G.R. No.

140486 February 6, 2001 subject area was issued in its name on 13 January 1989 (for
OCT No. SP 02) and on 04 April 1988 (for TCT No. 7310).
PUBLIC ESTATES AUTHORITY, petitioner, Petitioner assailed the title of private respondents'
vs. predecessor-in-interest, Fermina Castro, claiming that the
JESUS S. YUJUICO and AUGUSTO Y. CARPIO, respondents. latter acquired her title to the subject land in 1974 when the
same was yet under water and therefore still then part of the
VITUG, J.: public domain.

The instant petition for review, with a prayer for the issuance After the issues-were joined, and during the pendency of the
of a temporary restraining order and/or writ of preliminary proceedings, petitioner, through its former General Manager,
injunction, seeks the reversal of the 13th September 1999 Atty. Arsenio B. Yulo, Jr., asked the Office of the Government
decision and 19th October 1999 resolution of the Court of Corporate Counsel ("OGCC") to make an in-depth study on the
Appeals, both issued in CA-G.R. SP No. 50855, entitled "Public validity of the titles of private respondents, the possible
Estates Authority vs. Hon. Raul E. De Leon, in his capacity as reversion of the property to the government, and the question
Presiding Judge, Regional Trial Court, National Capital Judicial of the correct position of Tie-Point T-12-A of the PEA property
Region, Branch 258, Parañaque City and Jesus S. Yujuico and sold to MBDC shown in the PEA Survey Plan. In an opinion,
Augusto Carpio." dated 13 October 1997, the OGCC upheld the validity of the
titles of private respondents and expressed that there was no
legal ground for filing reversion proceedings. There was,
The relevant antecedents: according to the OGCC, a mispositioning of the PEA survey
reference point by about 88 meters westward based on the
On 24 July 1996, private respondents filed with the Regional documentary evidence submitted to the court, resulting in the
Trial Court of Parañaque City, a complaint, docketed Civil Case overlap of the PEA and the Yujuico property. The OGCC
No. 96-0317, for the "Removal of Cloud and Annulment of recommended that petitioner should instead negotiate an
Title with Damages" against petitioner. Respondent Yujuico amicable settlement with private respondents. Upon request
averred being the registered owner of Lot 1 of the subject of Atty. Yulo, the Office of the Solicitor General (OSG) also
area along Roxas Boulevard, Parañaque City, with an area of gave an opinion, dated 22 December 1997, to the effect that,
10,000 square meters, covered by Transfer Certificate of Title premised on the matters on record, there was no sufficient
(TCT) No. 446386, dated 07 June 1974, of the Registry of basis for the government to institute an action to annul OCT
Deeds for the Province of Rizal. Respondent Carpio, in his No. 10215 in the name of Fermina Castro and the derivative
case, himself maintained to be the registered owner of Lot 2 titles of private respondents.
with an area of 7,343 square meters, covered by TCT No.
44265, dated 16 June 1976, of the same registry. The two lots Petitioner created a special committee of three PEA board
were originally consolidated in one title registered in the directors composed of Atty. Nestor Kalaw, as Chairman, and
name of one Fermina Castro under Original Certificate of Title Gregorio Fider and Edgardo de Leon, as members, to study
(OCT) No. 10215, dated 31 May 1974, of the Registry of Deeds the matter of a possible settlement of the case and to submit
for the province. its recommendation. In due time, the committee
recommended an amicable settlement of Civil Case No. 96-
Sometime in 1989, petitioner Public Estates Authority (PEA) 0317 and submitted a proposed compromise agreement
obtained ownership of various parcels of land along Manila which the PEA Board approved on 17 April 1998.
Bay for the purpose of constructing the Manila-Cavite Coastal
Road. It was issued OCT No. Sp 02 on 13 January 1989. Following a series of negotiations, a compromise agreement
Petitioner likewise acquired ownership of some other parcels was concluded on 15 May 1998 by then PEA General Manager
of land along the Manila Bay Coast covered by TCT No. 7310 Atty. Arsenio B. Yulo, Jr., assisted by the OGCC, and by
and TCT No. 19346 portions of which were by it to the Manila Benedicto Yujuico, attorney-in-fact of private respondents,
Bay Development Corporation ("MBDC"). The MBDC, in turn, assisted by counsel Atty. Angel Cruz. The compromise
leased portions of the aforesaid lots to Uniwide Holdings, Inc. agreement contained, among other things, two major
Petitioner proceeded to carve out the path of the Coastal .provisions, i.e., -
Road. Private respondents claimed that a subsequent
verification survey commissioned by them showed that the
coastal road directly overlapped their property and that a (a) that because PEA is not in a position to settle by
portion of the area sold by petitioner to the MBDC was also cash payment, it was agreed that private
owned by them (private respondents). Private respondents respondents' property with a combined area of
contended that the titles issued in the name of petitioner and 1.7343 hectares covered by TCT No. 446386 and TCT
the MBDC, being then invalid, ineffective, or voidable, should No. 44265 shall be exchanged with PEA property to
be nullified and set aside. be taken from PEA's property described as CBP-1A,
shown on the Sketch Plan attached as Annex "A" of
the Compromise Agreement, and that all taxes and
In its answer, petitioner denied that the Coastal Road had registration expenses for the property to be conveyed
overlapped the property of private respondents, stating that under the exchange shall be for the account of the
the area covered by the infrastructure was granted to it by the conveying party; and
government through a Special Patent and that the title to the
1
 (b) that private respondents were given an Option to mistake or excusable negligence contemplated by the rules of
purchase an additional 7.6 hectares from said PEA civil procedure sufficient to support a petition for relief from
property CBP-1A within a period of three years from judgment. It further ruled that the petition for relief filed on
the date of the approval by the Court of the 14 September 1998 came much too late considering that the
Compromise Agreement at the price based on the resolution approving the compromise agreement was issued
market value as determined by PEA on the date of the by the trial court on 18 May 1998 and Civil Case No. 96-0317
exercise of the Option. was dismissed on 03 July 1998. Petitioner's motion for
reconsideration was denied by the Court of Appeals on 19
The compromise was approved by the trial court in its October 1999.
resolution of 18 May 1998.
Hence, the instant petition.
On 17 June 1998, pursuant to the compromise, the parties
executed a "Deed of Exchange of Real Property" with a sketch Petitioner raises the following grounds for allowance of the
plan showing where the PEA property with an area of 1.4007 petition:
hectares to be conveyed to private respondents (in 3 Lots)
would be taken in exchange for private respondents' property I.
with a combined area of 1.7343 hectares.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF
On 31 July 1998, the incumbent PEA General Manager, Carlos LAW AND ACTED WITH GRAVE ABUSE OF DISCRETION IN
P. Doble, informed the Office of the Solicitor General that the HOLDING THAT PETITIONER IS NOT EXEMPT FROM THE
new PEA board and management had reviewed the PAYMENT OF DOCKET AND OTHER LEGAL FEES IN THE
compromise agreement and decided to defer and hold in INSTANT CASE DESPITE THE FACT THAT IT WAS SUED BY
abeyance its implementation in view of the letter, dated 27 RESPONDENTS NOT FOR ANY PECUNIARY ACTIVITY BUT IN
July 1998, of the former PEA General Manager, Atty. Arsenio RELATION TO CERTAIN RECLAIMED PARCELS OF LAND
Yulo, Jr., to the effect that the compromise agreement, which REGISTERED AND OWNED BY PETITIONER UNDENIABLY
he signed did not reflect a condition required by the previous FOR AND ON BEHALF OF THE NATIONAL GOVERNMENT.
PEA Board, i.e., the approval by the Office of the President.
II.
On 14 September 1998, the new management of PEA filed a
petition for relief from the resolution, dated 18 May 1998, of THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF
the trial court which approved the compromise agreement on LAW AND ACTED WITH GRAVE ABUSE OF DISCRETION IN
the ground of mistake and excusable negligence consisting of BARRING PETITIONER, THROUGH PROCEDURAL
"inadvertence" on the part of former General Manager Yulo in TECHNICALITIES, FROM SEEKING EQUITABLE AND JUDICIAL
the signing of the compromise agreement without the RELIEFS WHEN IT HELD THAT THE PETITION FOR RELIEF
requisite approval of the Office of the President. Private FILED A QUO, DESPITE THE PECULIAR CIRCUMSTANCES OF
respondents opposed the petition and prayed for its dismissal THE INSTANT CASE, WAS FILED OUT OF TIME.
in that (a) it was filed beyond the reglementary period
provided under Section 3, Rule 38, of the 1997 Rules of Civil
Procedure, and (b) the allegation of mistake and excusable III.
negligence was a sham because it was through and upon the
recommendation of a special committee of three PEA THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF
directors and assisted by the OGCC, as well as guided by the LAW AND ACTED WITH GRAVE ABUSE OF DISCRETION IN
legal opinions of both the OGCC and the OSG, that PEA entered AVOIDING AND EVADING, BASED ON A TECHNICAL AND/OR
into and approved the compromise agreement. PROCEDURAL GROUND, THE ISSUE OF FRAUD.

The petition for relief was dismissed by the trial court on 06
November 1998 on the ground that it was filed out of time
and that the allegation of mistake and excusable negligence
had no valid basis. Petitioner filed a motion for
reconsideration of the 06th November 1998 order of the trial
court but its motion was denied on 07 January 1999.
Petitioner elevated the case to the Court of Appeals via a
petition for certiorari but the petition was dismissed by the
appellate court on 13 September 1999 for petitioner's failure
to pay the required docket fees and for lack of merit. The
appellate court agreed with the findings of the trial court that
the alleged inadvertence on the part of former PEA General
Manager in signing the compromise agreement on the belief
that everything was in order could hardly be considered the
Petitioner admits that it has been paying docket fees in filing
court petitions but asserts that since it is being sued not in
relation to any pecuniary activity but as a government entity
holding reclaimed parcels of land for and on behalf of the
National Government pursuant to the purpose and objective
of its creation, it should be exempt from such fees
conformably with Section 19, Rule 141, of the Revised Rules
of Court. Petitioner claims that fraud has attended the
execution of the compromise agreement, adding that the
unexplained deletion of the condition of prior approval by the
Office of the President constitutes extrinsic fraud which has
prevented it from having a trial or from presenting its case in
court.
2
In refutation of the above assignment of errors private
respondents contend that petitioner as an "incorporated
agency" of the government is liable and not exempt from the
payment of docket fees. Respondents argue that the
distinction made by petitioner with respect to its being sued
not in relation to any pecuniary activity but as a government
entity owning reclaimed parcels of land for and on behalf of
the National Government is frivolous as not being based on
any provision of the PEA Charter. Respondents aver that
petitioner, in fact, appears to concede that its petition for
relief has been filed out of time. In any case, respondents
submit, there is absolutely no extrinsic fraud perpetrated
upon the petitioner and that the appellate court has properly
disregarded this allegation as having been raised for the first
time on appeal.
Petitioner has raised a valid point in its first assignment of
error.
In both original and appealed cases, the court can be tasked to
take cognizance over such cases only upon the payment of the
prescribed docket fees.1 In this regard, Section 1 and Section
19, Rule 141, of the Revised Rules of Court provide:
"Sec. 1. Payment of Fees. - Upon the filing of the pleading or
other application which initiates an action or proceeding, the
fees prescribed therefor shall be paid in full."
"Sec. 19. Government Exempt. - The Republic of the
Philippines, its agencies and instrumentalities, are exempt
from paying the legal fees provided in this Rule. Local
governments and government-owned or controlled
corporations with or without independent charters are not
exempt from paying such fees."
Section 2, paragraph 10, of the Administrative Code of 1987
defines instrumentality as an agency of the National
Government, not integrated within the department
framework, vested with special functions or jurisdiction by
law, endowed with some if not all corporate powers,
administering special funds, and enjoying operational
autonomy, usually through a charter. The term, under the
Code, includes regulatory agencies, chartered institutions and
government-owned or controlled corporations.
Petitioner is a creation of Presidential Decree No. 1084, dated
04 February 1977, as a government corporation wholly
owned by the Government. It has been empowered to
exercise the right of eminent domain in the name of the
Republic of the Philippines. In the acquisition of real estate by
condemnation proceedings, the title to such real estate is to
be taken in the name of the Republic of the Philippines;
thereupon, such real estate shall be entrusted to the Authority
as the agent of the Republic of the Philippines.2 Although
vested with personality separate and distinct from the
government, petitioner is not thereby divorced from its being
an agent or instrumentality of the government within the
purview of Section 19, Rule 141, of the Revised Rules of Court.
Petitioner, in having been charged with the construction of
the Manila-Cavite Coastal Road exercises a governmental
function, as so distinguished from a mere proprietary interest,
and it is in relation thereto that it has here been sued. In Iron
Steel Authority vs. Court of Appeals,3 the Court has observed
that certain agencies or instrumentalities of the National
Government are cast in corporate form, that is to say,
incorporated agencies or instrumentalities, at times with and
at other times without capital stock, and correspondingly
vested with a juridical personality distinct from the
personality of the Republic.
At all events, while a court may refused to entertain a suit for
non-payment of docket fees, such failure does not preclude it,
however, from taking cognizance of the case as circumstances
may so warrant or when the ends of justice would be best
served if the case were to be given due course. Verily, the
payment of fees is by no means a mere technicality of law or
procedure.4 It is also an indispensable step in the perfection of
an appeal.5 While it is mandatory on the litigant, the court,
however, is not necessarily left without any alternative but to
dismiss the appeal for non-payment of docket fees. Thus, the
failure to pay the appeal docketing fee confers a discretionary
authority, not mandatory charge, on the part of the court to
dismiss an appeal. This discretion must, of course, be
exercised soundly, wisely and prudently, and with great deal
of circumspection6 in accordance with the tenets of fair play,
never capriciously, and always with a view to substance.7
Similarly, the Court has had occasions to suspend its own
rules, or to except a particular case from its operation,
whenever the purposes of justice require it.8 Strong
compelling reasons, such as serving the ends of justice and
preventing a miscarriage thereof, can warrant a suspension of
the rules.9 While there is a crying need to unclog court
dockets, on the one hand, there is, on the other hand, an
incomparable demand for resolving disputes fairly and
equitably.10
The Court, in fine, holds that petitioner, as and when it sues or
is sued in the exercise of a governmental function, could come
within the category of an exempt agency of government under
the Rules.
The Court now addresses the issue of whether or not the
petition for relief has been filed with the trial court within the
reglementary period prescribed therefor.
Section 3, Rule 38, of the 1997 Rules of Civil Procedure
provides that a verified petition for relief must be filed within
sixty (60) days after the petitioner learns of the judgment,
final order, or other proceeding to be set aside and not more
than six (6) months after such judgment or final order has
been entered or such proceeding has been taken. It must be
accompanied with affidavits showing the fraud, accident,
mistake, or excusable negligence relied upon, and the facts
constituting petitioner's good and substantial cause of action
or defense.
In the instant case, the trial court issued the order approving
the compromise agreement on 18 May 1998. Consequentially,
two hearings were held in both of which instances petitioner
3
was represented by counsel. The first was on 01 June 1998
when petitioner's co-defendant, Manila Bay Development
Corporation ("MBDC"), through Atty. William Chua, openly
manifested that it was no longer pursuing its counterclaim
against private respondents and its cross-claim against
petitioner because of the approval of the compromise
agreement. On 17 June 1998, the parties executed a Deed of
Exchange of Real Properties pursuant to the compromise. The
second .hearing took place on 02 July 1998, where the counsel
for private respondents similarly manifested that they were
withdrawing all claims against Uniwide and MBDC. Thus, the
trial court, in its order dated 03 July 1998, dismissed with
prejudice all the claims by the plaintiffs and defendants
against each other. This narration was neither denied nor
refuted by petitioner.
Surprisingly, petitioner, while reiterating in its own
Memorandum the same sequence of events, would now argue,
however, that its incumbent-management was not aware that
prior to 15 July 1998, its previous counsel was already
aware of the existence of the 18th May 1998 resolution of
the trial court, indicating parenthetically, that indeed the
petition for relief was filed beyond the sixty-day period
allowed therefor. It would not be right to allow a mere change WHEREFORE, without anymore touching on the merit of the
of management of PEA to defeat the operation of the Rules on
reglementary period.
Having thus concluded, the Court may not freely take on the infirmity. Let the case be remanded to the lower court, which
third issued raised by petitioner.
Significantly, one other substantive matter brought up during proceedings.
[G.R. No. 135384. April 4, 2001]
MARIANO DE GUIA and APOLONIA DE GUIA, petitioners,
vs. CIRIACO, LEON, VICTORINA, TOMASA and PABLO, all
surnamed DE GUIA, respondents.
DECISION
PANGANIBAN, J.:
Under the pre-1997 Rules of Civil Procedure, a notice of
pretrial must be served separately on the counsel and the
client. If served only on the counsel, the notice must expressly
direct the counsel to inform the client of the date, the time and
the place of the pretrial conference. The absence of such
notice renders the proceedings void, and the judgment
rendered therein cannot acquire finality and may be attacked
directly or collaterally.
The Case
Before us is a Petition for Review under Rule 45 of the
Rules of Court, assailing the February 17, 1998 Decision [1] of
the Court of Appeals (CA) in CA-GR CV No. 42971. The
dispositive portion of the CA Decision reads as follows:
judgment, we hereby SET ASIDE the default Order of June 18,
1992 which the lower court had improvidently issued as well
as the ensuing judgment which suffers from the same fatal
is directed to promptly set the case for pre-trial conference in
accordance with the present Rules, and for further
[2]

the oral argument of the case is that the property subject

matter of the case was still under water11 when titled, in the Also assailed is the September 11, 1998 CA
name of Fermina Castro and when it was thereafter conveyed Resolution[3] which denied petitioners Motion for
to private respondents; however, this issue, yet unventilated Reconsideration.
and a subject beyond the limited coverage of PEA's charter, is The Facts
not appropriate for consideration and determination, nor can
it be peremptorily adjudged, by the Court in this instance. In
resolving this petition, the Court does not thus foreclose the The appellate court summarized the antecedents of the
right of the Republic of the Philippines itself from pursuing case as follows:
any proper recourse in such separate proceedings as it may
deem warranted. The record shows that on October 11, 1990, plaintiffs Mariano
De Guia, Apolonia De Guia, Tomasa De Guia and Irene Manuel
WHEREFORE, the instant petition is DENIED, and the filed with the court below a complaint for partition against
temporary restraining order previously issued is accordingly defendants Ciriaco, Leon, Victorina and Pablo De Guia. They
lifted. No costs. alleged x x x that the real properties therein described were
inherited by plaintiffs and defendants from their
SO ORDERED. predecessors-in-interest, and that the latter unjustly refused
to have the properties subdivided among them. Shortly after
defendants filed their traverse, an amended complaint was
admitted by the lower court, in which plaintiff Tomasa De
Guia was impleaded as one of the defendants for the reason
that she had become an unwilling co-plaintiff.

It is further shown in the record that on June 11, 1992, the

Branch Clerk of Court issued a Notice setting the case for pre-
trial conference on June 18, 1992 at 8:30 a.m. Copies of said
notices were sent by registered mail to parties and their
counsel. It turned out that both defendants and counsel failed
to attend the pre-trial conference. Hence, upon plaintiffs

4
motion, defendants were declared as in default and plaintiffs The Respondent Court, with grave abuse of discretion, erred
were allowed to present their evidence ex-parte. in reversing the trial courts Decision notwithstanding private
respondents violations of Rule 15, Sections 4 and 5 and
It appears that on July 6, 1992, defendants filed their Motion Administrative Circular No. 04-94 and Revised Circular No.
for Reconsideration of the June 16, 1992 Order which 28-91.
declared them as in default. They explained therein that they
received the Notice of pre-trial only in the afternoon of June III
18, 1992, giving them no chance to appear for such
proceeding in the morning of that day. The Motion was The Respondent Court of Appeals, with grave abuse of
opposed by plaintiffs who pointed out that per Postal Delivery discretion, erred in not affirming the compromise agreement
Receipt, defendants counsel actually received his copy of the which has the effect and authority of res judicata even if not
Notice on June 17, 1992 or one day before the date of pre- judicially approved.
trial. Citing Section 2, Rule 13 of the Rules of Court, plaintiffs
further urged that counsels receipt of the said notice on June IV
17, 1992 was sufficient to bind defendants who received said The Respondent Court gravely erred in not applying Rule 135,
notice on the next day. Finally, they faulted defendants for
Section 8 as warranted by the facts, admission and the
failing to support their Motion for Reconsideration with an evidence of the parties.[7]
affidavit of merit showing among others that they had a
meritorious defense.
In the main, petitioners raise the following core issues:
(1) the propriety of the trial courts order declaring
In an Order dated August 19, 1992, plaintiffs motion for respondents in default; and (2) petitioners allegation of
reconsideration was denied and on June 11, 1993, judgment procedural prejudice.
was rendered ordering the partition of the controverted
parcels of land.[4] The Courts Ruling

The CA Ruling
The Petition has no merit.
First Issue: The Propriety of the Default Order
The CA sustained respondents claim that the trial court
had improperly declared them in default. It held that the
Notice of pretrial received by their counsel a day before the When the present dispute arose in 1992, the applicable
hearing did not bind the clients, because the Rules of Court in rule was Section 1, Rule 20 of the pre-1997 Rules of Civil
effect at the time mandated separate service of such Notice Procedure, which provided as follows:
upon the parties and their counsel. Said the appellate court:
SECTION 1. Pre-trial mandatory. -- In any action after the last
In fine, we hold that the lower court committed a reversible pleading has been filed, the court shall direct the parties and
error in declaring appellants as in default for their failure to their attorneys to appear before it for a conference to
attend the pre-trial conference [of] which they were not consider:
properly served x x x notice and in subsequently rendering
the herein appealed judgment. And while we commend the
x x x x x x x x x.
lower court for its apparent interest in disposing of the case
with dispatch, the imperatives of procedural due process This provision mandated separate service of the notice of
constrain us to set aside the default order and the appealed pretrial upon the parties and their lawyers.[8] In Taroma v.
judgment, both of which were entered in violation of Sayo,[9] the Court explained:
appellants right to notice of pre-trial as required by the
Rules.[5] For the guidance of the bench and bar, therefore, the Court in
reaffirming the ruling that notice of pre-trial must be served
separately upon the party and his counsel of record, restates
Hence, this Petition.[6]
that while service of such notice to party may be made
Issues directly to the party, it is best that the trial courts uniformly
serve such notice to party through or care of his counsel at
counsels address with the express imposition upon counsel of
Petitioners impute the following alleged errors to the CA: the obligation of notifying the party of the date, time and place
of the pre-trial conference and assuring that the party either
I
appear thereat or deliver counsel a written authority to
The Respondent Court of Appeals, with grave abuse of represent the party with power to compromise the case, with
discretion, erred in not finding private respondents as in the warning that a party who fails to do so may be non-suited
default despite the existence of fraud, for being contrary to or declared in default. (emphasis supplied)
law, and for being contrary to the findings of the trial court.
Hence, before being declared non-suited or considered in
II default, parties and their counsel must be shown to have been
5
served with notice of the pretrial conference.[10] Moreover, if We understand petitioners apprehension at the prospect
served only on the counsel, the notice must expressly direct of re-hearing the case; after all, it has been nine years since
him or her to inform the client of the date, the time and the the filing of the Complaint. However, their claim and the
place of the pretrial conference. The absence of such notice evidence supporting it -- and respondents as well -- can be
renders the proceedings void, and the judgment rendered best threshed out and justly resolved in the lower court. In
therein cannot acquire finality and may be attacked directly this regard, we cannot pass upon the validity of the
or collaterally.[11] Agreement of Partition between Mariano de Guia and Ciriaco
de Guia, for such action would amount to a prejudgment of the
In this case, respondents received the notice on case.
the afternoon of June 18, 1992, or after the pretrial scheduled
on the morning of that day. Moreover, although the Notice was WHEREFORE, the Petition is DENIED and the assailed
also sent to their counsel, it did not contain any imposition or Decision and Resolution AFFIRMED. No pronouncement as to
directive that he inform his clients of the pretrial costs.
conference. The Notice merely stated: You are hereby notified
that the above-entitled case will be heard before this court on SO ORDERED.
the 18 day of June, 1992, at 8:30 a.m. for pre-trial.
th [12]

Such belated receipt of the notice, which was not

attributable to respondents, amounted to a lack of 92
notice. Thus, the lower court erred in declaring them in
default and in denying them the opportunity to fully ventilate
and defend their claim in court. LABRADOR, J.:
Of course, this situation would not have arisen under
Section 3,[13] Rule 18 of the 1997 Rules of Civil Procedure. It
specifically provides that notice of pretrial shall be served on
counsel, who is charged with the duty of notifying the
client.Considering the milieu of the present case, however,
such amended proviso is not applicable.
Second Issue: Allegation of Procedural Bias
Petitioners allege that, to their detriment, the appellate
court disregarded established procedural precepts in
resolving the case, and that it did so for three
reasons. First, respondents Manifestation and Motion to Lift
the Order of Default, filed with the trial court, was merely pro
forma because the former lacked the requisite notice of
hearing. Second, it also lacked an affidavit of merit. Third,
respondents Appeal Brief did not contain a certificate of non-
forum shopping.
Phil. 373
This is an appeal against an order of the Court of First
Instance of Manila dismissing the complaint as to plaintiff L. G.
Marquez. The pertinent allegations of the complaint are as
follows: that plaintiff Gutierrez Lora was authorized by
defendants to negotiate the gale of their share or interest in a
parcel of land on Plaza Goiti, Manila, and having met his co-
plaintiff L. G. Marquez, a real estate broker, both of them
agreed to work together for the sale of defendant's property;
that they found a ready, willing, and able buyer, which
accepted defendants' price and terms, but that thereafter
defendants, without any jusifiable reason, refused to carry out
the sale and execute the necessary deed therefor; and that as
a consequence plaintiffs failed to receive the commission
which they were entitled to receive. The defendants
presented a motion to dismiss the complaint as to L. G.
Marquez on the ground that he has no cause of action against
defendants, and this motion having been granted, plaintiff L.
G. Marquez has prosecuted this appeal.

Granting that respondents Manifestation and Motion to The complaint was dismissed on «the alleged ground that it
Lift the Order of Default was pro forma, this issue has become states no cause of action against the defendants. Is this
moot, not only because the trial court had denied such objection to the complaint justified? The term "cause of
Motion, but also because what was appealed was the action" has been held to be synonymous with "right of action"
judgment rendered by the lower court. For the same reason, (37 Words and Phrases, 642), but in the law of pleading (Code
we must also reject petitioners insistence that an affidavit of Pleading) one is distinguished from the other in that a right of
merit was absent. In any case, there was no need to attach an action is a remedial right belonging to some person, while a
affidavit of merit to the Motion, as the defenses of cause of action is a formal statement of the operative facts
respondents had been set out in their Answer. that give rise to such remedial right. The one is a matter of
right and depends on the substantive law, while the other is a
With regard to the absence of a certification of non-
matter of statement and is governed by the law of procedure.
forum shopping, substantial justice behooves us to agree with
the disquisition of the appellate court.We do not condone the It is not denied that Lora, if he rendered the service alleged in
shortcomings of respondents counsel, but we simply cannot the complaint, would have a right to be paid compensation for
ignore the merits of their claim. Indeed, it has been held that the service he rendered jointly with Marquez. He acted as a
[i]t is within the inherent power of the Court to suspend its broker, and a broker is entitled to a commission for his
own rules in a particular case in order to do justice.[14] services. There is no prohibition in law against the
One last point. Petitioners fault the CA for remanding the employment of a companion to look for a buyer; neither is it
case to the trial court, arguing that the appellate court should against public policy. Neither was there even any implied
have resolved the case on its merit. understanding between Lora and the defendants that no part

6
of the compensation to which Lora would be entitled to contract, whether express or implied, was required to be
receive could be paid to any companion or helper of Lora. brought in the name of the one who held the legal interest.
Marquez's right to compensation can not, therefore, be This requirement was based upon the doctrine of privity of
disputed under the operative facts set forth in the complaint. contract.
SEC. 235. Privity of Contract. When Necessary. It was a rule of
The next issue is, is there a cause of action in favor of Marquez the common law that before one may complain of another for
against the defendants? From the facts alleged in the breach of contract, there must be some direct contractual
complaint, it is clear that there is a primary right in favor of relation, or privity, between them; and this, with only a few
Marquez (to be paid for his services even through Lora only) exceptions, is a requirement of the law today.
and a corresponding duty devolving upon the defendants (to
pay for said services). Since (as alleged) defendants refuse to At common law, in order that two or more persons may join
comply with their duty, Marquez now is entitled to enforce his in an action upon a contract, there must be community of
legal right by an action in court. The complaint in the case at interest between them; that is, they must be parties to the
bar, therefore, contains both the primary right and duty and contract and jointly interested therein.
the delict or wrong combined which constitute the cause of
action in the legal sense as used in Code Pleading (Pomeroy, Persons subsequently admitted to the benefit of a contract,
Code Remedies, section 347), and the cause of action is full without the privity or assent of the promisor, can not join in a
and complete. suit on the contract.
Objection to the complaint, however, is not that Marquez has
no right to share in the compensation to be paid Lora, whom But we did not import into this jurisdiction the common law
defendants had directly engaged, but that Marquez can not procedure. Our original Code of Civil Procedure (Act 190) was
join in this action and enforce therein his rights directly taken mainly from the Code of Civil Procedure of California,
against the defendants, evidently because defendants never and this in turn was based upon the Code of Civil Procedure of
dealt with Marquez, directly or indirectly, or, in other words, New York adopted in that stated in 1948. Our system of
that both Marquez and his services were not known to them. pleading is Code Pleading, that system used in the states of
The following parts of defendants' motion to dismiss show the Union that had adopted codes of procedure. The code
that such in fact was the objection: system of pleading adopted in substance the rules of equity
practice as to parties, under which "air persons having an
This paragraph clearly shows that the authority to sell was interest in the subject of the action, and in obtaining the relief
only given to plaintiff Z, Gutierrez Lora and not to the other demanded, may be joined as plaintiffs." (Phillips, Code
plaintiff L. G. Marquez. Attention is respectfully called to the Pleading, section 251, page 247.) In New York and California
word "plaintiff" used in said paragraph III and expressed in interest in the subject matter, or in any relief growing out of
singular form to the exclusion of the other plaintiff L. G. the same transaction or series of transactions is sufficient to
Marquez. If the plaintiff L. G. Marquez had worked at all for allow joinder.
the sale of the property at the instance of an invitation of his
co-plaintiff Z. Gutierrez Lora, we maintain that his action if Under the former Code of Civil Procedure "every action must
there is any is against his co-plaintiff and not against the be prosecuted in the name of the real party in interest," and
defendants herein. "all persons having an interest in the subject of the action and
in obtaining the relief demanded shall be joined as plaintiffs,"
As far as the defendants are concerned in this case, plaintiff L. and "if any person having an interest and in obtaining the
G. Marquez is not only a stranger in this case hut also relief demanded refuses to join as plaintiff, he may be made a
unknown to the defendants; and if he had worked at all for defendant and the fact of his interest and refusal to join to be
the sale of the defendants' share and participation in the stated in the com plaint." (Section 114, Act 190.) The principle
parcels of lands referred to in the complaint, the same was under lying the rule is that all persons having a material
made not only at his own lookout, risk and responsibility but interest under the substantive law should be made parties, as
also with no authority whatsoever. distinguished from that of the common law which allowed
only a two-sided controversy, each party to be opposed to the
other.
The principle underlying defendants' objection is one of
procedure, not of substantive law, recognized under the The above principles have not been changed by the reforms in
common law, where no one could sue for the breach of a the rules in 1940 and 1941. The action is still to be prosecuted
contract who was not a party thereto, and the action allowed in the name of the real party in interest. Under section 6 of
to be brought only in the name of the one holding the legal Rule 3, "All persons in whom * * * any right to relief in respect
title. The requirement was based upon the doctrine of privity to or arising out of the same transaction * * * is alleged to
of contract. exist, whether jointly, severally, or in the alternative, may, * *
* join as plaintiffs * * *, where any question of law or fact
SEC. 234. Plaintiffs in Action ex Contractu. When an action of comment to all such plaintiffs * * * may arise in the action; * *
contract concerns only the original parties to the instrument, *" Plaintiff Marquez, in the case at bar, clearly falls under the
it is not difficult to determine who should be the plaintiff. above rule. He is entitled to be paid his commission out of the
Obviously the one seeking to enforce it is the real party in very contract of agency between Lora and the defendants;
interest. At common law, no one could sue for tha breach of a Lora and he acted jointly in rendering services to defendants
contract who was not a party thereto. Hence an action on under Lora's contract, and the same questions of law and fact
7
govern their claims. The rules do not require the existence of defendants pending the decision of the Arbitration
privity of contract between Marquez and the defendants as Committee.
required under the common law; all that they demand is that
Marquez has a material interest in the subject of the action, The above Omnibus Order was amended by the trial
the right to share in the broker's commission to be paid Lora court in its October 1, 1992 Order,[10] the dispositive portion
under the latter's contract, which right Lora does not deny. of which reads as follows:
This is sufficient to justify the joinder of Marquez as a party
plaintiff, even in the absence of privity of contract between WHEREFORE, the Omnibus Order
him and the defendants. dated 30 April 1992 is hereby reconsidered
by deleting the phrase since the complaint
We find, therefore, that the complaint of Marquez was also seeks exemplary damages, attorneys
improperly dismissed. The order of dismissal is hereby fees, litigation expenses and costs of suit
reversed, with costs against defendants. against HBT, on page 4 thereof and par. C of
its dispositive portion is amended to read:

(c) Procedings against Home

INSULAR SAVINGS BANK, Petitioner, Bankers and Trust Co. are suspended
versus pending award/decision in the arbitration
FAR EAST BANK ANDTRUST COMPANY, Respondent. proceedings while those against individual
defendants be immediately reinstated and
x ----------------------------------------------------------------------------- continued.
----------- x
June 22, 2006 HBT and Tancuans separate Motions
for Reconsiderations are hereby denied, for
G.R. No. 141818 lack of merit.

This petition for review on certiorari[1] assails the November SO ORDERED.[11]

9, 1999 Order of the Regional Trial Court of Makati City,
[2]

Branch 135, in Civil Case No. 92-145 which dismissed the On February 2, 1998, the PCHC Arbitration Committee
petition for review for lack of jurisdiction and its February 1, rendered its decision in favor of respondent,[12] thus:
2000 Order[3] denying reconsideration thereof.
IN VIEW OF ALL THE FOREGOING, judgment
The antecedent facts are as follows: is hereby rendered in favor of the plaintiff
and against the defendant sentencing the
On December 11, 1991, Far East Bank and Trust Company latter to pay the plaintiff the sum of P25.2
(Respondent) filed a complaint against Home Bankers Trust million as principal. In view of the fact,
and Company (HBTC)[4] with the Philippine Clearing House however, that this amount was split between
Corporations (PCHC) Arbitration Committee docketed as the plaintiff and the defendant in the course
Arbicom Case No. 91-069.[5] Respondent sought to recover of the proceedings, the amount to be paid by
from the petitioner, the sum of P25,200,000.00 representing the defendant to the plaintiff should only be
the total amount of the three checks drawn and debited P12,600,000.00 plus interest on this latter
against its clearing account. HBTC sent these checks to amount at the rate of 12% per annum from
respondent for clearing by operation of the PCHC clearing February 11, 1992, the date when the total
system. Thereafter, respondent dishonored the checks for amount of P25.2 Million was split between
insufficiency of funds and returned the checks to plaintiff and defendant up to the date of
HBTC. However, the latter refused to accept them since the payment.
checks were returned by respondent after the reglementary
regional clearing period.[6] In view of the facts found by the committee,
no attorneys fees nor other damages are
Meanwhile, on January 17, 1992, before the awarded.
termination of the arbitration proceedings, respondent filed
another complaint but this time with the Regional Trial Court SO ORDERED.[13]
(RTC) in Makati City docketed as Civil Case No. 92-145 for
Sum of Money and Damages with Preliminary The motion for reconsideration filed by petitioner was denied
Attachment. The complaint was filed not only against HBTC by the Arbitration Committee.[14] Consequently, to appeal the
but also against Robert Young, Eugene Arriesgado and Victor decision of the Arbitration Committee in Arbicom Case No.
Tancuan (collectively known as Defendants), who were the 91-069, petitioner filed a petition for review in the earlier
president and depositors of HBTC respectively.[7] Aware of the case filed by respondent in Branch 135 of the RTC
arbitration proceedings between respondent and petitioner, of Makati and docketed as Civil Case No. 92-145.[15] In an
the RTC, in an Omnibus Order dated April 30, order dated January 20, 1999, the RTC directed both
1992,[8] suspended the proceedings in the case against all the petitioner and respondent to file their respective memoranda,
8
after which, said petition would be deemed submitted for of the RTC of Makati where there was already a pending
resolution.[16] original action, i.e., Civil Case No. 92-145.

Both parties filed several pleadings. On February 8, 1999, The petition lacks merit.
respondent filed a Motion to Dismiss Petition for Review for
Lack of Jurisdiction,[17] which was opposed by the The Philippine Clearing House Corporation was
petitioner.[18] Respondent then filed its Reply to the created to facilitate the clearing of checks of member
opposition,[19] to which petitioner filed a
banks. Among these member banks exists
Rejoinder.[20] On August 16, 1999, respondent submitted its
a compromissoire,[25] or an arbitration agreement embedded
Surrejoinder.[21] in their contract wherein they consent that any future dispute
or controversy between its PCHC participants involving any
On November 9, 1999, the RTC rendered the assailed Order check would be submitted to the Arbitration Committee for
which held, thus: arbitration. Petitioner and respondent are members of PCHC,
thus they underwent arbitration proceedings.
Acting on plaintiff Far East Bank and Trust
Companys Motion To Dismiss Petition For
Review For Lack Of Jurisdiction, considering
that the petition for review is a separate and The PCHC has its own Rules of Procedure for
distinct case, the same must comply with all Arbitration (PCHC Rules). However, this is governed by
the requirements for filing initiatory Republic Act No. 876, also known as The Arbitration
pleadings for civil actions before this Court Law[26] and supplemented by the Rules of Court.[27] Thus, we
so that since the commencement of the first thresh out the remedy of petition for review availed of by
subject petition lacks the mandatory the petitioner to appeal the order of the Arbitration
requirements provided for, except the Committee.
payment of docket fees, for lack of
jurisdiction, the petition for review is hereby Sections 23, 24 and 29 of The Arbitration Law, and
dismissed. Section 13 of the PCHC Rules, provide:

SO ORDERED.[22] SEC. 23. Confirmation of award. At any time

The RTC denied petitioners motion for
reconsideration,[23] hence, this petition on the sole ground, to
wit:
THE REGIONAL TRIAL COURT ERRED IN
DISMISSING THE PETITION OF PETITIONER
FOR LACK OF JURISDICTION ON THE
GROUND THAT IT SHOULD HAVE BEEN
DOCKETED AS A SEPARATE CASE.[24]
Petitioner contends that Civil Case No. 92-145 was merely
suspended to await the outcome of the arbitration case
pending before the PCHC. Thus, any petition questioning the
decision of the Arbitration Committee must be filed in Civil
Case No. 92-145 and should not be docketed as a separate
action. Likewise, petitioner avers that had it filed a separate
action, this would have resulted in a multiplicity of suits,
which is abhorred in procedure.
Meanwhile respondent avers that the RTC correctly
dismissed the appeal from the award of private arbitrators
since there is no statutory basis for such appeal. Respondent
argues that petitioners claim that the parties by agreement
had conferred on the RTC appellate jurisdiction over
decisions of private arbitrators is erroneous because they
cannot confer a non-existent jurisdiction on the RTC or any
court.Furthermore, the petition for review filed by petitioner
violated the rule on commencing an original action under
Section 5, Rule 1, and the raffle of cases under Section 2, Rule
20 of the Rules of Court, when it filed the same in Branch 135
within one month after the award is
made, any party to the controversy which
was arbitrated may apply to the court
having jurisdiction, as provided in Section
28, for an order confirming the
award; and thereupon the court must
grant such order unless the award is
vacated, modified or corrected, as
prescribed herein. Notice of such motion
must be served upon the adverse party or his
attorney as prescribed by law for the service
of such notice upon an attorney in action in
the same court.
SEC. 24. Grounds for vacating award. In any
one of the following cases, the court must
make an order vacating the award upon the
petition of any party to the controversy
when such party proves affirmatively that in
the arbitration proceedings:
(a) The award was procured by
corruption, fraud or other undue means; or
(b) That there was evident partiality
or corruption in the arbitrators or any of
them; or
(c) That the arbitrators were guilty
of misconduct in refusing to postpone the
hearing upon sufficient cause shown, or in
refusing to hear evidence pertinent and
material to the controversy; that one or more
of the arbitrators was disqualified to act as
9
such under section nine hereof, and willfully
refrained from disclosing such
disqualification or of any other misbehavior
by which the rights of any party have been
materially prejudiced; or
(d) That the arbitrators exceeded
their powers, or so imperfectly executed
them, that a mutual, final and definite award
upon the subject matter submitted to them
was not made.
xxxx
SEC. 25. Grounds for modifying or correcting
award. In any one of the following cases, the
court must make an order modifying or
correcting the award, upon the application of
any party to the controversy which was
arbitrated:
(a) Where there was an evident
miscalculation of figures, or an evident
mistake in the description of any person,
thing or property referred to in the award; or
(b) Where the arbitrators have
awarded upon a matter not submitted to
them, not affecting the merits of the decision
upon the matter submitted; or
(c) Where the award is imperfect in
a matter of form not affecting the merits of
the controversy, and if it had been a
commissioners report, the defect could have
been amended or disregarded by the court.
The order may modify and correct
the award so as to effect the intent thereof
and promote justice between the parties.
SEC. 29. Appeals. An appeal may be
taken from an order made in a proceeding
under this Act, or from judgment entered
upon an award through certiorari
proceedings, but such appeals shall
be limited to questions of law. The
proceedings upon such an appeal, including
the judgment thereon shall be governed by
the Rules of Court insofar as they are
applicable.
AMENDED ARBITRATION RULES OF
PROCEDURE OF PCHC
Sec. 13. The findings of facts of the
decision or award rendered by the
Arbitration Committee or by the sole
Arbitrator as the case may be shall be
final and conclusive upon all the parties
in said arbitration dispute. The decision or
award of the Arbitration Committee or of the
Sole Arbitrator or of the Board of Directors,
as the case may be, shall be appealable only
on questions of law to any of the Regional
Trial Courts in the National Capital
Region where the Head Office of any of
the parties is located. The appellant shall
perfect his appeal by filing a notice of appeal
to the Arbitration Secretariat and filing a
Petition with the Regional Trial Court of the
National Capital Region for the review of the
decision or award of the committee or sole
arbitrator or of the Board of Directors, as the
case may be, within a non-extendible period
of fifteen (15) days from and after its receipt
of the order denying or granting said motion
for reconsideration or new trial had been
filed, within a non-extendible period of
fifteen (15) days from and after its receipt of
the order denying or granting said motion
for reconsideration or of the decision
rendered after the new trial if one had been
granted.
x x x x. (Emphasis supplied)
As provided in the PCHC Rules, the findings of facts of
the decision or award rendered by the Arbitration Committee
shall be final and conclusive upon all the parties in said
arbitration dispute.[28]Under Article 2044[29] of the New Civil
Code, the validity of any stipulation on the finality of the
arbitrators award or decision is recognized. However, where
the conditions described in Articles 2038,[30] 2039[31] and
2040[32] applicable to both compromises and arbitrations are
obtaining, the arbitrators award may be annulled or
rescinded.[33] Consequently, the decision of the Arbitration
Committee is subject to judicial review.
Furthermore, petitioner had several judicial remedies
available at its disposal after the Arbitration Committee
denied its Motion for Reconsideration. It may petition the
proper RTC to issue an order vacating the award on the
grounds provided for under Section 24 of the Arbitration
Law.[34] Petitioner likewise has the option to file a petition for
review under Rule 43 of the Rules of Court with the Court of
Appeals on questions of fact, of law, or mixed questions of fact
and law.[35] Lastly, petitioner may file a petition for certiorari
under Rule 65 of the Rules of Court on the ground that the
Arbitrator Committee acted without or in excess of its
jurisdiction or with grave abuse of discretion amounting to
lack or excess of jurisdiction. Since this case involves acts or
omissions of a quasi-judicial agency, the petition should be
filed in and cognizable only by the Court of Appeals.[36]
In this instance, petitioner did not avail of any of the
abovementioned remedies available to it. Instead it filed a
petition for review with the RTC where Civil Case No. 92-145
is pending pursuant to Section 13 of the PCHC Rules to sustain
its action. Clearly, it erred in the procedure it chose for
judicial review of the arbitral award.
Having established that petitioner failed to avail of
the abovementioned remedies, we now discuss the issue of
10
the jurisdiction of the trial court with respect to the petition SO ORDERED.
for review filed by petitioner.

Jurisdiction is the authority to hear and determine a

cause - the right to act in a case.[37] Jurisdiction over the
subject matter is the power to hear and determine the general
class to which the proceedings in question belong. Jurisdiction BF HOMES, INC. and THEPHILIPPINE
over the subject matter is conferred by law and not by the WATERWORKS AND CONSTRUCTION CORP.,
consent or acquiescence of any or all of the parties or by Petitioners,
erroneous belief of the court that it exists.[38] - versus -

In the instant case, petitioner and respondent have MANILA ELECTRIC COMPANY, Respondent.
agreed that the PCHC Rules would govern in case of x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
controversy. However, since the PCHC Rules came about only - - - -x
as a result of an agreement between and among member
banks of PCHC and not by law, it cannot confer jurisdiction to G.R. No. 171624
the RTC. Thus, the portion of the PCHC Rules granting December 6, 2010
jurisdiction to the RTC to review arbitral awards, only on
questions of law, cannot be given effect. This Petition for Review on Certiorari under Rule 45
of the Rules of Court assails the Decision[1] dated October 27,
Consequently, the proper recourse of petitioner from 2005 of the Court of Appeals in CA-G.R. SP No. 82826,
the denial of its motion for reconsideration by the Arbitration nullifying and setting aside (1) the Order[2] dated November
Committee is to file either a motion to vacate the arbitral 21, 2003 of the Regional Trial Court (RTC), Branch 202 of Las
award with the RTC, a petition for review with the Court of Pias City, in Civil Case No. 03-0151, thereby dissolving the
Appeals under Rule 43 of the Rules of Court, or a petition for writ of injunction against respondent Manila Electric
certiorari under Rule 65 of the Rules of Court. In the case at Company (MERALCO); and (2) the Resolution[3] dated
bar, petitioner filed a petition for review with the RTC when February 7, 2006 of the Court of Appeals denying the Motion
the same should have been filed with the Court of Appeals for Reconsideration of petitioners BF Homes, Inc. (BF Homes)
under Rule 43 of the Rules of Court. Thus, the RTC of Makati and Philippine Waterworks and Construction Corporation
did not err in dismissing the petition for review for lack of (PWCC).
jurisdiction but not on the ground that petitioner should have
filed a separate case from Civil Case No. 92-145 but on the MERALCO is a corporation duly organized and
necessity of filing the correct petition in the proper court. It is existing under Philippine laws engaged in the distribution and
immaterial whether petitioner filed the petition for review in sale of electric power in Metro Manila. On the other hand, BF
Civil Case No. 92-145 as an appeal of the arbitral award or Homes and PWCC are owners and operators of waterworks
whether it filed a separate case in the RTC, considering that systems delivering water to over 12,000 households and
the RTC will only have jurisdiction over an arbitral award in commercial buildings in BF Homes subdivisions in Paraaque
cases of motions to vacate the same. Otherwise, as elucidated City, Las Pias City, Caloocan City, and Quezon City. The water
herein, the Court of Appeals retains jurisdiction in petitions distributed in the waterworks systems owned and operated
for review or in petitions for certiorari.Consequently, by BF Homes and PWCC is drawn from deep wells using
petitioners arguments, with respect to the filing of separate pumps run by electricity supplied by MERALCO.
action from Civil Case No. 92-145 resulting in a multiplicity of
suits, cannot be given due course. On June 23, 2003, BF Homes and PWCC filed a
Petition [With Prayer for the Issuance of Writ of Preliminary
Alternative dispute resolution methods or ADRs like Injunction and for the Immediate Issuance of Restraining
arbitration, mediation, negotiation and conciliation are Order] against MERALCO before the RTC, docketed as Civil
encouraged by the Supreme Court. By enabling parties to Case No. 03-0151.
resolve their disputes amicably, they provide solutions that
are less time-consuming, less tedious, less confrontational, In their Petition before the RTC, BF Homes and PWCC
and more productive of goodwill and lasting invoked their right to refund based on the ruling of this Court
relationships.[39] It must be borne in mind that arbitration in Republic v. Manila Electric Company[4]:
proceedings are mainly governed by the Arbitration Law and
suppletorily by the Rules of Court. 7. It is of judicial notice that on November 15,
2002, in G.R. No. 141314, entitled Republic of the
WHEREFORE, in light of the foregoing, the petition Philippines vs. Manila Electric Company, and G.R. No.
is DENIED.The November 9, 1999 Order of the Regional Trial 141369, entitled Lawyers Against Monopoly and
Court of Makati City, Branch 135, in Civil Case No. 92-145 Poverty (LAMP) et al. vs. Manila Electric Compnay
which dismissed the petition for review for lack of jurisdiction (MERALCO), (both cases shall hereafter be referred to
and the February 1, 2000 Order denying its reconsideration, as MERALCO Refund cases, for brevity), the Supreme
are AFFIRMED. Court ordered MERALCO to refund its customers,
which shall be credited against the customers future
11
consumption, the excess average amount of P0.167
per kilowatt hour starting with the customers billing
cycles beginning February 1998. The dispositive
portion of the Supreme Court Decision in the
MERALCO Refund cases reads:
WHEREFORE, in view of the
foregoing, the instant petitions are
GRANTED and the decision of the
Court of Appeals in C.A. G.R. SP No.
46888 is REVERSED. Respondent
MERALCO is authorized to adopt a
rate adjustment in the amount
of P0.017 kilowatthour, effective
with respect to MERALCOs billing
cycles beginning February
1994. Further, in accordance with
the decision of the ERB dated
February 16, 1998, the excess
average amount of P0.167 per
kilowatt hour starting with the
applicants billing cycles beginning
February 1998 is ordered to be
refunded to MERALCOs customers
or correspondingly credited in their
favor for future consumption.
x x x x.
8. The Motion for Reconsideration filed by
MERALCO in the MERALCO Refund cases was
DENIED WITH FINALITY (the uppercase letters were
used by the Supreme Court) in the Resolution of the
Supreme Court dated April 9, 2003.
9. The amount that MERALCO was mandated
to refund to [BF Homes and PWCC] pursuant to the
MERALCO Refund cases is in the amount
of P11,834,570.91.[5]
BF Homes and PWCC then alleged in their RTC enjoin MERALCO to reconnect electric power to all of
Petition that:
10. On May 20, 2003, without giving any
notice whatsoever, MERALCO disconnected electric
supply to [BF Homes and PWCCs] sixteen (16) water
pumps located in BF Homes in Paraaque, Caloocan,
and Quezon City, which thus disrupted water supply
in those areas.
11. On June 4, 2003, [BF Homes and PWCC]
received by facsimile transmission a letter from
MERALCO, x x x, in which MERALCO demanded to [BF
Homes and PWCC] the payment of electric bills
amounting to P4,717,768.15.
12. [MERALCO] replied in a letter dated June damages of at least P1,000,000.00.
11, 2003, x x x, requesting MERALCO to apply
the P4,717,768.15 electric bill against
the P11,834,570.91 that MERALCO was ordered to
refund to [BF Homes and PWCC] pursuant to the
MERALCO Refund cases. x x x
13. Displaying the arrogance that has
become its distinction, MERALCO, in its letter dated
June 16, 2003, x x x, denied [BF Homes and PWCCs]
request alleging that it has not yet come up with the
schedule for the refund of large amounts, such as
those of [BF Homes and PWCC].
14. Even while MERALCO was serving its
reply-letter to [BF Homes and PWCC], MERALCO,
again, without giving any notice, cut off power supply
to [BF Homes and PWCCs] five (5) water pumps
located in BF Homes Paraaque and BF Resort Village,
in Pamplona, Las Pias City.
15. In its letter dated June 4, 2003 (Annex A),
MERALCO threatened to cut off electric power
connections to all of [BF Homes and PWCCs] water
pumps if [BF Homes and PWCC] failed to pay their
bills demanded by MERALCO by June 20, 2003.[6]
BF Homes and PWCC thus cited the following causes
of action for their RTC Petition:
16. In refusing to apply [MERALCOs] electric
bills against the amounts that it was ordered to
refund to [BF Homes and PWCC] pursuant to the
MERALCO Refund cases and in making the
implementation of the refund ordered by the
Supreme Court dependent upon its own will and
caprice, MERALCO acted with utmost bad faith.
17. [BF Homes and PWCC] are clearly
entitled to the remedies under the law to compel
MERALCO to consider [BF Homes and PWCCs]
electric bills fully paid by the amounts which
MERALCO was ordered to refund to [BF Homes and
PWCC] pursuant to the MERALCO Refund cases, to
[BF Homes and PWCCs] water pumps, and to order
MERALCO to desist from further cutting off power
connection to [BF Homes and PWCCs] water pumps.
18. MERALCOs unjust and oppressive acts
have cast dishonor upon [BF Homes and PWCCs]
good name and besmirched their reputation for
which [BF Homes and PWCC] should be indemnified
by way of moral damages in the amount of not less
than P1,000,000.00.
19. As an example for the public good, to
dissuade others from emulating MERALCOs unjust,
oppressive and mercenary conduct, MERALCO should
be directed to pay [BF Homes and PWCC] exemplary
20. MERALCOs oppressive and inequitable
conduct forced [BF Homes and PWCC] to engage the
12
services of counsel to defend their rights and thereby
incur litigation expenses in the amount of at
least P500,000.00 for which [BF Homes and PWCC]
should be indemnified.[7]
BF Homes and PWCC additionally prayed that the RTC issue a
writ of preliminary injunction and restraining order
considering that:
21. As indicated in its letter dated June 4,
2003 (Annex A), unless seasonably restrained,
MERALCO will cut off electric power connections to
all of [BF Homes and PWCCs] water pumps on June
20, 2003.
22. Part of the reliefs herein prayed for is to
restrain MERALCO from cutting off electric power
connections to [BF Homes and PWCCs] water pumps.
23. Unless MERALCOS announced intention
to cut off electric power connections to [BF Homes
and PWCCs] water pumps is restrained, [BF Homes
and PWCC] will suffer great and irreparable injury
because they would not [be] able to supply water to
their customers.
24. [BF Homes and PWCC] therefore pray
that a writ for preliminary injunction be issued upon
posting of a bond in an amount as will be determined
by this Honorable Court.
25. [BF Homes and PWCC] further pray that,
in the meantime and immediately upon the filing of
the above captioned Petition, a restraining order be
issued before the matter of preliminary injunction
can be heard.[8]
On August 15, 2003, MERALCO filed before the RTC service in accordance with the terms and conditions
its Answer with Counterclaims and Opposition to the of its legislative franchise and the law.
Application for Writ of Preliminary Injunction[9] of BF Homes
and PWCC.
According to MERALCO:
2.2. Both petitioners BF Homes, Incorporated
and Philippine Waterworks Corporation are
admittedly the registered customers of [MERALCO]
by virtue of the service contracts executed between
them under which the latter undertook to supply
electric energy to the former for a fee. The following
twenty-three (23) Service Identification Nos. (SINs)
are registered under the name of BF Homes,
Incorporated: x x x. While the following twenty-one
(21) Service Identification Nos. (SINs) are registered
under the name of Philippine Waterworks
Construction Corporation: x x x
xxxx
2.4. The service contracts as well as the
terms and conditions of [MERALCOs] service as
approved by BOE [Board of Energy], now ERC
[Energy Regulatory Commission], provide in relevant
parts, that [BF Homes and PWCC] agree as follows:
DISCONTINUANCE OF SERVICE:
The Company reserves the right
to discontinue service in case the
customer is in arrears in the
payment of bills or for failure to
pay the adjusted bills in those cases
where the meter stopped or failed to
register the correct amount of
energy consumed, or for failure to
comply with any of these terms and
conditions, or in case of or to
prevent fraud upon the
Company. Before disconnection is
made in the case of, or to prevent
fraud, the Company may adjust the
bill of said customer accordingly and
if the adjusted bill is not paid, the
Company may disconnect the same.
(Emphasis supplied)
2.5. This contractual right of [MERALCO] to
discontinue electric service for default in the
payment of its regular bills is sanctioned and
approved by the rules and regulations of ERB (now
the ERC). This right is necessary and reasonable
means to properly protect and enable [MERALCO] to
perform and discharge its legal and contractual
obligation under its legislative franchise and the
law. Cutting off service for non-payment by the
customers of the regular monthly electric bills is the
only practical way a public utility, such as
[MERALCO], can ensure and maintain efficient
xxxx
2.14. Instead of paying their unpaid electric
bills and before [MERALCO] could effect its legal and
contractual right to disconnect [BF Homes and
PWCCs] electric services, [BF Homes and PWCC] filed
the instant petition to avoid payment of [MERALCOs]
valid and legal claim for regular monthly electric bills.
2.15. [BF Homes and PWCCs] unpaid regular
bills totaled P6,551,969.55 covering the May and June
2003 electric bills. x x x
xxxx
2.17. [BF Homes and PWCC] knew that
[MERALCO] is already in the process of implementing
the decision of the Supreme Court as to the refund
case. But this refund has to be implemented in
13
accordance with the guidelines and schedule to be
approved by the ERC. Thus [BF Homes and PWCCs]
filing of the instant petition is merely to evade
payment of their unpaid electric bills to
[MERALCO].[10]
Hence, MERALCO sought the dismissal of the RTC
Petition of BF Homes and PWCC on the following grounds: preliminary injunction of BF Homes and PWCC because:
3.1 The Honorable Court has no jurisdiction
to award the relief prayed for by [BF Homes and
PWCC] because:
a) The petition is in effect preempting or
defeating the power of the ERC to
implement the decision of the Supreme
Court.
b) [MERALCO] is a utility company whose
business activity is wholly regulated by
the ERC. The latter, being the regulatory
agency of the government having the
authority over the respondent, is the one
tasked to approve the guidelines,
schedules and details of the refund.
c) The decision of the Supreme Court,
dated November 15, 2002, clearly states
that respondent is directed to make the
refund to its customers in accordance
with the decision of the ERC (formerly
ERB) dated February 16, 1998. Hence,
[MERALCO] has to wait for the schedule
and details of the refund to be approved
by the ERC before it can comply with the
Supreme Court decision.
3.2. [MERALCO] has the right to
disconnect the electric service to [BF Homes and
PWCC] in that:
a) The service contracts between
[MERALCO] and [BF Homes and PWCC]
expressly authorize the former to
discontinue and disconnect electric
services of the latter for their failure to
pay the regular electric bills rendered.
b) It is [MERALCOs] legal duty as a public
utility to furnish its service to the
general public without arbitrary
discrimination and, consequently,
[MERALCO] is obligated to discontinue
and disconnect electric services to [BF
Homes and PWCC] for their refusal or
failure to pay the electric energy actually
used by them.[11]
For its compulsory counterclaims, MERALCO prayed
that the RTC orders BF Homes and PWCC to pay
MERALCO P6,551,969.55 as actual damages (representing the
unpaid electric bills of BF Homes and PWCC for May and June
2003), P1,500,000.00 as exemplary damages, P1,500,000.00
as moral damages, and P1,000,000.00 as attorneys fees.
Lastly, MERALCO opposed the application for writ of
I
[MERALCO] HAS THE LEGAL AND
CONTRACTUAL RIGHT TO DEMAND
PAYMENT OF THE ELECTRIC BILLS AND, IN
CASE OF NON-PAYMENT, TO DISCONTINUE
THE ELECTRIC SERVICES OF [BF HOMES and
PWCC]
II
[BF HOMES and PWCC] HAVE NO CLEAR
RIGHT WHICH WARRANTS PROTECTION BY
INJUNCTIVE PROCESS
After hearing,[12] the RTC issued an Order on November 21,
2003 granting the application of BF Homes and PWCC for the
issuance of a writ of preliminary injunction. The RTC found
that the records showed that all requisites for the issuance of
said writ were sufficiently satisfied by BF Homes and
PWCC. The RTC stated in its Order:
Albeit, this Court respects the right of a
public utility company like MERALCO, being
a grantee of a legislative franchise under
Republic Act No. 9029, to collect overdue
payments from its subscribers or customers
for their respective consumption of electric
energy, such right must, however, succumb
to the paramount substantial and
constitutional rights of the public to the
usage and enjoyment of waters in their
community. Thus, there is an urgent need for
the issuance of a writ of preliminary
injunction in order to prevent social unrest
in the community for having been deprived
of the use and enjoyment of waters flowing
through [BF Homes and PWCCs] water
pumps.[13]
The RTC decreed in the end:
WHEREFORE, in the light of the foregoing,
[BF Homes and PWCCs] prayer for the
issuance of a writ of preliminary injunction is
hereby GRANTED. Respondent Manila
Electric Company is permanently restrained
from proceeding with its announced
intention to cut-off electric power connection
14
 to [BF Homes and PWCCs] water pumps
unless otherwise ordered by this
Court.Further, [BF Homes and PWCC] are
hereby ordered to post a bond in the amount
of P500,000 to answer for whatever injury or
damage that may be caused by reason of the
preliminary injunction.[14]
The Motion for Reconsideration of MERALCO of the
aforementioned Order was denied by the RTC in another
Order issued on January 9, 2004.[15] The RTC reiterated its
earlier finding that all the requisites for the proper issuance of
an injunction had been fully complied with by BF Homes and
PWCC, thus:
Records indubitably show that all
the requisites for the proper issuance of an
injunction have been fully complied with in
the instant case.
It should be noted that a
disconnection of power supply would
obviously cause irreparable injury because
the pumps that supply water to the BF
community will be without electricity,
thereby rendering said community without
water. Water is a basic and endemic
necessity of life. This is why its enjoyment
and use has been constitutionally
safeguarded and protected. Likewise, a
community without water might create
social unrest, which situation this Court has
the mandate to prevent. There is an urgent
and paramount necessity for the issuance of
the injunctive writ to prevent serious
damage to the guaranteed rights of [BF
Homes and PWCC] and the residents of the
community to use and enjoy water.[16]
The RTC resolved the issue on jurisdiction raised by
MERALCO, as follows:
As to the jurisdictional issue raised
by respondent MERALCO, it can be gleaned
from a re-evaluation and re-assessment of
the records that this Court has jurisdiction to
delve into the case. This Court gave both
parties the opportunity to be heard as they
introduced evidence on the propriety of the
issuance of the injunctive writ. It is well-
settled that no grave abuse of discretion
could be attributed to its issuance where a
party was not deprived of its day in court as
it was heard and had exhaustively presented
all its arguments and defenses. (National
Mines and Allied Workers Union vs. Valero,
132 SCRA 578, 1984.)[17]
Aggrieved, MERALCO filed with the Court of Appeals a
Petition for Certiorari under Rule 65 of the Rules of Court,
docketed as CA-G.R. SP No. 82826. MERALCO sought the
reversal of the RTC Orders dated November 21, 2003 and
January 9, 2004 granting a writ of preliminary injunction in
favor of BF Homes and PWCC. MERALCO asserted that the
RTC had no jurisdiction over the application of BF Homes and
PWCC for issuance of such a writ.
In its Decision dated October 27, 2005, the Court of Appeals
agreed with MERALCO that the RTC had no jurisdiction to
issue a writ of preliminary injunction in Civil Case No. 03-
0151, as said trial court had no jurisdiction over the subject
matter of the case to begin with. It ratiocinated in this wise:
For one, it cannot be gainsaid that the ERC
has original and exclusive jurisdiction over
the case. Explicitly, Section 43(u) of Republic
Act No. 9136, otherwise known as
the Electric Power Industry Reform Act, (RA
9136), states that the ERC shall have the
original and exclusive jurisdiction over all
cases contesting rates, fees, fines and
penalties imposed by the ERC in the exercise
of its powers, functions and responsibilities
and over all cases involving disputes
between and among participants or players
in the energy sector. Section 4(o) of Rule 3 of
the Implementing Rules and Regulations of
RA 9136 likewise provides that the ERC shall
also be empowered to issue such other rules
that are essential in the discharge of its
functions as an independent quasi-judicial
body.
For another, the respondent judge, instead of
presiding over the case, should have
dismissed the same and yielded jurisdiction
to the ERC pursuant to the doctrine of
primary jurisdiction. It is plain error on the
part of the respondent judge to determine,
preliminary or otherwise, a controversy
involving a question which is within the
jurisdiction of an administrative tribunal,
especially so where the question demands
the exercise of sound administrative
discretion.
Needless to state, the doctrine of primary
jurisdiction applies where the administrative
agency, as in the case of ERC, exercises its
quasi-judicial and adjudicatory
function. Thus, in cases involving specialized
disputes, the practice has been to refer the
same to an administrative agency of special
competence pursuant to the doctrine of
primary jurisdiction. The courts will not
determine a controversy involving a
question which is within the jurisdiction of
the administrative tribunal prior to the
resolution of that question by the
15
 administrative tribunal, where the question
demands the exercise of sound
administrative discretion requiring the
special knowledge, experience and services
of the administrative tribunal to determine
technical and intricate matters of fact, and a
uniformity of ruling is essential to comply
with the premises of the regulatory statute
administered.
Verily, the cause of action of [BF Homes and
PWCC] against [MERALCO] originates from
the Meralco Refund Decision as it involves
the perceived right of the former to compel
the latter to set-off or apply their refund to
their present electric bill. The issue delves
into the right of the private respondents to
collect their refund without submitting to the
approved schedule of the ERC, and in effect
give unto themselves preferential right over
other equally situated consumers of
[MERALCO]. Perforce, the ERC, as can be
gleaned from the afore-stated legal
provisions, has primary, original and
exclusive jurisdiction over the said
controversy.
Indeed, the respondent judge glaringly erred
in enjoining the right of [MERALCO] to
disconnect its services to [BF Homes and
PWCC] on the premise that the court has
jurisdiction to apply the provisions on
compensation or set-off in this
case. Although [MERALCO] recognizes the
right of [BF Homes and PWCC] to the refund
as provided in the Meralco Refund Decision,
it is the ERC which has the authority to
implement the same according to its
approved schedule, it being a dispute arising
from the exercise of its jurisdiction.
Moreover, it bears to stress that the Meralco
Refund Decision was brought into fore by the
Decision dated 16 February 1998 of the ERC
(then Energy Regulatory Board) granting
refund to [MERALCOs] consumers. Being the
agency of origin, the ERC has the jurisdiction
to execute the same. Besides, as stated, it is
empowered to promulgate rules that are
essential in the discharge of its functions as
an independent quasi-judicial body.[18]
The dispositive portion of the judgment of the PWCC had no other recourse but to seek an injunctive remedy
appellate court reads:
WHEREFORE, the foregoing
considered, the instant petition is
hereby GRANTED and the assailed
Orders REVERSED and SET
ASIDE. Accordingly, the writ of injunction
against [MERALCO] is
hereby DISSOLVED. No costs.[19]
In a Resolution dated February 7, 2006, the Court of
Appeals denied the Motion for Reconsideration of BF Homes
and PWCC for failing to raise new and persuasive and
meritorious arguments.
Now, BF Homes and PWCC come before this
Court via the instant Petition, raising the following
assignment of errors:
1. The Court of Appeals ERRED in saying
that the respondent judge committed
grave abuse of discretion by issuing the
disputed writ of injunction pending the
merits of the case including the issue of
subject matter jurisdiction.
2. The Court of Appeals ERRED in saying
that the ERC under the doctrine of
primary jurisdiction has the original and
EXCLUSIVE jurisdiction to take
cognizance of a petition for injunction to
prevent electrical disconnection to a
customer entitled to a refund.
3. The Court of Appeals ERRED in NOT
SAYING that the ERC as a quasi-judicial
body under RA 9136 has no power to
issue any injunctive relief or remedy to
prevent disconnection.
4. The Court of Appeals ERRED in not
resolving the issue as to the violation of
MERALCO of a standing injunction order
while the case remains undecided.[20]
At the core of the Petition is the issue of whether
jurisdiction over the subject matter of Civil Case No. 03-0151
lies with the RTC or the Energy Regulatory Commission
(ERC). If it is with the RTC, then the said trial court also has
jurisdiction to issue the writ of preliminary injunction against
MERALCO. If it is with the ERC, then the RTC also has no
jurisdiction to act on any incidents in Civil Case No. 03-0151,
including the application for issuance of a writ of preliminary
injunction of BF Homes and PWCC therein.
BF Homes and PWCC argued that due to the threat of
MERALCO to disconnect electric services, BF Homes and
from the RTC under its general jurisdiction. The merits of Civil
Case No. 03-0151 was not yet in issue, only the propriety of
issuing a writ of preliminary injunction to prevent an
irreparable injury. Even granting that the RTC has no
jurisdiction over the subject matter of Civil Case No. 03-0151,
the ERC by enabling law has no injunctive power to prevent
16
the disconnection by MERALCO of electric services to BF
Homes and PWCC.
The Petition has no merit.
Settled is the rule that jurisdiction is conferred only
by the Constitution or the law.[21] Republic v. Court of
Appeals[22] also enunciated that only a statute can confer
jurisdiction on courts and administrative agencies.
Related to the foregoing and equally well-settled is
the rule that the nature of an action and the subject matter
thereof, as well as which court or agency of the government
has jurisdiction over the same, are determined by the material
allegations of the complaint in relation to the law involved
and the character of the reliefs prayed for, whether or not the
complainant/plaintiff is entitled to any or all of such reliefs. A
prayer or demand for relief is not part of the petition of the
cause of action; nor does it enlarge the cause of action stated
or change the legal effect of what is alleged. In determining
which body has jurisdiction over a case, the better policy is to
consider not only the status or relationship of the parties but
also the nature of the action that is the subject of their
controversy.[23]
In Manila Electric Company v. Energy Regulatory
Board,[24]the Court traced the legislative history of the
regulatory agencies which preceded the ERC, presenting a
summary of these agencies, the statutes or issuances that
created them, and the extent of the jurisdiction conferred
upon them, viz:
1. The first regulatory body, the Board of
Rate Regulation (BRR), was created by virtue of Act
No. 1779. Its regulatory mandate under Section 5 of
the law was limited to fixing or regulating rates of
every public service corporation.
2. In 1913, Act No. 2307 created the Board of
Public Utility Commissioners (BPUC) to take over the
functions of the BRR. By express provision of Act No.
2307, the BPUC was vested with jurisdiction,
supervision and control over all public utilities and
their properties and franchises.
3. On November 7, 1936, Commonwealth Act
(C.A.) No. 146, or the Public Service Act (PSA), was
passed creating the Public Service Commission
(PSC) to replace the BPUC. Like the BPUC, the PSC
was expressly granted jurisdiction, supervision and
control over public services, with the concomitant
authority of calling on the public force to exercise its
power, to wit:
SEC. 13. Except as otherwise
provided herein, the Commission
shall have general supervision and
regulation of, jurisdiction and
control over, all public
utilities, and also over their
property, property rights,
equipment, facilities and franchises
so far as may be necessary for the
purpose of carrying out the
provisions of this Act, and in the
exercise of its authority it shall have
the necessary powers and the aid of
the public force x x x.
Section 14 of C.A. No. 146 defines the
term public serviceor public utility as including every
individual, copartnership, association, corporation or
joint-stock company, . . . that now or hereafter may
own, operate, manage or control within the
Philippines, for hire or compensation, any common
carrier, x x x, electric light, heat, power, x x x, when
owned, operated and managed for public use or
service within the Philippines x x x.Under the
succeeding Section 17(a), the PSC has the power even
without prior hearing
(a) To investigate, upon its
own initiative, or upon complaint in
writing, any matter concerning any
public service as regards matters
under its jurisdiction; to require any
public service to furnish safe,
adequate and proper service as the
public interest may require and
warrant, to enforce compliance with
any standard, rule, regulation, order
or other requirement of this Act or
of the Commission, x x x.
4. Then came Presidential Decree (P.D.) No. 1,
reorganizing the national government and
implementing the Integrated Reorganization
Plan. Under the reorganization plan, jurisdiction,
supervision and control over public services related
to electric light, and power heretofore vested in the
PSC were transferred to the Board of Power and
Waterworks (BOPW).
Later, P.D. No. 1206 abolished the
BOPW. Its powers and function relative to
power utilities, including its authority to
grant provisional relief, were transferred to
the newly-created Board of Energy (BOE).
5. On May 8, 1987, then President
Corazon C. Aquino issued E.O. No.
172 reconstituting the BOE into the ERB,
transferring the formers functions and
powers under P.D. No. 1206 to the latter and
consolidating in and entrusting on the
ERB all the regulatory and adjudicatory
functions covering the energy sector.Section
14 of E.O. No. 172 states that (T)he
applicable provisions of [C.A.] No. 146, as
amended, otherwise known as the Public
Service Act; x x x and [P.D.] No. 1206, as
amended, creating the Department of
17
 Energy, shall continue to have full force and
effect, except insofar as inconsistent with
this Order.[25]
Thereafter, on June 8, 2001, Republic Act No. 9136,
known as the Electric Power Industry Reform Act of 2001
(EPIRA), was enacted, providing a framework for
restructuring the electric power industry. One of the avowed
purposes of the EPIRA is to establish a strong and purely
independent regulatory body. The Energy Regulatory Board
(ERB) was abolished and its powers and functions not
inconsistent with the provision of the EPIRA were expressly
transferred to the ERC.[26]
The powers and functions of the ERB not inconsistent
with the EPIRA were transferred to the ERC by virtue of
Sections 44 and 80 of the EPIRA, which read:
Sec. 44. Transfer of Powers and
Functions. The powers and functions of the
Energy Regulatory Board not inconsistent
with the provisions of this Act are hereby
transferred to the ERC. The foregoing
transfer of powers and functions shall
include all applicable funds and
appropriations, records, equipment,
property and personnel as may be necessary.
Sec. 80. Applicability and Repealing
Clause. The applicability provisions of
Commonwealth Act No. 146, as amended,
otherwise known as the Public Service
Act. Republic Act 6395, as amended, revising
the charter of NPC; Presidential Decree 269,
as amended, referred to as the National
Electrification Decree; Republic Act 7638,
otherwise known as the Department of
Energy Act of 1992; Executive Order 172, as
amended, creating the ERB; Republic Act
7832 otherwise known as the Anti-Electricity
and Electric Transmission Lines/Materials
Pilferage Act of 1994; shall continue to have
full force and effect except insofar as they are
inconsistent with this Act.
The provisions with respect to
electric power of Section 11(c) of Republic
Act 7916, as amended, and Section 5(f) of
Republic Act 7227, are hereby repealed or
modified accordingly.
Presidential Decree No. 40 and all
laws, decrees, rules and regulations, or
portions thereof, inconsistent with this Act
are hereby repealed or modified accordingly.
In addition to the foregoing, the EPIRA also conferred
new powers upon the ERC under Section 43, among which
are:
SEC. 43. Functions of the ERC. The
ERC shall promote competition, encourage
market development, ensure customer
choice and penalize abuse of market power
in the restructured electricity industry. In
appropriate cases, the ERC is authorized to
issue cease and desist order after due notice
and hearing. Towards this end, it shall be
responsible for the following key functions in
the restructured industry:
xxxx
(f) In the public interest, establish
and enforce a methodology for setting
transmission and distribution wheeling rates
and retail rates for the captive market of a
distribution utility, taking into account all
relevant considerations, including the
efficiency or inefficiency of the regulated
entities. The rates must be such as to allow
the recovery of just and reasonable costs and
a reasonable return on rate base (RORB) to
enable the entity to operate viably. The ERC
may adopt alternative forms of
internationally-accepted rate-setting
methodology as it may deem
appropriate. The rate-setting methodology
so adopted and applied must ensure a
reasonable price of electricity. The rates
prescribed shall be non-discriminatory. To
achieve this objective and to ensure the
complete removal of cross subsidies, the cap
on the recoverable rate of system losses
prescribed in Section 10 of Republic Act No.
7832, is hereby amended and shall be
replaced by caps which shall be determined
by the ERC based on load density, sales mix,
cost of service, delivery voltage and other
technical considerations it may
promulgate. The ERC shall determine such
form of rate-setting methodology, which
shall promote efficiency. x x x.
xxxx
(u) The ERC shall have the original
and exclusive jurisdiction over all cases
contesting rates, fees, fines and penalties
imposed by the ERC in the exercise of the
abovementioned powers, functions and
responsibilities and over all cases involving
disputes between and among participants or
players in the energy sector.
All notices of hearings to be
conducted by the ERC for the purpose of
fixing rates or fees shall be published at least
twice for two successive weeks in two (2)
newspapers of nationwide circulation.
18

A careful review of the material allegations of BF
Homes and PWCC in their Petition before the RTC reveals that
the very subject matter thereof is the off-setting of the
amount of refund they are supposed to receive from
MERALCO against the electric bills they are to pay to the same
company. This is squarely within the primary jurisdiction of
the ERC.
The right of BF Homes and PWCC to refund, on which
their claim for off-setting depends, originated from the
MERALCO Refund cases. In said cases, the Court (1)
authorized MERALCO to adopt a rate adjustment in the
amount of P0.017 per kilowatthour, effective with respect to
its billing cycles beginning February 1994; and (2) ordered
MERALCO to refund to its customers or credit in said
customers favor for future consumption P0.167 per
kilowatthour, starting with the customers billing cycles that
begin February 1998, in accordance with the ERB Decision
dated February 16, 1998.
It bears to stress that in the MERALCO Refund cases,
this Court only affirmed the February 16, 1998 Decision of the
ERB (predecessor of the ERC) fixing the just and reasonable
rate for the electric services of MERALCO and granting refund
to MERALCO consumers of the amount they overpaid. Said
Decision was rendered by the ERB in the exercise of its
jurisdiction to determine and fix the just and reasonable rate
of power utilities such as MERALCO.
Presently, the ERC has original and exclusive
jurisdiction under Rule 43(u) of the EPIRA over all cases
contesting rates, fees, fines, and penalties imposed by the ERC
in the exercise of its powers, functions and responsibilities,
and over all cases involving disputes between and among
participants or players in the energy sector. Section 4(o) of
the EPIRA Implementing Rules and Regulation provides that
the ERC shall also be empowered to issue such other rules
that are essential in the discharge of its functions as in
independent quasi-judicial body.
Indubitably, the ERC is the regulatory agency of the
government having the authority and supervision over
MERALCO. Thus, the task to approve the guidelines,
schedules, and details of the refund by MERALCO to its
consumers, to implement the judgment of this Court in the
MERALCO Refund cases, also falls upon the ERC. By filing their
Petition before the RTC, BF Homes and PWCC intend to collect
their refund without submitting to the approved schedule of
the ERC, and in effect, enjoy preferential right over the other
equally situated MERALCO consumers.
Administrative agencies, like the ERC, are tribunals of
limited jurisdiction and, as such, could wield only such as are
specifically granted to them by the enabling statutes. In
relation thereto is the doctrine of primary jurisdiction
involving matters that demand the special competence of
administrative agencies even if the question involved is also
judicial in nature. Courts cannot and will not resolve a
controversy involving a question within the jurisdiction of an
administrative tribunal, especially when the question
demands the sound exercise of administrative discretion
requiring special knowledge, experience and services of the
administrative tribunal to determine technical and intricate
matters of fact. The court cannot arrogate into itself the
authority to resolve a controversy, the jurisdiction of which is
initially lodged with the administrative body of special
competence.[27]
Since the RTC had no jurisdiction over the Petition of
BF Homes and PWCC in Civil Case No. 03-0151, then it was
also devoid of any authority to act on the application of BF
Homes and PWCC for the issuance of a writ of preliminary
injunction contained in the same Petition. The ancillary and
provisional remedy of preliminary injunction cannot exist
except only as an incident of an independent action or
proceeding.[28]
Incidentally, BF Homes and PWCC seemed to have
lost sight of Section 8 of Executive Order No. 172 which
explicitly vested on the ERB, as an incident of its principal
function, the authority to grant provisional relief, thus:
Section 8. Authority to Grant
Provisional Relief. The Board may, upon the
filing of an application, petition or complaint
or at any stage thereafter and without prior
hearing, on the basis of supporting papers
duly verified or authenticated, grant
provisional relief on motion of a party in the
case or on its own initiative, without
prejudice to a final decision after hearing,
should the Board find that the pleadings,
together with such affidavits, documents and
other evidence which may be submitted in
support of the motion, substantially support
the provisional order: Provided, That the
Board shall immediately schedule and
conduct a hearing thereon within thirty (30)
days thereafter, upon publication and notice
to all affected parties.
The aforequoted provision is still applicable to the
ERC as it succeeded the ERB, by virtue of Section 80 of the
EPIRA. A writ of preliminary injunction is one such
provisional relief which a party in a case before the ERC may
move for.
Lastly, the Court herein already declared that the RTC
not only lacked the jurisdiction to issue the writ of
preliminary injunction against MERALCO, but that the RTC
actually had no jurisdiction at all over the subject matter of
the Petition of BF Homes and PWCC in Civil Case No. 03-
0151. Therefore, in addition to the dissolution of the writ of
preliminary injunction issued by the RTC, the Court also
deems it appropriate to already order the dismissal of the
Petition of BF Homes and PWCC in Civil Case No. 03-0151 for
lack of jurisdiction of the RTC over the subject matter of the
same. Although only the matter of the writ of preliminary
injunction was brought before this Court in the instant
Petition, the Court is already taking cognizance of the issue on
19
the jurisdiction of the RTC over the subject matter of the
Petition. The Court may motu proprio consider the issue of
jurisdiction. The Court has discretion to determine whether
the RTC validly acquired jurisdiction over Civil Case No. 03-
0151 since, to reiterate, jurisdiction over the subject matter is
conferred only by law.Jurisdiction over the subject matter
cannot be acquired through, or waived by, any act or omission
of the parties. Neither would the active participation of the
parties nor estoppel operate to confer jurisdiction on the RTC
where the latter has none over a cause of action.[29]Indeed,
when a court has no jurisdiction over the subject matter, the
only power it has is to dismiss the action.[30]
WHEREFORE, the instant Petition for Review
is DENIED.The Decision dated October 27, 2005 of the Court
of Appeals in CA-G.R. SP No. 82826 is AFFIRMED with
the MODIFICATION that the Regional Trial Court, Branch 202
of Las Pias City, is ORDEREDto dismiss the Petition [With
Prayer for the Issuance of Writ of Preliminary Injunction and
for the Immediate Issuance of Restraining Order] of BF
Homes, Inc. and Philippine Waterworks and Construction
Corporation in Civil Case No. 03-0151. Costs against BF
Homes, Inc. and Philippine Waterworks and Construction
Corporation.
SO ORDERED.
FELICITAS M. MACHADO and MARCELINO
MACHADO, Petitioners,
vs.
RICARDO L. GATDULA, COMMISSION ON THE
SETTLEMENT OF LAND PROBLEMS, and IRINEO S. PAZ,
Sheriff IV, Office of the Provincial Sheriff, San Pedro, The COSLAP Ruling
Laguna, Respondents.
DECISION
BRION, J.:
Before this Court is the Petition for Review on Certiorari 1 filed
by petitioners Felicitas M. Machado and Marcelino P. Machado
(the Machados), assailing the decision2 of the Court of Appeals
(CA) dated January 31, 2002 and the resolution3 dated
December 5, 2002 in CA-G.R. SP No. 65871. The CA decision
dismissed the Machados’ petition for certiorari and their
motion for reconsideration, and upheld the jurisdiction of the
Commission on Settlement of Land Problems (COSLAP) to
render judgment over a private land and to issue the
corresponding writs of execution and demolition.
THE FACTUAL ANTECEDENTS
The dispute involves two adjoining parcels of land located
in Barangay San Vicente, San Pedro, Laguna, one belonging to
the Machados, and the other belonging to respondent Ricardo While this appeal was pending, the COSLAP, upon Gatdula’s
L. Gatdula (Gatdula). motion, issued a writ of execution8 enforcing the terms of the
On February 2, 1999, Gatdula wrote a letter4 to the COSLAP
requesting assistance because the Machados allegedly
blocked the right of way to his private property by
constructing a two-door apartment on their property.
Acting on Gatdula’s letter, the COSLAP conducted
a mediation conference on February 25, 1999; the parties
then agreed to have a verification survey conducted on their
properties and to share the attendant expenses. Thereafter,
the COSLAP issued an Order dated March 16, 1999 directing
the Chief of the Survey Division of the Community
Environment and Natural Resources Office – Department of
Environment and Natural Resources (CENRO-DENR), to
conduct a verification survey on May 9, 1999. The order
likewise stated that in the event that no surveyor is available,
the parties may use the services of a private surveyor, whom
the CENRO-DENR Survey Division would deputize.
As scheduled, a private surveyor, Junior Geodetic Engineer
Abet F. Arellano (Engr. Arellano), conducted a verification
survey of the properties in the presence of both parties. Engr.
Arellano submitted a report to the COSLAP finding that the
structure built by the Machados encroached upon an alley
found within the Gatdula property. Engr. Arellano’s findings
corroborated the separate report of Engineer Noel V. Soqueco
of the CENRO, Los Baños, Laguna that had also been
submitted to the COSLAP.
The Machados contested these reports in their position paper
dated August 26, 1999. They alleged that Gatdula had no right
of action since they did not violate Gatdula’s rights. 5 They
P.
further assailed the jurisdiction of the COSLAP, stating that the
proper forum for the present case was the Regional Trial Court
of San Pedro, Laguna.
On October 25, 1999, the COSLAP issued a
resolution6 (October 25, 1999 COSLAP Resolution) directing
the Machados to reopen the right of way in favor of Gatdula.
In so ruling, the COSLAP relied on the verification survey
made by Engr. Arellano, which established that the Machados
had encroached on the existing alley in Gatdula’s property.
The COSLAP declared the Machados estopped from
questioning its jurisdiction to decide the case, since they
actively participated in the mediation conferences and the
verification surveys without raising any jurisdictional
objection. It ruled that its jurisdiction does not depend on the
convenience of the Machados.
The Machados filed a motion for reconsideration which the
COSLAP denied in a resolution dated January 24, 2000.
On February 18, 2000, the Machados filed a notice of
appeal7 with the Office of the President (OP).
20
October 25, 1999 COSLAP Resolution. The Machados opposed 2. Whether the COSLAP can validly issue the writs of
the writ by filing a motion to quash on March 30, 2001. 9 They execution and demolition against the Machados.
argued that the October 25, 1999 COSLAP Resolution was not
yet ripe for execution in view of the pending appeal before the THE COURT’S RULING
OP.
We find the petition meritorious.
Since the Machados persistently refused to reopen the right of
way they closed, the provincial sheriff recommended to The COSLAP does not have jurisdiction over the
COSLAP the issuance of a writ of demolition. The COSLAP present case
issued the writ of demolition10 on July 12, 2001.
In resolving the issue of whether the COSLAP has jurisdiction
The CA Ruling over the present case, a review of the history of the COSLAP
and an account of the laws creating the COSLAP and its
On July 31, 2001, the Machados went to the CA for relief predecessor, the Presidential Action Committee on Land
through a Petition for Certiorari and Prohibition,11 claiming Problems (PACLAP), is in order.
that the COSLAP issued the writs of execution and demolition
with grave abuse of discretion. The COSLAP’s forerunner, the PACLAP, was created on July
31, 1970 pursuant to Executive Order No. 251. As originally
The CA found the Machados’ claim unfounded and, conceived, the committee was tasked to expedite and
accordingly, dismissed their petition in its decision of January coordinate the investigation and resolution of land disputes,
31, 2002.12 It declared that the COSLAP correctly issued the streamline and shorten administrative procedures, adopt bold
assailed writs because the October 25, 1999 COSLAP and decisive measures to solve land problems, and/or
Resolution had already become final and executory for failure recommend other solutions.
of the Machados to avail of the proper remedy against the
COSLAP orders and resolutions. Under Section 3 (2)13 of On March 19, 1971, Executive Order No. 305 was issued
Executive Order No. 561 (EO 561), the resolutions, orders, reconstituting the PACLAP. The committee was given
and decisions of the COSLAP become final and executory 30 exclusive jurisdiction over all cases involving public lands and
days after promulgation, and are appealable by certiorari only other lands of the public domain,18 and was likewise vested
to the Supreme Court. In Sy v. Commission on the Settlement of with adjudicatory powers phrased in broad terms:
Land Problems,14 it was held that under the doctrine of judicial
hierarchy, the orders, resolutions and decisions of the
COSLAP, as a quasi-judicial agency, are directly appealable to 1. To investigate, coordinate, and resolve expeditiously land
the CA under Rule 43 of the 1997 Rules of Civil Procedure, disputes, streamline administrative proceedings, and, in
and not to the Supreme Court. Thus, the CA ruled that the general, to adopt bold and decisive measures to solve
Machados’ appeal to the OP was not the proper remedy and problems involving public lands and lands of the public
did not suspend the running of the period for finality of the domain.19 [emphasis supplied]
October 25, 1999 COSLAP Resolution.
Thereafter, Presidential Decree No. 832 (PD 832)20 was issued
On the issue of jurisdiction, the CA found that the COSLAP was on November 27, 1975 reorganizing the PACLAP and
created to provide a more effective mechanism for the enlarging its functions and duties. The decree also granted
expeditious settlement of land problems, in general; the PACLAP quasi-judicial functions. Section 2 of PD 832 states:
present case, therefore, falls within its
jurisdiction.15Moreover, the Machados’ active participation in Section 2. Functions and duties of the PACLAP. – The PACLAP
the mediation conference and their consent to bring about the shall have the following functions and duties:
verification survey bound them to the COSLAP’s decisions,
orders and resolutions. 1. Direct and coordinate the activities, particularly
the investigation work, of the various government
From this CA decision, the Machados filed a motion for agencies and agencies involved in land problems or
reconsideration, which the CA subsequently denied in its
16 disputes, and streamline administrative procedures
Resolution of December 5, 2002. 17 to relieve small settlers and landholders and
members of cultural minorities of the expense and
The Machados thus filed the present Rule 45 petition with this time-consuming delay attendant to the solution of
Court, raising two vital issues: such problems or disputes;

1. Whether the COSLAP has jurisdiction over
Gatdula’s complaint for right of way against the
Machados; and
2. Refer for immediate action any land problem or
dispute brought to the attention of the PACLAP, to
any member agency having jurisdiction thereof:
Provided, That when the Executive Committee
decides to act on a case, its resolution, order or
decision thereon shall have the force and effect of a
21
 regular administrative resolution, order or decision, Under these terms, the COSLAP has two different rules in
and shall be binding upon the parties therein acting on a land dispute or problem lodged before it, e.g.,
involved and upon the member agency having COSLAP can assume jurisdiction only if the matter is one of
jurisdiction thereof; those enumerated in paragraph 2(a) to (e) of the law.
Otherwise, it should refer the case to the agency having
xxxx appropriate jurisdiction for settlement or resolution.21 In
resolving whether to assume jurisdiction over a case or to
4. Evolve and implement a system of procedure for refer it to the particular agency concerned, the COSLAP
the speedy investigation and resolution of land considers: (a) the nature or classification of the land involved;
disputes or problems at provincial level, if possible. (b) the parties to the case; (c) the nature of the questions
[emphasis supplied] raised; and (d) the need for immediate and urgent action
thereon to prevent injury to persons and damage or
destruction to property. The terms of the law clearly do not
The PACLAP was abolished by EO 561 effective on September vest on the COSLAP the general power to assume jurisdiction
21, 1979, and was replaced by the COSLAP. Unlike the former over any land dispute or problem.22 Thus, under EO 561, the
laws, EO 561 specifically enumerated the instances when the instances when the COSLAP may resolve land disputes are
COSLAP can exercise its adjudicatory functions: limited only to those involving public lands or those covered
by a specific license from the government, such as pasture
Section 3. Powers and Functions. – The Commission shall have lease agreements, timber concessions, or reservation grants.23
the following powers and functions:
Undisputably, the properties involved in the present dispute
xxxx are private lands owned by private parties, none of whom is a
squatter, a patent lease agreement holder, a government
2. Refer and follow up for immediate action by the agency reservation grantee, a public land claimant or a member of
having appropriate jurisdiction any land problem or dispute any cultural minority.24
referred to the Commission: Provided, That the Commission
may, in the following cases, assume jurisdiction and resolve Moreover, the dispute between the parties can hardly be
land problems or disputes which are critical and explosive in classified as critical or explosive in nature that would
nature considering, for instance, the large number of the generate social tension or unrest, or a critical situation that
parties involved, the presence or emergence of social tension would require immediate and urgent action. The issues raised
or unrest, or other similar critical situations requiring in the present case primarily involve the application of the
immediate action: Civil Code provisions on Property and the Easement of Right
of Way. As held in Longino v. General,25 "disputes requiring no
(a) Between occupants/squatters and pasture lease special skill or technical expertise of an administrative body
agreement holders or timber concessionaires; that could be resolved by applying pertinent provisions of the
Civil Code are within the exclusive jurisdiction of the regular
(b) Between occupants/squatters and government courts."
reservation grantees;
The Machados cannot invoke Section 3, paragraph 2(e) of EO
(c) Between occupants/squatters and public land 561, which provides that the COSLAP may assume jurisdiction
claimants or applicants; over complaints involving "other similar land problems of
grave urgency," to justify the COSLAP’s intervention in this
(d) Petitions for classification, release and/or case. The statutory construction principle of ejusdem generic
subdivision of lands of the public domain; and prescribes that where general words follow an enumeration
of persons or things, by words of a particular and specific
meaning, such general words are not to be construed in their
(e) Other similar land problems of grave urgency and
widest extent but are to be held as applying only to persons or
magnitude.
things of the same kind as those specifically mentioned. 26 A
dispute between two parties concerning the right of way over
The Commission shall promulgate such rules and procedures private lands cannot be characterized as similar to those
as will ensure expeditious resolution and action on the above enumerated under Section 3, paragraph 2(a) to (d) of EO
cases. The resolution, order or decision of the Commission on 561.1avvphi1
any of the foregoing cases shall have the force and effect of a
regular administrative resolution, order or decision and shall
In Davao New Town Development Corporation v. Commission
be binding upon the parties therein and upon the agency
on the Settlement of Land Problems27 – where we ruled that
having jurisdiction over the same. Said resolution, order or
the COSLAP does not have blanket authority to assume every
decision shall become final and executory within thirty (30)
matter referred to it – we made it clear that its jurisdiction is
days from its promulgation and shall be appealable by
confined only to disputes over lands in which the government
certiorari only to the Supreme Court. [emphasis supplied]
has a proprietary or regulatory interest.

22
The CA apparently misread and misapplied the Court’s ruling
in Bañaga v. Court of Appeals.28 Bañaga involved two
contending parties who filed free patent applications for a
parcel of public land with the Bureau of Lands. Because of the
Bureau of Lands’ failure to act within a reasonable time on the
applications and to conduct an investigation, the COSLAP
decided to assume jurisdiction over the case. Since the dispute
involved a public land on a free patent issue, the COSLAP
undeniably had jurisdiction over the Bañaga case.
Jurisdiction is conferred by law and a judgment
issued by a quasi-judicial body without jurisdiction is
void
By reason of the Machados’ active participation in
the mediation conferences and the COSLAP verification
surveys, the CA declared the Machados estopped from
questioning the body’s jurisdiction and bound by its decisions,
orders and resolutions. We disagree with this ruling. SO ORDERED.
Jurisdiction over a subject matter is conferred by law and not
by the parties’ action or conduct.29 Estoppel generally does
not confer jurisdiction over a cause of action to a tribunal
where none, by law, exists. In Lozon v. NLRC,30 we declared
that:
Lack of jurisdiction over the subject matter of the suit is yet
another matter. Whenever it appears that the court has no
jurisdiction over the subject matter, the action shall be
dismissed. This defense may be interposed at any time, during
appeal or even after final judgment. Such is understandable,
as this kind of jurisdiction is conferred by law and not within
the courts, let alone the parties, to themselves determine or
conveniently set aside. In People v. Casiano, this Court, on the
issue of estoppel, held:
The operation of the principle of estoppel on the question of
jurisdiction seemingly depends upon whether the lower court
actually had jurisdiction or not. If it had no jurisdiction, but
the case was tried and decided upon the theory that it had
jurisdiction, the parties are not barred, on appeal, from
assailing such jurisdiction, for the same ‘must exist as a
matter of law, and may not be conferred by consent of the
parties or by estoppel’ However if the lower court had
jurisdiction, and the case was heard and decided upon a given
theory, such, for instance, as that the court had no jurisdiction,
the party who induced it to adopt such theory will not be
permitted, on appeal, to assume an inconsistent position –
that the lower court had jurisdiction. Here, the principle of
estoppel applies. The rule that jurisdiction in conferred by
law, and does not depend upon the will of the parties, has no
bearing thereon. [emphasis supplied]
In this case, the COSLAP did not have jurisdiction over the
subject matter of the complaint filed by Gatdula, yet it
proceeded to assume jurisdiction over the case and even
issued writs of execution and demolition against the
Machados. The lack of jurisdiction cannot be cured by the
parties’ participation in the proceedings before the
COSLAP.31 Under the circumstances, the Machados can
rightfully question its jurisdiction at anytime, even during
appeal or after final judgment. A judgment issued by a quasi-
judicial body without jurisdiction is void.32 It cannot be the
source of any right or create any obligation. All acts pursuant
to it and all claims emanating from it have no legal effect. The
void judgment can never become final and any writ of
execution based on it is likewise void.33
WHEREFORE, premises considered, we GRANT the petition
for review on certiorari. The assailed Court of Appeals
decision dated January 31, 2002 and resolution dated
December 5, 2002 in CA-G.R. SP No. 65871 are REVERSED and
SET ASIDE. The Decision of the Commission on the Settlement
of Land Problems dated October 25, 1999 in COSLAP Case No.
99-59, as well as the writ of execution dated March 21, 2001
and the writ of demolition dated July 12, 2001, are declared
NULL and VOID for having been issued without jurisdiction.
G.R. No. 173379 December 1, 2010
ABUBAKAR A. AFDAL and FATIMA A. AFDAL, Petitioners,
vs.
ROMEO CARLOS, Respondent.
The Case
This is a petition for review1 of the 3 January 20052 and 16
June 20063 Orders of the Regional Trial Court, Branch 25,
Biñan, Laguna (RTC) in Civil Case No. B-6721. In its 3 January
2005 Order, the RTC ordered the dismissal of petitioners
Abubakar A. Afdal and Fatima A. Afdal’s (petitioners) petition
for relief from judgment. In its 16 June 2006 Order, the RTC
denied petitioners’ motion for reconsideration.
The Facts
On 18 December 2003, respondent Romeo Carlos
(respondent) filed a complaint for unlawful detainer and
damages against petitioners, Zenaida Guijabar (Guijabar),
John Doe, Peter Doe, Juana Doe, and all persons claiming
rights under them docketed as Civil Case No. 3719 before the
Municipal Trial Court, Biñan, Laguna (MTC). Respondent
alleged that petitioners, Guijabar, and all other persons
claiming rights under them were occupying, by mere
tolerance, a parcel of land in respondent’s name covered by
Transfer Certificate of Title No. T-5301394 in the Registry of
Deeds Calamba, Laguna. Respondent claimed that petitioner
Abubakar Afdal (petitioner Abubakar) sold the property to
him but that he allowed petitioners to stay in the property. On
25 August 2003, respondent demanded that petitioners,
Guijabar, and all persons claiming rights under them turn
over the property to him because he needed the property for
his personal use.5 Respondent further alleged that petitioners
refused to heed his demand and he was constrained to file a
complaint before the Lupon ng Tagapamayapa (Lupon).
According to respondent, petitioners ignored the notices and
23
the Lupon issued a "certificate to file action."6 Then, Martha D.G. Ubaldo and Francisco D. Ubaldo. Petitioners
respondent filed the complaint before the MTC. denied that they sold the property to respondent. Petitioners
added that on 15 December 2003, petitioner Abubakar filed
According to the records, there were three attempts to serve with the Commission on Elections his certificate of candidacy
the summons and complaint on petitioners – 14 January, 3 as mayor in the municipality of Labangan, Zamboanga del Sur,
and 18 February 2004.7 However, petitioners failed to file an for the 10 May 2004 elections. Petitioners said they only
answer. learned of the MTC’s 23 August 2004 Decision on 27 October
2004. Petitioners also pointed out that they never received
On 2 June 2004, respondent filed an ex-parte motion and respondent’s demand letter nor were they informed of, much
compliance with position paper submitting the case for less participated in, the proceedings before the Lupon.
decision based on the pleadings on record.8 Moreover, petitioners said they were not served a copy of the
summons and the complaint.
In its 23 August 2004 Decision,9 the MTC ruled in favor of
respondent. The dispositive portion of the 23 August 2004 On 3 January 2005, the RTC issued the assailed Order
Decision reads: dismissing the petition for relief. The RTC said it had no
jurisdiction over the petition because the petition should have
been filed before the MTC in accordance with Section 1 of
WHEREFORE, judgment is hereby rendered in favor of Rule 38 of the Rules of Court which provides that a petition
plaintiff and against defendants as follows: for relief should be filed "in such court and in the same case
praying that the judgment, order or proceeding be set aside."
1. Ordering defendants Abubakar Afdal, Zenaida
Guijabar and all persons claiming rights under them Petitioners filed a motion for reconsideration. In its 16 June
to vacate the subject property and peacefully turn- 2006 Order, the RTC denied petitioners’ motion.
over possession of the same to plaintiff;
Hence, this petition.
2. Ordering defendants to pay plaintiff the amount of
TEN THOUSAND PESOS (₱10,000.00) as rental
arrears from August 25, 2003 up to the date of The Issue
decision;
Petitioners raise the sole issue of whether the RTC erred in
3. Ordering defendants to pay plaintiff the amount of dismissing their petition for relief from judgment.
TEN THOUSAND PESOS (₱10,000.00) a month
thereafter, as reasonable compensation for the use of The Ruling of the Court
the subject premises until they finally vacate the
same; Petitioners maintain that the RTC erred in dismissing their
petition for relief. Petitioners argue that they have no other
4. Ordering defendants to pay plaintiff the amount of recourse but to file the petition for relief with the RTC.
FIFTY THOUSAND PESOS (₱50,000.00) as and for Petitioners allege the need to reconcile the apparent
attorney’s fees plus ONE THOUSAND FIVE HUNDRED inconsistencies with respect to the filing of a petition for relief
PESOS (₱1,500.00) appearance fee; from judgment under Rule 38 of the Rules of Court and the
prohibition under the Revised Rule on Summary Procedure.
5. Ordering defendants to pay the costs of suit. Petitioners suggest that petitions for relief from judgment in
forcible entry and unlawful detainer cases can be filed with
the RTC provided that petitioners have complied with all the
SO ORDERED.10 legal requirements to entitle him to avail of such legal remedy.

On 1 October 2004, the MTC issued a writ of execution.11 Section 13(4) of Rule 70 of the Rules of Court provides:

On 30 October 2004, petitioners filed a petition for relief from
judgment with the MTC.12 Respondent filed a motion to
dismiss or strike out the petition for relief.13 Subsequently,
petitioners manifested their intention to withdraw the
petition for relief after realizing that it was a prohibited
pleading under the Revised Rule on Summary Procedure. On
10 November 2004, the MTC granted petitioners’ request to
withdraw the petition for relief.14
SEC. 13. Prohibited pleadings and motions. - The following
petitions, motions, or pleadings shall not be allowed: x x x
4. Petition for relief from judgment; x x x
Section 19(d) of the Revised Rule on Summary Procedure also
provides:

On 6 December 2004, petitioners filed the petition for relief SEC. 19. Prohibited pleadings and motions. - The following
before the RTC.15 Petitioners alleged that they are the lawful pleadings, motions, or petitions shall not be allowed in the
owners of the property which they purchased from spouses cases covered by this Rule: x x x

24
(d) Petition for relief from judgment; x x x Sec. 7. Substituted Service. - If, for justifiable causes, the
defendant cannot be served within a reasonable time as
Clearly, a petition for relief from judgment in forcible entry provided in the preceding section, service may be effected (a)
and unlawful detainer cases, as in the present case, is a by leaving copies of the summons at the defendant’s residence
prohibited pleading. The reason for this is to achieve an with some person of suitable age and discretion then residing
expeditious and inexpensive determination of the cases therein, or (b) by leaving the copies at defendant’s office or
subject of summary procedure.16 regular place of business with some competent person in
charge thereof.
Moreover, Section 1, Rule 38 of the Rules of Court provides:
Any judgment of the court which has no jurisdiction over the
SEC. 1. Petition for relief from judgment, order or other person of the defendant is null and void.
22

proceedings. - When a judgment or final order is entered, or

any other proceeding is thereafter taken against a party in any The 23 August 2004 Decision of the MTC states:
court through fraud, accident, mistake or excusable
negligence, he may file a petition in such court and in the Record shows that there were three attempts to serve the
same case praying that the judgment, order or summons to the defendants. The first was on January 14,
proceeding be set aside. (Emphasis supplied) 2004 where the same was unserved. The second was on
February 3, 2004 where the same was served to one Gary
A petition for relief from judgment, if allowed by the Rules Akob and the last was on February 18, 2004 where the return
and not a prohibited pleading, should be filed with and was duly served but refused to sign.23
resolved by the court in the same case from which the petition
arose.171avvphi1 A closer look at the records of the case also reveals that the
first indorsement dated 14 January 2004 carried the
In the present case, petitioners cannot file the petition for annotation that it was "unsatisfied/given address cannot be
relief with the MTC because it is a prohibited pleading in an located."24 The second indorsement dated 3 February 2004
unlawful detainer case. Petitioners cannot also file the stated that the summons was "duly served as evidenced by his
petition for relief with the RTC because the RTC has no signature of one Gary Acob25 (relative)."26While the last
jurisdiction to entertain petitions for relief from judgments of indorsement dated 18 February 2004 carried the annotation
the MTC. Therefore, the RTC did not err in dismissing the that it was "duly served but refused to sign" without
petition for relief from judgment of the MTC. specifying to whom it was served.27

The remedy of petitioners in such a situation is to file a Service of summons upon the defendant shall be by personal
petition for certiorari with the RTC under Rule 6518 of the service first and only when the defendant cannot be promptly
Rules of Court on the ground of lack of jurisdiction of the MTC served in person will substituted service be availed
over the person of petitioners in view of the absence of of.28 In Samartino v. Raon,29 we said:
summons to petitioners. Here, we shall treat petitioners’
petition for relief from judgment as a petition for certiorari We have long held that the impossibility of personal service
before the RTC. justifying availment of substituted service should be
explained in the proof of service; why efforts exerted towards
An action for unlawful detainer or forcible entry is a real personal service failed. The pertinent facts and circumstances
action and in personam because the plaintiff seeks to enforce a attendant to the service of summons must be stated in the
personal obligation on the defendant for the latter to vacate proof of service or Officer’s Return; otherwise, the substituted
the property subject of the action, restore physical possession service cannot be upheld.30
thereof to the plaintiff, and pay actual damages by way of
reasonable compensation for his use or occupation of the In this case, the indorsements failed to state that prompt and
property.19 In an action in personam, jurisdiction over the personal service on petitioners was rendered impossible. It
person of the defendant is necessary for the court to validly failed to show the reason why personal service could not be
try and decide the case.20 Jurisdiction over the defendant is made. It was also not shown that efforts were made to find
acquired either upon a valid service of summons or the petitioners personally and that said efforts failed. These
defendant’s voluntary appearance in court.21 If the defendant requirements are indispensable because substituted service is
does not voluntarily appear in court, jurisdiction can be in derogation of the usual method of service. It is an
acquired by personal or substituted service of summons as extraordinary method since it seeks to bind the defendant to
laid out under Sections 6 and 7 of Rule 14 of the Rules of the consequences of a suit even though notice of such action is
Court, which state: served not upon him but upon another whom the law could
only presume would notify him of the pending proceedings.
Sec. 6. Service in person on defendant. - Whenever practicable, Failure to faithfully, strictly, and fully comply with the
the summons shall be served by handing a copy thereof to the statutory requirements of substituted service renders such
defendant in person, or, if he refuses to receive and sign for it, service ineffective.31
by tendering it to him.

25
Likewise, nowhere in the return of summons or in the records [G.R. No. 157095 : January 15, 2010]
of the case was it shown that Gary Acob, the person on whom
substituted service of summons was effected, was a person of MA. LUISA G. DAZON, PETITIONER, VS. KENNETH Y. YAP
suitable age and discretion residing in petitioners’ residence. AND PEOPLE OF THE PHILIPPINES, RESPONDENTS.
In Manotoc v. Court of Appeals,32 we said:

If the substituted service will be effected at defendant’s house

or residence, it should be left with a person of "suitable age
and discretion then residing therein." A person of suitable age
and discretion is one who has attained the age of full legal
capacity (18 years old) and is considered to have enough
discernment to understand the importance of a summons.
"Discretion" is defined as "the ability to make decisions which
represent a responsible choice and for which an
understanding of what is lawful, right or wise may be
presupposed." Thus, to be of sufficient discretion, such person
must know how to read and understand English to
comprehend the import of the summons, and fully realize the
need to deliver the summons and complaint to the defendant
at the earliest possible time for the person to take appropriate
action. Thus, the person must have the "relation of
confidence" to the defendant, ensuring that the latter would
receive or at least be notified of the receipt of the
summons. The sheriff must therefore determine if the
person found in the alleged dwelling or residence of
defendant is of legal age, what the recipient’s relationship
with the defendant is, and whether said person
comprehends the significance of the receipt of the
summons and his duty to immediately deliver it to the
defendant or at least notify the defendant of said receipt
of summons. These matters must be clearly and
specifically described in the Return ofcondominium project. Thus, on March 22, 1999, petitioner
Summons.33 (Emphasis supplied)
In this case, the process server failed to specify Gary Acob’s (1976), otherwise known as "The Subdivision and
age, his relationship to petitioners and to ascertain whether Condominium Buyers' Protective Decree". Primetown failed
he comprehends the significance of the receipt of the to refund petitioner's payments.
summons and his duty to deliver it to petitioners or at least
notify them of said receipt of summons.
In sum, petitioners were not validly served with summons
and the complaint in Civil Case No. 3719 by substituted
service. Hence, the MTC failed to acquire jurisdiction over the
person of the petitioners and, thus, the MTC’s 23 August 2004
Decision is void.34 Since the MTC’s 23 August 2004 Decision is
void, it also never became final.35
WHEREFORE, we GRANT the petition. We SET ASIDE the 3
January 2005 and 16 June 2006 Orders of the Regional Trial
Court, Branch 25, Biñan, Laguna. The 23 August 2004
Decision and the 1 October 2004 Writ of Execution, as well as
all acts and deeds incidental to the judgment in Civil Case No.
3719, are declared VOID. We REMAND the case to the
Municipal Trial Court, Biñan, Laguna, for consolidation with
the unlawful detainer case in Civil Case No. 3719 and for the
said Municipal Trial Court to continue proceedings thereon by
affording petitioners Abubakar A. Afdal and Fatima A. Afdal a
chance to file their answer and present evidence in their
defense, and thereafter to hear and decide the case.SO
ORDERED.
The primordial function of the Housing and Land Use
Regulatory Board (HLURB) is the regulation of the real estate
trade and business. Though the agency's jurisdiction has been
expanded by law, it has not grown to the extent of
encompassing the conviction and punishment of criminals.
The present Petition for Review on Certiorari assails the
Orders of the Regional Trial Court (RTC) of Lapu-Lapu City,
Branch 54 dated October 2, 2002 and January 13,2003, which
granted the Motion to Withdraw Information filed by the
public prosecutor and denied the motion for reconsideration
filed by petitioner, respectively.
Factual Antecedents
Respondent Kenneth Y. Yap was the president of Primetown
Property Group, Inc., (Primetown) the developer of Kiener
Hills Mactan Condominium, a low-rise condominium project.
In November 1996, petitioner Ma. Luisa G. Dazon entered into
a contract[1] with Primetown for the purchase of Unit No. C-
108 of the said condominium project. Petitioner made a
downpayment and several installment payments, totaling
P1,114,274.30.[2] Primetown, however, failed to finish the
demanded for the refund of her payments from Primetown,
pursuant to Section 23[3]of Presidential Decree (PD) No. 957
On October 26,2000,[4] petitioner filed a criminal complaint
with the Office of the City Prosecutor of Lapu-Lapu City
against respondent as president of Primetown for violation of
Section 23 in relation to Section 39[5] of PD 957. Subsequently,
after a finding of probable cause, an Information[6] was filed
with the RTC of Lapu-Lapu City docketed as Criminal Case No.
015331-L.
Meanwhile, respondent, in connection with the resolution
finding probable cause filed a Petition for Review with the
Department of Justice (DOJ). On June 14,2002, the DOJ
rendered a Resolution[8] ordering the trial prosecutor to cause
the withdrawal of the Information. Hence, the prosecutor filed
a Motion to Withdraw Information[9] with the RTC.
The RTC disposed of the matter as follows:
Wherefore, in view of the foregoing, the Motion to Withdraw
Information filed by [the] public prosecutor is hereby
granted. Accordingly, the information' filed against the herein
accused is ordered withdrawn and to be transmitted back to
the City Prosecutor's Office of Lapu-Lapu City.
26
 for one of the units in the aborted Mactan condominium
Furnish copies of this order to Prosecutor Rubi, Attys. Valdez project in the total amount of P1,114,274.30.
and Pangan.
As early as in the case of Solid Homes, Inc. vs. Payawal, 177
SO ORDERED.[10] Petitioner's motion for reconsideration was SCRA 72, the Supreme Court had ruled that the Housing and
denied.[11] Land Use Regulatory Board (HLURB) has exclusive
jurisdiction over cases involving real estate business and
Issue practices under PD 957. This ruling is reiterated in several
subsequent cases, to name a few of them, Union Bank of the
Hence, the present Petition for Review on Certiorari raising Philippines-versus-HLURB, G.R. No. 953364, June 29, 1992;
the following issue: ''Whether or not a regional trial court has C.T. Torres Enterprises vs. Hilionada, 191 SCRA 286; Villaflor
jurisdiction over a criminal action arising from violation of PD vs. Court of Appeals, 280 SCRA 297; Marina Properties Coip.
957".[12] vs. Court of Appeals, 294 SCRA 273; and Raet vs. Court of
Appeals, 295 SCRA 677. Of significant relevance is the
Petitioner's Arguments following pronouncement of the Supreme Court in Raet vs.
Court of Appeals (supra), as follows:
Petitioner contends that jurisdiction is conferred by law and
that there is no law expressly vesting on the HLUKB exclusive xxx The contention has merit. The decision in the ejectment
jurisdiction over criminal actions arising from violations of PD suit is conclusive only on the question of possession of the
957. subject premises. It does not settle the principal question
involved in the present case, namely, whether there was
Respondent's Arguments perfected contract of sale between petitioners and private
respondent PVDHC involving the units in question. Under
Respondent, on the other hand, contends that there is no 8(100) of E.O. No. 648 dated February 7, 1981, as amended by
error of law involved in this case and that petitioner failed to E.O. No. 90 dated December 17, 1986 this question is for the
give due regard to the hierarchy of courts by filing the present HLURB to decide. The said provision of law gives that agency
petition directly with the Supreme Court instead of with the the power to—
Court of Appeals. He further argues that the real issue is not of
jurisdiction but the existence of probable cause. The Secretary Hear and decide cases of unsound real estate business
of Justice, according to respondent, found no probable cause practices; claims involving refijnd filed against project
to warrant the filing of the Information, hence its directive to owners, developers, dealers, brokers, or salesmen; and cases
cause the withdrawal of the Information. of specific performance.

Our Ruling This jurisdiction of the HLURB is exclusive. It has been held to
extend to the determination of the question whether there is a
The petition has merit. perfected contract of sale between condominium buyers and
[the] developer x x x.
The DOJ Resolution dated June 14, 2002 which ordered
the withdrawal of the information was based on the finding In fine, the Rule of Law dictates that we should yield to this
that the HLURB, and not the regular court, has jurisdiction over judicial declaration upholding the jurisdiction of the HLURB
the case. over cases of this nature.

Hence, there is a need for the Court to make a definite ruling

Both the respondent[13] and the OSG[14] agree with the on a question of law - the matter of jurisdiction over the
petitioner that the regular courts and not the HLURB have criminal aspect of PD 957.
jurisdiction over the criminal aspect of PD 957. The parties,
however, disagree on the basis of the directive of the DOJ for
the withdrawal of the Information. Was it, as argued by Jurisdiction over criminal actions arising from violations of PD
petitioner, lack of jurisdiction of the RTC or was it, as argued 957 is vested in the regular courts.
by respondent, lack of probable cause? We perused the DOJ
Resolution dated June 14, 2002 and we find that the basis of
the resolution was, not that there was lack of probable cause Jurisdiction is" conferred by law and determined by the
but, the finding that it is the HLURB that has jurisdiction over
material averments in the complaint as well as the character
Hie case. Pertinent portions of the said DOJ Resolution of the relief sought.15 The scope and limitation of the
provide: jurisdiction of the HLURB are well-defined.'6 Its precusor, the
National Housing Authority (NHA),17 was vested under PD
The petition is impressed with merit. 957 with exclusive jurisdiction to regulate the real estate
trade and business,18 specifically the registration of
A perusal of the allegations in the complaint-affidavit would subdivision or condominium projects and dealers, brokers
show complainant's grievance against respondent was the and salesmen of subdivision lots or condominium units,
failure of the latter's firm to refund the payments she made issuance and suspension of license to sell; and revocation of
27
registration certificate and license to sell. Its jurisdiction was
later expanded under PD 1344 (1978) to include adjudication Sec. 39. Penalties.- Any person who shall violate any of the
of certain cases, to wit: provisions of this Decree and/or any rule or regulation that
may be issued pursuant to this Decree shall, upon conviction,
Sec. 1. In the exercise of its functions to regulate the real be punished by a fine of not more than twenty thousand
estate trade and business and in addition to its powers (P20,000.00) pesos and/or imprisonment of not more than
provided for in Presidential Decree No. 957, the National ten years: Provided, That in the case of corporations,
Housing Authority shall have the exclusive jurisdiction to hear partnership, cooperatives, or associations, the President,
and decide cases of the following nature: Manager or Administrator or the person who has charge of
the administration of the business shall be criminally
a) Unsound real estate business practices; responsible for any violation of this/Decree and/or the rules
and regulations promulgated pursuant thereto,
b) Claims involving refund and any other claims filed by
subdivision lot or condominium unit buyer against the project Having limited, under Section 38 of PD 957, the grant of
owner, developer, dealer, broker or salesman; and power to the former NHA, now HLURB, over the imposition of
fines to those which do not exceed ten thousand pesos, it is
c) Cases involving specific performance of contractual and clear that the power in relation to criminal liability mentioned
statutory obligations filed by buyers of subdivision lot or in the immediately succeeding provision, to impose, upon
condominium unit against the owner, developer, dealer, conviction, fines above ten thousand pesos
broker or salesman. (Italics supplied) and/or imprisonment, was not conferred on it. Section 39,
unlike Section 38, conspicuously does not state that it is the
It is a settled rule of statutory construction that the express MIA that may impose the punishment specified therein.
mention of one thing in the law means the exclusion of others
not expressly mentioned. This rule is expressed in the familiar Not having been specifically conferred with power to hear and
maxim expressio unius est exclusio alterius[19]. Where a decide cases which are criminal in nature, as well as to
statute, by its terms, is expressly limited to certain matters, it impose penalties therefor, we find that the HLURB has no
may not, by interpretation or construction, be extended to jurisdiction over criminal actions arising from violations of PD
others. The rule proceeds from the premise that the 957.
legislature would not have made specified enumerations in a
statute had the intention been not to restrict its meaning and On the other hand, BP Big. 129 states:
to confine its terms to statute had the intention been not to
restrict its meaning and to confine its terms to those expressly Sec. 20. Jurisdiction in Criminal Cases. - Regional Trial Courts
mentioned.[20] Noticeably, cases that are criminal in nature are shall exercise exclusive original jurisdiction in all criminal
not mentioned in the enumeration quoted above. The cases not within the exclusive jurisdiction of any court,
primordial function of the HLURB, after all, is the regulation of tribunal or body, except those now falling under the exclusive
the real estate trade and business and not the conviction and and concurrent jurisdiction of the Sandiganbayan which shall
punishment of criminals. "It may be conceded that the hereafter be exclusively taken cognizance of by the latter.
legislature may confer on administrative boards or bodies
quasi-judicial powers involving the exercise of judgment and Based on the above-quoted provision, it is the RTC that has
discretion, as incident to the performance of administrative jurisdiction over criminal cases arising from violations of PD
functions. But in so doing, the legislature must state its 957.
intention in express terms that would leave no doubt, as even
such quasi-judicial prerogatives must be limited, if they are to In the present case, the affidavit-complaint[23] alleges the
be valid, only to those incidental to or in connection with the violation of Section 23 oFTD 957 and asks for the institution
performance of administrative duties, which do not amount to of a criminal action against respondent Yap, as President of
conferment of jurisdiction over a matter exclusively vested in Primetown. The Office of the City Prosecutor found probable
the courts".[21] cause for the filing of an'Information for the subject
offense. The DOJ made no reversal of such finding of probable
Administrative agencies being tribunals of limited jurisdiction cause. Instead, it directed the withdrawal of the information
can only wield such powers as are specifically granted to on the erroneous premise that it is the HLURB which has
them by their enabling statutes. PD 957 makes the following jurisdiction over the case. However, as above-discussed, and
specific grant of powers to the NHA (now HLURB) for the contrary to the resolution of the Secretary of Justice, it is not
imposition of administrative fines, and it also mentions the HLURB but the RTC that has jurisdiction to hear the said
penalties for criminal cases, to wit: criminal action.

Sec. 38. Administrative Fines.- The Authority may prescribe
and impose fines not exceeding ten thousand pesos for
violations of the provisions of this Decree or any rule or
regulation thereunder. Fines shall be payable to the Authority
and enforceable through writs of execution in accordance
with the provisions of the Rules of Court (Italics supplied)
WHEREFORE, the petition is GRANTED. The assailed October
2, 2002 and January 13, 2003 Orders of the Regional Trial
Court of Lapu-Lapu City, Branch 54, are REVERSED and SET
ASIDE. The said Court is DIRECTED to proceed with the
arraignment of the respondent and to hear the case with
dispatch. SO ORDERED.
28
G.R. No. L-35830 July 24, 1990 including Atty. Danilo Pine to file an answer in their behalf as
defendants in Case No. TM 223, and that the filing of the
FORTUNATA MERCADO, BASILIA CUEVAS MERCADO, petition for certiorari with the Court of Appeals to annul the
SOTERA MERCADO and TRINIDAD MERCADO, petitioners, writ of execution in the same case was without their
vs. knowledge and participation.
Hon. ALBERTO Q. UBAY as Presiding Judge of the Court of
First Instance of Rizal, Branch XXXII, LUCINA SAMONTE Petitioners' motion to dismiss the action was denied by the
and TRINIDAD M. SAMONTE, respondents. CFI of Rizal. Thus, the instant petition was filed.

This is a petition for certiorari and prohibition under Rule 65 The issue to be resolved in this case is whether or not the
of the Revised Rules of Court with a prayer for the issuance of Court of First Instance of Rizal (now RTC) committed grave
a writ of preliminary injunction. Petitioners seek to enjoin and abuse of discretion or acted without jurisdiction in denying
restrain respondent judge from further proceeding with Civil the petitioners' motion to dismiss the action for annulment of
Case No. the final and executory judgment rendered by the CFI of
C-2442 in the Court of First Instance of Rizal (now Regional Cavite.
Trial Court) on the ground of lack of jurisdiction to annul a
final and executory judgment rendered by the Court of First The applicable law is Republic Act No. 296, as amended,
Instance of Cavite (now Regional Trial Court) in Civil Case No. otherwise known as "The Judiciary Act of 1948," which was
TM-223. the law in force when the disputed action for annulment was
filed on May 27, 1972 in the CFI of Rizal. This is based on the
The antecedent facts are as follows: principle that the facts alleged in the complaint and the law in
force at the time of commencement of action determine the
On May 18, 1966, petitioners filed an action for partition with jurisdiction of a court (Lum Bing v. Ibanez 92 Phil. 799;
the Court of First Instance of Cavite, Branch I, docketed as Rodriguez v. Pecson, 92 Phil. 172; Salao v. Crisostomo, No. L-
Civil Case No. TM-223, against Antonio, Ely and respondents 29146, August 5, 1985, 138 SCRA 17; Tolentino v. Social
Lucina and Trinidad, all surnamed Samonte and who are Security Commission No. L-28870, September 6, 1985, 138
brothers and sisters. SCRA 428; Philippine Overseas Drilling, etc. v. Minister of
Labor, G.R. No. 55703, November 27, 1986, 146 SCRA 79).
On June 27, 1966, the defendants were served with a copy of
the complaint and summons thru their co-defendant Antonio Section 44(a) of the Revised Judiciary Act of 1948 then vested
Samonte who acknowledged receipt thereof. original jurisdiction in the Courts of First Instance over all
civil actions in which the subject of the litigation is not
On July 11, 1966, all the defendants in the above-numbered capable of pecuniary estimation and an action for the
case, thru counsel, Atty. Danilo Pine, filed their answer to the annulment of a judgment and an order of a court of justice
complaint. Later, on January 4,1967, the said defendants, thru belongs to this category (Vda. de Ursua v. Pelayo, 107 Phil.
the same counsel, filed their amended answer. 622). A court of first instance or a branch thereof has the
authority and the jurisdiction as provided for by law to annul
a final and executory judgment rendered by another court of
On July 31, 1970, the Court of First Instance of Cavite (now first instance or by another branch of the same court. This
RTC) rendered judgment in favor of the petitioners and was the ruling laid down in the cases of (Dulap v. Court of
against all the defendants in the civil case, including private Appeals, No. L-28306, December 18, 1971, 42 SCRA 537;
respondents. Since no appeal was made by any of the Gianan v. Imperial, No. L-37963, February 28, 1974, 55 SCRA
defendants from the decision of the trial court, the same 755 and Francisco v. Aquino, Nos. L-33235-36, July 29, 1976,
became final and executory and the court issued the 72 SCRA 149 which overturned the contrary rulings in Mas v.
corresponding writ of execution. Dumara-og No. L-16252, September 29,1964,12 SCRA 34; J.M.
Tuason & Co. v. Torres, et al., No. L-24717, December 4, 1967,
However, before the writ could be carried out by the 21 SCRA 1169; and Sterling Investment Corporation, et al. v.
provincial sheriff, all the defendants, thru the same counsel, Ruiz, etc. et al., No. L-30694, October 31, 1969, 30 SCRA 318).
Atty. Danilo Pine, filed a petition for certiorari and mandamus Thus, in an action to annul a final judgment or order, the
with the Court of Appeals seeking to annul the writ of choice of which court the action should be filed is not left to
execution issued by the trial court in Cavite in Case No. TM- the parties; by legal mandate the action should be filed with
223. On July 9, 1971, the Court of Appeals dismissed the the Court of First Instance. The question is in what place (with
petition for lack of merit. what particular court of first instance) the action should be
commenced and tried (Dulap, supra). The issue therefore to
On May 27, 1972, respondent Lucina Samonte and Trinidad be resolved in the instant case is not one of jurisdiction but of
Samonte brought an action before the Court of First Instance venue-whether it was properly laid in the Court of First
of Rizal (now RTC) docketed as Case No. Instance of Rizal for the annulment of the judgment rendered
C-2442, for the annulment of the final judgment rendered by by the CFI of Cavite.
the trial court in Cavite in Case No. TM-223, alleging the
following matters: that they did not authorize anyone

29
Section 2, Rule 4 of the Rules of the Court fixes the venue in of jurisdiction over annulment of judgments from the trial
Courts of First Instance, as follows: courts to the Court of Appeals under B.P. 129.
SEC. 2. Venue in Court of First Instance — (a) Real
actions. — Actions affecting title to, or for recovery of
possession, or for partition or condemnation of, or
foreclosure of mortgage on, real property, shall be
commenced and tried in the province where the
property or any part thereof lies.
(b) Personal actions. — All other actions may be
commenced and tried where the defendant or any of
the defendants besides or may be found, or where the
plaintiff or any of the plaintiffs resides, at the election
of the plaintiff.
xxx xxx xxx
The complaint filed by respondent with the CFI of Rizal for the
annulment of judgment states that they reside at Caloocan
City and that petitioners, as defendants, reside at Cavite (p.
48, Rollo). Since the action for annulment of judgment is a
personal one, the venue of the action in this case should be
either CFI of Caloocan or CFI of Cavite at the election of the
plaintiff. Clearly, venue was improperly laid in the CFI of Rizal
and respondent judge should have dismissed the action for
annulment of judgment on the ground of improper venue.
It is significant to state at this point that although the
prevailing rule before B. P. 129 was that courts of first
instance and their branches have jurisdiction to annul each
other's final judgments and orders as ruled in Dulap and
subsequent cases, fundamental principles still dictate that the
better policy, as a matter of comity or courteous interaction
between courts of first instance and the branches thereof, is
for the annulment cases to be tried by the same court or
branch which heard the main action sought to be annulled
(Gianan v. Imperial, supra).i•t•c-aüsl Moreover, despite the re-
examination by this Court of the old ruling in Mas v. Dumara-
og, supra, recent decisions still uphold its rationale that
pursuant to judicial stability, the doctrine of non-interference
should be regarded as highly important in the administration
of justice whereby the judgment of a court of competent
jurisdiction may not be opened, modified or vacated by any
court of concurrent jurisdiction (Ngo Bun Tiong v. Sayo, No. L-
45825, June 30, 1988, 163 SCRA 237; Republic v. Reyes, Nos.
L-30263-65, October 30, 1987; Parco v. Court of Appeals, No.
L-33152, January 30, 1982, 111 SCRA 262).
While the foregoing discussion may no longer find any
application at this time with the effectivity of Batas Pambansa,
Blg. 129, enacted on August 10, 1981, which transferred the
jurisdiction over actions for annulment of judgment to the
Court of Appeals, it was deemed necessary if only to bring
light and settle the existing confusion and chaos among judges
of the different courts of first instance and their branches
concerning the application of the old laws on jurisdiction and It is an important fundamental principle in Our judicial
venue over this kind of action. Probably, this confusion was system that every litigation must come to an end. Access to
the underlying reason of the Legislature behind the transfer the courts is guaranteed. But there must be a limit thereto.
Once a litigant's rights have been adjudicated in a valid final
Even if We were to disregard, for the sake of argument, the
issue on jurisdiction of and venue in the Court of First
Instance of Rizal in the annulment suit, We found, upon
perusal of the records, that no sufficient grounds exist to
justify the annulment of the final judgment of the Cavite court.
Certain requisites must be established before a judgment can
be the subject of an action for annulment. A judgment can be
annulled only on two grounds: (a) the judgment is void for
want of jurisdiction or for lack of due process of law, or (b) it
has been obtained by fraud (Santiago v. Ceniza, No. L-17322,
June 30, 1962, 5 SCRA 494).
None of the aforementioned grounds was shown to exist to
support the annulment action. The contention of private
respondents that they were not served with summons in Case
No. TM-223 in the Cavite court is untenable. In their
memorandum filed with this Court, they admit that they were
served with summons thru their co-defendant Antonio
Samonte who acknowledged receipt thereof. The receipt of
summons is shown by the return submitted by the sheriff to
the Court of First Instance of Cavite. Apart from the
presumption that the sheriff had regularly performed his
functions, records amply show that all the defendants,
including private respondents had filed their answer in Case
No. TM-223 thru counsel, Atty. Danilo Pine. And when final
judgment had been rendered by the CFI of Cavite against
respondents and a writ of execution issued by the trial court,
the private respondents, thru the same counsel, Atty. Pine
even instituted a petition for certiorari and mandamus to
enjoin the execution of the judgment of the Cavite court.
Respondents now allege that they have not authorized Atty.
Danilo Pine to appear in their behalf as defendants in Case No.
TM-223 or to file the petition for certiorari with the appellate
court. Such allegation is devoid of merit.
An attorney is presumed to be properly authorized to
represent any cause in which he appears, and no written
power of attorney is required to authorize him to appear in
court for his client (Sec. 21, Rule 138, Rules of Court). The fact
that private respondents had not personally appeared in the
hearings of Case TM-223 in the trial court is immaterial. The
filing of the answer by and appearance of Atty. Danilo Pine in
their behalf are sufficient to give private respondents
standing in court. It is hard to believe that a counsel who has
no personal interest in the case would fight for and defend a
case with persistence and vigor if he had not been authorized
or employed by the party concerned. It is obvious that since
the appellate court had decided adversely against private
respondents in their petition for certiorari, the latter filed the
annulment suit for a second chance at preventing petitioners
from enforcing the decision rendered by the Cavite court in
favor of the latter.
30
judgment of a competent court, he should not be granted an amount of P7,320.00 in payment of the checks. However,
unbridled license to come back for another try. The prevailing when the private complainant presented the check for
party should not be harassed by subsequent suits. For, if payment, it was dishonored by the drawee bank for having
endless litigations were to be encouraged, unscrupulous been drawn against insufficient funds.
litigants will multiply in number to the detriment of the
administration of justice (Ngo Bun Tiong v. Sayo, supra; "Nonetheless, the private-respondent executed an affidavit of
Pacquing v. Court of Appeals, G.R. 52498, July 19, 1982, 115 desistance for the purpose of seeking the dismissal of the case
SCRA 117). against the petitioner. But said affidavit was rejected and,
instead, the petitioner was declared administratively liable
ACCORDINGLY, the petition is GRANTED and the respondent and ordered dismissed from the service with forfeiture of all
judge of the Court of First Instance of Rizal (now Regional benefits and disqualification from government service. The
Trial Court) is ORDERED to dismiss Civil Case No. C-2442. The petitioner sought a consideration but the same was denied.
temporary restraining order issued by this Court is hereby
made permanent. "The petitioner next appealed to the Supreme Court by way of
a petition for review on certiorari. However, in the light of the
SO ORDERED. decision in Fabian vs. Desierto, [(295 SCRA 470) 1998] and
Administrative Circular No. 99-2-01-SC, the appeal was
dismissed.

"In the interim, the adverse Ombudsman decision attained

G.R. No. 147995 March 4, 2004
finality."1

JESSIE MACALALAG, petitioner, vs. OMBUDSMAN, PABLO

Petitioner filed an action for annulment of judgment with the
ALORO and COURT OF APPEALS, respondents.
Court of Appeals on the ground that "the gross ignorance,
negligence and incompetence of petitioner's former lawyer
The elemental issue in the petition for review is whether or deprived petitioner of his day in court which (would) justify
not the Court of Appeals has jurisdiction over actions for the annulment of the assailed Resolution and Order." The
annulment of decisions or orders of the Ombudsman in appellate court, however, dismissed the petition for lack of
administrative cases. jurisdiction thereover; it ratiocinated:

The factual antecedents of the case, summarized by the
appellate court, are basically undisputed –
"x x x on February 3, 1997, private respondent Pablo Aloro
lodged with the Office of the Ombudsman for Visayas a
complaint for dishonesty against the petitioner Jessie
Macalalag, an employee of the Philippine Postal Corporation,
Bacolod City. The petitioner was directed to file his answer
through Orders dated February 18, July 7, and November 13,
1997 and April 24, 1998 but he did not bother to file any.
Instead, when the case was called for preliminary conference
on 27 October 1998, he sent a telegram requesting for
postponement and praying that he be allowed to submit his
position paper after which the case shall be deemed
submitted for resolution. Again, no position paper was ever
submitted by him. Accordingly, the investigator was
constrained to resolve the case on the basis solely of the
evidence furnished by the private respondent.
"It was established that the private respondent, a resident of
Bacolod City, is a retired employee receiving a monthly
pension from the Social Security System. As of September 15,
1996, however, he failed to receive his pension checks
corresponding to the months of April, May and July, 1996.
When he went to Bacolod City Post Office to verify about the
matter, he learned that his missing checks were taken by the
petitioner, an employee of the Philippine Postal Corporation
in Bacolod City, who endorsed and encashed them for his
personal benefit. When confronted by the private respondent,
the petitioner issued to the former his personal check in the
"x x x Under Section 9 (2) of B.P. Blg. 129, this Court
has exclusive original jurisdiction only over actions
for annulment of judgments of the Regional Trial
Courts. Nothing is mentioned therein about
judgments of other courts, much less of the
Ombudsman or any quasi-judicial body. The case
of Fabian v. Desierto, 295 SCRA 470 (1998), vested
this Court only with exclusive appellate
jurisdiction to review decisions of the Office of the
Ombudsman in administrative disciplinary actions
which should be taken via a petition for review under
Rule 43 of the 1997 Rules of Civil Procedure."2
Undaunted, petitioner has filed the instant petition for review,
arguing that Section 47 of the Rules of Court on annulment of
judgments, refers to "Regional Trial Courts" in its generic
sense that should thus include quasi-judicial bodies whose
functions or rank are co-equal with those of the Regional Trial
Court.
Petitioner's thesis finds no support in law and jurisprudence.
Rule 47, entitled "Annulment of Judgments or Final Orders
and Resolutions," is a new provision under the 1997 Rules of
Civil Procedure albeit the remedy has long been given
imprimatur by the courts.3 The rule covers "annulment by the
Court of Appeals of judgments or final orders and resolutions
in civil actions of Regional Trial Courts for which the ordinary
remedies of new trial, appeal, petition for relief or other
31
appropriate remedies could no longer be availed of through WHEREFORE, the petition is DISMISSED and the decision,
no fault of the petitioner."4 An action for annulment of dated 24 January 2001, of the Court of Appeals in CA-G.R. SP
judgment is a remedy in law independent of the case where No. 59361 is AFFIRMED. Costs against petitioner.
the judgment sought to be annulled is rendered.5 The concern
that the remedy could so easily be resorted to as an SO ORDERED.
instrument to delay a final and executory judgment, 6 has
prompted safeguards to be put in place in order to avoid an
abuse of the rule. Thus, the annulment of judgment may be
based only on the grounds of extrinsic fraud and lack of
jurisdiction,7 and the remedy may not be invoked (1) where G.R. No. 88550 April 18, 1990
the party has availed himself of the remedy of new trial,
appeal, petition for relief or other appropriate remedy and INDUSTRIAL ENTERPRISES, INC., petitioner,
lost therefrom, or (2) where he has failed to avail himself of vs.
those remedies through his own fault or negligence. THE HON. COURT OF APPEALS, MARINDUQUE MINING &
INDUSTRIAL CORPORATION, THE HON. GERONIMO
Section 27 of Republic Act No. (R.A.) 6770, also known as The VELASCO in his capacity as Minister of Energy and
Ombudsman Act of 1989, provides that orders, directives and PHILIPPINE NATIONAL BANK, respondents.
decisions of the Ombudsman in administrative cases are
appealable to the Supreme Court via Rule 45 of the Rules of This petition seeks the review and reversal of the Decision of
Court. In Fabian v. Desierto8 , the Court has declared Section respondent Court of Appeals in CA-G.R. CV No. 12660, 1 which
27 of the Act to be unconstitutional since it expands the ruled adversely against petitioner herein.
Supreme Court's jurisdiction without its advice and consent
required under Article VI, Section 30, of the 1987 Petitioner Industrial Enterprises Inc. (IEI) was granted a coal
Constitution. Hence, all appeals from decisions of the operating contract by the Government through the Bureau of
Ombudsman in administrative disciplinary cases are instead Energy Development (BED) for the exploration of two coal
to be taken to the Court of Appeals under Rule 43 of the 1997 blocks in Eastern Samar. Subsequently, IEI also applied with
Rules of Civil Procedure. The rule is reiterated in the then Ministry of Energy for another coal operating
Administrative Circular No. 99-2-01-SC. contract for the exploration of three additional coal blocks
which, together with the original two blocks, comprised the
Parenthetically, R.A. 6770 is silent on the remedy of so-called "Giporlos Area."
annulment of judgments or final orders and resolutions of the
Ombudsman in administrative cases. In Tirol, Jr. v. Del IEI was later on advised that in line with the objective of
Rosario,9 the Court has held that since The Ombudsman Act rationalizing the country's over-all coal supply-demand
specifically deals with the remedy of an aggrieved party from balance . . . the logical coal operator in the area should be the
orders, directives and decisions of the Ombudsman in Marinduque Mining and Industrial Corporation (MMIC),
administrative disciplinary cases only, the right to appeal is which was already developing the coal deposit in another
not to be considered granted to parties aggrieved by orders area (Bagacay Area) and that the Bagacay and Giporlos Areas
and decisions of the Ombudsman in criminal or non- should be awarded to MMIC (Rollo, p. 37). Thus, IEI and MMIC
administrative cases. The right to appeal is a mere statutory executed a Memorandum of Agreement whereby IEI assigned
privilege and may be exercised only in the manner prescribed and transferred to MMIC all its rights and interests in the two
by, and in accordance with, the provisions of law.10 There coal blocks which are the subject of IEI's coal operating
must then be a law expressly granting such right. 11 This legal contract.
axiom is also applicable and even more true in actions for
annulment of judgments which is an exception to the rule on
Subsequently, however, IEI filed an action for rescission of the
finality of judgments.
Memorandum of Agreement with damages against MMIC and
the then Minister of Energy Geronimo Velasco before the
Moreover, petitioner may no longer resort to the remedy of Regional Trial Court of Makati, Branch 150, 2alleging that
annulment of judgment after having filed an appeal with the MMIC took possession of the subject coal blocks even before
Supreme Court. Neither can he claim that he is not bound by the Memorandum of Agreement was finalized and approved
his lawyer's actions; it is only in case of gross or palpable by the BED; that MMIC discontinued work thereon; that MMIC
negligence of counsel when the courts can step in and accord failed to apply for a coal operating contract for the adjacent
relief to a client who would have suffered thereby.12 If every coal blocks; and that MMIC failed and refused to pay the
perceived mistake, failure of diligence, lack of experience or reimbursements agreed upon and to assume IEI's loan
insufficient legal knowledge of the lawyer would be admitted obligation as provided in the Memorandum of Agreement
as a reason for the reopening of a case, there would be no end (Rollo, p. 38). IEI also prayed that the Energy Minister be
to controversy. Fundamental to our judicial system is the ordered to approve the return of the coal operating contract
principle that every litigation must come to an end. It would from MMIC to petitioner, with a written confirmation that
be a clear mockery if it were otherwise. Access to the courts is said contract is valid and effective, and, in due course, to
guaranteed, but there must be a limit to it. convert said contract from an exploration agreement to a

32
development/production or exploitation contract in IEI's is inextricably tied up with the right to develop coal-bearing
favor. lands and the determination of whether or not the reversion
of the coal operating contract over the subject coal blocks to
Respondent, Philippine National Bank (PNB), was later IEI would be in line with the integrated national program for
impleaded as co-defendant in an Amended Complaint when coal-development and with the objective of rationalizing the
the latter with the Development Bank of the Philippines country's over-all coal-supply-demand balance, IEI's cause of
effected extra-judicial foreclosures on certain mortgages, action was not merely the rescission of a contract but the
particularly the Mortgage Trust Agreement, dated 13 July reversion or return to it of the operation of the coal blocks.
1981, constituted in its favor by MMIC after the latter Thus it was that in its Decision ordering the rescission of the
defaulted in its obligation totalling around P22 million as of Agreement, the Trial Court, inter alia, declared the continued
15 July 1984. The Court of Appeals eventually dismissed the efficacy of the coal-operating contract in IEI's favor and
case against the PNB (Resolution, 21 September 1989). directed the BED to give due course to IEI's application for
three (3) IEI more coal blocks. These are matters properly
Strangely enough, Mr. Jesus S. Cabarrus is the President of falling within the domain of the BED.
both IEI and MMIC.
For the BED, as the successor to the Energy Development
In a summary judgment, the Trial Court ordered the Board (abolished by Sec. 11, P.D. No. 1206, dated 6 October
rescission of the Memorandum of Agreement, declared the 1977) is tasked with the function of establishing a
continued efficacy of the coal operating contract in favor of comprehensive and integrated national program for the
IEI; ordered the reversion of the two coal blocks covered by exploration, exploitation, and development and extraction of
the coal operating contract; ordered BED to issue its written fossil fuels, such as the country's coal resources; adopting a
affirmation of the coal operating contract and to expeditiously coal development program; regulating all activities relative
cause the conversion thereof from exploration to thereto; and undertaking by itself or through service
development in favor of IEI; directed BED to give due course contracts such exploitation and development, all in the
to IEI's application for a coal operating contract; directed BED interest of an effective and coordinated development of
to give due course to IEI's application for three more coal extracted resources.
blocks; and ordered the payment of damages and
rehabilitation expenses (Rollo, pp. 9-10). Thus, the pertinent sections of P.D. No. 1206 provide:

In reversing the Trial Court, the Court of Appeals held that the
rendition of the summary judgment was not proper since
there were genuine issues in controversy between the parties,
and more importantly, that the Trial Court had no jurisdiction
over the action considering that, under Presidential Decree
No. 1206, it is the BED that has the power to decide
controversies relative to the exploration, exploitation and
development of coal blocks (Rollo, pp. 43-44).
Hence, this petition, to which we resolved to give due course
and to decide.
Sec. 6. Bureau of Energy Development. There is
created in the Department a Bureau of Energy
Development, hereinafter referred to in this Section
as the Bureau, which shall have the following powers
and functions, among others:
a. Administer a national program for the
encouragement, guidance, and whenever necessary,
regulation of such business activity relative to
the exploration, exploitation, development, and
extraction of fossil fuels such as petroleum, coal, . . .

Incidentally, the records disclose that during the pendency of
the appeal before the Appellate Court, the suit against the
then Minister of Energy was dismissed and that, in the
meantime, IEI had applied with the BED for the development
of certain coal blocks.
The decisive issue in this case is whether or not the civil court
has jurisdiction to hear and decide the suit for rescission of
the Memorandum of Agreement concerning a coal operating
contract over coal blocks. A corollary question is whether or
not respondent Court of Appeals erred in holding that it is the
Bureau of Energy Development (BED) which has jurisdiction
over said action and not the civil court.
While the action filed by IEI sought the rescission of what
appears to be an ordinary civil contract cognizable by a civil
court, the fact is that the Memorandum of Agreement sought
to be rescinded is derived from a coal-operating contract and
The decisions, orders, resolutions or actions of the
Bureau may be appealed to the Secretary whose
decisions are final and executory unless appealed to
the President. (Emphasis supplied.)
That law further provides that the powers and functions of
the defunct Energy Development Board relative to the
implementation of P.D. No. 972 on coal exploration and
development have been transferred to the BED, provided that
coal operating contracts including the transfer or assignment
of interest in said contracts, shall require the approval of the
Secretary (Minister) of Energy (Sec. 12, P.D. No. 1206).
Sec. 12. . . . the powers and functions transferred to
the Bureau of Energy Development are:
xxx xxx xxx

33
 ii. The following powers and functions of the Energy when apparently they have statutory power to proceed in
Development Board under PD No. 910 . . . recognition of the primary jurisdiction of an administrative
agency.
(1) Undertake by itself or through other arrangements,
such as service contracts, the active exploration, One thrust of the multiplication of administrative
exploitation, development, and extraction of energy agencies is that the interpretation of contracts and
resources . . . the determination of private rights thereunder is no
longer a uniquely judicial function, exercisable only
(2) Regulate all activities relative to the exploration, by our regular courts (Antipolo Realty Corp. vs.
exploitation, development, and extraction of fossil and National Housing Authority, 153 SCRA 399, at 407).
nuclear fuels . . .
The application of the doctrine of primary jurisdiction,
(P.D. No. 1206) (Emphasis supplied.) however, does not call for the dismissal of the case below. It
need only be suspended until after the matters within the
P.D. No. 972 also provides: competence of the BED are threshed out and determined.
Thereby, the principal purpose behind the doctrine of
primary jurisdiction is salutarily served.
Sec. 8. Each coal operating contract herein authorized
shall . . . be executed by the Energy Development
Board. Uniformity and consistency in the regulation of
business entrusted to an administrative agency are
secured, and the limited function of review by the
Considering the foregoing statutory provisions, the judiciary are more rationally exercised, by
jurisdiction of the BED, in the first instance, to pass upon any preliminary resort, for ascertaining and interpreting
question involving the Memorandum of Agreement between the circumstances underlying legal issues, to agencies
IEI and MMIC, revolving as its does around a coal operating that are better equipped than courts by
contract, should be sustained. specialization, by insight gained through experience,
and by more flexible procedure (Far East Conference
In recent years, it has been the jurisprudential trend to apply v. United States, 342 U.S. 570).
the doctrine of primary jurisdiction in many cases involving
matters that demand the special competence of With the foregoing conclusion arrived at, the question as to
administrative agencies. It may occur that the Court has the propriety of the summary judgment rendered by the Trial
jurisdiction to take cognizance of a particular case, which Court becomes unnecessary to resolve.
means that the matter involved is also judicial in character.
However, if the case is such that its determination requires
the expertise, specialized skills and knowledge of the proper WHEREFORE, the Court Resolved to DENY the petition. No
administrative bodies because technical matters or intricate costs.
questions of facts are involved, then relief must first be
obtained in an administrative proceeding before a remedy SO ORDERED.
will be supplied by the courts even though the matter is
within the proper jurisdiction of a court. This is the doctrine G.R. No. L-21450 April 15, 1968
of primary jurisdiction. It applies "where a claim is originally
cognizable in the courts, and comes into play whenever SERAFIN TIJAM, ET AL., plaintiffs-appellees,
enforcement of the claim requires the resolution of issues vs.
which, under a regulatory scheme, have been placed within MAGDALENO SIBONGHANOY alias GAVINO SIBONGHANOY
the special competence of an administrative body, in such and LUCIA BAGUIO, defendants,
case the judicial process is suspended pending referral of such MANILA SURETY AND FIDELITY CO., INC. (CEBU
issues to the administrative body for its view" (United States v. BRANCH) bonding company and defendant-appellant.
Western Pacific Railroad Co., 352 U.S. 59, Emphasis supplied).
On July 19, 1948 — barely one month after the effectivity of
Clearly, the doctrine of primary jurisdiction finds application Republic Act No. 296 known as the Judiciary Act of 1948 —
in this case since the question of what coal areas should be the spouses Serafin Tijam and Felicitas Tagalog commenced
exploited and developed and which entity should be granted Civil Case No. R-660 in the Court of First Instance of Cebu
coal operating contracts over said areas involves a technical against the spouses Magdaleno Sibonghanoy and Lucia Baguio
determination by the BED as the administrative agency in to recover from them the sum of P1,908.00, with legal interest
possession of the specialized expertise to act on the matter. thereon from the date of the filing of the complaint until the
The Trial Court does not have the competence to decide whole obligation is paid, plus costs. As prayed for in the
matters concerning activities relative to the exploration, complaint, a writ of attachment was issued by the court
exploitation, development and extraction of mineral against defendants' properties, but the same was soon
resources like coal. These issues preclude an initial judicial dissolved upon the filing of a counter-bond by defendants and
determination. It behooves the courts to stand aside even

34
the Manila Surety and Fidelity Co., Inc. hereinafter referred to subsequent motion for reconsideration, and/or in not
as the Surety, on the 31st of the same month. quashing or setting aside the writ of execution.

After being duly served with summons the defendants filed Not one of the assignment of errors — it is obvious — raises
their answer in which, after making some admissions and the question of lack of jurisdiction, neither directly nor
denials of the material averments of the complaint, they indirectly.
interposed a counterclaim. This counterclaim was answered
by the plaintiffs. Although the appellees failed to file their brief, the Court of
Appeals, on December 11, 1962, decided the case affirming
After trial upon the issues thus joined, the Court rendered the orders appealed from.
judgment in favor of the plaintiffs and, after the same had
become final and executory, upon motion of the latter, the On January 8, 1963 — five days after the Surety received
Court issued a writ of execution against the defendants. The notice of the decision, it filed a motion asking for extension of
writ having been returned unsatisfied, the plaintiffs moved time within which to file a motion for reconsideration. The
for the issuance of a writ of execution against the Surety's Court of Appeals granted the motion in its resolution of
bond (Rec. on Appeal, pp. 46-49), against which the Surety January 10 of the same year. Two days later the Surety filed a
filed a written opposition (Id. pp. 49) upon two grounds, pleading entitled MOTION TO DISMISS, alleging substantially
namely, (1) Failure to prosecute and (2) Absence of a demand that appellees action was filed in the Court of First Instance of
upon the Surety for the payment of the amount due under the Cebu on July 19, 1948 for the recovery of the sum of
judgment. Upon these grounds the Surety prayed the Court P1,908.00 only; that a month before that date Republic Act
not only to deny the motion for execution against its counter- No. 296, otherwise known as the Judiciary Act of 1948, had
bond but also the following affirmative relief : "to relieve the already become effective, Section 88 of which placed within
herein bonding company of its liability, if any, under the bond the original exclusive jurisdiction of inferior courts all civil
in question" (Id. p. 54) The Court denied this motion on the actions where the value of the subject-matter or the amount
ground solely that no previous demand had been made on the of the demand does not exceed P2,000.00, exclusive of
Surety for the satisfaction of the judgment. Thereafter the interest and costs; that the Court of First Instance therefore
necessary demand was made, and upon failure of the Surety had no jurisdiction to try and decide the case. Upon these
to satisfy the judgment, the plaintiffs filed a second motion for premises the Surety's motion prayed the Court of Appeals to
execution against the counterbond. On the date set for the set aside its decision and to dismiss the case. By resolution of
hearing thereon, the Court, upon motion of the Surety's January 16, 1963 the Court of Appeals required the appellees
counsel, granted the latter a period of five days within which to answer the motion to dismiss, but they failed to do so.
to answer the motion. Upon its failure to file such answer, the Whereupon, on May 20 of the same year, the Court resolved
Court granted the motion for execution and the to set aside its decision and to certify the case to Us. The
corresponding writ was issued. pertinent portions of its resolution read as follows:

Subsequently, the Surety moved to quash the writ on the
ground that the same was issued without the required
summary hearing provided for in Section 17 of Rule 59 of the
Rules of Court. As the Court denied the motion, the Surety
appealed to the Court of Appeals from such order of denial
and from the one denying its motion for reconsideration
(Id. p. 97). Its record on appeal was then printed as required
by the Rules, and in due time it filed its brief raising therein
no other question but the ones covered by the following
assignment of errors:
I. That the Honorable Court a quo erred in issuing its
order dated November 2, 1957, by holding the
incident as submitted for resolution, without a
summary hearing and compliance with the other
mandatory requirements provided for in Section 17,
Rule 59 of the Rules of Court.
II. That the Honorable Court a quo erred in ordering
the issuance of execution against the herein bonding
company-appellant.
III. That the Honorable Court a quo erred in denying
the motion to quash the writ of execution filed by the
herein bonding company-appellant as well as its
It would indeed appear from the record that the
action at bar, which is a suit for collection of money in
the sum of exactly P1,908.00 exclusive of interest,
was originally instituted in the Court of First Instance
of Cebu on July 19, 1948. But about a month prior to
the filing of the complaint, more specifically on June
17, 1948, the Judiciary Act of 1948 took effect,
depriving the Court of First Instance of original
jurisdiction over cases in which the demand,
exclusive of interest, is not more than P2,000.00.
(Secs. 44[c] and 86[b], R.A. No. 296.)
We believe, therefore, that the point raised in
appellant's motion is an important one which merits
serious consideration. As stated, the complaint was
filed on July 19, 1948. This case therefore has been
pending now for almost 15 years, and throughout the
entire proceeding appellant never raised the question
of jurisdiction until after receipt of this Court's
adverse decision.
There are three cases decided by the Honorable
Supreme Court which may be worthy of
consideration in connection with this case, namely:
Tyson Tan, et al. vs. Filipinas Compañia de Seguros, et
35
 al., G.R. No. L-10096, March 23, 1956; Pindangan thereto praying for its denial but also asked for an
Agricultural Co., Inc. vs. Jose P. Dans, etc., et al., G.R. additional affirmative relief — that it be relieved of its liability
No. L-14591, September 26, 1962; and Alfredo under the counter-bond upon the grounds relied upon in
Montelibano, et al. vs. Bacolod-Murcia Milling Co., support of its opposition — lack of jurisdiction of the court a
Inc., G.R. No. L-15092, September 29, 1962, wherein quo not being one of them.
the Honorable Supreme Court frowned upon the
'undesirable practice' of appellants submitting their Then, at the hearing on the second motion for execution
case for decision and then accepting the judgment, if against the counter-bond, the Surety appeared, through
favorable, but attacking it for lack of jurisdiction counsel, to ask for time within which to file an answer or
when adverse. opposition thereto. This motion was granted, but instead of
such answer or opposition, the Surety filed the motion to
Considering, however, that the Supreme Court has dismiss mentioned heretofore.
the "exclusive" appellate jurisdiction over "all cases
in which the jurisdiction of any inferior court is in A party may be estopped or barred from raising a question in
issue" (See. 1, Par. 3[3], Judiciary Act of 1948, as different ways and for different reasons. Thus we speak of
amended), we have no choice but to certify, as we estoppel in pais, or estoppel by deed or by record, and of
hereby do certify, this case to the Supreme estoppel by laches.
Court.1äwphï1.ñët
Laches, in a general sense is failure or neglect, for an
ACCORDINGLY, pursuant to Section 31 of the unreasonable and unexplained length of time, to do that
Judiciary Act of 1948 as amended, let the record of which, by exercising due diligence, could or should have been
this case be forwarded to the Supreme Court. done earlier; it is negligence or omission to assert a right
within a reasonable time, warranting a presumption that the
It is an undisputed fact that the action commenced by party entitled to assert it either has abandoned it or declined
appellees in the Court of First Instance of Cebu against the to assert it.
Sibonghanoy spouses was for the recovery of the sum of
P1,908.00 only — an amount within the original exclusive The doctrine of laches or of "stale demands" is based upon
jurisdiction of inferior courts in accordance with the grounds of public policy which requires, for the peace of
provisions of the Judiciary Act of 1948 which had taken effect society, the discouragement of stale claims and, unlike the
about a month prior to the date when the action was statute of limitations, is not a mere question of time but is
commenced. True also is the rule that jurisdiction over the principally a question of the inequity or unfairness of
subject matter is conferred upon the courts exclusively by permitting a right or claim to be enforced or asserted.
law, and as the lack of it affects the very authority of the court
to take cognizance of the case, the objection may be raised at It has been held that a party can not invoke the jurisdiction of
any stage of the proceedings. However, considering the facts a court to sure affirmative relief against his opponent and,
and circumstances of the present case — which shall after obtaining or failing to obtain such relief, repudiate or
forthwith be set forth — We are of the opinion that the Surety question that same jurisdiction (Dean vs. Dean, 136 Or. 694,
is now barred by laches from invoking this plea at this late 86 A.L.R. 79). In the case just cited, by way of explaining the
hour for the purpose of annuling everything done heretofore rule, it was further said that the question whether the court
in the case with its active participation. had jurisdiction either of the subject-matter of the action or of
the parties was not important in such cases because the party
As already stated, the action was commenced in the Court of is barred from such conduct not because the judgment or order
First Instance of Cebu on July 19, 1948, that is, almostfifteen of the court is valid and conclusive as an adjudication, but for
years before the Surety filed its motion to dismiss on January the reason that such a practice can not be tolerated —
12, 1963 raising the question of lack of jurisdiction for the first obviously for reasons of public policy.
time.
Furthermore, it has also been held that after voluntarily
It must be remembered that although the action, originally, submitting a cause and encountering an adverse decision on
was exclusively against the Sibonghanoy spouses the Surety the merits, it is too late for the loser to question the
became a quasi-party therein since July 31, 1948 when it filed jurisdiction or power of the court (Pease vs. Rathbun-Jones
a counter-bond for the dissolution of the writ of attachment etc., 243 U.S. 273, 61 L. Ed. 715, 37 S. Ct. 283; St. Louis etc. vs.
issued by the court of origin (Record on Appeal, pp. 15-19). McBride, 141 U.S. 127, 35 L. Ed. 659). And in Littleton vs.
Since then, it acquired certain rights and assumed specific Burgess, 16 Wyo. 58, the Court said that it is not right for a
obligations in connection with the pending case, in party who has affirmed and invoked the jurisdiction of a court
accordance with sections 12 and 17, Rule 57, Rules of Court in a particular matter to secure an affirmative relief, to
(Bautista vs. Joaquin, 46 Phil. 885; Kimpang & Co. vs. Javier, afterwards deny that same jurisdiction to escape a penalty.
65 Phil. 170).
Upon this same principle is what We said in the three cases
Upon the filing of the first motion for execution against the mentioned in the resolution of the Court of Appeals of May 20,
counter-bond the Surety not only filed a written opposition 1963 (supra) — to the effect that we frown upon the
36
"undesirable practice" of a party submitting his case for
decision and then accepting the judgment, only if favorable,
and attacking it for lack of jurisdiction, when adverse — as
well as in Pindañgan etc. vs. Dans, et al., G.R. L-14591,
September 26, 1962; Montelibano, et al., vs. Bacolod-Murcia
Milling Co., Inc., G.R. L-15092; Young Men Labor Union etc. vs.
The Court of Industrial Relation et al., G.R. L-20307, Feb. 26,
1965, and Mejia vs. Lucas, 100 Phil. p. 277.
The facts of this case show that from the time the Surety
became a quasi-party on July 31, 1948, it could have raised
the question of the lack of jurisdiction of the Court of First
Instance of Cebu to take cognizance of the present action by
reason of the sum of money involved which, according to the
law then in force, was within the original exclusive
jurisdiction of inferior courts. It failed to do so. Instead, at
several stages of the proceedings in the court a quo as well as
in the Court of Appeals, it invoked the jurisdiction of said
courts to obtain affirmative relief and submitted its case for a
final adjudication on the merits. It was only after an adverse
decision was rendered by the Court of Appeals that it finally
woke up to raise the question of jurisdiction. 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 on July 19, 1948 and compel the
judgment creditors to go up their Calvary once more. The
inequity and unfairness of this is not only patent but
revolting.
Coming now to the merits of the appeal: after going over the
entire record, We have become persuaded that We can do
nothing better than to quote in toto, with approval, the
decision rendered by the Court of Appeals on December 11,
1962 as follows:
In Civil Case No. R-660 of the Court of First Instance
of Cebu, which was a suit for collection of a sum of
money, a writ of attachment was issued against
defendants' properties. The attachment, however,
was subsequently discharged under Section 12 of
Rule 59 upon the filing by defendants of a bond
subscribed by Manila Surety & Fidelity Co., Inc.
After trial, judgment was rendered in favor of
plaintiffs.
The writ of execution against defendants having been
returned totally unsatisfied, plaintiffs moved, under
Section 17 of Rule 59, for issuance of writ of
execution against Manila Surety & Fidelity Co., Inc. to
enforce the obligation of the bond. But the motion
was, upon the surety's opposition, denied on the
ground that there was "no showing that a demand
had been made, by the plaintiffs to the bonding
company for payment of the amount due under the
judgment" (Record on Appeal, p. 60).
Hence, plaintiffs made the necessary demand upon
the surety for satisfaction of the judgment, and upon
the latter's failure to pay the amount due, plaintiffs
again filed a motion dated October 31, 1957, for
issuance of writ of execution against the surety, with
notice of hearing on November 2, 1957. On October
31, 1957, the surety received copy of said motion and
notice of hearing.
It appears that when the motion was called on
November 2, 1957, the surety's counsel asked that he
be given time within which to answer the motion, and
so an order was issued in open court, as
follows:1äwphï1.ñët
As prayed for, Atty. Jose P. Soberano, Jr., counsel for
the Manila Surety & Fidelity Co., Inc., Cebu Branch,
is given until Wednesday, November 6, 1957, to file his
answer to the motion for the issuance of a writ of
execution dated October 30, 1957 of the
plaintiffs, after which this incident shall be deemed
submitted for resolution.
SO ORDERED.
Given in open court, this 2nd day of November, 1957,
at Cebu City, Philippines.
(Sgd.) JOSE M. MENDOZA
Judge
Since the surety's counsel failed to file any answer or
objection within the period given him, the court, on
December 7, 1957, issued an order granting plaintiffs'
motion for execution against the surety; and on
December 12, 1957, the corresponding writ of
execution was issued.
On December 24, 1957, the surety filed a motion to
quash the writ of execution on the ground that the
same was "issued without the requirements of
Section 17, Rule 59 of the Rules of Court having been
complied with," more specifically, that the same was
issued without the required "summary hearing". This
motion was denied by order of February 10, 1958.
On February 25, 1958, the surety filed a motion for
reconsideration of the above-stated order of denial;
which motion was likewise denied by order of March
26, 1958.
From the above-stated orders of February 10, 1958
and March 26, 1958 — denying the surety's motion
to quash the writ of execution and motion for
reconsideration, respectively — the surety has
interposed the appeal on hand.
The surety insists that the lower court should have
granted its motion to quash the writ of execution
because the same was issued without the summary
hearing required by Section 17 of Rule 59, which
reads;
37
 "Sec. 17. When execution returned unsatisfied,
recovery had upon bond. — If the execution
be returned unsatisfied in whole or in part,
the surety or sureties on any bond given
pursuant to the provisions of this role to
secure the payment of the judgment shall
become finally charged on such bond, and
bound to pay to the plaintiff upon demand
the amount due under the judgment, which
amount may be recovered from such surety
or sureties after notice and summary hearing
in the same action." (Emphasis ours)
Summary hearing is "not intended to be carried on in
the formal manner in which ordinary actions are
prosecuted" (83 C.J.S. 792). It is, rather, a procedure
by which a question is resolved "with dispatch, with
the least possible delay, and in preference to ordinary
legal and regular judicial proceedings" (Ibid, p. 790).
What is essential is that "the defendant is notified or
summoned to appear and is given an opportunity to
hear what is urged upon him, and to interpose a
defense, after which follows an adjudication of the
rights of the parties" (Ibid., pp. 793-794); and as to
the extent and latitude of the hearing, the same will
naturally lie upon the discretion of the court,
depending upon the attending circumstances and the
nature of the incident up for consideration.
In the case at bar, the surety had been notified of the
plaintiffs' motion for execution and of the date when
the same would be submitted for consideration. In
fact, the surety's counsel was present in court when
the motion was called, and it was upon his request
that the court a quo gave him a period of four days
within which to file an answer. Yet he allowed that
period to lapse without filing an answer or objection.
The surety cannot now, therefore, complain that it
was deprived of its day in court.
It is argued that the surety's counsel did not file an
answer to the motion "for the simple reason that all
its defenses can be set up during the hearing of the
motion even if the same are not reduced to writing"
(Appellant's brief, p. 4). There is obviously no merit
in this pretense because, as stated above, the record
will show that when the motion was called, what the
surety's counsel did was to ask that he be allowed
and given time to file an answer. Moreover, it was
stated in the order given in open court upon request
of the surety's counsel that after the four-day period
within which to file an answer, "the incident shall be
deemed submitted for resolution"; and counsel
apparently agreed, as the order was issued upon his
instance and he interposed no objection thereto.
It is also urged that although according to Section 17
of Rule 59, supra, there is no need for a separate
action, there must, however, be a separate judgment
against the surety in order to hold it liable on the
bond (Appellant's Brief, p. 15). Not so, in our opinion.
A bond filed for discharge of attachment is, per
Section 12 of Rule 59, "to secure the payment to the
plaintiff of any judgment he may recover in the
action," and stands "in place of the property so
released". Hence, after the judgment for the plaintiff
has become executory and the execution is "returned
unsatisfied" (Sec. 17, Rule 59), as in this case, the
liability of the bond automatically attaches and, in
failure of the surety to satisfy the judgment against
the defendant despite demand therefor, writ of
execution may issue against the surety to enforce the
obligation of the bond.
UPON ALL THE FOREGOING, the orders appealed from are
hereby affirmed, with costs against the appellant Manila
Surety and Fidelity Company, Inc.
G.R. No. L-17029 September 30, 1964
SAMUEL S. SHARRUF, petitioner, vs. FRANK BUBLA,
ARSENIO SOLIDUM, Presiding Judge, Court of First
Instance of Manila, Branch XVII,respondents.
This is a verified petition for certiorari, with a prayer for a
preliminary injunction filed by Samuel S. Sharruf against
Frank Bubla and the Hon. Arsenio Solidum, Judge of the Court
of First Instance of Manila, Branch XVII, to set aside the
latter's orders of March 14 and April 11, 1960 in Civil Case No.
33461 denying petitioner's motion for new trial, for lack of
merit, and his motion for reconsideration thereof,
respectively, and his order of June 3, 1960 disallowing
petitioner's appeal from the order of denial of March 14, 1960
on the ground that the order aforesaid was already final and
executory, and ordering its execution.
On August 15, 1957 respondent Bubla, a non-resident alien,
through his counsel and legal representative, William Quasha
& Associates, filed a complaint with the respondent court to
compel petitioner to render an accounting in connection with
a written contract entered into between them (Civil Case No.
33461). Petitioner filed an answer denying the material
allegations of the complaint and setting forth therein a
counterclaim for damages, but on September 17, 1958 his
counsel filed a motion to withdraw his appearance for the
reason that he had been unable to get in touch with him. The
court granted the motion.
When the case called for pre-trial on September 27, 1958,
petitioner failed to appear, and the court set the case for trial
on the judgments an December 1, 1958. Notice thereof was
sent to petitioner at his address of record. After several
postponements, the hearing of the case was reset for March 6,
1959, but petitioner again failed to appear either personally
or thru counsel, despite notice sent to him at his address of
record. Instead of proceeding with the trial of the case — as
His Honor could have done — he directed respondent Bubla's
38
counsel to exert efforts to notify petitioner of the trial of the a) To render to the plaintiff, Frank Bubla, an
case on April 23, 1959. Upon petitioner's failure to appear accounting of the gross receipts from the Theatrical
when the case was finally called for trial on that date, the performances of the "Bubla Continental Revue" at the
court received Bubla's evidence which consisted of Bubla's "Riviera Night Club", Manila Grand Opera House and
deposition taken before the Philippine Consul, Philippine in other places in the Philippines covering the period
Embassy at Sydney, Australia, and documentary evidence of four (4) months under defendant's management,
relative to their contract, management and operation of the less authorized expenditures and advances;
theatrical venture and stipulation as to accounting. On the
basis thereof, the respondent court found that the following b) To pay such sum as may be due the plaintiff as a
facts had been established: result of such accounting, with interest thereon at the
legal rate from January 31, 1955, until fully paid;
From the evidence in the record, it appears that the
plaintiff, Frank Bubla, is a resident of 11 Shipley c) To pay to plaintiff the amount of P2,000.00 by way
Street, South Yarra Melbourne, State of Victoria, of attorney's fees; and
Commonwealth of Australia, and was an
entrepreneur managing a theatrical troupe under the d) The costs of suit.
name of "Bubla Continental Revue" in 1954, while the
defendant, Samuel S. Sharruf was then the operator
and manager of the "Riviera Night Club" at Dewey On February 5, 1960, copy of the above-quoted decision was
Boulevard, Manila. Exhibits "A" to "K" of plaintiff's served upon petitioner. On March 7, 1960, he filed a motion
deposition show that plaintiff and defendant entered for new trial on the ground of mistake and/or excusable
into a series of agreement by correspondence negligence which motion was denied by the court in its order
whereby the former undertook to provide the latter of March 14, 1960, as follows:
with the so-called "Bubla Continental Revue" for the
purpose of presenting two nightly floor shows in said Inasmuch as the Motion for New Trial and to set aside
night club for a consideration of P2,500.00 monthly, the decision in this case is not supported by affidavits
"net and free income tax", as well as three daily stage of merit, as required by the Rules, the same is hereby
shows at the Manila Grand Opera House (Exhibits "E", DENIED. Moreover, it appears from the record that
"A-3", and "A-46"), for another P2,500.00 a month. the decision was rendered on June 9, 1959, whereas
Subsequently, plaintiff and defendant reduced the the Motion for New Trial was filed on March 7, 1960,
terms of their agreement to a formal contract (Exhibit more than six months after the condition of such
"P"). judgment, as provided in Section 3, Rule 38 of the
Rules of Court ... .
The "Bubla Continental Revue", comprising of six
members excluding the plaintiff, who was unable to On March 18, 1960, petitioner filed an urgent motion for
enter this country because his visa was not approved, reconsideration which was denied by the court on March 19,
arrived in Manila sometime in September, 1954, and 1960. Four days later, petitioner filed another motion for
from September 29, 1954 to January 15, 1955, it reconsideration raising as additional grounds therefor that
performed floor shows at the "Riviera Night Club" the decision rendered in said case was null and void for want
twice nightly, and three or four stage shows daily at of notice to him of the hearing thereof and that respondent
the Manila Grand Opera House under the Bubla had no legal capacity to sue before our courts. Said
management and sponsorship of herein defendant motion was denied on April 11, 1960. In another order of June
(Exhibits "A-28", "A-36", "A-42", "A-43" and "A-46"). 3, 1960, the respondent court disallowed petitioner's appeal
In the meantime plaintiff authorized defendant to pay from its order of March 14th, on the ground that it was not
the salaries of the members of said theatrical troupe filed within the reglementary period for appeal, and ordered
and requested an accounting of the expenditures the issuance of a writ of execution.
incurred as well as payment of whatever amount was
due plaintiff by virtue of their contract (Exhibit "P"). Upon the facts before Us, we find no sufficient reason to grant
However, despite such demands (Annex "A", Exhibits the writ prayed for.1awphîl.nèt
"II", "III", "IV" and "V"), defendant failed to render any
accounting and to pay to plaintiff such amount as was
The granting or denial of a motion for new trial is a matter
due him, thereby compelling the latter to engage the
addressed to the sound discretion of the trial court. In this
services of his lawyers for P5,000.00 for the purpose
case where petitioner's motion was based on mistake and/or
of instituting this action. excusable negligence, the lower court found that the same
was not supported by any affidavit of merit. Even if we were
and on June 9, 1959, it rendered judgment as follows: to agree with petitioner that, in this connection, his answer to
the complaint may be taken into account, the allegations made
WHEREFORE, judgment is hereby rendered ordering therein do not appear to satisfy the rule as to proof of mistake
the defendant, Samuel S. Sharuff as follows: or excusable negligence. Consequently, the respondent court
committed no error in denying said motion.

39
Petitioner insists that the respondent court acquired no
jurisdiction over the person of respondent Bubla. We find this
to be without merit. It is settled law in this jurisdiction that a
court may acquire jurisdiction over the person of a party
either by his voluntary appearance in court demanding
affirmative relief or by having him served. With summons
within the territorial jurisdiction of the Philippines. Bubla was
the plaintiff in Civil Case No. 33461 filed against the herein
petitioner. By filing his complaint, therefore, Bubla submitted
voluntarily to the jurisdiction of the respondent court and the
latter acquired such jurisdiction even if, as a matter of fact,
Bubla had never been able to enter the Philippines.
Petitioner's claim that the decision of the respondent court in
Civil Case No. 33461 is void because of lack of notice of trial
served on him is likewise untenable. The record shows that
petitioner had a registered address in the record of said case
at which repeated notices of trial were addressed to him.
Aside from this, it also appears that the respondent court,
instead of proceeding to receive the evidence of the plaintiff
on March 6, went out of its way and deemed it wise to reset
the trial for April 23 of the same year, directing Bubla's
counsel to exert efforts to notify petitioner. But this
notwithstanding, the latter failed to appear on the aforesaid
date, for which reason the respondent court received Bubla's
evidence and subsequently rendered judgment in his favor.
WHEREFORE, the petition for certiorari under consideration
is dismissed, with costs.
G.R. No. 74781 March 13, 1991
FRANCISCO S. PE AND ANITA MONASTERIO
PE, petitioners, vs. HON. INTERMEDIATE APPELLATE
COURT, DOMINGA SY, LILIA ONG, JOSE JUAN TONG, LILY
LIM, ONG SEE FU alias ONG TO AN AND LUISA
YU, respondents.
This is a petition for review on certiorari seeking the reversal
of the decision of the respondent Intermediate Appellate
Court (now Court of Appeals) dated December 27, 1985
which affirmed the decision of the Court of First Instance of
Iloilo City, Branch I dismissing the case; and its resolution
dated May 7, 1986 denying the motion for reconsideration for
lack of merit.
The antecedent facts giving rise to the controversy at bar are
as follows:
Plaintiff spouses Francisco and Anita Monasterio Pe were the
registered owners of several parcels of land, designated as
Lots Nos. 40, 41, 42, 45 and 47 of the Cadastral Survey of Iloilo
and two buildings on Lot 40 and 41, all situated in the City of
Iloilo, Philippines.
The above-mentioned parcels of land were mortgaged with
different banking institutions. Lots Nos. 40 and 41 were
mortgaged to the Philippine Veterans Bank for P351,162.59;
Lots Nos. 42 and 45 were mortgaged to the Development
Bank of the Philippines for P189,322.49; and Lot No. 47 to
Philippine Commercial and Industrial Bank for P57,000.00.
Also mortgaged with the same bank were a tractor and one
set of "Ransomed Model II, Offset Discharrow Category II-18-
24 diameter" for P118,242.00.
Sometime in September 1976, the Pe spouses and the spouses
Ong Su Fu alias Ong To An and Luisa Yu negotiated for the
purchase of the five (5) parcels of land.
On September 14, 1976, Ong Su Fu issued in favor of
Francisco Pe a check for P 30,000.00 as earnest money and as
partial payment for the price of the lots.
Thereafter, on September 20, 1976 ,the Pe spouses as First
Party, executed a contract to sell, but it was in favor of
defendant Domingo Sy (son-in-law of Ong Su Fu). Said
contract was prepared by the Ong Su Fu's counsel. The
pertinent portions of the said contract are quoted hereunder:
WITNESSETH
That the FIRST PARTY is the registered owner of five
(5) parcels of land, more particularly described as
follows:
xxx xxx xxx
That the FIRST PARTY intends to sell the above-
described parcels of land and the SECOND PARTY is
likewise desirous of buying the same for the total
consideration of SIX HUNDRED TWENTY THOUSAND
(P620,000.00) PESOS, Philippine Currency, under the
following terms and conditions, to with (sic):
1. That the SECOND PARTY shall pay to the FIRST
PARTY the sum of THIRTY THOUSAND (P30,000.00)
PESOS, upon the signing of the agreement which shall
serve as partial payment of the total consideration,
receipt of which is hereby acknowledged by the
FIRST PARTY as shown by his signature appearing
hereinbelow.
2. That since the above-described parcels of land are
presently incumbered (sic) with different banking
institutions it is the agreement of the parties that as
soon as the incumbrance (sic) appertaining to the
respective lots is paid and the mortgage herein
released, the FIRST PARTY shall execute the
corresponding final deed of sale for said lots in favor
of the SECOND PARTY, it being understood that the
SECOND PARTY shall procure the payment of the said
bank obligation which payment shall be considered
payment of that particular lots; that this procedure
shall be followed with respect to the other lots herein
involved;
40
 xxx xxx xxx
(Roll of Exhibits, pp. 1 and 2)
Thereafter, Domingo Sy transferred his rights under the
contract to sell to Jose Juan Tong with respect to Lots Nos. 40
and 41.
On October 4, 1976, after payment by Jose Juan Tong of the Pe
spouses' account with the Philippine Veterans Bank in the
amount of P 351,162.59, pursuant to the contract, the latter
executed in favor of the former a deed of sale covering Lots
Nos. 40 and 41 and the two buildings thereon.
However, the deed of sale stated that the consideration was P
95,000.00. The titles to the two parcels of land were
subsequently transferred to spouses Jose Juan Tong and Lily
Lim.
On the same date, the Pe spouses executed in favor of
Domingo Sy a deed of sale over Lots Nos. 42 and 45, after
payment by the latter of the former's account with the
Development Bank of the Philippines in the amount of
P189,322.49.
Again, the deed of sale stated a different consideration which
is P30,000.00 and thereafter, the respective titles were issued Hence, this present petition raising this lone issue:
in favor of Domingo Sy and his spouse.
Consequently, a contract to sell and a corresponding deed of
sale covering Lot No. 47 were prepared for Dionisio Sy
(brother of Domingo Sy), but the deed did not materialize as
the former's offer of P 49,454.92, as payment for the However, the petitioners raised four (4) assignment of errors,
remaining parcel of land (Lot No. 47) was rejected by the Pe which are as follows:
spouses, the latter insisting on the full payment of their
obligation with the Philippine Commercial and Industrial
Bank (PCIB) in the amount of P383,615.97 and P620,000.00
as the alleged consideration stipulated in the Contract to Sell.
Thereafter, the Pe spouses failed to settle their account with
the PCIB, hence, the mortgages on Lot No. 47, the tractor and
the "Offset Discharrow" were foreclosed and the properties
were sold at public auction. After the foreclosure and sale of
the properties, the Pe spouses were asked to pay the
deficiency in the amount of P 110,095.08 as of April 5, 1979,
and the overdue balance in several promissory notes.
On November 25, 1976, the Pe spouses commenced a
complaint for specific performance and/or rescission of
contract and reconveyance of property with damages, with
the Court of First Instance of Iloilo.
After a careful perusal of the facts and circumstances of the
case, the trial court reached the conclusion that the
questioned stipulation in the contract "is clear and could not
be construed otherwise." (Record on Appeal, p. 109) In
addition, the court found that there was partial novation
through the substitution of spouses Jose Juan Tong and his
wife for Domingo Sy in the purchase of Lots 40 and 41 and the
two buildings thereon. Accordingly, the trial court rendered a
decision on August 3, 1981, the dispositive portion is
hereunder quoted as follows:
WHEREFORE, the above-entitled case is dismissed.
With costs against the plaintiffs.
SO ORDERED. (Record on Appeal, p. 111)
From said decision, the Pe spouses interposed an appeal
before the respondent Intermediate Appellate Court (now
Court of Appeals). The respondent court affirmed the trial
court's decision and rendered judgment on December 27,
1985, to wit:
WHEREFORE, the decision appealed from is hereby
AFFIRMED. With costs.
SO ORDERED. (Rollo, p. 24)
On March 1, 1986, the Pe spouses filed a motion for
reconsideration of the aforementioned Intermediate
Appellate Court's (now Court of Appeals) decision. However,
respondent court in a resolution dated May 7, 1986 denied
the motion for lack of merit.
WHETHER THE ENTIRE CONSIDERATION OF THE
CONTRACT TO SELL IS P620,000.00 OR
P1,544,161.05 (Rollo, p. 8)
I
THE LOWER COURT ERRED IN GIVING THE
DEFENDANTS THE BENEFITS OF NOVATION AS A
DEFENSE NOTWITHSTANDING THAT NO SUCH
SPECIAL OR AFFIRMATIVE DEFENSE HAS EVER
BEEN INTERPOSED IN THEIR ANSWER AND THUS
DEEMED WAIVED BY THEM.
II
THE LOWER COURT ERRED IN DEALING WITH
ISSUES THAT WERE NEITHER RAISED IN THE
PLEADING NOR INCIDENTAL TO THE ISSUE JOINED
THEREBY WHICH HAD BEEN AGREED UPON BY THE
PARTIES IN THE PRE-TRIAL CONFERENCE AS THE
ONLY ONE TO BE RESOLVED BY THE COURT.
III
THE LOWER COURT ERRED IN NOT FINDING THAT
THE PREPONDERANCE OF EVIDENCE IS IN FAVOR
OF THE PLAINTIFFS.
41
 IV 6. . . .

THE LOWER COURT ERRED IN DISMISSING THE The market value of the lots in 1976 must be twice its value in
COMPLAINT. 1967, hence,

Petitioners allege that the consideration of the Contract to Sell it is very far from the version of the private
is P1,544,161.05 and thereby submit the following grounds as respondent which is P 620,000.00. (Rollo, p. 11)
the basis for its allegation, to wit:
On petitioners' first assignment of error, they contend that
1. The wordings of the Contract itself point to the "novation was never raised in the pleadings nor in the pre-
consideration of P l,544,161.05. . . . (Rollo, p. 9) trial conference," hence, the lower court erred in giving the
defendants the benefit of novation as a defense.
xxx xxx xxx
For its second assignment of error, petitioners allege that "the
The petitioners insist that the questioned stipulations of the respondent court has no jurisdiction to invent its own issues.
contract mean It is not only the parties who are bound by the issues stated in
the pre-trial order but the court is equally bound thereby."
that 'Second Party' (private respondents) shall first (Rollo, p. 14)
pay the total bank obligations of the five (5) lots to
the three (3) banks (Development Bank of the On the other hand, respondents argue that the questioned
Philippines, Philippine Veterans Bank and Philippine stipulations in the Contract to Sell are undoubtedly clear and
Commercial and Industrial Bank) and thereafter, pay unambiguous and insisted that only the petitioners injected
the amount of P620,000.00 to the first party doubtful interpretation to said stipulations.
(petitioners). Since the total obligations to the three
(3) banks is P 924,161.05, the total consideration is In response to petitioners' first and second assignment of
that amount plus P620,000.00 which is P error, the respondents contend that "the records of the case
l,544,161.05. (Rollo, pp. 9-10). will show that novation was pleaded in the answer; thus,
having been properly pleaded the issued novation was
2. . . . unquestionably within the jurisdiction of the Honorable lower
court to resolve." (Rollo, pp. 121-122)
To limit the consideration to only P 620,000.00 is
senseless and absurd because the bank obligations The Court finds petitioners' first and second assignment of
alone amounted to P924,161.05—very much more errors meritorious.
than P 620,000.00. (Rollo, p. 10)
In the recent case of General Insurance and Surety Corporation
3. . . . v. Union Insurance Society of Canton (G.R. Nos. 30475-76, 22
November 1989, 179 SCRA 530), the Court citing Section 2,
To insist on P 620,000.00 is to make ineffective the Rule 9 of the Revised Rules of Court ruled that "defenses and
terms and conditions providing for the payment of objections not pleaded either in a motion to dismiss or in the
the bank obligations — an interpretation which answer are deemed waived, the only exceptions recognized
would contradict the clear and positive stipulation of under the rule being: (1) a failure to state a cause of action,
the contract. (Rollo, p. 10) and (2) lack of jurisdiction."

xxx xxx xxx In contradiction to respondents' contention, We rule that

4. The logic and common sense of the contract point
to P1,544,161.05 as the consideration. (Rollo, p. 11)
xxx xxx xxx
5. . . .
If the consideration is only P 620,000.00, why did the
two private respondents pay the obligations covering
Lots Nos. 40, 41, 42 and 45 with the banks? They had
no business doing that because they would eventually
be paying more—P 924,161.05 (the total bank
obligations). (Rollo, p. 11)
novation was never pleaded in the respondents' answer,
hence, such defense is deemed waived.
Time and again, We stress that "courts of justice have no
jurisdiction or power to decide a question not in issue."
(Viajar v. Court of Appeals, G.R. No. 77294, 12 December
1988, 168 SCRA 405, 411 citing Lim Toco vs. Go Fay, 80 Phil.
166) A judgment going outside the issues and purporting to
adjudicate something upon which the parties were not heard
is not merely irregular, but extrajudicial and invalid. (Viajar
vs. Court of Appeals, supra citing Salvante vs. Cruz, 88 Phil.
236-244, Lazo vs. Republic Surety and Insurance Co., Inc., 31
SCRA 329, 334).
42
Thus, the lower court erred in discussing novation, an issue petitioners shall execute the final deed of sale. The
which is neither raised in the pleadings nor material to the subsequent acts of the parties conformed with this condition.
controversy. The lower court is hereby admonished in dealing Thus, the parties should be bound by such written contract.
and discussing issues that were neither raised in the
pleadings, incidental or material to the controversy at bar. It should also be noted that at the time of the execution of the
Contract to Sell, the total obligation due to the PCIB as regards
Notwithstanding such error, We still rule that the findings of Lot No. 47 was only P99,374.89. The rise of the same
facts of the lower court considering the fact that such were obligation to P 383,615.96 (Record on Appeal, p. 98) was
affirmed by the appellate court should be given full credit. brought about by subsequent loans the petitioners obtained
with the same bank for which the tractor and an "Offset
The Supreme Court is not a trier of facts. It leaves these Discharrow" were given as additional security.
matters to the lower court, which have more opportunity and
facilities to examine these matters. The Supreme Court has no Contracts are respected as the law between the contracting
jurisdiction as a rule to reverse the lower court's findings. parties.1âwphi1 The parties may establish such stipulations,
(Korean Airlines Ltd. vs. Court of Appeals, G.R. No. 61418, 24 clauses, terms and conditions as they may want to include. As
September 1987, 154 SCRA 211) As a rule, findings of fact of long as such agreements are not contrary to law, morals, good
the Court of Appeals are final and conclusive and cannot be customs, public policy or public order they shall have the
reviewed on appeal, provided, they are borne out by the force of law between them. (Mercantile Insurance Co., Inc. vs.
record or are based on substantial evidence. However, this Ysmael Jr. and Co., Inc. G.R. No. 43862, 13 January 1989, 169
rule admits of certain exceptions, as when the findings of facts SCRA 66)
are conclusions without citation of specific evidence on which
they are based; or the appellate court's findings are contrary All premises considered, this Court is convinced that the
to those of the trial court. (Sese vs. Intermediate Appellate lower court did not commit any error in dismissing the
Court, G.R. No. 66168, 31 July 1987,152 SCRA 585) complaint.

The findings of fact of both courts are conclusions based on ACCORDINGLY, the appealed judgment and resolution of the
substantial evidence and the appellate court's findings are not respondent Intermediate Appellate Court (now Court of
in any way contrary to that of the lower court, therefore, such Appeals) affirming the lower court's decision are hereby
factual findings are conclusive and should be given great AFFIRMED with costs against the petitioners.
weight.
SO ORDERED.
The lower court's decision is based on the specific provisions
of the contract. It ruled that "this particular stipulation is clear JESSE U. LUCAS, Petitioner,
and could not be construed otherwise. Plaintiff Francisco Pe is - versus -
a holder of the degree of Bachelor of Science in Commerce
with twenty six years of experience as businessman. He could JESUS S. LUCAS,
have realized the import of the document he signed." (Record Respondent.
on Appeal, p. 64)
G.R. No. 190710
Article 1370 of the New Civil Code provides that: June 6, 2011

If the terms of a contract are clear and leave no doubt

upon the intention of the contracting parties, the
literal meaning of its stipulation shall control. Is a prima facie showing necessary before a court can issue a
DNA testing order? In this petition for review on certiorari, we
If the words appear to be contrary to the evident address this question to guide the Bench and the Bar in
intention of the parties, the latter shall prevail over dealing with a relatively new evidentiary tool. Assailed in this
the former. petition are the Court of Appeals (CA) Decision[1] dated
September 25, 2009 and Resolution dated December 17,
After a thorough examination of the provisions of the Contract 2009.
to Sell, the Court finds petitioners' contention devoid of merit.
The words of the contract are clear and leave no doubt upon
the true intention of the contracting parties. The condition The antecedents of the case are, as follows:
laid down in paragraph (2) of the Contract to Sell does not
provide for an additional consideration but only provides for On July 26, 2007, petitioner, Jesse U. Lucas, filed a Petition to
the manner in which the consideration is to be applied. It Establish Illegitimate Filiation (with Motion for the
clearly provides that the payment shall be applied to Submission of Parties to DNA Testing)[2] before the Regional
petitioners' obligations with the bank where the respective Trial Court (RTC), Branch 72, Valenzuela City. Petitioner
properties were mortgaged and upon their release, narrated that, sometime in 1967, his mother, Elsie Uy (Elsie),
migrated to Manila from Davao and stayed with a certain Ate
43
Belen (Belen) who worked in a prominent nightspot
in Manila. Elsie would oftentimes accompany Belen to work.
On one occasion, Elsie got acquainted with respondent, Jesus
S. Lucas, at Belens workplace, and an intimate relationship
developed between the two. Elsie eventually got pregnant
and, on March 11, 1969, she gave birth to petitioner, Jesse U.
Lucas. The name of petitioners father was not stated in
petitioners certificate of live birth. However, Elsie later on
told petitioner that his father is respondent. On August 1,
1969, petitioner was baptized at San Isidro Parish, Taft
Avenue, Pasay City. Respondent allegedly extended financial
support to Elsie and petitioner for a period of about two
years. When the relationship of Elsie and respondent ended,
Elsie refused to accept respondents offer of support and
decided to raise petitioner on her own. While petitioner was
growing up, Elsie made several attempts to introduce
petitioner to respondent, but all attempts were in vain.
Attached to the petition were the following: (a) petitioners
certificate of live birth; (b) petitioners baptismal certificate;
(c) petitioners college diploma, showing that he graduated
from Saint Louis University in Baguio City with a degree in
Psychology; (d) his Certificate of Graduation from the same
school; (e) Certificate of Recognition from the University of
the Philippines, College of Music; and (f) clippings of several
articles from different newspapers about petitioner, as a
musical prodigy.
Respondent was not served with a copy of the petition.
Nonetheless, respondent learned of the petition to establish
filiation. His counsel therefore went to the trial court on
August 29, 2007 and obtained a copy of the petition.
Petitioner filed with the RTC a Very Urgent Motion to Try and
Hear the Case. Hence, on September 3, 2007, the RTC, finding
the petition to be sufficient in form and substance, issued the
Order[3] setting the case for hearing and urging anyone who
has any objection to the petition to file his opposition. The
court also directed that the Order be published once a week
for three consecutive weeks in any newspaper of general
circulation in the Philippines, and that the Solicitor General be
furnished with copies of the Order and the petition in order
that he may appear and represent the State in the case.
On September 4, 2007, unaware of the issuance of the favor. Thus, on October 20, 2008, it issued the Order[9] setting
September 3, 2007 Order, respondent filed a Special aside the courts previous order, thus:
Appearance and Comment. He manifested inter alia that: (1)
he did not receive the summons and a copy of the petition; (2)
the petition was adversarial in nature and therefore summons
should be served on him as respondent; (3) should the court
agree that summons was required, he was waiving service of
summons and making a voluntary appearance; and (4) notice
by publication of the petition and the hearing was improper
because of the confidentiality of the subject matter.[4]
On September 14, 2007, respondent also filed a Manifestation
and Comment on Petitioners Very Urgent Motion to Try and
Hear the Case.Respondent reiterated that the petition for
recognition is adversarial in nature; hence, he should be
served with summons. This time, the RTC held that the ruling on the grounds relied
After learning of the September 3, 2007 Order, respondent upon by petitioner for filing the petition is premature
filed a motion for reconsideration.[5] Respondent averred that considering that a full-blown trial has not yet taken place. The
the petition was not in due form and substance because
petitioner could not have personally known the matters that
were alleged therein. He argued that DNA testing cannot be
had on the basis of a mere allegation pointing to respondent
as petitioners father. Moreover, jurisprudence is still
unsettled on the acceptability of DNA evidence.
On July 30, 2008, the RTC, acting on respondents motion for
reconsideration, issued an Order[6] dismissing the case. The
court remarked that, based on the case of Herrera v.
Alba,[7] there are four significant procedural aspects of a
traditional paternity action which the parties have to face:
a prima facie case, affirmative defenses, presumption of
legitimacy, and physical resemblance between the putative
father and the child. The court opined that petitioner must
first establish these four procedural aspects before he can
present evidence of paternity and filiation, which may include
incriminating acts or scientific evidence like blood group test
and DNA test results. The court observed that the petition did
not show that these procedural aspects were present.
Petitioner failed to establish a prima facie case considering
that (a) his mother did not personally declare that she had
sexual relations with respondent, and petitioners statement
as to what his mother told him about his father was clearly
hearsay; (b) the certificate of live birth was not signed by
respondent; and (c) although petitioner used the surname of
respondent, there was no allegation that he was treated as the
child of respondent by the latter or his family. The court
opined that, having failed to establish a prima facie case,
respondent had no obligation to present any affirmative
defenses. The dispositive portion of the said Order therefore
reads:
WHEREFORE, for failure of the
petitioner to establish compliance with the
four procedural aspects of a traditional
paternity action in his petition, his motion
for the submission of parties to DNA testing
to establish paternity and filiation is
hereby DENIED. This case is DISMISSED
without prejudice.
SO ORDERED.[8]
Petitioner seasonably filed a motion for reconsideration to the
Order dated July 30, 2008, which the RTC resolved in his
WHEREFORE, in view of the
foregoing, the Order dated July 30, 2008 is
hereby reconsidered and set aside.
Let the Petition (with Motion for the
Submission of Parties to DNA Testing) be set
for hearing on January 22, 2009 at 8:30 in
the morning.
xxxx
SO ORDERED.[10]
44
court stressed that the petition was sufficient in form and
substance. It was verified, it included a certification against
forum shopping, and it contained a plain, concise, and direct
statement of the ultimate facts on which petitioner relies on
for his claim, in accordance with Section 1, Rule 8 of the Rules
of Court. The court remarked that the allegation that the
statements in the petition were not of petitioners personal
knowledge is a matter of evidence. The court also dismissed
respondents arguments that there is no basis for the taking of
DNA test, and that jurisprudence is still unsettled on the
acceptability of DNA evidence. It noted that the new Rule on
DNA Evidence[11] allows the conduct of DNA testing, whether
at the courts instance or upon application of any person who
has legal interest in the matter in litigation.
Respondent filed a Motion for Reconsideration of
Order dated October 20, 2008 and for Dismissal of
Petition,[12] reiterating that (a) the petition was not in due
form and substance as no defendant was named in the title,
and all the basic allegations were hearsay; and (b) there was
no prima facie case, which made the petition susceptible to
dismissal.
The RTC denied the motion in the Order dated
January 19, 2009, and rescheduled the hearing.[13]
Aggrieved, respondent filed a petition
for certiorari with the CA, questioning the Orders dated
October 20, 2008 and January 19, 2009.
On September 25, 2009, the CA decided the petition
for certiorari in favor of respondent, thus:
WHEREFORE, the instant petition
for certiorari is hereby GRANTED for being
meritorious. The assailed Orders dated
October 20, 2008 and January 19, 2009 both
issued by the Regional Trial Court, Branch
172 of Valenzuela City in SP. Proceeding Case
No. 30-V-07 are REVERSED and SET ASIDE.
Accordingly, the case docketed as SP.
Proceeding Case No. 30-V-07 is
DISMISSED.[14]
The CA held that the RTC did not acquire jurisdiction
over the person of respondent, as no summons had been
served on him. Respondents special appearance could not be
considered as voluntary appearance because it was filed only
for the purpose of questioning the jurisdiction of the court
over respondent. Although respondent likewise questioned
the courts jurisdiction over the subject matter of the petition,
the same is not equivalent to a waiver of his right to object to
the jurisdiction of the court over his person.
The CA remarked that petitioner filed the petition to
establish illegitimate filiation, specifically seeking a DNA
testing order to abbreviate the proceedings. It noted that
petitioner failed to show that the four significant procedural
aspects of a traditional paternity action had been met. The CA
further held that a DNA testing should not be allowed when
the petitioner has failed to establish a prima facie case, thus:
While the tenor [of Section 4, Rule on DNA Evidence]
appears to be absolute, the rule could not really have
been intended to trample on the substantive rights of
the parties. It could have not meant to be an
instrument to promote disorder, harassment, or
extortion. It could have not been intended to legalize
unwarranted expedition to fish for evidence. Such
will be the situation in this particular case if a court
may at any time order the taking of a DNA test. If the
DNA test in compulsory recognition cases is
immediately available to the petitioner/complainant
without requiring first the presentation of
corroborative proof, then a dire and absurd rule
would result. Such will encourage and promote
harassment and extortion.
xxxx
At the risk of being repetitious, the Court would like
to stress that it sees the danger of allowing an
absolute DNA testing to a compulsory recognition
test even if the plaintiff/petitioner failed to
establish prima facieproof. x x x If at anytime, motu
proprio and without pre-conditions, the court can
indeed order the taking of DNA test in compulsory
recognition cases, then the prominent and well-to-do
members of our society will be easy prey for
opportunists and extortionists. For no cause at all, or
even for [sic] casual sexual indiscretions in their
younger years could be used as a means to harass
them. Unscrupulous women, unsure of the paternity
of their children may just be taking the chances-just
in case-by pointing to a sexual partner in a long past
one-time encounter. Indeed an absolute and
unconditional taking of DNA test for compulsory
recognition case opens wide the opportunities for
extortionist to prey on victims who have no stomach
for scandal.[15]
Petitioner moved for reconsideration. On December
17, 2009, the CA denied the motion for lack of merit.[16]
In this petition for review on certiorari, petitioner
raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS
ERRED WHEN IT RESOLVED THE ISSUE OF
LACK OF JURISDICTION OVER THE PERSON
OF HEREIN RESPONDENT ALBEIT THE
SAME WAS NEVER RAISED IN THE
PETITION FOR CERTIORARI.
I.A
WHETHER OR NOT THE
COURT OF APPEALS ERRED
WHEN IT RULED THAT
JURISDICTION WAS NOT
ACQUIRED OVER THE
PERSON OF THE
RESPONDENT.
45
 I.B right to summons in his Manifestation and Comment on
WHETHER OR NOT THE Petitioners Very Urgent Motion to Try and Hear the Case.
COURT OF APPEALS ERRED Hence, the issue is already moot and academic.
WHEN IT FAILED TO
REALIZE THAT THE Petitioner argues that the case was adversarial in nature.
RESPONDENT HAD Although the caption of the petition does not state
ALREADY SUBMITTED respondents name, the body of the petition clearly indicates
VOLUNTARILY TO THE his name and his known address. He maintains that the body
JURISDICTION OF THE of the petition is controlling and not the caption.
COURT A QUO.
Finally, petitioner asserts that the motion for DNA testing
I.C should not be a reason for the dismissal of the petition since it
WHETHER OR NOT THE is not a legal ground for the dismissal of cases. If the CA
COURT OF APPEALS ERRED entertained any doubt as to the propriety of DNA testing, it
WHEN IT ESSENTIALLY should have simply denied the motion.[18] Petitioner points
RULED THAT THE TITLE OF out that Section 4 of the Rule on DNA Evidence does not
A PLEADING, RATHER require that there must be a prior proof of filiation before
THAN ITS BODY, IS DNA testing can be ordered. He adds that the CA erroneously
CONTROLLING. relied on the four significant procedural aspects of a paternity
case, as enunciated in Herrera v. Alba.[19] Petitioner avers that
II. these procedural aspects are not applicable at this point of the
WHETHER OR NOT THE COURT OF APPEALS proceedings because they are matters of evidence that should
ERRED WHEN IT ORDERED THE DISMISSAL be taken up during the trial.[20]
OF THE PETITION BY REASON OF THE
MOTION (FILED BY THE PETITIONER In his Comment, respondent supports the CAs ruling on most
BEFORE THE COURT A QUO) FOR THE issues raised in the petition for certiorari and merely
CONDUCT OF DNA TESTING. reiterates his previous arguments. However, on the issue of
lack of jurisdiction, respondent counters that, contrary to
II.A petitioners assertion, he raised the issue before the CA in
WHETHER OR NOT THE relation to his claim that the petition was not in due form and
COURT OF APPEALS ERRED substance. Respondent denies that he waived his right to the
WHEN IT ESSENTIALLY service of summons. He insists that the alleged waiver and
RULED THAT DNA TESTING voluntary appearance was conditional upon a finding by the
CAN ONLY BE ORDERED court that summons is indeed required. He avers that the
AFTER THE PETITIONER assertion of affirmative defenses, aside from lack of
ESTABLISHES PRIMA FACIE jurisdiction over the person of the defendant, cannot be
PROOF OF FILIATION. considered as waiver of the defense of lack of jurisdiction
over such person.
III.
WHETHER OR NOT THE COURT OF APPEALS The petition is meritorious.
ERRED WITH ITS MISPLACED
RELIANCE ON THE CASE OF HERRERA Primarily, we emphasize that the assailed Orders of
VS. ALBA, the trial court were orders denying respondents motion to
dismiss the petition for illegitimate filiation. An order denying
ESPECIALLY AS REGARDS THE FOUR a motion to dismiss is an interlocutory order which neither
SIGNIFICANT PROCEDURAL ASPECTS OF A terminates nor finally disposes of a case, as it leaves
TRADITIONAL PATERNITY ACTION.[17] something to be done by the court before the case is finally
decided on the merits. As such, the general rule is that the
Petitioner contends that respondent never raised as issue in denial of a motion to dismiss cannot be questioned in a special
his petition for certiorari the courts lack of jurisdiction over civil action for certiorari, which is a remedy designed to
his person. Hence, the CA had no legal basis to discuss the correct errors of jurisdiction and not errors of judgment.
same, because issues not raised are deemed waived or Neither can a denial of a motion to dismiss be the subject of
abandoned. At any rate, respondent had already voluntarily an appeal unless and until a final judgment or order is
submitted to the jurisdiction of the trial court by his filing of rendered. In a number of cases, the court has granted the
several motions asking for affirmative relief, such as the (a) extraordinary remedy of certiorari on the denial of the motion
Motion for Reconsideration of the Order dated September 3, to dismiss but only when it has been tainted with grave
2007; (b) Ex Parte Motion to Resolve Motion for abuse of discretion amounting to lack or excess of
Reconsideration of the Order dated November 6, 2007; and jurisdiction.[21] In the present case, we discern no grave abuse
(c) Motion for Reconsideration of the Order dated October 20, of discretion on the part of the trial court in denying the
2008 and for Dismissal of Petition. Petitioner points out that motion to dismiss.
respondent even expressly admitted that he has waived his
46
 The grounds for dismissal relied upon by respondent is determined that the adverse party had, in fact, the
were (a)the courts lack of jurisdiction over his person due to opportunity to file his opposition, as in this case. We find that
the absence of summons, and (b) defect in the form and the due process requirement with respect to respondent has
substance of the petition to establish illegitimate filiation, been satisfied, considering that he has participated in the
which is equivalent to failure to state a cause of action. proceedings in this case and he has the opportunity to file his
opposition to the petition to establish filiation.
We need not belabor the issues on whether lack of
jurisdiction was raised before the CA, whether the court To address respondents contention that the petition
acquired jurisdiction over the person of respondent, or should have been adversarial in form, we further hold that the
whether respondent waived his right to the service of herein petition to establish filiation was sufficient in form. It
summons. We find that the primordial issue here is actually was indeed adversarial in nature despite its caption which
whether it was necessary, in the first place, to serve summons lacked the name of a defendant, the failure to implead
on respondent for the court to acquire jurisdiction over the respondent as defendant, and the non-service of summons
case. In other words, was the service of summons upon respondent. A proceeding is adversarial where the party
jurisdictional? The answer to this question depends on the seeking relief has given legal warning to the other party and
nature of petitioners action, that is, whether it is an action in afforded the latter an opportunity to contest it.[27] In this
personam, in rem, or quasi in rem. petitionclassified as an action in remthe notice requirement
for an adversarial proceeding was likewise satisfied by the
An action in personam is lodged against a person publication of the petition and the giving of notice to the
based on personal liability; an action in rem is directed against Solicitor General, as directed by the trial court.
the thing itself instead of the person; while an action quasi in
rem names a person as defendant, but its object is to subject The petition to establish filiation is sufficient in
that person's interest in a property to a corresponding lien or substance. It satisfies Section 1, Rule 8 of the Rules of Court,
obligation. A petition directed against the "thing" itself or which requires the complaint to contain a plain, concise, and
the res, which concerns the status of a person, like a petition direct statement of the ultimate facts upon which the plaintiff
for adoption, annulment of marriage, or correction of entries bases his claim. A fact is essential if it cannot be stricken out
in the birth certificate, is an action in rem.[22] without leaving the statement of the cause of action
inadequate.[28] A complaint states a cause of action when it
contains the following elements: (1) the legal right of plaintiff,
In an action in personam, jurisdiction over the person (2) the correlative obligation of the defendant, and (3) the act
of the defendant is necessary for the court to validly try and or omission of the defendant in violation of said legal right.[29]
decide the case. In a proceeding in rem or quasi in rem,
jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court, provided that The petition sufficiently states the ultimate facts
the latter has jurisdiction over the res. Jurisdiction over relied upon by petitioner to establish his filiation to
the res is acquired either (a) by the seizure of the property respondent. Respondent, however, contends that the
under legal process, whereby it is brought into actual custody allegations in the petition were hearsay as they were not of
of the law, or (b) as a result of the institution of legal petitioners personal knowledge. Such matter is clearly a
proceedings, in which the power of the court is recognized matter of evidence that cannot be determined at this point but
and made effective. [23] only during the trial when petitioner presents his evidence.

The herein petition to establish illegitimate filiation is
an action in rem. By the simple filing of the petition to
establish illegitimate filiation before the RTC, which
undoubtedly had jurisdiction over the subject matter of the
petition, the latter thereby acquired jurisdiction over the case.
An in rem proceeding is validated essentially through
publication. Publication is notice to the whole world that the
proceeding has for its object to bar indefinitely all who might
be minded to make an objection of any sort to the right sought
to be established.[24] Through publication, all interested
parties are deemed notified of the petition.
In a motion to dismiss a complaint based on lack of cause of
action, the question submitted to the court for determination
is the sufficiency of the allegations made in the complaint to
constitute a cause of action and not whether those allegations
of fact are true, for said motion must hypothetically admit the
truth of the facts alleged in the complaint.[30]
The inquiry is confined to the four corners of the complaint,
and no other.[31] The test of the sufficiency of the facts alleged
in the complaint is whether or not, admitting the facts alleged,
the court could render a valid judgment upon the same in
accordance with the prayer of the complaint.[32]

If at all, service of summons or notice is made to the
defendant, it is not for the purpose of vesting the court with
jurisdiction, but merely for satisfying the due process
requirements.[25] This is but proper in order to afford the
person concerned the opportunity to protect his interest if he
so chooses.[26] Hence, failure to serve summons will not
deprive the court of its jurisdiction to try and decide the case.
In such a case, the lack of summons may be excused where it
If the allegations of the complaint are sufficient in form and
substance but their veracity and correctness are assailed, it is
incumbent upon the court to deny the motion to dismiss and
require the defendant to answer and go to trial to prove his
defense. The veracity of the assertions of the parties can be
ascertained at the trial of the case on the merits.[33]
47
 The statement in Herrera v. Alba[34] that there are (a) A biological sample exists that is
four significant procedural aspects in a traditional paternity relevant to the case;
case which parties have to face has been widely
misunderstood and misapplied in this case. A party is (b) The biological sample: (i) was
confronted by these so-called procedural aspects during trial, not previously subjected to the
when the parties have presented their respective evidence. type of DNA testing now
They are matters of evidence that cannot be determined at requested; or (ii) was previously
this initial stage of the proceedings, when only the petition to subjected to DNA testing, but
establish filiation has been filed. The CAs observation that the results may require
petitioner failed to establish a prima facie casethe first confirmation for good reasons;
procedural aspect in a paternity caseis therefore misplaced.
A prima facie case is built by a partys evidence and not by (c) The DNA testing uses a
mere allegations in the initiatory pleading. scientifically valid technique;

Clearly then, it was also not the opportune time to (d) The DNA testing has the
discuss the lack of a prima facie case vis--vis the motion for scientific potential to produce
DNA testing since no evidence has, as yet, been presented by new information that is relevant
petitioner. More essentially, it is premature to discuss to the proper resolution of the
whether, under the circumstances, a DNA testing order is case; and
warranted considering that no such order has yet been issued
by the trial court. In fact, the latter has just set the said case (e) The existence of other factors, if
for hearing. any, which the court may
consider as potentially affecting
At any rate, the CAs view that it would be dangerous the accuracy or integrity of the
to allow a DNA testing without corroborative proof is well DNA testing.
taken and deserves the Courts attention. In light of this
observation, we find that there is a need to supplement the This Rule shall not preclude a DNA
Rule on DNA Evidence to aid the courts in resolving motions testing, without need of a prior court order,
for DNA testing order, particularly in paternity and other at the behest of any party, including law
filiation cases. We, thus, address the question of whether enforcement agencies, before a suit or
a prima facie showing is necessary before a court can issue a proceeding is commenced.
DNA testing order.

The Rule on DNA Evidence was enacted to guide the This does not mean, however, that a DNA testing
Bench and the Bar for the introduction and use of DNA order will be issued as a matter of right if, during the hearing,
evidence in the judicial system. It provides the prescribed the said conditions are established.
parameters on the requisite elements for reliability and
validity (i.e., the proper procedures, protocols, necessary In some states, to warrant the issuance of the DNA
laboratory reports, etc.), the possible sources of error, the
testing order, there must be a show cause hearing wherein
available objections to the admission of DNA test results as
the applicant must first present sufficient evidence to
evidence as well as the probative value of DNA evidence. It
establish a prima facie case or a reasonable possibility of
seeks to ensure that the evidence gathered, using various paternity or good cause for the holding of the test. [36] In these
methods of DNA analysis, is utilized effectively and properly,
states, a court order for blood testing is considered a search,
[and] shall not be misused and/or abused and, more which, under their Constitutions (as in ours), must be
importantly, shall continue to ensure that DNA analysis serves
preceded by a finding of probable cause in order to be valid.
justice and protects, rather than prejudice the public.[35]
Hence, the requirement of a prima facie case, or reasonable
possibility, was imposed in civil actions as a counterpart of a
Not surprisingly, Section 4 of the Rule on DNA finding of probable cause. The Supreme Court of Louisiana
Evidence merely provides for conditions that are aimed to eloquently explained
safeguard the accuracy and integrity of the DNA testing.
Section 4 states: Although a paternity action is civil, not
criminal, the constitutional prohibition
SEC. 4. Application for DNA Testing Order. against unreasonable searches and seizures
The appropriate court may, at any time, is still applicable, and a proper showing of
either motu proprio or on application of any sufficient justification under the particular
person who has a legal interest in the matter factual circumstances of the case must be
in litigation, order a DNA testing. Such order made before a court may order a compulsory
shall issue after due hearing and notice to the blood test. Courts in various jurisdictions
parties upon a showing of the following: have differed regarding the kind of
procedures which are required, but those
jurisdictions have almost universally found
48
 that a preliminary showing must be made
before a court can constitutionally order
compulsory blood testing in paternity
cases.We agree, and find that, as a
preliminary matter, before the court may
issue an order for compulsory blood testing,
the moving party must show that there is a
reasonable possibility of paternity. As
explained hereafter, in cases in which
paternity is contested and a party to the
action refuses to voluntarily undergo a blood
test, a show cause hearing must be held in
which the court can determine whether
there is sufficient evidence to establish
a prima facie case which warrants issuance
of a court order for blood testing.[37]

The same condition precedent should be applied in

our jurisdiction to protect the putative father from mere
harassment suits. Thus, during the hearing on the motion for
DNA testing, the petitioner must present prima facie evidence
or establish a reasonable possibility of paternity.

Notwithstanding these, it should be stressed that the

issuance of a DNA testing order remains discretionary upon
the court. The court may, for example, consider whether there
is absolute necessity for the DNA testing. If there is already
preponderance of evidence to establish paternity and the DNA
test result would only be corroborative, the court may, in its
discretion, disallow a DNA testing.

WHEREFORE, premises considered, the petition

is GRANTED. The Court of Appeals Decision dated September
25, 2009 and Resolution dated December 17, 2009
are REVERSED and SET ASIDE. The Orders dated October 20,
2008 and January 19, 2009 of
the Regional Trial Court of Valenzuela City are AFFIRMED.

SO ORDERED.

49