclude even the same applicant
from subsequently seeking a judicial confirmation of his title to the same land, provided he
thereafter complies with the provisions. of Section 48 of Commonwealth Act No. 141, as amended,
and as long as said public land remains alienable and disposable (now section 3 and 4, PD No.
1073,) 21 (Emphasis supplied)

As a rule, the Court respects the factual findings of the Court of Appeals, imparting to them a certain
measure of finality. However, the rule is not without clearly defined exceptions, among which are: ". .
. (2) the inference made is manifestly mistaken; . . . (4) the judgment is based on misapprehension of
facts; . . . and (9) when the finding of fact of the Court of Appeals is premised on the absence of evidence
and is contradicted by evidence on record." 22

It must be emphasized that the burden is on applicant to prove his positive averments and not for the
government or the private oppositors to establish a negative proposition insofar as the applicants' specific
lots are concerned. 23 Applying this rule to the instant case, the conclusions reached by the court a
quo and respondent Court of Appeals that the private respondents through their predecessors-in-interest
have been in open, continuous, exclusive and notorious possession of the subject land under
a bonafide claim of ownership are not persuasive for the following reasons.

First, the testimony of Crisanto Angeles as to his possession and ownership of the two (2) parcels of land
fails to inspire belief. He claimed that he was in possession of the land way back in 1930. Yet he declared
the same for taxation purposes only in 1966. Although tax receipts are not incontrovertible evidence of
ownership, they constitute at least proof that the holder had a claim of title over the property. 24 He
stated that he knew the owners of the adjoining properties, but during the cross-examination, he was
unable to give their names. Nor was he able to explain how he came into possession of the parcel of land
and there is no showing of any title, perfect or imperfect, granted by the state to him or his predecessors.

Second, the attempt of Monico Balila to corroborate Angeles' length of possession over the subject
property is less than credible. Having been an adjoining owner only in 1953 by his own admission, he
could not have known how long Crisanto Angeles owned and possessed the parcels of land.

Third, Pablito Punay, the second predecessor-in-interest of Lot No. 2855 of the private respondents was
not made to testify. No reason was disclosed for his failure to appear before the court.

Lastly, the documents introduced by the applicants merely evidenced the fact that the parcels of land
applied for were alienable and disposable lands of the public domain, 25 but no document has been
presented that would clearly establish the length of time of the possession of their predecessors-in-
interest. That the private respondents have paid the corresponding taxes since 1972 26 when they
possessed the same is of no moment because what is vital to consider is their predecessors-in-interest's
compliance with the 30-year period.

Undoubtedly, the private respondents have failed to submit convincing proof of their predecessors-in-
interest's actual, peaceful and adverse possession in the concept of owner of the lots in question during
the period required, by law. This is of utmost significance in view of the basic presumption that lands of
whatever classification belong to the State and evidence of a land grant must be "well-nigh
incontrovertible." 27

WHEREFORE, premises considered, the May 7, 1977 decision of the Court of Appeals is hereby REVERSED
and SET ASIDE, and judgment is rendered DISMISSING the application for registration and confirmation
of titles of Lots No. 2855 and 2656. No pronouncement as to costs. SO ORDERED.
G.R. No. 73039 October 9, 1987
PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO CAVILI, petitioners, vs. HON. TEODORO N.
FLORENDO, Presiding Judge, Branch XXXVI, Regional Trial Court of Negros Oriental, 7th
Judicial Region, CLARITA CAVILI, ULPIANO CAVILI, ESTRELLA CAVILI, PLACIDA CAVILI, ET
AL., respondents.

This is a petition to review and set aside two orders of the then Court of First Instance of Negros Oriental,
namely: (1) the order dated October 11, 1985, disqualifying Perfects Cavili dela Cruz as a witness in Civil
Case No. 6880 entitled "Clarita Cavili, et al. v. Perfecta Cavili, Quirino Cavili, and Primitivo Cavili" and (2)
the order dated November 26, 1985, refusing to reconsider the previous orders of disqualification and
resetting the reception of evidence for the defendants to December 19 and 20, 1985 with a warning that
should defendants' witnesses fail to appear in court on said date, they will be deemed to have waived their
right to be witnesses in this case.

The private respondents filed Civil Case No. 6880 with the Court of First Instance of Negros Oriental
against herein petitioners for Partition, Accounting, and Damages. After the case was raffled to Branch I
presided over by Judge Augusto S. Villarin, summons was issued to the three petitioners, all at Bayawan
Negros Oriental which was the address indicated in the complaint.

After trying to effect service, the process server went back to the court with the following return of service
to Quirino and Primitivo Cavili not contacted, according to Perfecta Cavili, subject persons is (sic) staying
in Kabangkalan, Negros Occidental."

Meanwhile, Atty. Jose P. Alamino filed a motion for extension to answer in behalf of the defendants,
manifesting the representation of his client Perfecta Cavili that she will inform her brothers Primitivo and
Quirino about the case.

The defendants, however, failed to file their answer within the request period and upon motion of the
plaintiffs, the defendants were declared in default, and on October 5, 1979, a judgment by default was
promulgated by Judge Augusto S. Villarin.

The records of the case, however, show that a Manifestation was filed by Atty. Jose P. Alamino informing
the court that since he never met Primitivo and Quirino Cavili, who are residents of another province, he
desisted from further appearing in the case in their behalf.

On November 7, 1979, Atty. Jose P. Alamillo received a copy of the decision. On December 7, 1979, he
filed a motion for new trial in behalf of the defendants on grounds of lack of jurisdiction and, with a
meritorious defense that the properties sought to be partitioned have already been the subject of a
written partition agreement between the direct heirs of the late Bernardo Cavili who are the predecessors
of the parties in this case. In/an order dated April 23, 1980, the court granted said motion.

The plaintiffs filed a motion for reconsideration of the order granting new trial and at the same time
prayed that a writ of execution be issued but only in so far as defendant Perfecta Cavili was concerned.

In an order dated July 21, 1981, Judge Cipriano Vamenta of Branch III of the Court of First Instance of
Negros Oriental to whom the case had been assigned after a re-raffle, set aside the order of April 23,
1980 and directed the execution of the October 5, 1979 decision without qualification ruling that the
petitioners' remedy should have been appeal rather than new trial.

Their motion for reconsideration having been denied on August 11, 1981, the defendants, now petitioners,
brought the case to this Court through a petition for certiorari, G.R. No. 57771, entitled "Quirino Cavili, et
al., Petitioners vs. Hon. Cipriano Vamenta, et al., Respondents "

On May 31, 1982, this Court rendered a decision, the dispositive portion of which reads:

WHEREFORE, Our resolution dismissing the petition is hereby reconsidered; the petition is
granted; and the order dated July 21, 1981, is set aside while that of April 23, 1980, is
revived. (No special pronouncement as to costs. Rollo p. 21)

Thereafter, the pre-trial and trial of Civil Case No. 6880 was scheduled on October 9, 10, and 11, 1985
before Branch XXXVI of the Regional Trial Court, presided by respondent Judge Teodoro N. Florendo. The
defendants, (now petitioners), presented Perfects Cavili dela Cruz as their first witness. The respondents,
through counsel moved for her disqualification as a witness on the ground that having been declared in
default, Perfects Cavili has lost her standing in court and she cannot be allowed to participate in all
premise the even as a witness. The court, through the respondent judge, sustained the respondents'
contention and disqualified her from testifying.

The petitioners, through counsel, moved for a reconsideration of the ruling.

On November 26, 1985, the lower court issued an order denying reconsideration of its Order dated
October 11, 1985 disqualifying Perfecta Cavili dela Cruz as a witness in Civil Case No. 6880.

Hence, this petition.

Petitioner Perfecta Cavili's competence as a witness is put in issue by the private respondents.

Section 18, Rule 130 of the Revised Rules of Court states who are qualified to be witnesses. It provides:

Section 18. Witnesses; their qualifications. — Except as provided in the next succeeding section, all
persons who, having organs of sense, can perceive, and perceiving, can make known their perception to
others, may be witnesses. Neither parties nor other persons interested in the outcome of a case shall be
excluded; nor those who have been convicted of crime; nor any person on account of his opinion on
matters of religious belief.

The generosity with which the Rule allows people to testify is apparent. Interest in the outcome of a case,
conviction of a crime unless otherwise provided by law, and religious belief are not grounds for
disqualification.

Sections 19 and 20 of Rule 130 provide for specific disqualifications. Section 19 disqualifies those who are
mentally incapacitated and children whose tender age or immaturity renders them incapable of being
witnesses. Section 20 provides for disqualification based on conflicts of interest or on relationship. Section
21 provides for disqualifications based on privileged communications. Section 15 of Rule 132 may not be a
rule on disqualification of witnesses but it states the grounds when a witness may be impeached by the
party against whom he was called.

There is no provision of the Rules disqualifying parties declared in default from taking the witness stand
for non-disqualified parties. The law does not provide default as an exception. The specific enumeration of
disqualified witnesses excludes the operation of causes of disability other than those mentioned in the
Rules. It is a maxim of recognized utility and merit in the construction of statutes that an express
exception, exemption, or saving clause excludes other exceptions. (In Re Estate of Enriquez, 29 Phil. 167)
As a general rule, where there are express exceptions these comprise the only limitations on the operation
of a statute and no other exception will be implied. (Sutherland on Statutory Construction, Fourth Edition,
Vol. 2A, p. 90) The Rules should not be interpreted to include an exception not embodied therein.

The respondents, however, cite Section 2, Rule 18 on Defaults, to wit:

Section 2. Effect of order of default. — Except as provided in section 9 of Rule 13, a party declared in
default shall not be entitled to notice of subsequent proceedings nor to take part in the trial.

They advance the argument that to allow Perfecta Cavili to stand as witness would be to permit a party in
default "to take part in the trial."

An explanation of the Rule is in order.

Loss of standing in court is the consequence of an order of default. Thus, a party declared in default is
considered out of court and cannot appear therein, adduce evidence, and be heard and for that reason he
is not entitled to notice. (Rule 18, Rules of Court; Lim Toco v. Go Fay, 80 Phil. 166) However, "loss of
pending" must be understood to mean only the forfeiture of one's rights as a party litigant, contestant or
legal adversary. A party in default loses his right to present his defense, control the proceedings, and
examine or cross-examine witnesses. He has no right to expect that his pleadings would be acted upon by
the court nor may he object to or refute evidence or motions filed against him. There is nothing in the
rule, however, which contemplates a disqualification to be a witness or a opponent in a case. Default does
not make him an incompetent.

As opposed to a party litigant, a witness is merely a beholder, a spectator or onlooker, called upon to
testify to what he has seen, heard, or observed. As such, he takes no active part in the contest of rights
between the parties. Cast in the cited role of witness, a party in default cannot be considered as " a part in
the trial." He remains suffering the effects of an order of default.

A party in default may thus be cited as a witness by his co-defendants who have the standing and the
right to present evidence which the former may provide. The incidental benefit giving the party in default
the opportunity to present evidence which may eventually redound to his advantage or bring about a
desired result, through his co-defendants, is of minor consequence.

Of greater concern or importance in allowing the presence of Perfecta Cavili as a witness in the case at
bar, is the preservation of the right of petitioners Quirino and Primitivo Cavili to secure the attendance of
witnesses and the production of evidence in their behalf. To reject Perfects Cavili's presentation of
testimonial evidence would be to treat Primitivo and Quirino, as if they too were in default. There is no
reason why the latter should also be made to bear the consequences of Perfecta's omission. Moreover, we
cannot deprive Quirino and Primitivo of the only instrument of proof available to them, as Perfecta alone
has been in possession and administration of the claim.

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The order of the respondent court
disqualifying. Perfects Cavili dela Cruz as a witness in Civil Case No. 6880 is hereby SET ASIDE. The case
is remanded to the court a quo for Wither proceedings. The temporary restraining order issued on January
6, 1986 is LIFTED. SO ORDERED.
G.R. No. L-53880 March 17, 1994
ENRICO L. PACETE, CLARITA DE LA CONCEPCION, EMELDA C. PACETE, EVELINA C. PACETE and
EDUARDO C. PACETE, petitioners, vs. HON. GLICERIO V. CARRIAGA, JR. and CONCEPCION
(CONCHITA) ALANIS PACETE, respondents.

The issue in this petition for certiorari is whether or not the Court of First Instance (now Regional Trial
Court) of Cotabato, Branch I, in Cotabato City, gravely abused its discretion in denying petitioners' motion
for extension of time to file their answer in Civil Case No. 2518, in declaring petitioners in default and
in rendering its decision of 17 March 1980 which, among other things, decreed the legal separation of
petitioner Enrico L. Pacete and private respondent Concepcion Alanis and held to be null and void ab
initio the marriage of Enrico L. Pacete to Clarita de la Concepcion.

On 29 October 1979, Concepcion Alanis filed with the court below a complaint for the declaration of nullity
of the marriage between her erstwhile husband Enrico L. Pacete and one Clarita de la Concepcion, as well
as for legal separation (between Alanis and Pacete), accounting and separation of property. In her
complaint, she averred that she was married to Pacete on 30 April 1938 before the Justice of the Peace of
Cotabato, Cotabato; that they had a child named Consuelo who was born on 11 March 1943; that Pacete
subsequently contracted (in 1948) a second marriage with Clarita de la Concepcion in Kidapawan, North
Cotabato; that she learned of such marriage only on 01 August 1979; that during her marriage to Pacete,
the latter acquired vast property consisting of large tracts of land, fishponds and several motor vehicles;
that he fraudulently placed the several pieces of property either in his name and Clarita or in the names of
his children with Clarita and other "dummies;" that Pacete ignored overtures for an amicable settlement;
and that reconciliation between her and Pacete was impossible since he evidently preferred to continue
living with Clarita.

The defendants were each served with summons on 15 November 1979. They filed a motion for an
extension of twenty (20) days from 30 November 1979 within which to file an answer. The court granted
the motion. On 18 December 1979, appearing through a new counsel, the defendants filed a second
motion for an extension of another thirty (30) days from 20 December 1979. On 07 January 1980, the
lower court granted the motion but only for twenty (20) days to be counted from 20 December 1979 or
until 09 January 1980. The Order of the court was mailed to defendants' counsel on 11 January 1980.
Likely still unaware of the court order, the defendants, on 05 February 1980, again filed another motion
(dated 18 January 1980) for an extension of "fifteen (15) days counted from the expiration of the 30-day
period previously sought" within which to file an answer. The following day, or on 06 February 1980, the
court denied this last motion on the ground that it was "filed after the original period given . . . as first
extension had expired." 1

The plaintiff thereupon filed a motion to declare the defendants in default, which the court forthwith
granted. The plaintiff was then directed to present her evidence. 2 The court received plaintiff's evidence
during the hearings held on 15, 20, 21 and 22 February 1980.

On 17 March 1980, the court 3 promulgated the herein questioned decision, disposing of the case, thus —

WHEREFORE, order is hereby issued ordering:

1. The issuance of a Decree of Legal Separation of the marriage between, the plaintiff, Concepcion
(Conchita) Alanis Pacete and the herein defendants, Enrico L. Pacete, in accordance with the
Philippine laws and with consequences, as provided for by our laws;

2. That the following properties are hereby declared as the conjugal properties of the partnership of
the plaintiff, Concepcion (Conchita) Alanis Pacete and the defendant, Enrico L. Pacete, half and
half, to wit:

1. The parcel of land covered by TCT No. V-815 which is a parcel of land situated in the barrio of
Langcong, Municipality of Matanog (previously of Parang), province of Maguindanao (previously of
Cotabato province) with an area of 45,265 square meters registered in the name of Enrico Pacete,
Filipino, of legal age, married to Conchita Alanis as shown in Exhibits "B" and "B-1" for the plaintiff.

2. A parcel of land covered by Transfer Certificate of Title No. T-20442, with an area of 538 square
meters and covered by Tax Declaration No. 2650 (74) in the name of Enrico Pacete, situated in the
Poblacion of Kidapawan, North Cotabato, together with all its improvements, which parcel of land,
as shown by Exhibits "K-1" was acquired by way of absolute deed of sale executed by Amrosio
Mondog on January 14, 1965.

3. A parcel of land covered by Transfer Certificate of Title No. T-20424 and covered by Tax
Declaration No. 803 (74), with an area of 5.1670 hectares, more or less, as shown by Exhibit "R",
the same was registered in the name of Enrico Pacete and the same was acquired by Enrico Pacete
last February 17, 1967 from Ambag Ampoy, as shown by Exhibit "R-1", situated at Musan,
Kidapawan, North Cotabato.
4. A parcel of land situated at Lanao, Kidapawan, North Cotabato, with an area of 5.0567 hectares,
covered by Tax Declaration No. 4332 (74), as shown by Exhibit "S", and registered in the name of
Enrico Pacete.

5. A parcel of land covered by Transfer Certificate of Title No. T-9750, situated at Lika, Mlang,
North Cotabato, with an area of 4.9841 hectares and the same is covered by Tax Declaration No.
803 (74) and registered in the name of Enrico Pacete and which land was acquired by Enrico
Pacete from Salvador Pacete on September 24, 1962, as shown by Exhibit "Q-1".

6. A parcel of land covered by Transfer Certificate of Title No. T-9944, with an area of 9.9566 and
also covered by Tax Declaration No. 8608 (74) and registered in the name of the defendant Enrico
L. Pacete which Enrico L. Pacete acquired from Sancho Balingcos last October 22, 1962, as shown
by Exhibit "L-1" and which parcel of land is situated at (Kialab), Kiab, Matalam, North Cotabato.

7. A parcel of land covered by Transfer Certificate of Title No. T-9227, situated at Kiab, Matalam,
North Cotabato, with an area of 12.04339 hectares, more or less, and also covered by Tax
Declaration No. 8607 (74) both in the name of the defendant Enrico L. Pacete which he acquired
last October 15, 1962 from Minda Bernardino, as shown by Exhibit "M-1".

8. A parcel of land covered by Transfer Certificate of Title No. T-9228, situated at Kiab, Matalam,
North Cotabato, with an area of 10.8908 hectares, registered in the name of Enrico Pacete and also
covered by Tax Declaration No. 5781 (74) in the name of Enrico Pacete and which parcel of land he
acquired last September 25, 1962 from Conchita dela Torre, as shown by Exhibit "P-1".

9. A parcel of land covered by Transfer Certificate of Title No. T-10301, situated at Linao, Matalam,
North Cotabato, with an area of 7.2547 hectares, registered in the name of Enrico Pacete and also
covered by Tax Declaration No. 8716 (74) also in the name of Enrico Pacete which Enrico Pacete
acquired from Agustin Bijo last July 16, 1963, as shown by Exhibit "N-1".

10. A parcel of land covered by Transfer Certificate of Title No. 12728 in the name of the
defendant, Enrico L. Pacete, with an area of 10.9006 hectares, situated at Linao, Matalam, North
Cotabato and is also covered by Tax Declaration No. 5745 (74) in the name of Enrico Pacete, as
shown on Exhibit "O" and which Enrico Pacete acquired last December 31, 1963 from Eliseo Pugni,
as shown on Exhibit "0-1".

3. Ordering the Cancellation of Original Certificate of Title No. P-34243 covering Lot No. 1066,
issued in the name of Evelina Pacete, situated at Kiab, Matalam, North Cotabato, and ordering the
registration of the same in the joint name of Concepcion (Conchita) Alanis Pacete and Enrico L.
Pacete as their conjugal property, with address on the part of Concepcion (Conchita) Alanis Pacete
at Parang, Maguindanao and on the part of Enrico L. Pacete at Kidapawan, North Cotabato.

4. Ordering likewise the cancellation of Original Certificate of Title No. V-20101, covering Lot No.
77, in the name of Eduardo C. Pacete, situated at New Lawaan, Mlang, North Cotabato, and the
issuance of a new Transfer Certificate of Title in the joint name of (half and half) Concepcion
(Conchita) Alanis Pacete and Enrico L. Pacete.

5. Ordering likewise the cancellation of Original Certificate of Title No. P-29890, covering Lot 1068,
situated at Kiab, Matalam, North Cotabato, with an area of 12.1031 hectares, in the name of
Emelda C. Pacete and the issuance of a new Transfer Certificate of Title in the joint name (half and
half) of Concepcion (Conchita) Alanis Pacete and Enrico L. Pacete; and declaring that the fishpond
situated at Barrio Tumanan, Bislig, Surigao Del Sur, with an area of 48 hectares and covered by
Fishpond Lease Agreement of Emelda C. Pacete, dated July 29, 1977 be cancelled and in lieu
thereof, the joint name of Concepcion (Conchita) Alanis Pacete and her husband, Enrico L. Pacete,
be registered as their joint property, including the 50 hectares fishpond situated in the same place,
Barrio Timanan, Bislig, Surigao del Sur.

6. Ordering the following motor vehicles to be the joint properties of the conjugal partnership of
Concepcion (Conchita) Alanis Pacete and Enrico L. Pacete, viz:

a. Motor vehicle with Plate No. T-RG-783; Make, Dodge; Motor No. T137-20561; Chassis No.
83920393, and Type, Mcarrier;

b. Motor vehicle with Plate No. T-RG-784; Make, Dodge; Motor No. T214-229547; Chassis No.
10D-1302-C; and Type, Mcarrier;

c. Motor vehicle with Plate No. J-PR-818; Make, Ford; Motor No. GRW-116188; Chassis No. HOCC-
GPW-1161-88-C; Type, Jeep;
 d. Motor vehicle with Plate No. TH-5J-583; Make, Ford: Motor No. F70MU5-11111; Chassis No.
HOCC-GPW-1161188-G; Type, Stake;

e. Motor vehicle with Plate No. TH-5J-584; Make, Hino; Motor No. ED300-45758; Chassis No.
KB222-22044; Type, Stake; and

f. Motor vehicle with Plate No. TH-5J-585; Make, Ford: Motor No. LTC-780-Dv; Chassis No. 10F-
13582-K; Type, Stake.

7. Ordering the defendant Enrico L. Pacete to pay the plaintiff the sum of P46,950.00 which is the
share of the plaintiff in the unaccounted income of the ricemill and corn sheller for three years from
1971 to 1973.

8. Ordering the defendant, Enrico L. Pacete, to reimburse the plaintiff the monetary equipment of
30% of whether the plaintiff has recovered as attorney's fees;

9. Declaring the subsequent marriage between defendant Enrico L. Pacete and Clarita de la
Concepcion to be void ab initio; and

10. Ordering the defendants to pay the costs of this suit. 4

Hence, the instant special civil action of certiorari.

Under ordinary circumstances, the petition would have outrightly been dismissed, for, as also pointed out
by private respondents, the proper remedy of petitioners should have instead been either to appeal from
the judgment by default or to file a petition for relief from judgment. 5 This rule, however, is not inflexible;
a petition for certiorari is allowed when the default order is improperly declared, or even when it
is properly declared, where grave abuse of discretion attended such declaration. 6 In these exceptional
instances, the special civil action of certiorari to declare the nullity of a judgment by default is
available. 7 In the case at bench, the default order unquestionably is not legally sanctioned. The Civil Code
provides:

Art. 101. No decree of legal separation shall be promulgated upon a stipulation of facts or by
confession of judgment.

In case of non-appearance of the defendant, the court shall order the prosecuting attorney to
inquire whether or not a collusion between the parties exists. If there is no collusion, the
prosecuting attorney shall intervene for the State in order to take care that the evidence for the
plaintiff is not fabricated.

The provision has been taken from Article 30 of the California Civil Code, 8 and it is, in substance,
reproduced in Article 60 of the Family Code. 9

Article 101 reflects the public policy on marriages, and it should easily explain the mandatory tenor of the
law. In Brown v. Yambao, 10 the Court has observed:

The policy of Article 101 of the new Civil Code, calling for the intervention of the state attorneys in
case of uncontested proceedings for legal separation (and of annulment of marriages, under Article
88), is to emphasize that marriage is more than a mere contract; that it is a social institution in
which the state is vitally interested, so that its continuation or interruption can not be made to
depend upon the parties themselves (Civil Code, Article 52; Adong vs. Cheong Gee, 43 Phil. 43;
Ramirez v. Gmur, 42 Phil. 855; Goitia v. Campos, 35 Phil. 252). It is consonant with this policy that
the inquiry by the Fiscal should be allowed to focus upon any relevant matter that may indicate
whether the proceedings for separation or annulment are fully justified or not.

Article 103 of the Civil Code, now Article 58 of the Family Code, further mandates that an action for legal
separation must "in no case be tried before six months shall have elapsed since the filing of the petition,"
obviously in order to provide the parties a "cooling-off" period. In this interim, the court should take steps
toward getting the parties to reconcile.

The significance of the above substantive provisions of the law is further underscored by the inclusion of
the following provision in Rule 18 of the Rules of Court:

Sec. 6. No defaults in actions for annulments of marriage or for legal separation. — If the
defendant in an action for annulment of marriage or for legal separation fails to answer, the court
shall order the prosecuting attorney to investigate whether or not a collusion between the parties
exists, and if there is no collusion, to intervene for the State in order to see to it that the evidence
submitted is not fabricated.
The special prescriptions on actions that can put the integrity of marriage to possible jeopardy are
impelled by no less than the State's interest in the marriage relation and its avowed intention not to leave
the matter within the exclusive domain and the vagaries of the parties to alone dictate.

It is clear that the petitioner did, in fact, specifically pray for legal separation. 11 That other remedies,
whether principal or incidental, have likewise been sought in the same action cannot dispense, nor excuse
compliance, with any of the statutory requirements aforequoted.

WHEREFORE, the petition for certiorari is hereby GRANTED and the proceedings below, including the
Decision of 17 March 1980 appealed from, are NULLIFIED and SET ASIDE. No costs.

SO ORDERED.
G.R. No. 101789. April 28, 1993.
BHAGWAN RAMNANI, petitioner, vs. COURT OF APPEALS, HON. BUENAVENTURA J. GUERRERO,
as Regional Trial Court Judge of Makati, Metro Manila, Branch 133, SPOUSES CENON G. DIZON
and JULIETTE B. DIZON, respondents.

On March 13, 1990, the spouses Juliette Dizon and Cenen Dizon filed a complaint in the Regional Trial
Court of Makati against the spouses Josephine Anne Ramnani and Bhagwan Ramnani for the collection of a
sum of money representing the alleged unremitted value of jewelry received by Josephine from Juliette on
consignment basis.

Josephine Ramnani submitted an answer with counterclaim 2 in which she alleged inter alia:

(a) That although she did receive pieces of jewelry worth P934,347.00 from Dizon, the latter had likewise
received from her jewelries worth P1,671,842,00, including cash and unpaid checks in the amount of
P159,742.50;

(b) That she paid Dizon P50,000; and

(c) That Dizon still owes her P787,495.00;

The trial court set the case for pre-trial on August 14, 1990, 3 but the Ramnanis did not appear.
Consequently, they were declared in default. 4 On September 12, 1990, they filed a motion to lift the
order of default, but this was denied on November 20, 1990.

On October 26, 1990, conformably to the default order, evidence of the Dizon spouses was received ex
parte. On January 28, 1991, Judge Buenaventura J. Guerrero rendered judgment against the Ramnanis,
holding them liable to the plaintiffs in the amounts of P884,347.00, representing the principal obligation
plus legal interest thereon from March 13, 1990, until fully paid; P100,000.00 as moral damages; and
P20,000.00 as exemplary damages. They were also required to pay P50,000.00 as attorney's fees, and
the costs of the suit.

The Ramnanis filed a motion for reconsideration on the ground that a "personal obligation contracted by
the wife without the consent of the husband (was) being made enforceable against the spouses' conjugal
partnership despite absence of any allegation and proof that the same redounded to the benefit of the
family as required by Article 121 of the Family Code." 7 The motion was denied on April 11, 1991.

On April 29, 1991, Bhagwan Ramnani filed a petition for certiorari before the respondent Court of Appeals
imputing error to the trial court:

(1) in denying the motion to lift order declaring petitioner as in default despite a clear showing of a
meritorious defense;

(2) in not considering petitioner's reason for failure to attend pre-trial as excusable neglect.

In a decision dated May 10, 1991, the Court of Appeals dismissed the petition, holding that certiorari was
not the proper remedy. 9

The respondent court said:

Petitioners alleged that the respondent court erred and committed grave abuse of discretion and/or acted
in excess of jurisdiction in assigning its Branch Clerk of Court as the hearing commissioner for the purpose
of the ex parte reception of plaintiffs' evidence (par. 19, Petition); that the questioned Decision failed to
specify whether defendants are solidarily or only jointly liable (par. 20, Petition); and that petitioner had a
valid and meritorious defense (par. 21, Petition). These are matters that could very well be ventilated in
an ordinary appeal. It should be stressed that the writ of certiorari issues for the correction of errors of
jurisdiction only or grave abuse of discretion amounting to lack or excess of jurisdiction. It cannot be
legally used for any other purpose (Silverio vs. Court of Appeals, 141 SCRA 527). Mere error of judgment
cannot be a proper subject of the special civil action for certiorari (Zapata vs. NLRC, 175 SCRA 56).
Further, it is a settled rule that certiorari cannot be made a substitute for an perform the function of an
appeal (People vs. Cuaresma, 172 SCRA 415).

The petitioner has come to this Court to challenge that decision. He avers that the Court of Appeals erred
in upholding the refusal of the trial court to set aside the order of default and the default judgment
thereafter issued.

The basic rule is found in Section 2, Rule 20, viz: "A party who fails to appear at a pre-trial conference
may be non-suited or considered as in default."
As held in Lina v. Court of Appeals, 10 the remedies available to a defendant in the regional trial court
who has been declared in default are:

a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion,
under oath, to set aside the order of default on the ground that his failure to answer was due to fraud,
accident, mistake or excusable neglect, and that he has a meritorious defense; (Sec. 3, Rule 18)

b) If the judgment has already been rendered when the defendant discovered the default, but before the
same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37;

c) If the defendant discovered the default after the judgment has become final and executory, he may file
a petition for relief under Section 2 of Rule 38; and

d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law,
even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)

The first remedy was adopted by the petitioner but his motion to lift the order of default was denied.
According to the trial court:

Defendants' non-appearance is inexcusable. It is unbelievable their former lawyer did not explain to them
the mandatory character of their appearance. Their invocation of the deteriorating health of defendant
Josephine necessitating her trip abroad for appropriate medical treatment, is unavailing. There is no
medical certificate to attest such illness. Besides, at the time of the hearing of the motion on October 19,
1990, counsel for the defendants admitted that Josephine had not yet arrived from the States, despite
their averment in their motion she would "only be back late September or early October of this year." This
only indicates her light regard of her duty to appear in court. Moreover, the other defendant Bhagwan
Ramnani did not submit any other plausible explanation for his absence in the pre-trial.

A satisfactory showing by the movant of the existence of fraud, accident, mistake or excusable neglect is
an indispensable requirement for the setting aside of a judgment of default or the order of default. After
going over the pleadings of the parties and the decision of the respondent court, we find that the motion
to lift the order of default was properly denied for non-compliance with this requirement.

The defendants were less than conscientious in defending themselves and protecting their rights before
the trial court. They did not pay proper attention and respect to its directive. The petitioner has not shown
that his and his wife's failure to attend the pre-trial hearing as required was due to excusable neglect,
much less to fraud, accident or mistake.

The petitioner insists, however, that they had a meritorious defense which the trial court should not have
disregarded. A meritorious defense is only one of the two conditions. Even if it be assumed for the sake of
argument that the private respondents did owe Josephine Ramnani P900,000, as alleged in the
counterclaim, that circumstance alone is not sufficient to justify the lifting of the order of default and the
default judgment. The obvious reason is that a meritorious defense must concur with the satisfactory
reason for the non-appearance of the defaulted party. There is no such reason in this case.

The appropriate remedy is an ordinary appeal under Section 2 of Rule 41 of the Rules of Court providing in
part as follows:

A party who has been declared in default may likewise appeal from the judgment rendered against him as
contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has
been presented by him in accordance with Rule 38.

In questioning the dismissal of its petition by the respondent court, the petitioner invokes the case of
Pioneer Insurance and Surety Corporation v. Hontanosas, 11 where the Court sustained the challenge to
an order of default in a petition for certiorari rather than in an ordinary appeal, which was held as not an
adequate remedy.

That case is not applicable to the present petition. Certiorari was allowed in that case because the
petitioner was illegally declared in default. The Court held that, first, the petitioner could not be compelled
to attend an unnecessary second pre-trial after it had indicated at the earlier pre-trial that there was no
possibility of an amicable settlement; second, the pre-trial was premature because the last pleading had
not yet been filed at the time; and third, there was insufficient notice of the pre-trial to the petitioner. In
the case at bar, no such irregularities in the pre-trial have been alleged by the petitioner.

As we held in Pure Foods Corporation v. NLRC:

It must emphatically be reiterated, since so often is it overlooked, that the special civil action for certiorari
is a remedy designed for the correction of errors of jurisdiction and not errors of judgment. The reason for
the rule is simple. When a court exercises its jurisdiction, an error committed while so engaged does not
deprive it of the jurisdiction being exercised when the error is committed. If it did, every error committed
by a court would deprive it of its jurisdiction and every erroneous judgment would be a void judgment.
This cannot be allowed. The administration of justice would not survive such a rule. Consequently, an
error of judgment that the court may commit in the exercise of its jurisdiction is not correctible through
the original civil action of certiorari.

Even on the supposition that certiorari was an appropriate remedy, the petition would still fail because it
has not been clearly shown that the trial court committed grave abuse of discretion in refusing to set aside
the default order and the default judgment. We have held in many cases, including Pahilanga v. Luna, 13
that:

It is within the sound discretion of the court to set aside an order of default and to permit a defendant to
file his answer and to be heard on the merits even after the reglementary period for the filing of the
answer has expired, but it is not error, or an abuse of discretion, on the part of the court to refuse to set
aside its order of default and to refuse to accept the answer where it finds no justifiable reason for the
delay in the filing of the answer. In motions for reconsideration of an order of default, the moving party
has the burden of showing such diligence as would justify his being excused from not filing the answer
within the reglementary period as provided by the Rules of Court, otherwise, these guidelines for an
orderly and expeditious procedure would be rendered meaningless. Unless it is shown clearly that a party
has justifiable reason for the delay the court will not ordinarily exercise its discretion in his favor.

The above doctrine is applicable to the inexcusable neglect of the herein petitioner and his wife to appear
at the pre-trial hearing duly scheduled and of which they were properly notified.

We must, however, moderate the award of damages by the trial court as we feel it is rather harsh upon
the petitioner. In the exercise of our discretion, we hereby reduce the moral damages to P20,000.00 and
the attorney's fees to P10,000.00, and disallow the exemplary damages. The rest of the award is
approved.

WHEREFORE, the challenged decision is AFFIRMED as above modified, with costs against the petitioner. It
is so ordered.
G.R. No. 75919 May 7, 1987
MANCHESTER DEVELOPMENT CORPORATION, ET AL., petitioners, vs. COURT OF APPEALS, CITY
LAND DEVELOPMENT CORPORATION, STEPHEN ROXAS, ANDREW LUISON, GRACE LUISON and
JOSE DE MAISIP, respondents.

Acting on the motion for reconsideration of the resolution of the Second Division of January 28,1987 and
another motion to refer the case to and to be heard in oral argument by the Court En Banc filed by
petitioners, the motion to refer the case to the Court en banc is granted but the motion to set the case for
oral argument is denied.

Petitioners in support of their contention that the filing fee must be assessed on the basis of the amended
complaint cite the case of Magaspi vs. Ramolete. 1 They contend that the Court of Appeals erred in that
the filing fee should be levied by considering the amount of damages sought in the original complaint.

The environmental facts of said case differ from the present in that —

1. The Magaspi case was an action for recovery of ownership and possession of a parcel of land with
damages. 2While the present case is an action for torts and damages and specific performance with prayer
for temporary restraining order, etc. 3

2. In the Magaspi case, the prayer in the complaint seeks not only the annulment of title of the defendant
to the property, the declaration of ownership and delivery of possession thereof to plaintiffs but also asks
for the payment of actual moral, exemplary damages and attorney's fees arising therefrom in the amounts
specified therein. 4However, in the present case, the prayer is for the issuance of a writ of preliminary
prohibitory injunction during the pendency of the action against the defendants' announced forfeiture of
the sum of P3 Million paid by the plaintiffs for the property in question, to attach such property of
defendants that maybe sufficient to satisfy any judgment that maybe rendered, and after hearing, to
order defendants to execute a contract of purchase and sale of the subject property and annul defendants'
illegal forfeiture of the money of plaintiff, ordering defendants jointly and severally to pay plaintiff actual,
compensatory and exemplary damages as well as 25% of said amounts as maybe proved during the trial
as attorney's fees and declaring the tender of payment of the purchase price of plaintiff valid and
producing the effect of payment and to make the injunction permanent. The amount of damages sought is
not specified in the prayer although the body of the complaint alleges the total amount of over P78 Million
as damages suffered by plaintiff. 5

3. Upon the filing of the complaint there was an honest difference of opinion as to the nature of the action
in the Magaspi case. The complaint was considered as primarily an action for recovery of ownership and
possession of a parcel of land. The damages stated were treated as merely to the main cause of action.
Thus, the docket fee of only P60.00 and P10.00 for the sheriff's fee were paid. 6

In the present case there can be no such honest difference of opinion. As maybe gleaned from the
allegations of the complaint as well as the designation thereof, it is both an action for damages and
specific performance. The docket fee paid upon filing of complaint in the amount only of P410.00 by
considering the action to be merely one for specific performance where the amount involved is not capable
of pecuniary estimation is obviously erroneous. Although the total amount of damages sought is not
stated in the prayer of the complaint yet it is spelled out in the body of the complaint totalling in the
amount of P78,750,000.00 which should be the basis of assessment of the filing fee.

4. When this under-re assessment of the filing fee in this case was brought to the attention of this Court
together with similar other cases an investigation was immediately ordered by the Court. Meanwhile
plaintiff through another counsel with leave of court filed an amended complaint on September 12, 1985
for the inclusion of Philips Wire and Cable Corporation as co-plaintiff and by emanating any mention of the
amount of damages in the body of the complaint. The prayer in the original complaint was maintained.
After this Court issued an order on October 15, 1985 ordering the re- assessment of the docket fee in the
present case and other cases that were investigated, on November 12, 1985 the trial court directed
plaintiffs to rectify the amended complaint by stating the amounts which they are asking for. It was only
then that plaintiffs specified the amount of damages in the body of the complaint in the reduced amount
of P10,000,000.00. 7 Still no amount of damages were specified in the prayer. Said amended complaint
was admitted.

On the other hand, in the Magaspi case, the trial court ordered the plaintiffs to pay the amount of
P3,104.00 as filing fee covering the damages alleged in the original complaint as it did not consider the
damages to be merely an or incidental to the action for recovery of ownership and possession of real
property. 8 An amended complaint was filed by plaintiff with leave of court to include the government of
the Republic as defendant and reducing the amount of damages, and attorney's fees prayed for to
P100,000.00. Said amended complaint was also admitted. 9

In the Magaspi case, the action was considered not only one for recovery of ownership but also for
damages, so that the filing fee for the damages should be the basis of assessment. Although the payment
of the docketing fee of P60.00 was found to be insufficient, nevertheless, it was held that since the
payment was the result of an "honest difference of opinion as to the correct amount to be paid as docket
fee" the court "had acquired jurisdiction over the case and the proceedings thereafter had were proper
and regular." 10 Hence, as the amended complaint superseded the original complaint, the allegations of
damages in the amended complaint should be the basis of the computation of the filing fee. 11

In the present case no such honest difference of opinion was possible as the allegations of the complaint,
the designation and the prayer show clearly that it is an action for damages and specific performance. The
docketing fee should be assessed by considering the amount of damages as alleged in the original
complaint.

As reiterated in the Magaspi case the rule is well-settled "that a case is deemed filed only upon payment
of the docket fee regardless of the actual date of filing in court . 12 Thus, in the present case the trial
court did not acquire jurisdiction over the case by the payment of only P410.00 as docket fee. Neither can
the amendment of the complaint thereby vest jurisdiction upon the Court. 13 For an legal purposes there
is no such original complaint that was duly filed which could be amended. Consequently, the order
admitting the amended complaint and all subsequent proceedings and actions taken by the trial court are
null and void.

The Court of Appeals therefore, aptly ruled in the present case that the basis of assessment of the docket
fee should be the amount of damages sought in the original complaint and not in the amended complaint.

The Court cannot close this case without making the observation that it frowns at the practice of counsel
who filed the original complaint in this case of omitting any specification of the amount of damages in the
prayer although the amount of over P78 million is alleged in the body of the complaint. This 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. It was only when in obedience to the order of this Court of October 18, 1985, the
trial court directed that the amount of damages be specified in the amended complaint, that petitioners'
counsel wrote the damages sought in the much reduced amount of P10,000,000.00 in the body of the
complaint but not in the prayer thereof. The design to avoid payment of the required docket fee is
obvious.

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 bib 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 amounts sought in the amended pleading. The ruling in the
Magaspi case 14 in so far as it is inconsistent with this pronouncement is overturned and reversed.

WHEREFORE, the motion for reconsideration is denied for lack of merit.

SO ORDERED.
G.R. Nos. 79937-38 February 13, 1989
SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS and D.J. WARBY, petitioners, vs. HON.
MAXIMIANO C. ASUNCION, Presiding Judge, Branch 104, Regional Trial Court, Quezon City and
MANUEL CHUA UY PO TIONG, respondents.

Again the Court is asked to resolve the issue of whether or not a court acquires jurisdiction over a case
when the correct and proper docket fee has not been paid.

On February 28, 1984, petitioner Sun Insurance Office, Ltd. (SIOL for brevity) filed a complaint with the
Regional Trial Court of Makati, Metro Manila for the consignation of a premium refund on a fire insurance
policy with a prayer for the judicial declaration of its nullity against private respondent Manuel Uy Po
Tiong. Private respondent as declared in default for failure to file the required answer within the
reglementary period.

On the other hand, on March 28, 1984, private respondent filed a complaint in the Regional Trial Court of
Quezon City for the refund of premiums and the issuance of a writ of preliminary attachment which was
docketed as Civil Case No. Q-41177, initially against petitioner SIOL, and thereafter including E.B. Philipps
and D.J. Warby as additional defendants. The complaint sought, among others, the payment of actual,
compensatory, moral, exemplary and liquidated damages, attorney's fees, expenses of litigation and costs
of the suit. Although the prayer in the complaint did not quantify the amount of damages sought said
amount may be inferred from the body of the complaint to be about Fifty Million Pesos (P50,000,000.00).

Only the amount of P210.00 was paid by private respondent as docket fee which prompted petitioners'
counsel to raise his objection. Said objection was disregarded by respondent Judge Jose P. Castro who
was then presiding over said case. Upon the order of this Court, the records of said case together with
twenty-two other cases assigned to different branches of the Regional Trial Court of Quezon City which
were under investigation for under-assessment of docket fees were transmitted to this Court. The Court
thereafter returned the said records to the trial court with the directive that they be re-raffled to the other
judges in Quezon City, to the exclusion of Judge Castro. Civil Case No. Q-41177 was re-raffled to Branch
104, a sala which was then vacant.

On October 15, 1985, the Court en banc issued a Resolution in Administrative Case No. 85-10-8752-RTC
directing the judges in said cases to reassess the docket fees and that in case of deficiency, to order its
payment. The Resolution also requires all clerks of court to issue certificates of re-assessment of docket
fees. All litigants were likewise required to specify in their pleadings the amount sought to be recovered in
their complaints.

On December 16, 1985, Judge Antonio P. Solano, to whose sala Civil Case No. Q-41177 was temporarily
assigned, issuedan order to the Clerk of Court instructing him to issue a certificate of assessment of the
docket fee paid by private respondent and, in case of deficiency, to include the same in said certificate.

On January 7, 1984, to forestall a default, a cautionary answer was filed by petitioners. On August
30,1984, an amended complaint was filed by private respondent including the two additional defendants
aforestated.

Judge Maximiano C. Asuncion, to whom Civil Case No. Q41177 was thereafter assigned, after his
assumption into office on January 16, 1986, issued a Supplemental Order requiring the parties in the case
to comment on the Clerk of Court's letter-report signifying her difficulty in complying with the Resolution
of this Court of October 15, 1985 since the pleadings filed by private respondent did not indicate the exact
amount sought to be recovered. On January 23, 1986, private respondent filed a "Compliance" and a "Re-
Amended Complaint" stating therein a claim of "not less than Pl0,000,000. 00 as actual compensatory
damages" in the prayer. In the body of the said second amended complaint however, private respondent
alleges actual and compensatory damages and attorney's fees in the total amount of about
P44,601,623.70.

On January 24, 1986, Judge Asuncion issued another Order admitting the second amended complaint and
stating therein that the same constituted proper compliance with the Resolution of this Court and that a
copy thereof should be furnished the Clerk of Court for the reassessment of the docket fees. The
reassessment by the Clerk of Court based on private respondent's claim of "not less than P10,000,000.00
as actual and compensatory damages" amounted to P39,786.00 as docket fee. This was subsequently paid
by private respondent.

Petitioners then filed a petition for certiorari with the Court of Appeals questioning the said order of Judie
Asuncion dated January 24, 1986.

On April 24, 1986, private respondent filed a supplemental complaint alleging an additional claim of
P20,000,000.00 as d.qmages so the total claim amounts to about P64,601,623.70. On October 16, 1986,
or some seven months after filing the supplemental complaint, the private respondent paid the additional
docket fee of P80,396.00. 1
On August 13, 1987, the Court of Appeals rendered a decision ruling, among others, as follows:

WHEREFORE, judgment is hereby rendered:

1. Denying due course to the petition in CA-G.R. SP No. 1, 09715 insofar as it seeks annulment of
the order

(a) denying petitioners' motion to dismiss the complaint, as amended, and

(b) granting the writ of preliminary attachment, but giving due course to the portion thereof
questioning the reassessment of the docketing fee, and requiring the Honorable respondent Court
to reassess the docketing fee to be paid by private respondent on the basis of the amount of
P25,401,707.00. 2

Hence, the instant petition.

During the pendency of this petition and in conformity with the said judgment of respondent court, private
respondent paid the additional docket fee of P62,432.90 on April 28, 1988. 3

The main thrust of the petition is that the Court of Appeals erred in not finding that the lower court did not
acquire jurisdiction over Civil Case No. Q-41177 on the ground of nonpayment of the correct and proper
docket fee. Petitioners allege that while it may be true that private respondent had paid the amount of
P182,824.90 as docket fee as herein-above related, and considering that the total amount sought to be
recovered in the amended and supplemental complaint is P64,601,623.70 the docket fee that should be
paid by private respondent is P257,810.49, more or less. Not having paid the same, petitioners contend
that the complaint should be dismissed and all incidents arising therefrom should be annulled. In support
of their theory, petitioners cite the latest ruling of the Court in Manchester Development Corporation vs.
CA, 4 as follows:

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 amounts sought in the amended pleading.
The ruling in the Magaspi Case in so far as it is inconsistent with this pronouncement is overturned
and reversed.

On the other hand, private respondent claims that the ruling in Manchester cannot apply retroactively to
Civil Case No. Q41177 for at the time said civil case was filed in court there was no such Manchester ruling
as yet. Further, private respondent avers that what is applicable is the ruling of this Court in Magaspi v.
Ramolete, 5 wherein this Court held that the trial court acquired jurisdiction over the case even if the
docket fee paid was insufficient.

The contention that Manchester cannot apply retroactively to this case is untenable. Statutes regulating
the procedure of the courts will be construed as applicable to actions pending and undetermined at the
time of their passage. Procedural laws are retrospective in that sense and to that extent. 6

In Lazaro vs. Endencia and Andres, 7 this Court held that the payment of the full amount of the docket fee
is an indispensable step for the perfection of an appeal. In a forcible entry and detainer case before the
justice of the peace court of Manaoag, Pangasinan, after notice of a judgment dismissing the case, the
plaintiff filed a notice of appeal with said court but he deposited only P8.00 for the docket fee, instead of
P16.00 as required, within the reglementary period of appeal of five (5) days after receiving notice of
judgment. Plaintiff deposited the additional P8.00 to complete the amount of the docket fee only fourteen
(14) days later. On the basis of these facts, this court held that the Court of First Instance did notacquire
jurisdiction to hear and determine the appeal as the appeal was not thereby perfected.

In Lee vs. Republic, 8 the petitioner filed a verified declaration of intention to become a Filipino citizen by
sending it through registered mail to the Office of the Solicitor General in 1953 but the required filing fee
was paid only in 1956, barely 5V2 months prior to the filing of the petition for citizenship. This Court ruled
that the declaration was not filed in accordance with the legal requirement that such declaration should be
filed at least one year before the filing of the petition for citizenship. Citing Lazaro, this Court concluded
that the filing of petitioner's declaration of intention on October 23, 1953 produced no legal effect until the
required filing fee was paid on May 23, 1956.

In Malimit vs. Degamo, 9 the same principles enunciated in Lazaro and Lee were applied. It was an
original petition for quo warranto contesting the right to office of proclaimed candidates which was mailed,
addressed to the clerk of the Court of First Instance, within the one-week period after the proclamation as
provided therefor by law. 10 However, the required docket fees were paid only after the expiration of said
period. Consequently, this Court held that the date of such payment must be deemed to be the real date
of filing of aforesaid petition and not the date when it was mailed.
Again, in Garica vs, Vasquez, 11 this Court reiterated the rule that the docket fee must be paid before a
court will act on a petition or complaint. However, we also held that said rule is not applicable when
petitioner seeks the probate of several wills of the same decedent as he is not required to file a separate
action for each will but instead he may have other wills probated in the same special proceeding then
pending before the same court.

Then in Magaspi, 12 this Court reiterated the ruling in Malimit and Lee that a case is deemed filed only
upon payment of the docket fee regardless of the actual date of its filing in court. Said case involved a
complaint for recovery of ownership and possession of a parcel of land with damages filed in the Court of
First Instance of Cebu. Upon the payment of P60.00 for the docket fee and P10.00 for the sheriffs fee, the
complaint was docketed as Civil Case No. R-11882. The prayer of the complaint sought that the Transfer
Certificate of Title issued in the name of the defendant be declared as null and void. It was also prayed
that plaintiff be declared as owner thereof to whom the proper title should be issued, and that defendant
be made to pay monthly rentals of P3,500.00 from June 2, 1948 up to the time the property is delivered
to plaintiff, P500,000.00 as moral damages, attorney's fees in the amount of P250,000.00, the costs of
the action and exemplary damages in the amount of P500,000.00.

The defendant then filed a motion to compel the plaintiff to pay the correct amount of the docket fee to
which an opposition was filed by the plaintiff alleging that the action was for the recovery of a parcel of
land so the docket fee must be based on its assessed value and that the amount of P60.00 was the correct
docketing fee. The trial court ordered the plaintiff to pay P3,104.00 as filing fee.

The plaintiff then filed a motion to admit the amended complaint to include the Republic as the defendant.
In the prayer of the amended complaint the exemplary damages earlier sought was eliminated. The
amended prayer merely sought moral damages as the court may determine, attorney's fees of
P100,000.00 and the costs of the action. The defendant filed an opposition to the amended complaint. The
opposition notwithstanding, the amended complaint was admitted by the trial court. The trial court
reiterated its order for the payment of the additional docket fee which plaintiff assailed and then
challenged before this Court. Plaintiff alleged that he paid the total docket fee in the amount of P60.00
and that if he has to pay the additional fee it must be based on the amended complaint.

The question posed, therefore, was whether or not the plaintiff may be considered to have filed the case
even if the docketing fee paid was not sufficient. In Magaspi, We reiterated the rule that the case was
deemed filed only upon the payment of the correct amount for the docket fee regardless of the actual date
of the filing of the complaint; that there was an honest difference of opinion as to the correct amount to
be paid as docket fee in that as the action appears to be one for the recovery of property the docket fee of
P60.00 was correct; and that as the action is also one, for damages, We upheld the assessment of the
additional docket fee based on the damages alleged in the amended complaint as against the assessment
of the trial court which was based on the damages alleged in the original complaint.

However, as aforecited, this Court overturned Magaspi in Manchester. Manchester involves an action for
torts and damages and specific performance with a prayer for the issuance of a temporary restraining
order, etc. The prayer in said case is for the issuance of a writ of preliminary prohibitory injunction during
the pendency of the action against the defendants' announced forfeiture of the sum of P3 Million paid by
the plaintiffs for the property in question, the attachment of such property of defendants that may be
sufficient to satisfy any judgment that may be rendered, and, after hearing, the issuance of an order
requiring defendants to execute a contract of purchase and sale of the subject property and annul
defendants' illegal forfeiture of the money of plaintiff. It was also prayed that the defendants be made to
pay the plaintiff jointly and severally, actual, compensatory and exemplary damages as well as 25% of
said amounts as may be proved during the trial for attorney's fees. The plaintiff also asked the trial court
to declare the tender of payment of the purchase price of plaintiff valid and sufficient for purposes of
payment, and to make the injunction permanent. The amount of damages sought is not specified in the
prayer although the body of the complaint alleges the total amount of over P78 Millon allegedly suffered
by plaintiff.

Upon the filing of the complaint, the plaintiff paid the amount of only P410.00 for the docket fee based on
the nature of the action for specific performance where the amount involved is not capable of pecuniary
estimation. However, it was obvious from the allegations of the complaint as well as its designation that
the action was one for damages and specific performance. Thus, this court held the plaintiff must be
assessed the correct docket fee computed against the amount of damages of about P78 Million, although
the same was not spelled out in the prayer of the complaint.

Meanwhile, plaintiff through another counsel, with leave of court, filed an amended complaint on
September 12, 1985 by the inclusion of another co-plaintiff and eliminating any mention of the amount of
damages in the body of the complaint. The prayer in the original complaint was maintained.

On October 15, 1985, this Court ordered the re-assessment of the docket fee in the said case and other
cases that were investigated. On November 12, 1985, the trial court directed the plaintiff to rectify the
amended complaint by stating the amounts which they were asking for. This plaintiff did as instructed. In
the body of the complaint the amount of damages alleged was reduced to P10,000,000.00 but still no
amount of damages was specified in the prayer. Said amended complaint was admitted.

Applying the principle in Magaspi that "the case is deemed filed only upon payment of the docket fee
regardless of the actual date of filing in court," this Court held that the trial court did not acquire
jurisdiction over the case by payment of only P410.00 for the docket fee. Neither can the amendment of
the complaint thereby vest jurisdiction upon the Court. For all legal purposes there was no such original
complaint duly filed which could be amended. Consequently, the order admitting the amended complaint
and all subsequent proceedings and actions taken by the trial court were declared null and void. 13

The present case, as above discussed, is among the several cases of under-assessment of docket fee
which were investigated by this Court together with Manchester. The facts and circumstances of this case
are similar to Manchester. In the body of the original complaint, the total amount of damages sought
amounted to about P50 Million. In the prayer, the amount of damages asked for was not stated. The
action was for the refund of the premium and the issuance of the writ of preliminary attachment with
damages. The amount of only P210.00 was paid for the docket fee. On January 23, 1986, private
respondent filed an amended complaint wherein in the prayer it is asked that he be awarded no less than
P10,000,000.00 as actual and exemplary damages but in the body of the complaint the amount of his
pecuniary claim is approximately P44,601,623.70. Said amended complaint was admitted and the private
respondent was reassessed the additional docket fee of P39,786.00 based on his prayer of not less than
P10,000,000.00 in damages, which he paid.

On April 24, 1986, private respondent filed a supplemental complaint alleging an additional claim of
P20,000,000.00 in damages so that his total claim is approximately P64,601,620.70. On October 16,
1986, private respondent paid an additional docket fee of P80,396.00. After the promulgation of the
decision of the respondent court on August 31, 1987 wherein private respondent was ordered to be
reassessed for additional docket fee, and during the pendency of this petition, and after the promulgation
of Manchester, on April 28, 1988, private respondent paid an additional docket fee of P62,132.92.
Although private respondent appears to have paid a total amount of P182,824.90 for the docket fee
considering the total amount of his claim in the amended and supplemental complaint amounting to about
P64,601,620.70, petitioner insists that private respondent must pay a docket fee of P257,810.49.

The principle in Manchester could very well be applied in the present case. The pattern and the intent to
defraud the government of the docket fee due it is obvious not only in the filing of the original complaint
but also in the filing of the second amended complaint.

However, in Manchester, petitioner did not pay any additional docket fee until] the case was decided by
this Court on May 7, 1987. Thus, in Manchester, due to the fraud committed on the government, this
Court held that the court a quo did not acquire jurisdiction over the case and that the amended complaint
could not have been admitted inasmuch as the original complaint was null and void.

In the present case, a more liberal interpretation of the rules is called for considering that, unlike
Manchester, private respondent demonstrated his willingness to abide by the rules by paying the
additional docket fees as required. The promulgation of the decision in Manchester must have had that
sobering influence on private respondent who thus paid the additional docket fee as ordered by the
respondent court. It triggered his change of stance by manifesting his willingness to pay such additional
docket fee as may be ordered.

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 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 lien and assess and collect the additional fee.

WHEREFORE, the petition is DISMISSED for lack of merit. The Clerk of Court of the court a quo is hereby
instructed to reassess and determine the additional filing fee that should be paid by private respondent
considering the total amount of the claim sought in the original complaint and the supplemental complaint
as may be gleaned from the allegations and the prayer thereof and to require private respondent to pay
the deficiency, if any, without pronouncement as to costs.

SO ORDERED.
G.R. Nos. 88075-77 December 20, 1989
MAXIMO TACAY, PONCIANO PANES and ANTONIA NOEL, petitioners, vs. REGIONAL TRIAL
COURT OF TAGUM Davao del Norte, Branches 1 and 2, Presided by Hon. Marcial Fernandez and
Hon. Jesus Matas, respectively, PATSITA GAMUTAN, Clerk of Court, and GODOFREDO
PINEDA, respondents.

In the Regional Trial Court at Tagum, Davao del Norte, 1 three(3) actions for recovery of possession
(acciones publicianas 2 ) were separately instituted by Godofredo Pineda against three (3) defendants,
docketed as follows:

1) vs. Antonia Noel Civil Case No. 2209

2) vs. Ponciano Panes Civil Case No. 2210

3) vs. Maximo Tacay Civil Case No. 2211.

Civil Cases Numbered 2209 and 2211 were raffled to Branch I of the Trial Court, presided over by Judge
Marcial Hernandez. Civil No. 2210 was assigned to Branch 2, presided over by Judge Jesus Matas.

The complaints 3 all alleged the same essential facts (1) Pineda was the owner of a parcel of land
measuring 790 square meters, his ownership being evidenced by TCT No. T-46560; (2) the previous
owner had allowed the defendants to occupy portions of the land by mere tolerance; (3) having himself
need to use the property, Pineda had made demands on the defendants to vacate the property and pay
reasonable rentals therefor, but these demands had been refused; and (4) the last demand had been
made more than a year prior to the commencement of suit. The complaints prayed for the same reliefs, to
wit:

1) that plaintiff be declared owner of the areas occupied by the defendants;

2) that defendants and their "privies and allies" be ordered to vacate and deliver the portions of
the land usurped by them;

3) that each defendant be ordered to pay:

1 ) P 2,000 as monthly rents from February, 1987;

2 ) Actual damages, as proven;

3 ) Moral and nominal damages as the Honorable Court may fix ;

4) P30,000.00, "as attorney's fees, and representation fees of P5,000.00 per day of appearance;" 4

and

4) that he (Pineda) be granted such "further relief and remedies ... just and equitable in the
premises.

The prayer of each complaint contained a handwritten notation (evidently made by plaintiff's counsel)
reading, "P5,000.00 as and for," immediately above the typewritten words, "Actual damages, as proven,"
the intention apparently being to make the entire phrase read, " P5,000.00 as and for actual damages as
proven. 5

Motions to dismiss were filed in behalf of each of the defendants by common counsel . 6 Every motion
alleged that the Trial Court had not acquired jurisdiction of the case —

. . . for the reason that the ... complaint violates the mandatory and clear provision of Circular No.
7 of the ... Supreme Court dated March 24,1988, by failing to specify all the amounts of damages
which plaintiff is claiming from defendant;" and

. . . for ... failure (of the complaint) to even allege the basic requirement as to the assessed value
of the subject lot in dispute.

Judge Matas denied the motion to dismiss filed in Civil Case No. 2210 but ordered the expunction of the
"allegations in paragraph 11 of the ... complaint regarding moral as well as nominal damages . 7 On
motion of defendant Panes, Judge Matas later ordered the striking out, too, of the "handwritten amount of
'P5,000. 00 as and for.' including the typewritten words 'actual damages as proven' ... in sub-paragraph b
of paragraph 4 in the conclusion and prayer of the complaint ..." 8
The motions to dismiss submitted in Civil Cases Numbered 2211 and 2209 were also denied in separate
orders promulgated by Judge Marcial Fernandez. 9 His Order in Case No. 2209 dated March 15, 1989 (a)
declared that since the "action at bar is for Reivindicatoria, Damages and Attorney's fees ... (d)efinitely
this Court has the exclusive jurisdiction," (b) that the claims for actual, moral and nominal damages "are
only one aspect of the cause of action," and (c) because of absence of specification of the amounts
claimed as moral, nominal and actual damages, they should be "expunged from the records."

Ascribing grave abuse of discretion to both Judges Matas and Fernandez in the rendition of the Orders
above described, the defendants in all three (3) actions have filed with this Court a "Joint Petition" for
certiorari, prohibition and mandamus, with prayer for temporary restraining order and/or writ of
preliminary prohibitory injunction," praying essentially that said orders be annulled and respondent judges
directed to dismiss all the complaints "without prejudice to private respondent Pineda's re-filing a similar
complaint that complies with Circular No. 7." The joint petition (a) re-asserted the proposition that
because the complaints had failed to state the amounts being claimed as actual, moral and nominal
damages, the Trial Courts a quo had not acquired jurisdiction over the three (3) actions in question-
indeed, the respondent Clerk of Court should not have accepted the complaints which initiated said suits,
and (b) it was not proper merely to expunge the claims for damages and allow "the so-called cause of
action for "reivindicatoria" remain for trial" by itself. 10

The joint petition should be, as it is hereby, dismissed.

It should be dismissed for failure to comply with this Court's Circular No. 1-88 (effective January 1, 1989).
The copies of the challenged Orders thereto attached 11 were not certified by the proper Clerk of Court or
his duly authorized representative. Certification was made by the petitioners' counsel, which is not
allowed.

The petition should be dismissed, too, for another equally important reason. It fails to demonstrate any
grave abuse of discretion on the part of the respondent Judges in rendering the Orders complained of or,
for that matter, the existence of any proper cause for the issuance of the writ of mandamus. On the
contrary, the orders appear to have correctly applied the law to the admitted facts.

It is true that the complaints do not state the amounts being claimed as actual, moral and nominal
damages. It is also true, however, that the actions are not basically for the recovery of sums of money.
They are principally for recovery of possession of real property, in the nature of an accion publiciana.
Determinative of the court's jurisdiction in this type of actions is the nature thereof, not the amount of the
damages allegedly arising from or connected with the issue of title or possession, and regardless of the
value of the property. Quite obviously, an action for recovery of possession of real property (such as an
accion plenaria de possesion) or the title thereof, 12or for partition or condemnation of, or the foreclosure
of a mortgage on, said real property 13 - in other words, a real action-may be commenced and prosecuted
without an accompanying claim for actual, moral, nominal or exemplary damages; and such an action
would fall within the exclusive, original jurisdiction of the Regional Trial Court.

Batas Pambansa Bilang 129 provides that Regional Trial Courts shall exercise exclusive original jurisdiction
inter alia over "all civil actions which involve the title to, or possession of, real property, or any interest
therein, except actions for forcible entry into and unlawful detainer of lands or buildings, original
jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts." 14 The rule applies regardless of the value of the real property involved, whether it be
worth more than P20,000.00 or not, infra. The rule also applies even where the complaint involving realty
also prays for an award of damages; the amount of those damages would be immaterial to the question of
the Court's jurisdiction. The rule is unlike that in other cases e.g., actions simply for recovery of money or
of personal property, 15 or actions in admiralty and maritime jurisdiction 16 in which the amount
claimed, 17 or the value of the personal property, is determinative of jurisdiction; i.e., the value of the
personal property or the amount claimed should exceed twenty thousand pesos (P20,000.00) in order to
be cognizable by the Regional Trial Court.

Circular No. 7 of this Court, dated March 24, 1988, cannot thus be invoked, as the petitioner does, as
authority for the dismissal of the actions at bar. That circular, avowedly inspired by the doctrine laid down
in Manchester Development Corporation v. Court of appeals, 149 SCRA 562 (May 7, 1987), has but limited
application to said actions, as shall presently be discussed. Moreover, the rules therein laid down have
since been clarified and amplified by the Court's subsequent decision in Sun Insurance Office, Ltd. (SIOL)
v. Asuncion, et al., G.R. Nos. 79937-38, February 13, 1989.

Circular No. 7 was aimed at the practice of certain parties who omit from the prayer of their complaints
"any specification of the amount of damages," the omission being "clearly intended for no other purposes
than to evade the payment of the correct filing fees if not to mislead the docket clerk, in the assessment
of the filing fee." The following rules were therefore set down:
1. All complaints, petitions, answers, and 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.

2. Any pleading that fails to comply with this requirement shall not be accepted nor admitted, or shall
otherwise be expunged from the record.

3. 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 clarificatory and additional rules laid down in Sun Insurance Office, Ltd. v. Asuncion, supra, read as
follows:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but (also) 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 lien and assess and collect the additional fee.

As will be noted, the requirement in Circular No. 7 that complaints, petitions, answers, and similar
pleadings should specify the amount of damages being prayed for not only in the body of the pleading but
also in the prayer, has not been altered. What has been revised is the rule that subsequent "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 trial court now being
authorized to allow payment of the fee within a reasonable time but in no case beyond the applicable
prescriptive or reglementary period. Moreover, a new rule has been added, governing awards of claims
not specified in the pleading - i.e., 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.

Now, under the Rules of Court, docket or filing fees are assessed on the basis of the "sum claimed," on
the one hand, or the "value of the property in litigation or the value of the estate," on the other. 18 There
are, in other words, as already above intimated, actions or proceedings involving real property, in which
the value of the property is immaterial to the court's jurisdiction, account thereof being taken merely for
assessment of the legal fees; and there are actions or proceedings, involving personal property or the
recovery of money and/or damages, in which the value of the property or the amount of the demand is
decisive of the trial court's competence (aside from being the basis for fixing the corresponding docket
fees). 19

Where the action is purely for the recovery of money or damages, the docket fees are assessed on the
basis of the aggregate amount claimed, exclusive only of interests and costs. In this case, the complaint
or similar pleading should, according to Circular No. 7 of this Court, "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."

Two situations may arise. One is where the complaint or similar pleading sets out a claim purely for
money or damages and there is no precise statement of the amounts being claimed. In this event the rule
is that the pleading will "not be accepted nor admitted, or shall otherwise be expunged from the record."
In other words, the complaint or pleading may be dismissed, or the claims as to which the amounts are
unspecified may be expunged, although as aforestated the Court may, on motion, permit amendment of
the complaint and payment of the fees provided the claim has not in the meantime become time-barred.
The other is where the pleading does specify the amount of every claim, but the fees paid are insufficient;
and here again, the rule now 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.
Where the action involves real property and a related claim for damages as well, the legal fees shall be
assessed on the basis of both (a) the value of the property and (b) the total amount of related damages
sought. The Court acquires jurisdiction over the action if the filing of the initiatory pleading is accompanied
by the payment of the requisite fees, or, if the fees are not paid at the time of the filing of the pleading, as
of the time of full payment of the fees within such reasonable time as the court may grant, unless, of
course, prescription has set in the meantime. But where-as in the case at bar-the fees prescribed for an
action involving real property have been paid, but the amounts of certain of the related damages (actual,
moral and nominal) being demanded are unspecified, the action may not be dismissed. The Court
undeniably has jurisdiction over the action involving the real property, acquiring it upon the filing of the
complaint or similar pleading and payment of the prescribed fee. And it is not divested of that authority by
the circumstance that it may not have acquired jurisdiction over the accompanying claims for damages
because of lack of specification thereof. What should be done is simply to expunge those claims for
damages as to which no amounts are stated, which is what the respondent Courts did, or allow, on
motion, a reasonable time for the amendment of the complaints so as to allege the precise amount of
each item of damages and accept payment of the requisite fees therefor within the relevant prescriptive
period.

WHEREFORE, the petition is DISMISSED, without pronouncement as to costs.

G.R. No. 89747 July 20, 1990
MAERSK-TABACALERA SHIPPING AGENCY (FILIPINAS), INC., petitioner, vs. THE HON. COURT OF
APPEALS, MONET'S EXPORT AND MANUFACTURING CORPORATION AND/OR VICENTE
TAGLE, respondents.

This is a petition for review on certiorari of the decision dated July 12, 1989 of the Court of Appeals in CA-
G.R. CV No. 18124 affirming that of the Regional Trial Court of Legaspi City in Civil Case No. 7480 which
awarded damages to the plaintiff, now private respondent, Monet's Export and Manufacturing (Monet for
short) against the petitioner Maersk- Tabacalera Shipping Agency (Filipinas), Inc., (Maersk for short) for
breach of a (contract of carriage. The facts are stated in the decision of the Court of Appeals as follows:

On May 21, 1985, a complaint for damages was filed by plaintiff Monet's Export and Manufacturing
Corporation (Monet's) and/or Vicente Tagle against defendants Maersk Tabacalera Shipping
(Maersk) and the New Asia Enterprises (New Asia) and/or Manuel Ranola, alleging, among other
things, that plaintiff, like defendant New Asia, is engaged in the export of locally-made handicrafts
and products, while defendant Maersk Line is engaged in furnishing containerized services through
which Monet's and New Asia normally ship their goods; that on March 11, 1984, plaintiff, after
complying with all the export and custom requirements, loaded its goods in Maersk's container to
be delivered on or before March 15, 1984 to Manila for immediate trans-shipment to its port of
destination; that through fraud and malice, and without prior notice to Monet's, Maersk unloaded
the goods at New Asia's factory site at Tagas, Daraga, Albay to give way to the latter's own export
shipment; that Monet's shipment was later returned to its warehouse at Banag, Daraga, Albay; and
that because of this occurrence, Monet's had to secure another shipper, thereby incurring
unnecessary expenses as well as suffering mental anguish, worry and sleepless nights thinking of
the possibility of losing its trading partners which would seriously doubt Monet's capacity as a
respectable exporter. Monet's likewise alleged having suffered actual, moral and exemplary
damages (p. 1, Record).

Answering the complaint, Maersk contended that contrary to Monet's allegations, the latter's
shipment was loaded on March 10, 1984 in Maersk container subject to the condition that the bill of
lading would be issued upon Monet's compliance with all the necessary export papers prior to the
departure of the truck bearing said container for Manila on March 11, 1984. Maersk further alleged
that Monet's knew that the subject goods would not be brought to Manila without submitting all the
necessary export papers, as without them, Maersk would incur charges on the cargo when
deposited at the customs warehouse in Manila and would subsequently be not allowed to export
the goods by custom authorities. (p. 16, Record).i•t•c-aüsl

Defendant New Asia, for its part, denied any liability in favor of Monet's, alleging that Monet's has
no cause of action against it not being a party to the contract of carriage between Monet and
Maersk (p. 24, Record).

Defendants during the hearing of February 17, 1986 were considered as in default for their failure
to attend the scheduled pre-trial conference despite proper notice. Subsequently, the order of
default in regard to defendant Maersk was lifted and the latter was allowed to cross-examine all the
witnesses of Monet's. Defendant New Asia did not move for the lifting of the order of default and
accordingly remained as in default. (p. 204, Record.)

On March 28, 1988, the appealed judgment was rendered:

WHEREFORE, premises considered, defendant Maersk Shipping Line is found to be liable to plaintiff
for damages in the following amounts: For breach of contract of carriage, P50,000.00; for moral
damages brought about by the wanton bad faith employed by defendant shipping line in the
performance of its contractual obligation, P50,000.00; and as exemplary damages, another
P50,000.00 and for attomey's fees, P20,000.00.

Defendant New Asia Enterprises is exonerated of any liability, there being no valid cause of action
by plaintiff against it. New Asia Enterprises cannot be made answerable for whatever action or
violation of contracted obligation defendant Maersk Line may have committed against plaintiff
because they are 2 separate corporations and there is no proof of any collusion between them. (pp.
27-28, Rollo.)

Maersk appealed to the Court of Appeals which affirmed the judgment of the trial court on July 12,
1989.

Hence, the instant petition wherein Maersk raises the following issues:

1. Respondent court erred in affirming the judgment of the trial court despite the obvious fact that
the trial court never acquired jurisdiction over the subject-matter of the action because private
respondents did not specify their claims for damages and the correct filing fees were not paid.
 2. It was error for respondent court to have awarded P50,000.00 for "breach of contract" because
this is not a form of damage and petitioner has a right to know for what it is being made to pay.

3. Respondent court erred also in awarding moral damages to a corporation that was not shown to
have a good reputation that was damaged.

4. Again, respondent court erred in awarding exemplary damages in the absense of evidence that
petitioner acted in a wanton or malevolent manner.

5. Finally, respondent court erred in awarding attorney's fees without any explanation for such an
award. (pp. 13-14, Rollo.)

Petitioner's allegation that the decisions of the trial court and the Court of Appeals were void for
lack of jurisdiction (p. 75, Rollo) as Monet did not pay the correct filing fee on its claims for actual,
moral and exemplary damages, the amounts of which were not specified in the body and prayer of
its complaint, is anchored in the following ruling of this Court in Manchester Development
Corporation vs. CA (149 SCRA 526 [1987]) —

... the trial court did not acquire jurisdiction over the case by the payment of only P410.00 as
docket fee. ...

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 assestment of the
filing fees in any case. Any pleading that fails to comply with the 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 amounts sought in the amended pleading.
(Emphasis supplied; pp. 568-569.)

Unlike Manchester, however, where the jurisdictional issue arising from insufficiency of the docket fee
paid, was seasonably raised in the answer of the defendant in the trial court, in this case the issue is being
raised for the first time in this Court. Petitioner submitted to the jurisdiction of the trial court without
question. It filed a counterclaim seeking affirmative reliefs, and actively took part in the trial (p. 53,
Rollo). A party who voluntarily participates in the trial cannot later on raise the issue of the court's lack of
jurisdiction (Tan Boon Bee & Co. v. Judge Jarencio, 163 SCRA 205).

Maersk should have raised its objection to the trial court s jurisdiction when the case was still in that
court. It should not have waited for an adverse decision by the Court of Appeals before waking up to raise
the question of jurisdiction. As this Court remarked in Tijam v. Sibonghanoy, 23 SCRA 29, 37:

Were we to sanction such conduct on its part, We would in effect be declaring as useless all the
proceedings had in the present case since it was commenced ... and compel the judgment creditors
to go up their Calvary once more. The inequity and unfairness of this is not only patent but
revolting.

A party may be barred by laches from invoking his plea (of lack of jurisdiction) for the first time on
appeal for the purpose of annulling everything done in the case with the active participation of said
party invoking the plea. (Tijam vs. Sibonghanoy, 23 SCRA 29, 34.)

Since this is a case where some of the claims (for moral and exemplary damages) were not specified in
the plaintiff s pleading and were left for determination by the court, the applicable rule is the third rule set
out in the decision of this Court in Sun Insurance Office Ltd., et al. vs. Hon. Maximiano Asuncion, et
al., 170 SCRA 274, to wit:

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 therefore 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 lien and assess and collect the
additional fee.

The Clerk of Court of the trial court shall assess and collect the proper additional fees on the totality of the
judgment for the private respondent (Id).
Monet's counsel in the trial court, Attorney Jesus Salazar, is hereby reprimanded for his unethical practice
of not specifying the amount of damages sought in the body and prayer of his complaint in order to
defraud the Government of the proper fee for docketing said complaint. He is warned that a repetition of
that malpractice will be dealt with more severely.

WHEREFORE, the petition for certiorari is denied for lack of merit. However, the Clerk of Court of the trial
court shall assess and collect the fees due on the judgment as if the same amounts were specified in the
complaint. Costs against the petitioner.

SO ORDERED.
G.R. No. 140954. April 12, 2005
HEIRS OF BERTULDO1 HINOG: Bertuldo Hinog II, Bertuldo Hinog III, Bertuldo Hinog, Jr.,
Jocelyn Hinog, Bertoldo Hinog IV, Bertoldo Hinog V, Edgardo Hinog, Milagros H. Pabatao, Lilian
H. King, Victoria H. Engracia, Terisita C. Hinog, Paz H. Besana, Roberto C. Hinog, Vicente C.
Hinog, Roel C. Hinog, Marilyn C. Hinog, Bebot C. Hinog, lordes C. Hinog, Pablo Chiong, Arlene
Lanasang (All respresented by Bertuldo Hinog III), Petitioners, vs. HON. ACHILLES MELICOR, in
his capacity as Presiding Judge, RTC, Branch 4, 7th Judicial Region, Tagbiliran City, Bohol, and
CUSTODIO BALANE, RUFO BALANE, HONORIO BALANE, and TOMAS BALANE, Respondents.

Before us is a petition for certiorari and prohibition under Rule 65 of the Rules of Court which assails the
Orders dated March 22, 1999, August 13, 1999 and October 15, 1999 of the Regional Trial Court, Branch
4, of Tagbilaran City, Bohol in Civil Case No. 4923.

The factual background of the case is as follows:

On May 21, 1991, private respondents Custodio, Rufo, Tomas and Honorio, all surnamed Balane, filed a
complaint for "Recovery of Ownership and Possession, Removal of Construction and Damages" against
Bertuldo Hinog (Bertuldo for brevity). They alleged that: they own a 1,399- square meter parcel of land
situated in Malayo Norte, Cortes, Bohol, designated as Lot No. 1714; sometime in March 1980, they
allowed Bertuldo to use a portion of the said property for a period of ten years and construct thereon a
small house of light materials at a nominal annual rental of P100.00 only, considering the close relations
of the parties; after the expiration of the ten-year period, they demanded the return of the occupied
portion and removal of the house constructed thereon but Bertuldo refused and instead claimed ownership
of the entire property.

Accordingly, private respondents sought to oust Bertuldo from the premises of the subject property and
restore upon themselves the ownership and possession thereof, as well as the payment of moral and
exemplary damages, attorney’s fees and litigation expenses "in amounts justified by the evidence." 2

On July 2, 1991, Bertuldo filed his Answer. He alleged ownership of the disputed property by virtue of a
Deed of Absolute Sale dated July 2, 1980, executed by one Tomas Pahac with the knowledge and
conformity of private respondents.3

After the pre-trial, trial on the merits ensued. On November 18, 1997, private respondents rested their
case. Thereupon, Bertuldo started his direct examination. However, on June 24, 1998, Bertuldo died
without completing his evidence.

On August 4, 1998, Atty. Sulpicio A. Tinampay withdrew as counsel for Bertuldo as his services were
terminated by petitioner Bertuldo Hinog III. Atty. Veronico G. Petalcorin then entered his appearance as
new counsel for Bertuldo.4

On September 22, 1998, Atty. Petalcorin filed a motion to expunge the complaint from the record and
nullify all court proceedings on the ground that private respondents failed to specify in the complaint the
amount of damages claimed so as to pay the correct docket fees; and that under Manchester
Development Corporation vs. Court of Appeals,5 non-payment of the correct docket fee is jurisdictional.6

In an amended motion, filed on October 2, 1998, Atty. Petalcorin further alleged that the private
respondents failed to pay the correct docket fee since the main subject matter of the case cannot be
estimated as it is for recovery of ownership, possession and removal of construction. 7

Private respondents opposed the motion to expunge on the following grounds: (a) said motion was filed
more than seven years from the institution of the case; (b) Atty. Petalcorin has not complied with Section
16, Rule 3 of the Rules of Court which provides that the death of the original defendant requires a
substitution of parties before a lawyer can have legal personality to represent a litigant and the motion to
expunge does not mention of any specific party whom he is representing; (c) collectible fees due the court
can be charged as lien on the judgment; and (d) considering the lapse of time, the motion is merely a
dilatory scheme employed by petitioners.8

In their Rejoinder, petitioners manifested that the lapse of time does not vest the court with jurisdiction
over the case due to failure to pay the correct docket fees. As to the contention that deficiency in payment
of docket fees can be made as a lien on the judgment, petitioners argued that the payment of filing fees
cannot be made dependent on the result of the action taken.9

On January 21, 1999, the trial court, while ordering the complaint to be expunged from the records and
the nullification of all court proceedings taken for failure to pay the correct docket fees, nonetheless, held:

The Court can acquire jurisdiction over this case only upon the payment of the exact prescribed
docket/filing fees for the main cause of action, plus additional docket fee for the amount of damages being
prayed for in the complaint, which amount should be specified so that the same can be considered in
assessing the amount of the filing fees. Upon the complete payment of such fees, the Court may take
appropriate action in the light of the ruling in the case of Manchester Development Corporation vs. Court
of Appeals, supra.10

Accordingly, on January 28, 1999, upon payment of deficiency docket fee, private respondents filed a
manifestation with prayer to reinstate the case.11 Petitioners opposed the reinstatement12 but on March
22, 1999, the trial court issued the first assailed Order reinstating the case.13

On May 24, 1999, petitioners, upon prior leave of court,14 filed their supplemental pleading, appending
therein a Deed of Sale dated November 15, 1982.15 Following the submission of private respondents’
opposition thereto,16the trial court, in its Order dated July 7, 1999, denied the supplemental pleading on
the ground that the Deed of Absolute Sale is a new matter which was never mentioned in the original
answer dated July 2, 1991, prepared by Bertuldo’s original counsel and which Bertuldo verified; and that
such new document is deemed waived in the light of Section 1, Rule 9 17 of the Rules of Court. The trial
court also noted that no formal substitution of the parties was made because of the failure of defendant’s
counsel to give the names and addresses of the legal representatives of Bertuldo, so much so that the
supposed heirs of Bertuldo are not specified in any pleading in the case. 18

On July 14, 1999, petitioners manifested that the trial court having expunged the complaint and nullified
all court proceedings, there is no valid case and the complaint should not be admitted for failure to pay
the correct docket fees; that there should be no case to be reinstated and no case to proceed as there is
no complaint filed.19

After the submission of private respondents’ opposition 20 and petitioners’ rejoinder,21 the trial court issued
the second assailed Order on August 13, 1999, essentially denying petitioners’ manifestation/rejoinder.
The trial court held that the issues raised in such manifestation/rejoinder are practically the same as those
raised in the amended motion to expunge which had already been passed upon in the Order dated
January 21, 1999. Moreover, the trial court observed that the Order dated March 22, 1999 which
reinstated the case was not objected to by petitioners within the reglementary period or even thereafter
via a motion for reconsideration despite receipt thereof on March 26, 1999.22

On August 25, 1999, petitioners filed a motion for reconsideration 23 but the same was denied by the trial
court in its third assailed Order dated October 15, 1999. The trial court held that the Manchester rule was
relaxed in Sun Insurance Office, Ltd. vs. Asuncion.24 Noting that there has been no substitution of parties
following the death of Bertuldo, the trial court directed Atty. Petalcorin to comply with the provisions of
Section 16, Rule 3 of the Rules of Court. The trial court also reiterated that the Order dated March 22,
1999 reinstating the case was not assailed by petitioners within the reglementary period, despite receipt
thereof on March 26, 1999.25

On November 19, 1999, Atty. Petalcorin complied with the directive of the trial court to submit the names
and addresses of the heirs of Bertuldo.26

On November 24, 1999, petitioners filed before us the present petition for certiorari and
prohibition.27 They allege that the public respondent committed grave abuse of discretion in allowing the
case to be reinstated after private respondents paid the docket fee deficiency since the trial court had
earlier expunged the complaint from the record and nullified all proceedings of the case and such ruling
was not contested by the private respondents. Moreover, they argue that the public respondent
committed grave abuse of discretion in allowing the case to be filed and denying the manifestation with
motion to dismiss, despite the defect in the complaint which prayed for damages without specifying the
amounts, in violation of SC Circular No. 7, dated March 24, 1988.

In their Comment, private respondents aver that no grave abuse of discretion was committed by the trial
court in reinstating the complaint upon the payment of deficiency docket fees because petitioners did not
object thereto within the reglementary period. Besides, Atty. Petalcorin possessed no legal personality to
appear as counsel for the heirs of Bertuldo until he complies with Section 16, Rule 3 of the Rules of
Court.28

At the outset, we note the procedural error committed by petitioners in directly filing the instant petition
before this Court for it violates the established policy of strict observance of the judicial hierarchy of
courts.

Although the Supreme Court, Court of Appeals and the Regional Trial Courts have concurrent jurisdiction
to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such
concurrence does not give the petitioner unrestricted freedom of choice of court forum. 29 As we stated
in People vs. Cuaresma:30

This Court's original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court with
Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not, however, to be
taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the
court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy
is determinative of the venue of appeals, and also serves as a general determinant of the appropriate
forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly
indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should
be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only when
there are special and important reasons therefor, clearly and specifically set out in the petition. This is
[an] established policy. It is a policy necessary to prevent inordinate demands upon the Court’s time and
attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further
over-crowding of the Court’s docket.31

The rationale for this rule is two-fold: (a) it would be an imposition upon the precious time of this Court;
and (b) it would cause an inevitable and resultant delay, intended or otherwise, in the adjudication of
cases, which in some instances had to be remanded or referred to the lower court as the proper forum
under the rules of procedure, or as better equipped to resolve the issues because this Court is not a trier
of facts.32

Thus, this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the
appropriate courts, and exceptional and compelling circumstances, such as cases of national interest and
of serious implications, justify the availment of the extraordinary remedy of writ of certiorari, calling for
the exercise of its primary jurisdiction. Exceptional and compelling circumstances were held present in the
following cases: (a) Chavez vs. Romulo33 on citizens’ right to bear arms; (b) Government of the United
States of America vs. Purganan34 on bail in extradition proceedings; (c) Commission on Elections vs.
Quijano-Padilla35 on government contract involving modernization and computerization of voters’
registration list; (d) Buklod ng Kawaning EIIB vs. Zamora 36 on status and existence of a public office; and
(e) Fortich vs. Corona37 on the so-called "Win-Win Resolution" of the Office of the President which
modified the approval of the conversion to agro-industrial area.

In this case, no special and important reason or exceptional and compelling circumstance analogous to
any of the above cases has been adduced by the petitioners so as to justify direct recourse to this Court.
The present petition should have been initially filed in the Court of Appeals in strict observance of the
doctrine on the hierarchy of courts. Failure to do so is sufficient cause for the dismissal of the petition at
bar.

In any event, even if the Court disregards such procedural flaw, the petitioners’ contentions on the
substantive aspect of the case fail to invite judgment in their favor.

The unavailability of the writ of certiorari and prohibition in this case is borne out of the fact that
petitioners principally assail the Order dated March 22, 1999 which they never sought reconsideration of,
in due time, despite receipt thereof on March 26, 1999. Instead, petitioners went through the motion of
filing a supplemental pleading and only when the latter was denied, or after more than three months have
passed, did they raise the issue that the complaint should not have been reinstated in the first place
because the trial court had no jurisdiction to do so, having already ruled that the complaint shall be
expunged.

After recognizing the jurisdiction of the trial court by seeking affirmative relief in their motion to serve
supplemental pleading upon private respondents, petitioners are effectively barred by estoppel from
challenging the trial court’s jurisdiction.38 If a party invokes the jurisdiction of a court, he cannot
thereafter challenge the court’s jurisdiction in the same case. 39 To rule otherwise would amount to
speculating on the fortune of litigation, which is against the policy of the Court. 40

Nevertheless, there is a need to correct the erroneous impression of the trial court as well as the private
respondents that petitioners are barred from assailing the Order dated March 22, 1999 which reinstated
the case because it was not objected to within the reglementary period or even thereafter via a motion for
reconsideration despite receipt thereof on March 26, 1999.

It must be clarified that the said order is but a resolution on an incidental matter which does not touch on
the merits of the case or put an end to the proceedings.41 It is an interlocutory order since there leaves
something else to be done by the trial court with respect to the merits of the case. 42 As such, it is not
subject to a reglementary period. Reglementary period refers to the period set by the rules for appeal or
further review of a final judgment or order, i.e., one that ends the litigation in the trial court.

Moreover, the remedy against an interlocutory order is generally not to resort forthwith to certiorari, but
to continue with the case in due course and, when an unfavorable verdict is handed down, to take an
appeal in the manner authorized by law.43 Only when the court issued such order without or in excess of
jurisdiction or with grave abuse of discretion and when the assailed interlocutory order is patently
erroneous and the remedy of appeal would not afford adequate and expeditious relief will certiorari be
considered an appropriate remedy to assail an interlocutory order. 44 Such special circumstances are
absolutely wanting in the present case.
Time and again, the Court has held that the Manchester rule has been modified in Sun Insurance Office,
Ltd. (SIOL) vs. Asuncion45 which defined the following guidelines involving the payment of docket fees:

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 fees 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 lien and assess and collect the additional fee.

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. 46 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.47

Under the peculiar circumstances of this case, the reinstatement of the complaint was just and proper
considering that the cause of action of private respondents, being a real action, prescribes in thirty
years,48 and private respondents did not really intend to evade the payment of the prescribed docket fee
but simply contend that they could not be faulted for inadequate assessment because the clerk of court
made no notice of demand or reassessment.49 They were in good faith and simply relied on the
assessment of the clerk of court.

Furthermore, the fact that private respondents prayed for payment of damages "in amounts justified by
the evidence" does not call for the dismissal of the complaint for violation of SC Circular No. 7, dated
March 24, 1988 which required that all complaints must specify the amount of damages sought not only in
the body of the pleadings but also in the prayer in order to be accepted and admitted for filing. Sun
Insurance effectively modified SC Circular No. 7 by providing that filing fees for damages and awards that
cannot be estimated constitute liens on the awards finally granted by the trial court. 50

Thus, while the docket fees were based only on the real property valuation, the trial court acquired
jurisdiction over the action, and judgment awards which were left for determination by the court or as
may be proven during trial would still be subject to additional filing fees which shall constitute a lien on
the judgment. It would then be the responsibility of the Clerk of Court of the trial court or his duly
authorized deputy to enforce said lien and assess and collect the additional fees.51

It is worth noting that when Bertuldo filed his Answer on July 2, 1991, he did not raise the issue of lack of
jurisdiction for non-payment of correct docket fees. Instead, he based his defense on a claim of ownership
and participated in the proceedings before the trial court. It was only in September 22, 1998 or more than
seven years after filing the answer, and under the auspices of a new counsel, that the issue of jurisdiction
was raised for the first time in the motion to expunge by Bertuldo’s heirs.

After Bertuldo vigorously participated in all stages of the case before the trial court and even invoked the
trial court’s authority in order to ask for affirmative relief, petitioners, considering that they merely
stepped into the shoes of their predecessor, are effectively barred by estoppel from challenging the trial
court’s jurisdiction. Although the issue of jurisdiction may be raised at any stage of the proceedings as the
same is conferred by law, it is nonetheless settled that a party may be barred from raising it on ground of
laches or estoppel.52

Moreover, no formal substitution of the parties was effected within thirty days from date of death of
Bertuldo, as required by Section 16, Rule 3 53 of the Rules of Court. Needless to stress, the purpose behind
the rule on substitution is the protection of the right of every party to due process. It is to ensure that the
deceased party would continue to be properly represented in the suit through the duly appointed legal
representative of his estate.54Non-compliance with the rule on substitution would render the proceedings
and judgment of the trial court infirm because the court acquires no jurisdiction over the persons of the
legal representatives or of the heirs on whom the trial and the judgment would be binding. 55 Thus, proper
substitution of heirs must be effected for the trial court to acquire jurisdiction over their persons and to
obviate any future claim by any heir that he was not apprised of the litigation against Bertuldo or that he
did not authorize Atty. Petalcorin to represent him.

The list of names and addresses of the heirs was submitted sixteen months after the death of Bertuldo
and only when the trial court directed Atty. Petalcorin to comply with the provisions of Section 16, Rule 3
of the Rules of Court. Strictly speaking therefore, before said compliance, Atty. Petalcorin had no standing
in the court a quo when he filed his pleadings. Be that as it may, the matter has been duly corrected by
the Order of the trial court dated October 15, 1999.

To be sure, certiorari under Rule 6556 is a remedy narrow in scope and inflexible in character. It is not a
general utility tool in the legal workshop.57 It offers only a limited form of review. Its principal function is
to keep an inferior tribunal within its jurisdiction.58 It can be invoked only for an error of jurisdiction, that
is, one where the act complained of was issued by the court, officer or a quasi-judicial body without or in
excess of jurisdiction, or with grave abuse of discretion which is tantamount to lack or in excess of
jurisdiction,59 not to be used for any other purpose,60 such as to cure errors in proceedings or to correct
erroneous conclusions of law or fact.61 A contrary rule would lead to confusion, and seriously hamper the
administration of justice.

Petitioners utterly failed to show that the trial court gravely abused its discretion in issuing the assailed
resolutions. On the contrary, it acted prudently, in accordance with law and jurisprudence.

WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit.

No costs.

SO ORDERED.
G.R. No. 136325. July 29, 2005
MANUEL M. SERRANO, Petitioners, vs. EUGENIO C. DELICA, Respondents

At bar is a petition for review on certiorari1 assailing the Decision2 dated September 30, 1998 and
Resolution dated November 13, 1998 of the Court of Appeals in CA-G.R. SP No. 46632, entitled "Manuel
M. Serrano, petitioner, vs. Hon. Alberto L. Lerma, Presiding Judge, Regional Trial Court, Branch 256,
Muntinlupa City, and Eugenio C. Delica, respondents.

The petition stemmed from the following facts:

On June 30, 1997, Eugenio C. Delica, respondent, filed with the Regional Trial Court, Branch 256,
Muntinlupa City, presided by Judge Alberto L. Lerma, a complaint for cancellation of Deeds of Sale,
Transfer Certificates of Title, Joint Venture Agreement, and damages, with prayer for the issuance of a
writ of preliminary injunction and temporary restraining order, docketed as Civil Case No. 97-120.
Impleaded as defendants were Manuel M. Serrano, now petitioner, Manuel P. Blanco, MBJ Land, Inc., and
MARILAQUE Land, Inc.

The complaint alleges inter alia that respondent is the registered owner of ten parcels of land situated in
Bagbagan, Muntinlupa City, with a total area of 2,062,475 square meters, more or less, covered by ten
Transfer Certificates of Title (TCT) Nos. S-12619 to S-12628 of the Registry of Deeds, same city. On
August 10, 1995, after having been "promised with financial bonanza" by petitioner and Manuel Blanco,
respondent executed in favor of the latter a special power of attorney. Blanco then sold to MBJ Land, Inc.
respondent’s three parcels of land covered by TCT Nos. S-12625, S-12626 and S-12628. Thus, these titles
were cancelled and in lieu thereof, TCT Nos. 207282, 207283 and 207284 were issued in the name of MBJ
Land, Inc.

On December 4, 1996, MBJ Land, Inc. entered into a Joint Venture Agreement with MARILAQUE Land, Inc.
involving the three parcels of land.

On December 23, 1996, petitioner Serrano again "unduly influenced, coerced and intimidated" respondent
into executing an affidavit wherein he confirmed that he sold his remaining seven parcels of land, covered
by TCT Nos. S-12619 to S-126124 and S-12627, to petitioners. Later, respondent found that these seven
titles were cancelled and new titles (TCT Nos. 209636 to 209642) were issued in petitioner’s name based
on a spurious Deed of Absolute Sale.

Respondent thus prayed in his complaint that the special power of attorney, affidavit, the new titles issued
in the names of petitioner and MBJ Land, Inc., and contracts of sale be cancelled; and that petitioner and
his co-defendants be ordered to pay respondent, jointly and severally, actual, moral and exemplary
damages in the amount of P200,000.00, as well as attorney’s fee of P200,000.00 and costs of litigation.
Respondent likewise prayed that, pending trial on the merits, a temporary restraining order and a writ of
preliminary injunction be issued ordering the defendants to immediately restore him to his possession of
the parcels of land in question; and that after trial, the writ of injunction be made permanent.

Petitioner then filed his answer with compulsory counterclaim, denying the material allegations of the
complaint.

Respondent later amended his complaint.

On August 5, 1997, the trial court issued a temporary restraining order and on September 8, 1997, a
preliminary injunction directing petitioner and his co-defendants to immediately restore respondent to his
possession.

Petitioner then filed consolidated motions for reconsideration praying that the complaint be dismissed for
respondent’s failure to pay the required docket fee; and that Judge Lerma be directed to inhibit himself
from hearing the case.

The trial court, in its Order dated January 7, 1998, denied petitioner’s consolidated motions.

Petitioner seasonably filed with the Court of Appeals a petition for certiorari and prohibition with
application for a preliminary injunction and temporary restraining order assailing the trial court’s twin
Orders dated September 8, 1997 ordering the issuance of a writ of preliminary injunction; and denying his
consolidated motions dated January 7, 1998. Petitioner raised three issues: (a) whether respondent paid
the correct docket fee; (b) whether the trial court’s issuance of the writ of preliminary injunction is in
order; and (c) whether Judge Lerma should inhibit himself from hearing the case.

On September 30, 1998, the Court of Appeals rendered a Decision partially granting the petition by:
(1) affirming the trial court’s ruling that the docket fee was correctly paid; (2) setting aside the trial
court’s Order directing the issuance of a writ of preliminary injunction; and (3) leaving the matter of
inhibition to the discretion of Judge Lerma.

Petitioner then filed a motion for partial reconsideration of the Court of Appeals’ ruling that respondent
correctly paid the docket fee and that the motion for inhibition should be addressed to Judge Lerma’s
sound discretion.

In a Resolution dated November 13, 1998, the Appellate Court denied the motion.

Hence the instant petition for review on certiorari.

The core issues for our resolution are:

1. Whether respondent paid the correct docket fee when he filed his complaint in Civil Case No. 97-120;
and

2. Whether the matter of inhibition should be addressed to Judge Lerma’s discretion.

On the first issue, we cannot overemphasized the importance of paying the correct docket fees. Such
fees are intended to take care of court expenses in the handling of cases in terms of cost of supplies, use
of equipment, salaries and fringe benefits of personnel, etc., computed as to man-hours used in the
handling of each case. The payment of said fees, therefore, cannot be made dependent on the result of
the action taken, without entailing tremendous losses to the government and to the judiciary in
particular.3

Thus, the rule is that "upon the filing of the pleading or other application which initiates an action or
proceeding, the fees prescribed therefor shall be paid in full."4 However, a litigant who is a pauper is
exempt from the payment of the docket fees. But the fees shall be a lien on the judgment rendered in
favor of said pauper litigant, unless the court otherwise provides.5

It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the
prescribed docket fees that vests a trial court with jurisdiction over the subject matter or nature of the
action.6

In the case at bar, petitioner impugns the Court of Appeals’ ruling that respondent’s complaint in Civil
Case No. 97-120 is not capable of pecuniary estimation and that, therefore, the docket fee is fixed
at P600.00 pursuant to Section 7(b)(1), Rule 141 of the Revised Rules of Court.

We agree with petitioner that the Court of Appeals erred in issuing such ruling. It should have considered
the allegations of the complaint and the character of the reliefs sought, the criteria in determining
the nature of an action.7

A careful examination of respondent’s complaint is that it is a real action. In Paderanga vs. Buissan,8 we
held that "in a real action, the plaintiff seeks the recovery of real property, or, as stated in Section
2(a), Rule 4 of the Revised Rules of Court,9 a real action is one ‘affecting title to real property or for
the recovery of possession of, or for partition or condemnation of, or foreclosure of a mortgage
on a real property.’"

Obviously, respondent’s complaint is a real action involving not only the recovery of real properties, but
likewise the cancellation of the titles thereto.

Considering that respondent’s complaint is a real action, the Rule requires that "the assessed value of
the property, or if there is none, the estimated value thereof shall be alleged by the
claimant and shall be the basis in computing the fees."10

We note, however, that neither the "assessed value" nor the "estimated value" of the questioned parcels
of land were alleged by respondent in both his original and amended complaint. What he stated in his
amended complaint is that the disputed realties have a "BIR zonal valuation" of P1,200.00 per square
meter. However, the alleged "BIR zonal valuation" is not the kind of valuation required by the Rule. It is
the assessed value of the realty.11 Having utterly failed to comply with the requirement of the Rule that
he shall allege in his complaint the assessed value of his real properties in controversy, the correct docket
fee cannot be computed. As such, his complaint should not have been accepted by the trial court. We thus
rule that it has not acquired jurisdiction over the present case for failure of herein respondent to pay the
required docket fee. On this ground alone, respondent’s complaint is vulnerable to dismissal.

Since the complaint is dismissible, the second issue on whether Judge Lerma should inhibit himself from
hearing the case has become moot and academic.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 46632 are hereby REVERSED. The complaint in Civil Case No. 97-120 is ordered
DISMISSED without prejudice.

SO ORDERED.
G.R. No. 165147 July 9, 2008
PHILIPPINE FIRST INSURANCE CO., INC. and PARAMOUNT GENERAL INSURANCE
CORPORATION,Petitioners, vs. PYRAMID LOGISTICS AND TRUCKING CORPORATION (formerly
PANACOR INTEGRATED WAREHOUSING AND TRUCKING CORPORATION), Respondent.

The issue, in the main, in the present case is whether respondent, Pyramid Logistics and Trucking
Corporation (Pyramid), which filed on November 7, 2001 a complaint, 1 denominated as one for specific
performance and damages, against petitioners Philippine First Insurance Company, Inc. (Philippine First)
and Paramount General Insurance Corporation (Paramount) before the Regional Trial Court (RTC) of
Makati, docketed as Civil Case No. 01-1609, paid the correct docket fee; if in the negative, whether the
complaint should be dismissed or Pyramid can still be ordered to pay the fee.

Pyramid sought to recover the proceeds of two insurance policies issued to it, Policy No. IN-002904 issued
by petitioner Paramount, and Policy No. MN-MCL-HO-00-0000007-00 issued by petitioner Philippine First.
Despite demands, petitioners allegedly failed to settle them, hence, it filed the complaint subject of the
present petition.

In its complaint, Pyramid alleged that on November 8, 2000, its delivery van bearing license plate number
PHL-545 which was loaded with goods belonging to California Manufacturing Corporation (CMC) valued at
PESOS NINE HUNDRED SEVEN THOUSAND ONE HUNDRED FORTY NINE AND SEVEN/100 (P907,149.07)
left the CMC Bicutan Warehouse but the van, together with the goods, failed to reach its destination and
its driver and helper were nowhere to be found, to its damage and prejudice; that it filed a criminal
complaint against the driver and the helper for qualified theft, and a claim with herein petitioners as co-
insurers of the lost goods but, in violation of petitioners’ undertaking under the insurance policies, they
refused without just and valid reasons to compensate it for the loss; and that as a direct consequence of
petitioners’ failure, despite repeated demands, to comply with their respective undertakings under the
Insurance Policies by compensating for the value of the lost goods, it suffered damages and was
constrained to engage the services of counsel to enforce and protect its right to recover compensation
under said policies, for which services it obligated itself to pay the sum equivalent to twenty-five (25%) of
any amount recovered as and for attorney’s fees and legal expenses. 2

Pyramid thus prayed

. . . that after due proceedings, judgment be rendered, ordering [herein petitioners] to comply with their
obligation under their respective Insurance Policies by paying to [it] jointly and severally, the claims
arising from the subject losses.

THAT, [herein petitioners] be adjudged jointly and severally to pay to [it], in addition to the foregoing, the
following:

1. The sum of PHP 50,000.00 plus PHP 1,500.00 for each Court session attended by counsel until
the instant [case] is finally terminated, as and for attorney’s fees;

2. The costs of suit[;]3 (Underscoring supplied)

and for other reliefs just and equitable in the premises. 4

Pyramid was assessed P610 docket fee, apparently on the basis of the amount of P50,000 specified in the
prayer representing attorney’s fees, which it duly paid.5

Pyramid later filed a 1st Amended Complaint6 containing minor changes in its body7 but bearing the same
prayer.8Branch 148 of the Makati RTC to which the complaint was raffled admitted the Amended
Complaint.9

Petitioners filed a Motion to Dismiss on the ground of, inter alia, lack of jurisdiction, Pyramid not having
paid the docket fees in full, arguing thus:

xxxx

In the body of the Amended Complaint, plaintiff alleged that the goods belonging to California
Manufacturing Co., Inc. (CMC) is [sic] "valued at Php907,149.07" and consequently, "plaintiff incurred
expenses, suffered damages and was constrained to engage the services of counsel to enforce and protect
its right to recover compensation under the said policies and for which services, it obligated itself to pay
the sum equivalent to twenty-five (25%) of any recovery in the instant action, as and for attorney’s fees
and legal expenses".

On the other hand, in the prayer in the Complaint, plaintiff deliberately omitted to specify what these
damages are. x x x
xxxx

Verily, this deliberate omission by the plaintiff is clearly intended for no other purposes than to evade the
payment of the correct filing fee if not to mislead the docket clerk, in the assessment of the filing fee. In
fact, the docket clerk in the instant case charged the plaintiff a total of Php610.00 only as a filing fee,
which she must have based on the amount of Php50,000.00 [attorney’s fees] only.10 (Emphasis in the
original; italics and underscoring supplied)

Petitioners cited11 Manchester Development Corporation v. Court of Appeals12 which held:

x x x [A]ll 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 or admitted, or shall otherwise be expunged from the
record.13 (Emphasis and underscoring supplied)

They cited too Sun Insurance Office, Ltd. v. Asuncion 14 which held that "[i]t is not simply the filing of the
complaint or appropriate 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."15

Petitioners thus concluded:

With the above cases as a backdrop, the Supreme Court, in revising the rules of pleading and practice in
the 1997 Rules of Civil Procedure, added a tenth ground to a Motion to Dismiss – to wit, "[t]hat a
condition precedent for filing claim [sic] has not been complied with.["]

On the contrary, if plaintiff would insist that its claim against the defendants is only Php50,000.00 plus
Php 1,500.00 as appearance fee per court hearing, then it follows that it is the Metropolitan Trial Court
which has jurisdiction over this case, not this Honorable Court. Such amount is way below the minimum
jurisdictional amount prescribed by the rules in order to confer jurisdiction to the Regional Trial
Court.16 (Underscoring supplied)

To the Motion to Dismiss Pyramid filed its Opposition, 17 alleging that if there was a mistake in the
assessment of the docket fees, the trial court was not precluded from acquiring jurisdiction over the
complaint as "it has the authority to direct the mistaken party to complete the docket fees in the course of
the proceedings . . ."18 The Opposition merited a Reply19 from petitioners.

By Order of June 3, 2002, the trial court20 denied the Motion to Dismiss in this wise:

xxxx

Indeed, a perusal of the Complaint reveals that while plaintiff made mention of the value of the goods,
which were lost, the prayer of plaintiff did not indicate its exact claim from the defendants. The Complaint
merely prayed defendants "to comply with their obligation under their respective insurance policies by
paying to plaintiff jointly and severally, the claims arising from the subject losses" and did not mention the
amount of PHP907,149.07, which is the value of the goods and which is also the subject of insurance. This
resulted to the assessment and payment of docket fees in the amount of P610 only. The Court, even
without the Motion to Dismiss filed by defendant, actually noted such omission which is actually becoming
a practice for some lawyers. For whatever purpose it may be, the Court will not dwell into it. In this
instant case, this being for specific performance, it is not dismissible on that ground but unless proper
docket fees are paid, the Court can only grant what was prayed for in the Complaint.

x x x x21 (Emphasis and underscoring supplied)

Petitioners’ Motion for Reconsideration 22 of the denial of their Motion to Dismiss having been denied 23 by
Order of August 1, 2002, they filed their Answer with Compulsory Counterclaim ad Cautelam, 24 alleging
that they intended to file a Petition for Certiorari with the Court of Appeals. 25

Petitioners did indeed eventually file before the Court of Appeals a Petition for Certiorari (With Preliminary
Injunction and Urgent Prayer for Restraining Order)26 posing the following two of three queries, viz:

First. Does [Pyramid’s] deliberate omission to pay the required correct docket and filing fee vest the trial
court [with] jurisdiction to entertain the subject matter of the instant case?

Second. [Is] the instant case an action for specific performance or simply one for damages or recovery of
a sum of money?

x x x x27
By Decision of June 3, 2004,28 the Court of Appeals partially granted petitioners’ petition for certiorari by
setting aside the trial judge’s assailed orders and ordering Pyramid to file the correct docket fees within a
reasonable time, it holding that while the complaint was denominated as one for specific performance, it
sought to recover from petitioners Pyramid’s "claims arising from the subject losses." The appellate court
ratiocinated:

xxxx

Indeed, it has been held that "it is not simply the filing of the complaint or appropriate initiatory pleading,
but the payment of the prescribed docket fee that vests a trial court with jurisdiction over the subject
matter or nature of the action." To determine the docket fees, it is necessary to determine the true nature
of the action by examining the allegations of the complaint. x x x

xxxx

While the captions of the complaint and 1st amended complaint denominated the case as one for "Specific
Performance and Damages", the allegations and prayer therein show that the specific performance sought
by private respondent was for petitioners to "comply with their obligation under their respective Insurance
Policies by paying to plaintiff jointly and severally, the claims arising from the subject losses" as well as
the attorney’s fees and costs of suit. Obviously, what constitutes specific performance is the payment
itself by petitioners of private respondent’s claims arising from the losses it allegedly incurred. x x x 29

xxxx

Public respondent should have ordered private respondent to pay the correct docket fees on the basis of
the allegations of the complaint. x x x

xxxx

While it has been held in Manchester Development Corporation vs. Court of Appeals x x x that "any
pleading that fails to comply with this requirement of specifying the amount of damages not only in the
body of the pleading but also in the prayer shall not be accepted nor admitted, or shall otherwise be
expunged from the record," this rule was relaxed in subsequent cases, wherein payment of the correct
docket fees was allowed within a reasonable time. . .

x x x x30 (Emphasis and underscoring supplied)

Thus the appellate court disposed:

WHEREFORE, the petition is partially granted. The Orders dated June 3, 2002 and August 1, 2002 of public
respondent are partially set aside insofar as they dispensed with the payment of the correct docket fees.
Consequently, [Pyramid] is hereby directed to pay the correct docket fees on the basis of the losses
alleged in the body of the complaint, plus the attorney’s fees mentioned in the prayer, within a reasonable
time which should not go beyond the applicable prescriptive or reglementary period. In all other respects,
the said Orders are affirmed.31(Underscoring supplied)

Petitioners filed a Motion for Reconsideration 32 of the appellate court’s decision. Pyramid filed its Comment
and Opposition to the Motion for Reconsideration,33 arguing thus:

xxxx

In the present case, [Pyramid] thru its Complaint simply sought from petitioners compliance with their
contractual undertaking as insurers of the goods insured which were lost in [its] custody. Private
respondent did not specify the extent of petitioners’ obligation as it left the matter entirely in the
judgment of the trial court to consider. Thus, the Complaint was labeled "Specific Performance" which
[Pyramid] submitted to the Clerk of Court for assessment of the docket fee, after which, it paid the same
based on the said assessment. There was no indication whatsoever that [Pyramid] had refused to pay;
rather, it merely argued against petitioners’ submissions as it maintained the correctness of the
assessment made.34 (Underscoring supplied)

By Resolution of August 23, 2004, the Court of Appeals denied petitioners’ Motion for
Reconsideration;35 hence, the present Petition for Review on Certiorari,36 raising the issues of whether the
appellate court erred:

. . . WHEN IT APPLIED IN THE INSTANT CASE THE LIBERAL RULE ENUNCIATED IN SUN INSURANCE
OFFICE, LTD. (SIOL) VS. ASUNCION, 170 SCRA 274 AND NATIONAL STEEL CORPORATION VS. COURT OF
APPEALS, 302 SCRA 523 (1999) IN RESPECT TO THE PAYMENT OF THE PRESCRIBED FILING AND DOCKET
FEES DESPITE CLEAR SHOWING OF RESPONDENT’S INTENTION TO EVADE THE PAYMENT OF THE
CORRECT DOCKET FEE WHICH WARRANTS THE APPLICATION OF THE DOCTRINE LAID DOWN
IN MANCHESTER DEVELOPMENT CORPORATION VS. COURT OF APPEALS, 149 SCRA 562.

. . . WHEN IT DID NOT APPLY THE RULING OF THIS HONORABLE TRIBUNAL IN MARCOPPER MINING
CORPORATION VS. GARCIA, 143 SCRA 178, TAN VS. DIRECTOR OF FORESTRY, 125 SCRA 302, AND
CHINA ROAD AND BRIDGE CORPORATION VS. COURT OF APPEALS, 348 SCRA 401. 37 (Underscoring
supplied)

Petitioners invoke the doctrine in Manchester Development Corporation v. Court of Appeals 38 that a
pleading which does not specify in the prayer the amount sought shall not be admitted or shall otherwise
be expunged, and that the court acquires jurisdiction only upon the payment of the prescribed docket
fee.39

Pyramid, on the other hand, insists, in its Comment on the Petition, 40 on the application of Sun Insurance
Office, Ltd. (SIOL) v. Asuncion41 and subsequent rulings relaxing the Manchester ruling by allowing
payment of the docket fee within a reasonable time, in no case beyond the applicable prescriptive or
reglementary period, where the filing of the initiatory pleading is not accompanied by the payment of the
prescribed docket fee.42

In Tacay v. Regional Trial Court of Tagum, Davao del Norte, 43 the Court clarified the effect of the Sun
Insurance ruling on the Manchester ruling as follows:

As will be noted, the requirement in Circular No. 7 [of this Court which was issued based on the
Manchester ruling44 ] that complaints, petitions, answers, and similar pleadings should specify the amount
of damages being prayed for not only in the body of the pleading but also in the prayer, has not been
altered. What has been revised is the rule that subsequent "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 trial court now being authorized to allow payment of the
fee within a reasonable time but in no case beyond the applicable prescriptive period or reglementary
period. Moreover, a new rule has been added, governing the awards of claims not specified in the pleading
– i.e., damages arising after the filing of the complaint or similar pleading – as to which the additional
filing fee therefore shall constitute a lien on the judgment.

Now, under the Rules of Court, docket or filing fees are assessed on the basis of the "sum claimed," on
the one hand, or the "value of the property in litigation or the value of the estate," on the other. . .

Where the action is purely for the recovery of money or damages, the docket fees are assessed on the
basis of the aggregate amount claimed, exclusive only of interests and costs. In this case, the complaint
or similar pleading should, according to Circular No. 7 of this Court, "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 filing fees in any case."

Two situations may arise. One is where the complaint or similar pleading sets out a claim purely for
money and damages and there is no statement of the amounts being claimed. In this event the rule is
that the pleading will "not be accepted nor admitted, or shall otherwise be expunged from the record." In
other words, the complaint or pleading may be dismissed, or the claims as to which amounts are
unspecified may be expunged, although as aforestated the Court may, on motion, permit amendment of
the complaint and payment of the fees provided the claim has not in the meantime become time-barred.
The other is where the pleading does specify the amount of every claim, but the fees paid are insufficient;
and here again, the rule now 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.45 (Emphasis and underscoring supplied)

Indeed, Pyramid captioned its complaint as one for "specific performance and damages" even if it was, as
the allegations in its body showed, seeking in the main the collection of its claims-sums of money
representing losses the amount of which it, by its own admission, "knew." 46 And, indeed, it failed to
specify in its prayer in the complaint the amount of its claims/damages.

When Pyramid amended its complaint, it still did not specify, in its prayer, the amount of claims/damages
it was seeking. In fact it has the audacity to inform this Court, in its Comment on the present Petition,
that

x x x In the natural order of things, when a litigant is given the opportunity to spend less for a docket fee
after submitting his pleading for assessment by the Office of the Clerk of Court, he would not decline it
inasmuch as to request for a higher assessment under the circumstances [for such] is against his interest
and would be senseless. Placed under the same situation, petitioner[s] would certainly do likewise. To say
otherwise would certainly be dishonest,47
which comment drew petitioners to conclude as follows:

[This] only shows respondent’s dishonesty and lack of regard of the rules. Following this line of reasoning,
respondent would do everything if only for it to spend less for the filing fee, even to the extent of
circumventing and defying the rule on the payment of the filing fee.

In spite of the fact that the respondent was already caught in the quagmire of its own cobweb of
deception, it further justified its unethical act by ratiocinating that "placed under the same situation,
petitioner would certainly do likewise, to say otherwise would certainly be dishonest". This attitude of the
respondent is very alarming! Having been caught red-handed, the honorable thing that respondent should
have done is admit its own violation rather than justify an act which it knows is a clear contravention of
the rules and jurisprudence.48 (Italics and emphasis in the original)

Pyramid’s following justification for omitting to specify in the prayer of its complaint the amount of its
claims/damages, viz:

xxxx

x x x While respondent knew its losses and alleged them in the body of the Complaint, it was not
aware of the extent of petitioners’ respective liability under the two insurance policies. The
allegation of respondent’s losses, albeit, without repeating them in its prayer for relief was not motivated
by an intention to mislead, cheat or defraud the Court. It just left the matter of liability arising from two
separate and distinct Insurance Policies covering the same insurable risk for the trial court’s
determination, hence, respondent came up with an action for "specific performance[,]" 49 (Emphasis and
underscoring supplied)

fails to impress.

As the salient allegations of Pyramid’s complaint show and as priorly stated, they constitute, in the main,
an action for collection of its claims it admittedly "knew."

Assuming arguendo that Pyramid has other claims the amounts of which are yet to be determined by the
trial court, the rule established in Manchester which was embodied in this Court’s Circular No. 7-88 issued
on March 24, 1988, as modified by the Sun Insurance ruling, still applies. Consider this Court’s
pronouncement bearing on the matter in Ayala Corporation v. Madayag:501awphil

xxxx

Apparently, the trial court misinterpreted paragraph 3 of the [Sun Insurance] ruling of this Court wherein
it stated that "where the judgment awards a claim not specified in the pleading, or if specified, the same
has been left for the determination of the court, the additional filing fee therefor shall constitute a lien on
the judgment" by considering it to mean that where in the body and prayer of the complaint there is a
prayer xxx the amount of which is left to the discretion of the Court, there is no need to specify the
amount being sought, and that any award thereafter shall constitute a lien on the judgment.

x x x While it is true that the determination of certain damages x x x 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 nor speculate as to
the amount thereof. (Emphasis and underscoring supplied)

If respondent Pyramid’s counsel had only been forthright in drafting the complaint and taking the cudgels
for his client and the trial judge assiduous in applying Circular No. 7 vis a vis prevailing jurisprudence, the
precious time of this Court, as well as of that of the appellate court, would not have been unnecessarily
sapped.

The Court at this juncture thus reminds Pyramid’s counsel to observe Canon 12 of the Code of Professional
Ethics which enjoins a lawyer to "exert every effort and consider it his duty to assist in the speedy and
efficient administration of justice," and Rule 12.04 of the same Canon which enjoins a lawyer "not [to]
unduly delay a case, impede the execution of a judgment or misuse court processes." And the Court
reminds too the trial judge to bear in mind that the nature of an action is determined by the allegations of
the pleadings51 and to keep abreast of all laws and prevailing jurisprudence, consistent with the standard
that magistrates must be the embodiments of competence, integrity and independence.52

WHEREFORE, in light of the foregoing discussions, the petition is DENIED.

SO ORDERED.
G.R. No. 181842 February 5, 2010
METROPOLITAN BANK AND TRUST CO. and SOLIDBANK CORPORATION, Petitioners, vs.
BERNARDITA H. PEREZ, represented by her Attorney-in-Fact PATRIA H. PEREZ, Respondent.

On September 17, 1997, petitioner Solidbank Corporation (Solidbank) forged a lease contract with
Bernardita H. Perez (respondent), represented by her attorney-in-fact Patria H. Perez1, over two parcels of
land located in Sta. Maria, Bulacan for a period of 15 years commencing on January 1, 1998. Solidbank
was to, as it did, construct a one-storey building specifically suited for bank premises.

Solidbank was later acquired by its co-petitioner Metropolitan Bank and Trust Company (Metrobank), the
latter as the surviving entity.

On September 24, 2002, Metrobank sent a notice of termination of the lease contract effective September
30, 2002.2 Respondent, objecting to the termination, filed a complaint for breach of contract and damages
against herein petitioners Solidbank and Metrobank before the Regional Trial Court (RTC) of Malolos,
Bulacan praying that, inter alia, herein petitioners be ordered to pay her "the would be unrealized income
for the ensuing idle months of the said building."3

Metrobank asserted in its Answer with Counterclaim, however, that the lease contract did not prohibit pre-
termination by the parties.

After respondent rested her case, Metrobank was, by Order of January 12, 2006, declared to have waived
its right to present evidence after its counsel incurred several unexcused absences.

By Decision of April 5, 2006, Branch 22 of the Malolos RTC ruled in favor of respondent, disposing as
follows:

WHEREFORE, IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the plaintiff and
against the defendants ordering the latter, jointly and severally:

1. To pay the plaintiff the amount of P212,322.60 as unrealized income before the filing of the case
(Sept. 2002 to Feb. 2003);

2. To pay the plaintiff the amount of P2,013,753.03 as unrealized (income) after the filing of the
case up to present (March 2003 to March 2006);

3. To pay the plaintiff the would be unrealized income for the ensuing idle months of said building
amounting to P7,126,494.30 (covering April 2006 until expiration of the contract of lease);

4. To pay plaintiff the amount of P200,000.00 as moral damages;

5. To pay plaintiff the amount of P100,000.00 as exemplary damages;

6. To pay plaintiff the amount of P100,000.00 as attorney’s fees and

7. To pay plaintiff as litigation expenses.

SO ORDERED.4 (emphasis and underscoring supplied)

On appeal, Metrobank challenged, in the main, the trial court’s award of "unrealized income for the
ensuing idle months" despite respondent’s failure to pay docket fees thereon to thus render the complaint
dismissible for lack of jurisdiction.

By Decision5 of November 23, 2007, the appellate court affirmed that of the trial court6 and denied, by
Resolution of February 21, 2008, a reconsideration thereof. Hence, the present petition for review on
certiorari.

In her Comment, respondent admitted that the filing fees she paid did not cover her prayer for unrealized
income for the ensuing idle months, for "at the time of filing and payment[,] the period that the building
would be idle could not yet be determined."7

In sustaining respondent’s justification for nonpayment of additional docket fees, the appellate court held:

For one, plaintiff-appellee Perez could not have been certain at the time she filed the Complaint that
defendant-appellant Metrobank would no longer return to the Leased Property. It would have been
speculative therefore on the part of plaintiff-appellee Perez to allege in her Complaint any unrealized
income for the remaining period of the Lease Contract considering that the possibility of defendant-
appellant Metrobank reconsidering its decision to terminate the said Lease Contract and returning to the
Leased Property at some future time was not definitively foreclosed when the Complaint was filed. In light
of her predicament, plaintiff-appellee Perez was thus justified in just making a general prayer for the court
a quo to award unrealized income for the "ensuing idle months" of the Leased Property.8 (italics in the
original; underscoring supplied)

The petition is partly meritorious.

In Manchester Development Corporation v. Court of Appeals,9 the Court held that a pleading which does
not specify in the prayer the amount sought shall not be admitted or shall be expunged, and that a court
acquires jurisdiction only upon payment of the prescribed docket fee. This rule was relaxed in Sun
Insurance Office, Ltd. v. Asuncion10 which was echoed in the 2005 case of Heirs of Bertuldo Hinog v.
Melico, the pertinent portion of the decision in the latter case reads:

Plainly, while the payment of 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.11 (emphasis and underscoring supplied)

Metrobank takes exception to the application of Sun Insurance Office to the present case because, by its
claim, respondent deliberately concealed the insufficient payment of docket fees.

Metrobank’s position fails. The ensuing months in which the leased premises would be rendered vacant
could not be determined at the time of the filing of the complaint. It bears recalling that the building
constructed on respondent’s leased premises was specifically constructed to house a bank, hence, the idle
period before another occupant with like business may opt to lease would be difficult to project.

On Metrobank’s raising the issue of lack of jurisdiction over the complaint for respondent’s failure to pay
the correct docket fees, apropos is the ruling in National Steel Corporation v. Court of Appeals: 12

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 before the expiration of the applicable
prescriptive 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 the appropriate docket fees and the amount actually paid by the plaintiff will be
considered a lien on any award he may obtain in his favor. 13 (emphasis and underscoring
supplied)1avvph!1

Metrobank raised the issue of jurisdiction only before the appellate court after it and its co-petitioner
participated in the proceedings before the trial court. While lack of jurisdiction may be raised at any time,
a party may be held in estoppel if, as in the present case, it has actively taken part in the proceedings
being questioned.

The foregoing disposition notwithstanding, respondent is liable for the balance between the actual fees
paid and the correct payable filing fees to include an assessment on the award of unrealized income,
following Section 2 of Rule 141 which provides:

SEC. 2. Fees in lien. – Where the court in its final judgment awards a claim not alleged, or a relief
different from, 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 fee (underscoring supplied),

and jurisprudence, viz:

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 nor speculate as to the
amount thereof.14 (emphasis and underscoring supplied)

A word on the grant of moral and exemplary damages and attorney’s fees.

The Court notes that respondent’s witness-attorney-in-fact testified only on the existence of the lease
agreement and unrealized income due to pre-termination. Since an award of moral damages is predicated
on a categorical showing from the claimant that emotional and mental sufferings were actually
experienced, absent any evidence thereon in the present case, 15 the award must be disallowed. And so
too must the award of attorney’s fees, absent an indication in the trial court’s Decision of the factual basis
thereof, the award having been merely stated in the dispositive portion.16 Parenthetically, while
respondent prayed in her complaint for the award of attorney’s fees and testified during the trial that:

Q: Now, in connection with the filing of this case and hiring your lawyer, do you have agreement
with your counsel with respect to attorney’s fees?

A: P100,000.00 acceptance fees.

Q: What about appearance fees?

A: I forgot already, sir.,17

there is no showing that she submitted any documentary evidence in support thereof.

WHEREFORE, the petition is in part GRANTED. The November 23, 2007 Decision of the Court of Appeals
is MODIFIED. The Clerk of Court of the Regional Trial Court of Malolos, Bulacan is ordered to reassess,
determine and collect additional fees that should be paid by respondent within fifteen (15) days, in
accordance with the foregoing discussion of the Court, provided the applicable prescriptive or
reglementary period has not

yet expired, which additional fees shall constitute a lien on the judgment in satisfaction of said lien. The
award of moral and exemplary damages and attorney’s fees is DELETED.

In all other respects, the appellate court’s Decision is AFFIRMED.

SO ORDERED.
G.R. No. 89070 May 18, 1992
BENGUET ELECTRlC COOPERATIVE, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, PETER COSALAN and BOARD OF DIRECTORS OF BENGUET ELECTRIC
COOPERATIVE, INC., * respondents.

Private respondent Peter Cosalan was the General Manager of Petitioner Benguet Electric Cooperative, Inc.
("Beneco"), having been elected as such by the Board of Directors of Beneco, with the approval of the
National Electrification Administrator, Mr. Pedro Dumol, effective 16 October 1982.

On 3 November 1982, respondent Cosalan received Audit Memorandum No. 1 issued by the Commission
on Audit ("COA"). This Memorandum noted that cash advances received by officers and employees of
petitioner Beneco in the amount of P129,618.48 had been virtually written off in the books of Beneco. In
the Audit Memorandum, the COA directed petitioner Beneco to secure the approval of the National
Electrification Administration ("NEA") before writing off or condoning those cash advances, and
recommended the adoption of remedial measures.

On 12 November 1982, COA issued another Memorandum — Audit Memorandum No. 2 –– addressed to
respondent Peter Cosalan, inviting attention to the fact that the audit of per diems and allowances
received by officials and members of the Board of Directors of Beneco showed substantial inconsistencies
with the directives of the NEA. The Audit Memorandum once again directed the taking of immediate action
in conformity with existing NEA regulations.

On 19 May 1983, petitioner Beneco received the COA Audit Report on the financial status and operations
of Beneco for the eight (8) month period ended 30 September 1982. This Audit Report noted and
enumerated irregularities in the utilization of funds amounting to P37 Million released by NEA to Beneco,
and recommended that appropriate remedial action be taken.

Having been made aware of the serious financial condition of Beneco and what appeared to be
mismanagement, respondent Cosalan initiated implementation of the remedial measures recommended by
the COA. The respondent members of the Board of Beneco reacted by adopting a series of resolutions
during the period from 23 June to 24 July 1984. These Board Resolutions abolished the housing allowance
of respondent Cosalan; reduced his salary and his representation and commutable allowances; directed
him to hold in abeyance all pending personnel disciplinary actions; and struck his name out as a principal
signatory to transactions of petitioner Beneco.

During the period from 28 July to 25 September 1984, the respondent Beneco Board members adopted
another series of resolutions which resulted in the ouster of respondent Cosalan as General Manager of
Beneco and his exclusion from performance of his regular duties as such, as well as the withholding of his
salary and allowances. These resolutions were as follows:

1. Resolution No. 91-4 dated 28 July 1984:

. . . that the services of Peter M. Cosalan as General Manager of BENECO is terminated upon
approval of the National Electrification Administration;

2. Resolution No. 151-84 dated September 15, 1984;

. . . that Peter M. Cosalan is hereby suspended from his position as General Manager of the
Benguet Electric Cooperative, Inc. (BENECO) effective as of the start of the office hours on
September 24, 1984, until a final decision has been reached by the NEA on his dismissal;

. . . that GM Cosalan's suspension from office shall remain in full force and effect until such
suspension is sooner lifted, revoked or rescinded by the Board of Directors; that all monies
due him are withheld until cleared;

3. Resolution No. 176-84 dated September 25, 1984;

. . . that Resolution No. 151-84, dated September 15, 1984 stands as preventive
suspension for GM Peter M. Cosalan. 1

Respondent Cosalan nevertheless continued to work as General Manager of Beneco, in the belief that he
could be suspended or removed only by duly authorized officials of NEA, in accordance with provisions of
P.D. No, 269, as amended by P.D. No. 1645 (the statute creating the NEA, providing for its capitalization,
powers and functions and organization), the loan agreement between NEA and petitioner Beneco 2 and the
NEA Memorandum of 2 July 1980. 3 Accordingly, on 5 October and 10 November 1984, respondent
Cosalan requested petitioner Beneco to release the compensation due him. Beneco, acting through
respondent Board members, denied the written request of respondent Cosalan.
Respondent Cosalan then filed a complaint with the National Labor Relations Commission ("NLRC") on 5
December 1984 against respondent members of the Beneco Board, challenging the legality of the Board
resolutions which ordered his suspension and termination from the service and demanding payment of his
salaries and allowances. On 18 February 1985, Cosalan amended his complaint to implead petitioner
Beneco and respondent Board members, the latter in their respective dual capacities as Directors and as
private individuals.

In the course of the proceedings before the Labor Arbiter, Cosalan filed a motion for reinstatement which,
although opposed by petitioner Beneco, was granted on 23 October 1987 by Labor Arbiter Amado T.
Adquilen. Petitioner Beneco complied with the Labor Arbiter's order on 28 October 1987 through
Resolution No. 10-90.

On 5 April 1988, the Labor Arbiter rendered a decision (a) confirming Cosalan's reinstatement; (b)
ordering payment to Cosalan of his backwages and allowances by petitioner Beneco and respondent Board
members, jointly and severally, for a period of three (3) years without deduction or qualification,
amounting to P344,000.00; and (3) ordering the individual Board members to pay, jointly and severally,
to Cosalan moral damages of P50,000.00 plus attorney's fees of ten percent (10%) of the wages and
allowances awarded him.

Respondent Board members appealed to the NLRC, and there filed a Memorandum on Appeal. Petitioner
Beneco did not appeal, but moved to dismiss the appeal filed by respondent Board members and for
execution of judgment. By this time, petitioner Beneco had a new set of directors.

In a decision dated 21 November 1988, public respondent NLRC modified the award rendered by the Labor
Arbiter by declaring that petitioner Beneco alone, and not respondent Board members, was liable for
respondent Cosalan's backwages and allowances, and by ruling that there was no legal basis for the award
of moral damages and attorney's fees made by the Labor Arbiter.

Beneco, through its new set of directors, moved for reconsideration of the NLRC decision, but without
success.

In the present Petition for Certiorari, Beneco's principal contentions are two-fold: first, that the NLRC had
acted with grave abuse of discretion in accepting and giving due course to respondent Board members'
appeal although such appeal had been filed out of time; and second, that the NLRC had acted with grave
abuse of discretion amounting to lack of jurisdiction in holding petitioner alone liable for payment of the
backwages and allowances due to Cosalan and releasing respondent Board members from liability
therefor.

We consider that petitioner's first contention is meritorious. There is no dispute about the fact that the
respondent Beneco Board members received the decision of the labor Arbiter on 21 April 1988.
Accordingly, and because 1 May 1988 was a legal holiday, they had only up to 2 May 1988 within which to
perfect their appeal by filing their memorandum on appeal. It is also not disputed that the respondent
Board members' memorandum on appeal was posted by registered mail on 3 May 1988 and received by
the NLRC the following day. 4 Clearly, the memorandum on appeal was filed out of time.

Respondent Board members, however, insist that their Memorandum on Appeal was filed on time because
it was delivered for mailing on 1 May 1988 to the Garcia Communications Company, a licensed private
letter carrier. The Board members in effect contend that the date of delivery to Garcia Communications
was the date of filing of their appeal memorandum.

Respondent Board member's contention runs counter to the established rule that transmission through a
private carrier or letter-forwarder –– instead of the Philippine Post Office –– is not a recognized mode of
filing pleadings. 5The established rule is that the date of delivery of pleadings to a private letter-
forwarding agency is not to be considered as the date of filing thereof in court, and that in such cases, the
date of actual receipt by the court, and not the date of delivery to the private carrier, is deemed the date
of filing of that pleading. 6

There, was, therefore, no reason grounded upon substantial justice and the prevention of serious
miscarriage of justice that might have justified the NLRC in disregarding the ten-day reglementary period
for perfection of an appeal by the respondent Board members. Accordingly, the applicable rule was that
the ten-day reglementary period to perfect an appeal is mandatory and jurisdictional in nature, that failure
to file an appeal within the reglementary period renders the assailed decision final and executory and no
longer subject to review. 7 The respondent Board members had thus lost their right to appeal from the
decision of the Labor Arbiter and the NLRC should have forthwith dismissed their appeal memorandum.

There is another and more compelling reason why the respondent Board members' appeal should have
been dismissed forthwith: that appeal was quite bereft of merit. Both the Labor Arbiter and the NLRC had
found that the indefinite suspension and termination of services imposed by the respondent Board
members upon petitioner Cosalan was illegal. That illegality flowed, firstly, from the fact that the
suspension of Cosalan was continued long after expiration of the period of thirty (30) days, which is the
maximum period of preventive suspension that could be lawfully imposed under Section 4, Rule XIV of the
Omnibus Rules Implementing the Labor Code. Secondly, Cosalan had been deprived of procedural due
process by the respondent Board members. He was never informed of the charges raised against him and
was given no opportunity to meet those charges and present his side of whatever dispute existed; he was
kept totally in the dark as to the reason or reasons why he had been suspended and effectively dismissed
from the service of Beneco Thirdly, respondent Board members failed to adduce any cause which could
reasonably be regarded as lawful cause for the suspension and dismissal of respondent Cosalan from his
position as General Manager of Beneco. Cosalan was, in other words, denied due process both procedural
and substantive. Fourthly, respondent Board members failed to obtain the prior approval of the NEA of
their suspension now dismissal of Cosalan, which prior approval was required, inter alia, under the
subsisting loan agreement between the NEA and Beneco. The requisite NEA approval was subsequently
sought by the respondent Board members; no NEA approval was granted.

In reversing the decision of the Labor Arbiter declaring petitioner Beneco and respondent Board members
solidarily liable for the salary, allowances, damages and attorney's fees awarded to respondent Cosalan,
the NLRC said:

. . . A perusal of the records show that the members of the Board never acted in their individual
capacities. They were acting as a Board passing resolutions affecting their general manager. If
these resolutions and resultant acts transgressed the law, to then BENECO for which the Board was
acting in behalf should bear responsibility. The records do not disclose that the individual Board
members were motivated by malice or bad faith, rather, it reveals an intramural power play gone
awry and misapprehension of its own rules and regulations. For this reason, the decision holding
the individual board members jointly and severally liable with BENECO for Cosalan's backwages is
untenable. The same goes for the award of damages which does not have the proverbial leg to
stand on.

The Labor Arbiter below should have heeded his own observation in his decision —

Respondent BENECO as an artificial person could not have, by itself, done anything to
prevent it. But because the former have acted while in office and in the course of their
official functions as directors of BENECO, . . .

Thus, the decision of the Labor Arbiter should be modified conformably with all the foregoing
holding BENECO solely liable for backwages and releasing the appellant board members from any
individual liabilities. 8 (Emphasis supplied)

The applicable general rule is clear enough. The Board members and officers of a corporation who purport
to act for and in behalf of the corporation, keep within the lawful scope of their authority in so acting, and
act in good faith, do not become liable, whether civilly or otherwise, for the consequences of their acts,
Those acts, when they are such a nature and are done under such circumstances, are properly attributed
to the corporation alone and no personal liability is incurred by such officers and Board members. 9

The major difficulty with the conclusion reached by the NLRC is that the NLRC clearly overlooked or
disregarded the circumstances under which respondent Board members had in fact acted in the instant
case. As noted earlier, the respondent Board members responded to the efforts of Cosalan to take
seriously and implement the Audit Memoranda issued by the COA explicitly addressed to the petitioner
Beneco, first by stripping Cosalan of the privileges and perquisites attached to his position as General
Manager, then by suspending indefinitely and finally dismissing Cosalan from such position. As also noted
earlier, respondent Board members offered no suggestion at all of any just or lawful cause that could
sustain the suspension and dismissal of Cosalan. They obviously wanted to get rid of Cosalan and so
acted, in the words of the NLRC itself, "with indecent haste" in removing him from his position and
denying him substantive and procedural due process. Thus, the record showed strong indications that
respondent Board members had illegally suspended and dismissed Cosalan precisely because he was
trying to remedy the financial irregularities and violations of NEA regulations which the COA had brought
to the attention of Beneco. The conclusion reached by the NLRC that "the records do not disclose that the
individual Board members were motivated by malice or bad faith" flew in the face of the evidence of
record. At the very least, a strong presumption had arisen, which it was incumbent upon respondent
Board members to disprove, that they had acted in reprisal against respondent Cosalan and in an effort to
suppress knowledge about and remedial measures against the financial irregularities the COA Audits had
unearthed. That burden respondent Board members did not discharge.

The Solicitor General has urged that respondent Board members may be held liable for damages under
the foregoing circumstance under Section 31 of the Corporation Code which reads as follows:

Sec. 31. Liability of directors, trustees or officers. — Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross
negligence or bad faith in directing the affairs of the corporation or acquire any personal or
 pecuniary interest in conflict with their duty as such directors or trustees shall be jointly liable and
severally for all damages resulting therefrom suffered by the corporation, its stockholders or
members and other persons . . . (Emphasis supplied)

We agree with the Solicitor General, firstly, that Section 31 of the Corporation Code is applicable in
respect of Beneco and other electric cooperatives similarly situated. Section 4 of the Corporation Code
renders the provisions of that Code applicable in a supplementary manner to all corporations, including
those with special or individual charters so long as those provisions are not inconsistent with such
charters. We find no provision in P.D. No. 269, as amended, that would exclude expressly or by necessary
implication the applicability of Section 31 of the Corporation Code in respect of members of the boards of
directors of electric cooperatives. Indeed, P.D. No. 269 expressly describes these cooperatives as
"corporations:"

Sec. 15. Organization and Purpose. — Cooperative non-stock, non-profit

membership corporations may be organized, and electric cooperative corporations heretofore
formed or registered under the Philippine non-Agricultural Co-operative Act may as hereinafter
provided be converted, under this Decree for the purpose of supplying, and of promoting and
encouraging-the fullest use of, service on an area coverage basis at the lowest cost consistent with
sound economy and the prudent management of the business of such corporations. 10 (Emphasis
supplied)

We agree with the Solicitor General, secondly, that respondent Board members were guilty of "gross
negligence or bad faith in directing the affairs of the corporation" in enacting the series of resolutions
noted earlier indefinitely suspending and dismissing respondent Cosalan from the position of General
Manager of Beneco. Respondent Board members, in doing so, acted belong the scope of their authority as
such Board members. The dismissal of an officer or employee in bad faith, without lawful cause and
without procedural due process, is an act that is contra legem. It cannot be supposed that members of
boards of directors derive any authority to violate the express mandates of law or the clear legal rights of
their officers and employees by simply purporting to act for the corporation they control.

We believe and so hold, further, that not only are Beneco and respondent Board members properly held
solidarily liable for the awards made by the Labor Arbiter, but also that petitioner Beneco which was
controlled by and which could act only through respondent Board members, has a right to be reimbursed
for any amounts that Beneco may be compelled to pay to respondent Cosalan. Such right of
reimbursement is essential if the innocent members of Beneco are not to be penalized for the acts of
respondent Board members which were both done in bad faith and ultra vires. The liability-generating acts
here are the personal and individual acts of respondent Board members, and are not properly attributed to
Beneco itself.

WHEREFORE, the Petition for Certiorari is GIVEN DUE COURSE, the comment filed by respondent Board
members is TREATED as their answer, and the decision of the National Labor Relations Commission dated
21 November 1988 in NLRC Case No. RAB-1-0313-84 is hereby SET ASIDE and the decision dated 5 April
1988 of Labor Arbiter Amado T. Adquilen hereby REINSTATED in toto. In addition, respondent Board
members are hereby ORDERED to reimburse petitioner Beneco any amounts that it may be compelled to
pay to respondent Cosalan by virtue of the decision of Labor Arbiter Amado T. Adquilen. No
pronouncement as to costs.

SO ORDERED.
G.R. No. L-58781 July 31, 1987
TEOFILO MAGNO, ISIDRO CABATIC, HERMINIO CABATIC, FELICITAS CABATIC, Assisted by her
husband, JOSE CARINO, TOMAS MAGNO, ELPIDIO MAGNO, AURORA MAGNO, Assisted by her
husband, ODELON BUGAYONG, NICANOR MAGNO and LOLITA MAGNO, petitioners, vs.
HONORABLE COURT OF APPEALS, GAVINO MAGNO, NICETAS MAGNO, and NAZARIA MAGNO,
Assisted by her husband, SIMEON DE GUZMAN, respondents.

This is a special civil action for certiorari seeking to declare void ab initio the Resolution of respondent
Court of Appeals dated September 22, 1981 which ordered the issuance of an Entry of Judgment in CA-
G.R. No. 52655-R. The petition also prays for the issuance of a preliminary injunction to temporarily
maintain the status quo by ordering the provincial sheriff of the province of Pangasinan to desist from
enforcing the writ of execution issued in Civil Case No. A-413 pursuant to the said Entry of Judgment.

Civil Case No. A-413 is an action for Partition of Certain Properties and for Damages, filed by private
respondents against petitioners in the Court of First Instance of Pangasinan, Branch VII thereof. In a
Decision* dated October 5, 1972, the lower court ordered the partition of the properties subject of the
complaint in accordance with the schedule therein appearing. It also ordered the petitioners to pay jointly
and severally unto the private respondents the amount of P3,000.00 as attorney's fees.

Petitioners appealed to the Court of Appeals which appeal was docketed as CA-G.R. No. 52655-R. On June
30, 1981, the said court promulgated its Decision** affirming the decision of the lower court.

Notice of the decision was sent to petitioners' counsel Atty. Atinidoro B. Sison at his given mailing address
which is 33 B.M.A. Ave., Tatalon, Quezon City. The same, however, was returned to the court with the
certification of the postmaster — "Return to sender, Reason — moved."

On September 14, 1981, respondent Court of Appeals issued the following Resolution: —

Considering that the copy of Decision dated June 30, 1981 addressed to Atty. Atinidoro B. Sison of
33 B.M.A. Tatalon, Quezon City, counsel for the appellants was returned unclaimed with the
notation on the envelope "MOVED", the Court Resolved to resend the said copy of the Decision to
the appellants themselves at Alaminos, Pangasinan, and the appellants are hereby informed that
the fifteen (15) days period within which to file for reconsideration will be counted from the receipt
of the decision herewith attached. (Annex "5-A" p. 54, Rollo).

A copy of this Resolution was sent to petitioners themselves addressed as follows — Mr. Teofilo Magno et
al., Patricio, Alaminos, Pangasinan. It is not disputed that this address is the address on record of
petitioners. But again the enveloped addressed to them was returned to the court with the notation —
deceased.

On September 22, 1981, the respondent court issued its now assailed Resolution ordering the issuance of
the entry of judgment.

Petitioners' motion for reconsideration was denied hence, they filed the present petition, which We find to
be without merit.

It is well-settled that when a party is represented by counsel, notice should be made upon the counsel of
record at his given address to which notices of all kinds emanating from the court should be sent in the
absence of a proper and adequate notice to the court of a change of address. (Cubar vs. Mendoza, 120
SCRA 768).lawph!1

In the case now before Us, the records show that the notice and copy of the decision of respondent Court
of Appeals were sent to petitioners's counsel of record Atty. Atinidoro E. Sison at his given mailing address
which is 33 B.M.A. Avenue, Tatalon, Quezon City. The first notice to him by the Postmaster to claim his
mail was on July 9, 1981. The rule is that service of notice becomes effective at the expiration of the five-
day period upon failure of the addresse to claim his mail within five (5) days from the date of first notice
Sec. 8, Rule 13 Rules of Court (Feraren vs. Santos, 113 SCRA 707). Therefore in this case the service
became effective five days after July 9, 1981 which is July 14, 1981. The decision became final on August
13, 1981. A xerox copy of the said envelope properly addressed appears on page 52 of the Rollo. This fact
is further shown by the certification issued by the then Acting Clerk of the Court of Appeals, Atty. Cesar M.
Marzan. (p. 51, Rollo). If Atty. Sison moved to another address without informing the respondent of his
change of address the omission or neglect will not stay the finality of the decision. The notice sent to
petitioners themselves, under the circumstances is not even necessary. (Francisco vs. Puno, 108 SCRA
427). It may be stated though that while petitioners claim that Teofilo Magno to whom the notice to the
petitioners was addressed is already dead, it is not explained why their present petition before this Court
still includes the name Teofilo Magno. There is no indication in the record that he has been duly
substituted by his legal representative.
The decision in this case having become final on July 29, 1981, there being no appeal taken therefrom,
respondent court committed no error in issuing its resolution dated September 22, 1981 ordering the
issuance of the corresponding entry of judgment.

WHEREFORE, for lack of merit, this petition is hereby DISMISSED. The restraining order earlier issued is
lifted. SO ORDERED.
G.R. No. 132007 August 5, 1998
SOLAR TEAM ENTERTAINMENT, INC., petitioner, vs. HON. HELEN BAUTISTA RICA-FORT, in her
capacity as Presiding Judge of the Regional Trial Court of Parañaque, Metro Manila (Branch
260), TEAM IMAGE ENTERTAINMENT, INC., FELIX S. CO, JEFFREY C. CAL, and KING
CUISIA, respondents.

At issue is whether respondent judge committed grave abuse of discretion amounting to lack or excess of
jurisdiction in denying petitioner's motion to expunge private respondents' answer with counterclaims on
the ground that said pleading was not served personally; moreover, there was no written explanation as
to why personal service was not accomplished, as required by Section 11 of Rule 13 of the 1997 Rules of
Civil Procedure.

The antecedents are not disputed.

On 10 July 1997, petitioner, as plaintiff, filed before the Regional Trial Court (RTC) in Parañaque, Metro
Manila, a complaint for recovery of possession and damages with prayer for a writ of replevin 1 against
herein private respondents. The case was docketed as Civil Case No. 97-0304 and was assigned to Branch
260 of said court, presided over by public respondent Judge Helen Bautista-Ricafort.

Summonses and copies of the complaint were forthwith served on private respondents. On 25 July 1997,
their counsel filed a notice of appearance with urgent ex-parte motion for extension of time to
plead, 2 which the court granted in its order of 4 August 1997. 3

On 8 August 1997, private respondents, as defendants, filed their "Answer (with Counterclaims).'' 4 A copy
thereof was furnished counsel for petitioner by registered mail; however, the pleading did not contain any
written explanation as to why service was not made personally upon petitioner-plaintiff, as required by
Section 11 of Rule 13 of the 1997 Rules of Civil Procedure.

On 11 August 1997, petitioner filed a motion to expunge the "Answer (with Counterclaims)" and to declare
herein private respondents in default, 5 alleging therein that the latter did not observe the mandate of the
aforementioned Section 11, and that there was:

[A]bsolutely no valid reason why defendant[s] should not have personally served plaintiff's .
. . counsel with [a] copy of their answer [as] (t)he office of defendant's (sic) counsel, Atty.
Froilan Cabaltera, is just a stone [sic] throw away from the office of [petitioner's] counsel,
with an estimate (sic) distance of about 200 meters more or less.

Petitioner further alleged that the post office was "about ten (10) times farther from the office of Atty.
Cabaltera,"

On 15 August 1997, private respondents filed their opposition 6 to the abovementioned motion, alleging
that petitioner's "rigid and inflexible reliance on the provisions of Section 11, Rule 13 . . . is an
adventitious resort to technicality and is contrary to Section 6 of Rule 3 . . . which admonishes that said
Rules 'shall be liberally construed in order to promote their objective in securing a just, speedy and
inexpensive disposition of [e]very action and proceeding;'" and that Section 11, Rule 13 notwithstanding,
private respondents "religiously complied with [Section 5 of Rule 13] by personally present[ing] to the
clerk of court their said Answer . . . furnishing a copy thereof to the counsel for [petitioner] by way of
registered mail."

On 8 September 1997, public respondent Judge Bautista-Ricafort issued an order 7 stating that under
Section 11 of Rule 13 "it is within the discretion of the [trial court] whether to consider the pleading as
filed or not," and denying, for lack of merit, petitioner's motion to expunge the "Answer (with
Counterclaims)" and to declare private respondents in default.

Petitioner immediately moved for reconsideration 8 of the order, but public respondent Judge Bautista-
Ricafort denied this motion in her order 9 of 17 November 1997. The order justified the denial in this wise:

Sec. 6 [of] Rule 1 of the 1997 Rules of Civil Procedure ordains that the Rules shall be
liberally construed in order to promote their objective of securing a just, speedy and
inexpensive disposition of every action and proceeding.

Liberal construction of the rules and the pleading is the controlling principle to effect
substantial justice.

As pointed out by the Supreme Court in Alonso vs. Villamor, 16 Phil. 315, "the error in this
case is purely technical. To take advantage of it for other purposes than to cure it, does not
appeal to a fair sense of justice. Its presentation as fatal to plaintiff a [sic] case smacks of
skill rather than right. A litigation is not a game of technicalities in which one, more deeply
 schooled and skilled in the subtle art of movement and position, entraps and destroys the
other. It is rather, a contest in which each contending party fully and fairly lays before the
Court the facts in issue and then, brushing aside as wholly trivial and indecisive all
imperfections or form of technicalities of procedure, asks that justice be done upon the
merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust."

While it is desirable that the above Rules be faithfully and even meticulously observed,
courts should not strict about procedural lapses that do not really impair the proper
administration of justice. Furthermore, it is well settled that litigations should, as much as
possible be decided on their merits and not on technicalities.

Petitioner thus filed the instant special civil action of certiorari, contending that public respondent Judge
Bautista-Ricafort committed grave abuse of discretion amounting to lack or excess of jurisdiction when she
admitted private respondents' "Answer (with Counterclaims)" notwithstanding private respondents' clear,
admitted and inexcusable violation of Section 11, Rule 13 of the 1997 Rules of Civil Procedure, in that: (a)
the "Answer (with Counterclaims)" was not served personally upon petitioner's counsel despite the
undisputed fact that the offices of private respondents' counsel and that of petitioner's counsel are only
about 200 meters away from each other; and (b) the Answer did not contain any explanation as to why
the answer was not served personally.

In their Comment, filed in compliance with the resolution of 2 February 1998, and to which petitioner filed
a Reply, private respondents aver that public respondent Judge Bautista-Ricafort correctly admitted
private respondents' "Answer (with Counterclaims)" in light of Section 6, Rule 1 of the 1997 Rules of Civil
Procedure; that Section 11 of Rule 13 begins with the phrase "whenever practicable," thereby suggesting
that service by mail may still be effected depending on the relative priority of the pleading sought to be
filed; and when service is not done personally, it is more prudent and judicious for the courts to require a
written explanation rather than to expunge the pleading outright or consider the same as not being filed.

In view of the importance of the issue raised, which is, undoubtedly, one of the first impression, the Court
resolved to give due course to the petition and consider it submitted for decision on the basis of the
pleadings filed by the parties.

Sec. 5, Rule 13 of the 1997 Rules of Civil Procedure prescribes two modes of service of pleadings,
motions, notices, orders, judgments and other papers, namely: (1) personal service; and (2) service by
mail. The first is governed by Section 6, while the second, by Section 7 of said Rule. If service cannot be
done either personally or by mail, substituted service may be resorted to under Section 8 thereof.

Pursuant, however, to Section 11 of Rule 13, service and filing of pleadings and other papers must,
whenever practicable, be done personally; and if made through other modes, the party concerned must
provide a written explanation as to why the service or filing was not done personally. The section reads:

Sec. 11. Priorities in modes of service and filing. — Whenever practicable, the service and
filing of pleadings and other papers shall be done personally. Except with respect to papers
emanating from the court, a resort to other modes must be accompanied by a written
explanation why the service or filing was not done personally. A violation of this Rule may
be cause to consider the paper as not filed. (n)

Note that Section 11 refers to both service of pleadings and other papers on the adverse party or
his counsel as provided for in Sections 6, 7 and 8; and to the filing of pleadings and other papers in
court.

Personal service and filing are preferred for obvious reasons. Plainly, such should expedite action or
resolution on a pleading, motion or other paper; and conversely, minimize, if not eliminate, delays likely
to be incurred if service or filing is done by mail, considering the inefficiency of the postal service.
Likewise, personal service will do away with the practice of some lawyers who, wanting to appear clever,
resort to the following less than ethical practices: (1) serving or filing pleadings by mail to catch opposing
counsel off-guard, thus leaving the latter with little or no time to prepare, for instance, responsive
pleadings or an opposition; or (2) upon receiving notice from the post office that the registered parcel
containing the pleading of or other paper from the adverse party may be claimed, unduly procrastinating
before claiming the parcel, or, worse, not claiming it at all, thereby causing undue delay in the disposition
of such pleading or other papers.

If only to underscore the mandatory nature of this innovation to our set of adjective rules requiring
personal service whenever practicable, Section 11 of Rule 13 then gives the court the discretion to
consider a pleading or paper as not filed if the other modes of service or filing were resorted to and no
written explanation was made as to why personal service was not done in the first place. The exercise of
discretion must, necessarily, consider the practicability of personal service, for Section 11 itself begins
with the clause "whenever practicable."
We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules of Civil
Procedure, personal service and filing is the general rule, and resort to other modes of service and filing,
the exception. Henceforth, whenever personal service or filing is practicable, in light of the circumstances
of time, place and person, personal service or filing is mandatory. Only when personal service or filing is
not practicable may resort to other modes be had, which must then be accompanied by a written
explanation as to why personal service or filing was not practicable to begin with. In adjudging the
plausibility of an explanation, a court shall likewise consider the importance of the subject matter of the
case or the issues involved therein, and the prima facie merit of the pleading sought to be expunged for
violation of Section 11. This Court cannot rule otherwise, lest we allow circumvention of the innovation
introduced by the 1997 Rules in order to obviate delay in the administration of justice.

Here, the proximity between the offices of opposing counsel was established; moreover, that the office of
private respondents' counsel was "ten times farther" from the post office than the distance separating the
offices of opposing counsel. Of course, proximity would seem to make personal service most practicable,
but exceptions may nonetheless apply. For instance, where the adverse party or opposing counsel to be
served with a pleading seldom reports to office and no employee is regularly present to receive pleadings,
or where service is done on the last day of the reglementary period and the office of the adverse party or
opposing counsel to be served is closed, for whatever reason.

Returning, however, to the merits of this case, in view of the proximity between the offices of opposing
counsel and the absence of any attendant explanation as to why personal service of the answer was not
effected, indubitably, private respondents' counsel violated Section 11 of Rule 13 and the motion to
expunge was prima facie meritorious. However, the grant or denial of said motion nevertheless remained
within the sound exercise of the trial court's discretion. Thus, as guided by Section 6, Rule 1 of the 1997
Rules of Civil Procedure, which ordains that the Rules shall be liberally construed in order to promote their
objective of securing a just, speedy and inexpensive disposition of every action or proceeding, as well as
by the dictum laid down in Alonso v. Villamor, 16 Phil. 315 [1910], the trial court opted to exercise its
discretion in favor of admitting the "Answer (with Counterclaims)," instead of expunging it from the
record.

To our mind, if motions to expunge or strike out pleadings for violation of Section 11 of Rule 13 were to be
indiscriminately resolved under Section 6 of Rule 1 or Alonzo v. Villamor and other analogous cases, then
Section 11 would become meaningless and its sound purpose negated. Nevertheless, we sustain the
challenged ruling of the trial court, but for reasons other than those provided for in the challenged order.

The 1997 Rules of Civil Procedure took effect only on 1 July 1997, while the questioned "Answer (with
Counterclaims)" was filed only on 8 August 1997, or on the 39th day following the effectivity of the 1997
Rules. Hence, private respondents' counsel may not have been fully aware of the requirements and
ramifications of Section 11, Rule 13. In fact, as pointed out by petitioner's counsel, in another case where
private respondents' counsel was likewise opposing counsel, the latter similarly failed to comply with
Section 11.

It has been several months since the 1997 Rules of Civil Procedure took effect. In the interim, this Court
has generally accommodated parties and counsel who failed to comply with the requirement of a written
explanation whenever personal service or filing was not practicable, guided, in the exercise of our
discretion, by the primary objective of Section 11, the importance of the subject matter of the case, the
issues involved and the prima facie merit of the challenged pleading. However, as we have in the past, for
the guidance of the Bench and Bar, strictest compliance with Section 11 of Rule 13 is mandated one
month from promulgation of this Decision.

WHEREFORE, the instant petition is DISMISSED considering that while the justification for the denial of the
motion to expunge the "Answer (with Counterclaims)" may not necessarily be correct, yet, for the reasons
above stated, the violation of Section 11 of Rule 13 may be condoned.

No pronouncement as to costs.

SO ORDERED.
[G.R. No. 115024. February 7, 1996]
MA. LOURDES VALENZUELA, petitioner, vs. COURT OF APPEALS, RICHARD LI and ALEXANDER
COMMERCIAL, INC., respondents.

[G.R. No. 117944. February 7, 1996]

RICHARD LI, petitioner, vs. COURT OF APPEALS and MA. LOURDES VALENZUELA, respondents.

KAPUNAN, J.:
These two petitions for review on certiorari under Rule 45 of the Revised Rules of Court stem from an
action to recover damages by petitioner Lourdes Valenzuela in the Regional Trial Court of Quezon City for
injuries sustained by her in a vehicular accident in the early morning of June 24, 1990. The facts found by
the trial court are succinctly summarized by the Court of Appeals below:

This is an action to recover damages based on quasi-delict, for serious physical injuries sustained in a
vehicular accident.

Plaintiffs version of the accident is as follows: At around 2:00 in the morning of June 24, 1990, plaintiff
Ma. Lourdes Valenzuela was driving a blue Mitsubishi lancer with Plate No. FFU 542 from her restaurant at
Marcos highway to her home at Palanza Street, Araneta Avenue. She was travelling along Aurora
Blvd. with a companion, Cecilia Ramon, heading towards the direction of Manila. Before reaching A. Lake
Street, she noticed something wrong with her tires; she stopped at a lighted place where there were
people, to verify whether she had a flat tire and to solicit help if needed. Having been told by the people
present that her rear right tire was flat and that she cannot reach her home in that cars condition, she
parked along the sidewalk, about 1 feet away, put on her emergency lights, alighted from the car, and
went to the rear to open the trunk. She was standing at the left side of the rear of her car pointing to the
tools to a man who will help her fix the tire when she was suddenly bumped by a 1987 Mitsubishi Lancer
driven by defendant Richard Li and registered in the name of defendant Alexander Commercial, Inc.
Because of the impact plaintiff was thrown against the windshield of the car of the defendant, which was
destroyed, and then fell to the ground. She was pulled out from under defendants car. Plaintiffs left leg
was severed up to the middle of her thigh, with only some skin and sucle connected to the rest of the
body. She was brought to the UERM Medical MemorialCenter where she was found to have a traumatic
amputation, leg, left up to distal thigh (above knee). She was confined in the hospital for twenty (20) days
and was eventually fitted with an artificial leg. The expenses for the hospital confinement (P 120,000.00)
and the cost of the artificial leg (P27,000.00) were paid by defendants from the car insurance.

In her complaint, plaintiff prayed for moral damages in the amount of P1 million, exemplary damages in
the amount of P100,000.00 and other medical and related expenses amounting to a total of P180,000.00,
including loss of expected earnings.

Defendant Richard Li denied that he was negligent. He was on his way home, travelling at 55 kph;
considering that it was raining, visibility was affected and the road was wet. Traffic was light. He testified
that he was driving along the inner portion of the right lane of Aurora Blvd. towards the direction of
Araneta Avenue, when he was suddenly confronted, in the vicinity of A. Lake Street, San Juan, with a car
coming from the opposite direction, travelling at 80 kph, with full bright lights. Temporarily blinded, he
instinctively swerved to the right to avoid colliding with the oncoming vehicle, and bumped plaintiffs car,
which he did not see because it was midnight blue in color, with no parking lights or early warning device,
and the area was poorly lighted. He alleged in his defense that the left rear portion of plaintiffs car was
protruding as it was then at a standstill diagonally on the outer portion of the right lane towards Araneta
Avenue (par. 18, Answer). He confirmed the testimony of plaintiffs witness that after being bumped the
car of the plaintiff swerved to the right and hit another car parked on the sidewalk. Defendants
counterclaimed for damages, alleging that plaintiff was reckless or negligent, as she was not a licensed
driver.

The police investigator, Pfc. Felic Ramos, who prepared the vehicular accident report and the sketch of the
three cars involved in the accident, testified that the plaintiffs car was near the sidewalk; this witness did
not remember whether the hazard lights of plaintiffs car were on, and did not notice if there was an early
warning device; there was a street light at the corner of Aurora Blvd. and F. Roman, about 100 meters
away. It was not mostly dark, i.e. things can be seen (p. 16, tsn, Oct. 28, 1991).

A witness for the plaintiff, Rogelio Rodriguez, testified that after plaintiff alighted from her car and opened
the trunk compartment, defendants car came approaching very fast ten meters from the scene; the car
was zigzagging. The rear left side of plaintiffs car was bumped by the front right portion of defendants car;
as a consequence, the plaintiffs car swerved to the right and hit the parked car on the sidewalk. Plaintiff
was thrown to the windshield of defendants car, which was destroyed, and landed under the car. He
stated that defendant was under the influence of liquor as he could smell it very well (pp. 43, 79,
tsn., June 17, 1991).

After trial, the lower court sustained the plaintiffs submissions and found defendant Richard Li guilty
of gross negligence and liable for damages under Article 2176 of the Civil Code. The trial court likewise
held Alexander Commercial, Inc., Lis employer, jointly and severally liable for damages pursuant to Article
2180. It ordered the defendants to jointly and severally pay the following amounts:

1. P41,840.00, as actual damages, representing the miscellaneous expenses of the plaintiff as a result of
her severed left leg;

2. The sums of (a) P37,500.00, for the unrealized profits because of the stoppage of plaintiffs Bistro La
Conga restaurant three (3) weeks after the accident on June 24, 1990; (b) P20,000.00, a month, as
unrealized profits of the plaintiff in her Bistro La Conga restaurant, from August, 1990 until the date of
this judgment; and (c) P30,000.00, a month, for unrealized profits in plaintiffs two (2) beauty salons from
July, 1990 until the date of this decision;

3. P1,000,000.00, in moral damages;

4. P50,000.00, as exemplary damages,

5. P60,000.00, as reasonable attorneys fees; and

6. Costs.

As a result of the trial courts decision, defendants filed an Omnibus Motion for New Trial and for
Reconsideration, citing testimony in Criminal Case O.C. No. 804367 (People vs. Richard Li), tending to
show that the point of impact, as depicted by the pieces of glass/debris from the parties cars, appeared to
be at the center of the right lane of Aurora Blvd. The trial court denied the motion. Defendants forthwith
filed an appeal with the respondent Court of Appeals. In a Decision rendered March 30, 1994, the Court of
Appeals found that there was ample basis from the evidence of record for the trial courts finding that the
plaintiffs car was properly parked at the right, beside the sidewalk when it was bumped by defendants
car.[1]Dismissing the defendants argument that the plaintiffs car was improperly parked, almost at the
center of the road, the respondent court noted that evidence which was supposed to prove that the car
was at or near center of the right lane was never presented during the trial of the case.[2] The respondent
court furthermore observed that:

Defendant Lis testimony that he was driving at a safe speed of 55 km./hour is self serving; it was not
corroborated. It was in fact contradicted by eyewitness Rodriguez who stated that he was outside his
beerhouse located at Aurora Boulevard after A. Lake Street, at or about 2:00 a.m. of June 24, 1990 when
his attention was caught by a beautiful lady (referring to the plaintiff) alighting from her car and opening
the trunk compartment; he noticed the car of Richard Li approaching very fast ten (10) meters away from
the scene; defendants car was zigzagging, although there were no holes and hazards on the street, and
bumped the leg of the plaintiff who was thrown against the windshield of defendants car, causing its
destruction. He came to the rescue of the plaintiff, who was pulled out from under defendants car and was
able to say hurting words to Richard Li because he noticed that the latter was under the influence of
liquor, because he could smell it very well (p. 36, et. seq., tsn, June 17, 1991). He knew that plaintiff
owned a beerhouse in Sta. Mesa in the 1970s, but did not know either plaintiff or defendant Li before the
accident.

In agreeing with the trial court that the defendant Li was liable for the injuries sustained by the
plaintiff, the Court of Appeals, in its decision, however, absolved the Lis employer, Alexander Commercial,
Inc. from any liability towards petitioner Lourdes Valenzuela and reduced the amount of moral damages to
P500,000.00. Finding justification for exemplary damages, the respondent court allowed an award of
P50,000.00 for the same, in addition to costs, attorneys fees and the other damages. The Court of
Appeals, likewise, dismissed the defendants counterclaims.[3]
Consequently, both parties assail the respondent courts decision by filing two separate petitions
before this Court. Richard Li, in G.R. No. 117944, contends that he should not be held liable for damages
because the proximate cause of the accident was Ma. Lourdes Valenzuelas own negligence. Alternatively,
he argues that in the event that this Court finds him negligent, such negligence ought to be mitigated by
the contributory negligence of Valenzuela.
On the other hand, in G.R. No. 115024, Ma. Lourdes Valenzuela assails the respondent courts decision
insofar as it absolves Alexander Commercial, Inc. from liability as the owner of the car driven by Richard Li
and insofar as it reduces the amount of the actual and moral damages awarded by the trial court. [4]
As the issues are intimately related, both petitions are hereby consolidated. It is plainly evident that
the petition for review in G.R. No. 117944 raises no substantial questions of law. What it, in effect,
attempts to have this Court review are factual findings of the trial court, as sustained by the Court of
Appeals finding Richard Li grossly negligent in driving the Mitsubishi Lancer provided by his company in
the early morning hours of June 24, 1990. This we will not do. As a general rule, findings of fact of the
Court of Appeals are binding and conclusive upon us, and this Court will not normally disturb such factual
findings unless the findings of fact of the said court are palpably unsupported by the evidence on record or
unless the judgment itself is based on a misapprehension of facts.[5]
 In the first place, Valenzuelas version of the incident was fully corroborated by an uninterested
witness, Rogelio Rodriguez, the owner-operator of an establishment located just across the scene of the
accident. On trial, he testified that he observed a car being driven at a very fast speed, racing towards the
general direction of Araneta Avenue.[6] Rodriguez further added that he was standing in front of his
establishment, just ten to twenty feet away from the scene of the accident, when he saw the car hit
Valenzuela, hurtling her against the windshield of the defendants Mitsubishi Lancer, from where she
eventually fell under the defendants car. Spontaneously reacting to the incident, he crossed the street,
noting that a man reeking with the smell of liquor had alighted from the offending vehicle in order to
survey the incident.[7] Equally important, Rodriguez declared that he observed Valenzuelas car parked
parallel and very near the sidewalk,[8] contrary to Lis allegation that Valenzuelas car was close to the
center of the right lane. We agree that as between Lis self-serving asseverations and the observations of a
witness who did not even know the accident victim personally and who immediately gave a statement of
the incident similar to his testimony to the investigator immediately after the incident, the latters
testimony deserves greater weight. As the court emphasized:

The issue is one of credibility and from Our own examination of the transcript, We are not prepared to set
aside the trial courts reliance on the testimony of Rodriguez negating defendants assertion that he was
driving at a safe speed. While Rodriguez drives only a motorcycle, his perception of speed is not
necessarily impaired. He was subjected to cross-examination and no attempt was made to question his
competence or the accuracy of his statement that defendant was driving very fast. This was the same
statement he gave to the police investigator after the incident, as told to a newspaper report (Exh. P). We
see no compelling basis for disregarding his testimony.

The alleged inconsistencies in Rodriguez testimony are not borne out by an examination of the testimony.
Rodriguez testified that the scene of the accident was across the street where his beerhouse is located
about ten to twenty feet away (pp. 35-36, tsn, June 17, 1991). He did not state that the accident
transpired immediately in front of his establishment. The ownership of the Lambingan sa Kambingan is not
material; the business is registered in the name of his mother, but he explained that he owns the
establishment (p. 5, tsn., June 20, 1991).

Moreover, the testimony that the streetlights on his side of Aurora Boulevard were on the night the
accident transpired (p. 8) is not necessarily contradictory to the testimony of Pfc. Ramos that there was a
streetlight at the corner of Aurora Boulevard and F. Roman Street (p. 45, tsn., Oct. 20, 1991).

With respect to the weather condition, Rodriguez testified that there was only a drizzle, not a heavy rain
and the rain has stopped and he was outside his establishment at the time the accident transpired (pp.
64-65, tsn.,June 17, 1991). This was consistent with plaintiffs testimony that it was no longer raining
when she left Bistro La Conga (pp. 10-11, tsn., April 29, 1991). It was defendant Li who stated that it was
raining all the way in an attempt to explain why he was travelling at only 50-55 kph. (p. 11, tsn., Oct. 14,
1991). As to the testimony of Pfc. Ramos that it was raining, he arrived at the scene only in response to a
telephone call after the accident had transpired (pp. 9-10, tsn, Oct. 28, 1991). We find no substantial
inconsistencies in Rodriguezs testimony that would impair the essential integrity of his testimony or reflect
on his honesty. We are compelled to affirm the trial courts acceptance of the testimony of said
eyewitness.

Against the unassailable testimony of witness Rodriguez we note that Lis testimony was peppered
with so many inconsistencies leading us to conclude that his version of the accident was merely adroitly
crafted to provide a version, obviously self-serving, which would exculpate him from any and all liability in
the incident. Against Valenzuelas corroborated claims, his allegations were neither backed up by other
witnesses nor by the circumstances proven in the course of trial. He claimed that he was driving merely at
a speed of 55 kph. when out of nowhere he saw a dark maroon lancer right in front of him, which was
(the) plaintiffs car. He alleged that upon seeing this sudden apparition he put on his brakes to no avail as
the road was slippery.[9]
One will have to suspend disbelief in order to give credence to Lis disingenuous and patently self-
serving asseverations. The average motorist alert to road conditions will have no difficulty applying the
brakes to a car traveling at the speed claimed by Li. Given a light rainfall, the visibility of the street, and
the road conditions on a principal metropolitan thoroughfare like Aurora Boulevard, Li would have had
ample time to react to the changing conditions of the road if he were alert - as every driver should be - to
those conditions. Driving exacts a more than usual toll on the senses. Physiological fight or
flight[10] mechanisms are at work, provided such mechanisms were not dulled by drugs, alcohol,
exhaustion, drowsiness, etc.[11]Lis failure to react in a manner which would have avoided the accident
could therefore have been only due to either or both of the two factors: 1) that he was driving at a very
fast speed as testified by Rodriquez; and 2) that he was under the influence of alcohol. [12] Either factor
working independently would have diminished his responsiveness to road conditions, since normally he
would have slowed down prior to reaching Valenzuelas car, rather than be in a situation forcing him to
suddenly apply his brakes. As the trial court noted (quoted with approval by respondent court):

Secondly, as narrated by defendant Richard Li to the San Juan Police immediately after the incident, he
said that while driving along Aurora Blvd., out of nowhere he saw a dark maroon lancer right in front of
him, which was plaintiffs car, indicating, again, thereby that, indeed, he was driving very fast, oblivious of
his surroundings and the road ahead of him, because if he was not, then he could not have missed
noticing at a still far distance the parked car of the plaintiff at the right side near the sidewalk which had
its emergency lights on, thereby avoiding forcefully bumping at the plaintiff who was then standing at the
left rear edge of her car.

Since, according to him, in his narration to the San Juan Police, he put on his brakes when he saw the
plaintiffs car in front of him, but that it failed as the road was wet and slippery, this goes to show again,
that, contrary to his claim, he was, indeed, running very fast. For, were it otherwise, he could have easily
completely stopped his car, thereby avoiding the bumping of the plaintiff, notwithstanding that the road
was wet and slippery. Verily, since, if, indeed, he was running slow, as he claimed, at only about 55
kilometers per hour, then, inspite of the wet and slippery road, he could have avoided hitting the plaintiff
by the mere expedient or applying his brakes at the proper time and distance.

It could not be true, therefore, as he now claims during his testimony, which is contrary to what he told
the police immediately after the accident and is, therefore, more believable, that he did not actually step
on his brakes, but simply swerved a little to the right when he saw the on-coming car with glaring
headlights, from the opposite direction, in order to avoid it.

For, had this been what he did, he would not have bumped the car of the plaintiff which was properly
parked at the right beside the sidewalk. And, it was not even necessary for him to swerve a little to the
right in order to safely avoid a collision with the on-coming car, considering that Aurora Blvd. is a double
lane avenue separated at the center by a dotted white paint, and there is plenty of space for both cars,
since her car was running at the right lane going towards Manila and the on-coming car was also on its
right lane going to Cubao.[13]

Having come to the conclusion that Li was negligent in driving his company-issued Mitsubishi Lancer,
the next question for us to determine is whether or not Valenzuela was likewise guilty of contributory
negligence in parking her car alongside Aurora Boulevard, which entire area Li points out, is a no parking
zone.
We agree with the respondent court that Valenzuela was not guilty of contributory negligence.
Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to
the harm he has suffered, which falls below the standard to which he is required to conform for his own
protection. [14] Based on the foregoing definition, the standard or act to which, according to petitioner Li,
Valenzuela ought to have conformed for her own protection was not to park at all at any point of Aurora
Boulevard, a no parking zone. We cannot agree.
Courts have traditionally been compelled to recognize that an actor who is confronted with an
emergency is not to be held up to the standard of conduct normally applied to an individual who is in no
such situation. The law takes stock of impulses of humanity when placed in threatening or dangerous
situations and does not require the same standard of thoughtful and reflective care from persons
confronted by unusual and oftentimes threatening conditions. [15] Under the emergency rule adopted by
this Court in Gan vs Court of Appeals,[16] an individual who suddenly finds himself in a situation of danger
and is required to act without much time to consider the best means that may be adopted to avoid the
impending danger, is not guilty of negligence if he fails to undertake what subsequently and upon
reflection may appear to be a better solution, unless the emergency was brought by his own
negligence.[17]
Applying this principle to a case in which the victims in a vehicular accident swerved to the wrong lane
to avoid hitting two children suddenly darting into the street, we held, in Mc Kee vs. Intermediate
Appellate Court,[18] that the driver therein, Jose Koh, adopted the best means possible in the given
situation to avoid hitting the children. Using the emergency rule the court concluded that Koh, in spite of
the fact that he was in the wrong lane when the collision with an oncoming truck occurred, was not guilty
of negligence.[19]
While the emergency rule applies to those cases in which reflective thought, or the opportunity to
adequately weigh a threatening situation is absent, the conduct which is required of an individual in such
cases is dictated not exclusively by the suddenness of the event which absolutely negates thoughtful care,
but by the over-all nature of the circumstances. A woman driving a vehicle suddenly crippled by a flat tire
on a rainy night will not be faulted for stopping at a point which is both convenient for her to do so and
which is not a hazard to other motorists. She is not expected to run the entire boulevard in search for a
parking zone or turn on a dark Street or alley where she would likely find no one to help her. It would be
hazardous for her not to stop and assess the emergency (simply because the entire length of Aurora
Boulevard is a no-parking zone) because the hobbling vehicle would be both a threat to her safety and to
other motorists. In the instant case, Valenzuela, upon reaching that portion of Aurora Boulevardclose to A.
Lake St., noticed that she had a flat tire. To avoid putting herself and other motorists in danger, she did
what was best under the situation. As narrated by respondent court:

She stopped at a lighted place where there were people, to verify whether she had a flat tire and to solicit
help if needed. Having been told by the people present that her rear right tire was flat and that she cannot
reach her home she parked along the sidewalk, about 1 feet away, behind a Toyota Corona Car.[20] In fact,
respondent court noted, Pfc. Felix Ramos, the investigator on the scene of the accident confirmed that
Valenzuelas car was parked very close to the sidewalk.[21] The sketch which he prepared after the incident
showed Valenzuelas car partly straddling the sidewalk, clear and at a convenient distance from motorists
passing the right lane of Aurora Boulevard. This fact was itself corroborated by the testimony of witness
Rodriguez.[22]

Under the circumstances described, Valenzuela did exercise the standard reasonably dictated by the
emergency and could not be considered to have contributed to the unfortunate circumstances which
eventually led to the amputation of one of her lower extremities. The emergency which led her to park her
car on a sidewalk in Aurora Boulevard was not of her own making, and it was evident that she had taken
all reasonable precautions.
Obviously in the case at bench, the only negligence ascribable was the negligence of Li on the night of
the accident. Negligence, as it is commonly understood is conduct which creates an undue risk of harm to
others.[23] It is the failure to observe that degree of care, precaution, and vigilance which the
circumstances justly demand, whereby such other person suffers injury. [24] We stressed, in Corliss vs.
Manila Railroad Company,[25] that negligence is the want of care required by the circumstances.
The circumstances established by the evidence adduced in the court below plainly demonstrate that Li
was grossly negligent in driving his Mitsubishi Lancer. It bears emphasis that he was driving at a fast
speed at about 2:00 A.M. after a heavy downpour had settled into a drizzle rendering the street slippery.
There is ample testimonial evidence on record to show that he was under the influence of liquor. Under
these conditions, his chances of effectively dealing with changing conditions on the road were significantly
lessened. As Prosser and Keaton emphasize:

[U]nder present day traffic conditions, any driver of an automobile must be prepared for the sudden
appearance of obstacles and persons on the highway, and of other vehicles at intersections, such as one
who sees a child on the curb may be required to anticipate its sudden dash into the street, and his failure
to act properly when they appear may be found to amount to negligence. [26]

Lis obvious unpreparedness to cope with the situation confronting him on the night of the accident
was clearly of his own making.
We now come to the question of the liability of Alexander Commercial, Inc. Lis employer. In denying
liability on the part of Alexander Commercial, the respondent court held that:

There is no evidence, not even defendant Lis testimony, that the visit was in connection with official
matters. His functions as assistant manager sometimes required him to perform work outside the office as
he has to visit buyers and company clients, but he admitted that on the night of the accident he came
from BF Homes Paraaque he did not have business from the company (pp. 25-26, tsn, Sept. 23, 1991).
The use ofthe company car was partly required by the nature of his work, but the privilege of using it for
non-official business is a benefit, apparently referring to the fringe benefits attaching to his position.

Under the civil law, an employer is liable for the negligence of his employees in the discharge of their
respective duties, the basis of which liability is not respondeat superior, but the relationship of pater
familias, which theory bases the liability of the master ultimately on his own negligence and not on that of
his servant (Cuison v. Norton and Harrison Co., 55 Phil. 18). Before an employer may be held liable for
the negligence of his employee, the act or omission which caused damage must have occurred while an
employee was in the actual performance of his assigned tasks or duties (Francis High School vs. Court of
Appeals, 194 SCRA 341). In defining an employers liability for the acts done within the scope of the
employees assigned tasks, the Supreme Court has held that this includes any act done by an employee, in
furtherance of the interests of the employer or for the account of the employer at the time of the infliction
of the injury or damage (Filamer Christian Institute vs. Intermediate Appellate Court, 212 SCRA 637). An
employer is expected to impose upon its employees the necessary discipline called for in the performance
of any act indispensable to the business and beneficial to their employer (at p. 645).

In light of the foregoing, We are unable to sustain the trial courts finding that since defendant Li was
authorized by the company to use the company car either officially or socially or even bring it home, he
can be considered as using the company car in the service of his employer or on the occasion of his
functions. Driving the company car was not among his functions as assistant manager; using it for non-
official purposes would appear to be a fringe benefit, one of the perks attached to his position. But to
impose liability upon the employer under Article 2180 of the Civil Code, earlier quoted, there must be a
showing that the damage was caused by their employees in the service of the employer or on the occasion
of their functions. There is no evidence that Richard Li was at the time of the accident performing any act
in furtherance of the companys business or its interests, or at least for its benefit. The imposition of
solidary liability against defendant Alexander Commercial Corporation must therefore fail. [27]

We agree with the respondent court that the relationship in question is not based on the principle
of respondeat superior, which holds the master liable for acts of the servant, but that of pater familias, in
which the liability ultimately falls upon the employer, for his failure to exercise the diligence of a good
father of the family in the selection and supervision of his employees. It is up to this point, however, that
our agreement with the respondent court ends. Utilizing the bonus pater familias standard expressed in
Article 2180 of the Civil Code,[28] we are of the opinion that Lis employer, Alexander Commercial, Inc. is
jointly and solidarily liable for the damage caused by the accident of June 24, 1990.
First, the case of St. Francis High School vs. Court of Appeals[29] upon which respondent court has
placed undue reliance, dealt with the subject of a school and its teachers supervision of students during an
extracurricular activity. These cases now fall under the provision on special parental authority found in Art.
218 of the Family Code which generally encompasses all authorized school activities, whether inside or
outside school premises.
Second, the employers primary liability under the concept of pater familias embodied by Art. 2180 (in
relation to Art. 2176) of the Civil Code is quasi-delictual or tortious in character. His liability is relieved on
a showing that he exercised the diligence of a good father of the family in the selection and supervision of
its employees. Once evidence is introduced showing that the employer exercised the required amount
of care in selecting its employees, half of the employers burden is overcome. The question of
diligent supervision, however, depends on the circumstances of employment.
Ordinarily, evidence demonstrating that the employer has exercised diligent supervision of its
employee during the performance of the latters assigned tasks would be enough to relieve him of the
liability imposed by Article 2180 in relation to Article 2176 of the Civil Code. The employer is not expected
to exercise supervision over either the employees private activities or during the performance of tasks
either unsanctioned by the former or unrelated to the employees tasks. The case at bench presents a
situation of a different character, involving a practice utilized by large companies with either their
employees of managerial rank or their representatives.
It is customary for large companies to provide certain classes of their employees with courtesy
vehicles. These company cars are either wholly owned and maintained by the company itself or are
subject to various plans through which employees eventually acquire their vehicles after a given period of
service, or after paying a token amount. Many companies provide liberal car plans to enable their
managerial or other employees of rank to purchase cars, which, given the cost of vehicles these days,
they would not otherwise be able to purchase on their own.
Under the first example, the company actually owns and maintains the car up to the point of turnover
of ownership to the employee; in the second example, the car is really owned and maintained by the
employee himself. In furnishing vehicles to such employees, are companies totally absolved of
responsibility when an accident involving a company-issued car occurs during private use after normal
office hours?
Most pharmaceutical companies, for instance, which provide cars under the first plan, require rigorous
tests of road worthiness from their agents prior to turning over the car (subject of company maintenance)
to their representatives. In other words, like a good father of a family, they entrust the company vehicle
only after they are satisfied that the employee to whom the car has been given full use of the said
company car for company or private purposes will not be a threat or menace to himself, the company or
to others. When a company gives full use and enjoyment of a company car to its employee, it in effect
guarantees that it is, like every good father, satisfied that its employee will use the privilege reasonably
and responsively.
In the ordinary course of business, not all company employees are given the privilege of using a
company-issued car. For large companies other than those cited in the example of the preceding
paragraph, the privilege serves important business purposes either related to the image of success an
entity intends to present to its clients and to the public in general, or for practical and utilitarian reasons -
to enable its managerial and other employees of rank or its sales agents to reach clients conveniently. In
most cases, providing a company car serves both purposes. Since important business transactions and
decisions may occur at all hours in all sorts of situations and under all kinds of guises, the provision for
the unlimited use of a company car therefore principally serves the business and goodwill of a company
and only incidentally the private purposes of the individual who actually uses the car, the managerial
employee or company sales agent. As such, in providing for a company car for business use and/or for the
purpose of furthering the companys image, a company owes a responsibility to the public to see to it that
the managerial or other employees to whom it entrusts virtually unlimited use of a company issued car
are able to use the company issue capably and responsibly.
In the instant case, Li was an Assistant Manager of Alexander Commercial, Inc. In his testimony
before the trial court, he admitted that his functions as Assistant Manager did not require him to
scrupulously keep normal office hours as he was required quite often to perform work outside the office,
visiting prospective buyers and contacting and meeting with company clients. [30] These meetings, clearly,
were not strictly confined to routine hours because, as a managerial employee tasked with the job of
representing his company with its clients, meetings with clients were both social as well as work-related
functions. The service car assigned to Li by Alexander Commercial, Inc. therefore enabled both Li - as well
as the corporation - to put up the front of a highly successful entity, increasing the latters goodwill before
its clientele. It also facilitated meeting between Li and its clients by providing the former with a convenient
mode of travel.
 Moreover, Lis claim that he happened to be on the road on the night of the accident because he was
coming from a social visit with an officemate in Paraaque was a bare allegation which was never
corroborated in the court below. It was obviously self-serving. Assuming he really came from his
officemates place, the same could give rise to speculation that he and his officemate had just been from a
work-related function, or they were together to discuss sales and other work related strategies.
In fine, Alexander Commercial, Inc. has not demonstrated, to our satisfaction, that it exercised the
care and diligence of a good father of the family in entrusting its company car to Li. No allegations were
made as to whether or not the company took the steps necessary to determine or ascertain the driving
proficiency and history of Li, to whom it gave full and unlimited use of a company car. [31] Not having been
able to overcome the burden of demonstrating that it should be absolved of liability for entrusting its
company car to Li, said company, based on the principle of bonus pater familias,ought to be jointly and
severally liable with the former for the injuries sustained by Ma. Lourdes Valenzuela during the accident.
Finally, we find no reason to overturn the amount of damages awarded by the respondent court,
except as to the amount of moral damages. In the case of moral damages, while the said damages are
not intended to enrich the plaintiff at the expense of a defendant, the award should nonetheless be
commensurate to the suffering inflicted. In the instant case we are of the opinion that the reduction in
moral damages from an amount of P 1,000,000.00 to P500,000.00 by the Court of Appeals was not
justified considering the nature of the resulting damage and the predictable sequelae of the injury.
As a result of the accident, Ma. Lourdes Valenzuela underwent a traumatic amputation of her left
lower extremity at the distal left thigh just above the knee. Because of this, Valenzuela will forever be
deprived of the full ambulatory functions of her left extremity, even with the use of state of the art
prosthetic technology. Well beyond the period of hospitalization (which was paid for by Li), she will be
required to undergo adjustments in her prosthetic devise due to the shrinkage of the stump from the
process of healing.
These adjustments entail costs, prosthetic replacements and months of physical and occupational
rehabilitation and therapy. During her lifetime, the prosthetic devise will have to be replaced and re-
adjusted to changes in the size of her lower limb effected by the biological changes of middle-age,
menopause and aging. Assuming she reaches menopause, for example, the prosthetic will have to be
adjusted to respond to the changes in bone resulting from a precipitate decrease in calcium levels
observed in the bones of all post-menopausal women. In other words, the damage done to her would not
only be permanent and lasting, it would also be permanently changing and adjusting to the physiologic
changes which her body would normally undergo through the years. The replacements, changes, and
adjustments will require corresponding adjustive physical and occupational therapy. All of these
adjustments, it has been documented, are painful.
The foregoing discussion does not even scratch the surface of the nature of the resulting damage
because it would be highly speculative to estimate the amount of psychological pain, damage and injury
which goes with the sudden severing of a vital portion of the human body. A prosthetic device, however
technologically advanced, will only allow a reasonable amount of functional restoration of the motor
functions of the lower limb. The sensory functions are forever lost. The resultant anxiety, sleeplessness,
psychological injury, mental and physical pain are inestimable.
As the amount of moral damages are subject to this Courts discretion, we are of the opinion that the
amount of P1,000,000.00 granted by the trial court is in greater accord with the extent and nature of the
injury -. physical and psychological - suffered by Valenzuela as a result of Lis grossly negligent driving of
his Mitsubishi Lancer in the early morning hours of the accident.
WHEREFORE, PREMISES CONSIDERED, the decision of the court of Appeals is modified with the
effect of REINSTATING the judgment of the Regional Trial Court.
SO ORDERED.