G.R. No.
205728 January 21, 2015
THE DIOCESE OF BACOLOD, REPRESENTED BY THE MOST REV.
BISHOP VICENTE M. NAVARRA and THE BISHOP HIMSELF IN HIS
PERSONAL CAPACITY, Petitioners,
vs.
COMMISSION ON ELECTIONS AND THE ELECTION OFFICER OF
BACOLOD CITY, ATTY. MAVIL V. MAJARUCON, Respondents.
DECISION
LEONEN, J.:
"The Philippines is a democratic and republican State. Sovereignty
resides in the people and all government authority emanates from
them." – Article II, Section 1, Constitution
All governmental authority emanates from our people. No
unreasonable restrictions of the fundamental and preferred right to
expression of the electorate during political contests no matter how
seemingly benign will be tolerated.
This case defines the extent that our people may shape the debates
during elections. It is significant and of first impression. We are
asked to decide whether the Commission on Elections (COMELEC)
has the competence to limit expressions made by the citizens —
who are not candidates — during elections.
Before us is a special civil action for certiorari and prohibition with
application for preliminary injunction and temporary restraining
order1 under Rule 65 of the Rules of Court seeking to nullify
COMELEC’s Notice to Remove Campaign Materials2 dated February
22, 2013 and letter3 issued on February 27, 2013.
The facts are not disputed.
On February 21, 2013, petitioners posted two (2) tarpaulins within a
private compound housing the San Sebastian Cathedral of Bacolod.
Each tarpaulin was approximately six feet (6') by ten feet (10') in
size. They were posted on the front walls of the cathedral within
public view. The first tarpaulin contains the message "IBASURA RH
Law" referring to the Reproductive Health Law of 2012 or Republic
Act No. 10354. The second tarpaulin is the subject of the present
case.4 This tarpaulin contains the heading "Conscience Vote" and
lists candidates as either "(Anti-RH) Team Buhay" with a check mark,
or "(Pro-RH) Team Patay" with an "X" mark.5 The electoral
candidates were classified according to their vote on the adoption of
Republic Act No. 10354, otherwise known as the RH Law.6Those who
voted for the passing of the law were classified by petitioners as
comprising "Team Patay," while those who voted against it form
"Team Buhay":7
TEAM BUHAY TEAM PATAY
Estrada, JV Angara, Juan Edgardo
Honasan, Gregorio Casiño, Teddy
Magsaysay, Mitos Cayetano, Alan Peter
Pimentel, Koko Enrile, Jackie
Trillanes, Antonio Escudero, Francis
Villar, Cynthia Hontiveros, Risa
Party List Buhay Legarda, Loren
Party List Ang Pamilya Party List Gabriela
Party List Akbayan
Party List Bayan Muna
Party List Anak Pawis
During oral arguments, respondents conceded that the tarpaulin
was neither sponsored nor paid for by any candidate. Petitioners
also conceded that the tarpaulin contains names ofcandidates for
the 2013 elections, but not of politicians who helped in the passage
of the RH Law but were not candidates for that election.
On February 22, 2013, respondent Atty. Mavil V. Majarucon, in her
capacity as Election Officer of Bacolod City, issued a Notice to
Remove Campaign Materials8 addressed to petitioner Most Rev.
Bishop Vicente M. Navarra. The election officer ordered the
tarpaulin’s removal within three (3) days from receipt for being
oversized. COMELEC Resolution No. 9615 provides for the size
requirement of two feet (2’) by three feet (3’).9
On February 25, 2013, petitioners replied10 requesting, among
others, that (1) petitioner Bishop be given a definite ruling by
COMELEC Law Department regarding the tarpaulin; and (2) pending
this opinion and the availment of legal remedies, the tarpaulin be
allowed to remain.11
On February 27, 2013, COMELEC Law Department issued a
letter12 ordering the immediate removal of the tarpaulin; otherwise,
it will be constrained to file an election offense against petitioners.
The letter of COMELEC Law Department was silenton the remedies
available to petitioners. The letter provides as follows:
Dear Bishop Navarra:
It has reached this Office that our Election Officer for this City, Atty.
Mavil Majarucon, had already given you notice on February 22, 2013
as regards the election propaganda material posted on the church
vicinity promoting for or against the candidates and party-list groups
with the following names and messages, particularly described as
follows:
Material size : six feet (6’) by ten feet (10’)
Description : FULL COLOR TARPAULIN
Image of : SEE ATTACHED PICTURES
Message : CONSCIENCE VOTE (ANTI RH) TEAM
BUHAY; (PRO RH) TEAM PATAY
Location : POSTED ON THE CHURCH VICINITY
OF THE DIOCESE OF BACOLOD CITY
The three (3) – day notice expired on February 25, 2013.
Considering that the above-mentioned material is found to be in
violation of Comelec Resolution No. 9615 promulgated on January
15, 2013 particularly on the size (even with the subsequent division
of the said tarpaulin into two), as the lawful size for election
propaganda material is only two feet (2’) by three feet (3’), please
order/cause the immediate removal of said election propaganda
material, otherwise, we shall be constrained to file an election
offense case against you.
We pray that the Catholic Church will be the first institution to help
the Commission on Elections inensuring the conduct of peaceful,
orderly, honest and credible elections.
Thank you and God Bless!
[signed]
ATTY. ESMERALDA AMORA-LADRA
Director IV13
Concerned about the imminent threatof prosecution for their
exercise of free speech, petitioners initiated this case through this
petition for certiorari and prohibition with application for
preliminary injunction and temporary restraining order.14 They
question respondents’ notice dated February 22, 2013 and letter
issued on February 27, 2013. They pray that: (1) the petition be
given due course; (2) a temporary restraining order (TRO) and/or a
writ of preliminary injunction be issued restraining respondents
from further proceeding in enforcing their orders for the removal of
the Team Patay tarpaulin; and (3) after notice and hearing, a
decision be rendered declaring the questioned orders of
respondents as unconstitutional and void, and permanently
restraining respondents from enforcing them or any other similar
order.15
After due deliberation, this court, on March 5, 2013, issued a
temporary restraining order enjoining respondents from enforcing
the assailed notice and letter, and set oral arguments on March 19,
2013.16
On March 13, 2013, respondents filed their comment17 arguing that
(1) a petition for certiorari and prohibition under Rule 65 of the
Rules of Court filed before this court is not the proper remedy to
question the notice and letter of respondents; and (2) the tarpaulin
is an election propaganda subject to regulation by COMELEC
pursuant to its mandate under Article IX-C, Section 4 of the
Constitution. Hence, respondents claim that the issuances ordering
its removal for being oversized are valid and constitutional.18
During the hearing held on March 19, 2013, the parties were
directed to file their respective memoranda within 10 days or by
April 1, 2013, taking into consideration the intervening holidays.19
The issues, which also served as guide for the oral arguments, are: 20
I.
WHETHER THE 22 FEBRUARY 2013 NOTICE/ORDER BY ELECTION
OFFICER MAJARUCON AND THE 27 FEBRUARY 2013 ORDER BY THE
COMELEC LAW DEPARTMENT ARE CONSIDERED JUDGMENTS/FINAL
ORDERS/RESOLUTIONS OF THE COMELEC WHICH WOULD WARRANT
A REVIEW OF THIS COURT VIA RULE 65 PETITION[;]
A. WHETHER PETITIONERS VIOLATED THE HIERARCHY OF
COURTS DOCTRINE AND JURISPRUDENTIAL RULES
GOVERNING APPEALS FROM COMELEC DECISIONS;
B. ASSUMING ARGUENDO THAT THE AFOREMENTIONED
ORDERS ARE NOT CONSIDERED JUDGMENTS/FINAL
ORDERS/RESOLUTIONS OF THE COMELEC, WHETHER
THERE ARE EXCEPTIONAL CIRCUMSTANCES WHICH
WOULD ALLOW THIS COURT TO TAKE COGNIZANCE OF
THE CASE[;]
II.
WHETHER IT IS RELEVANT TODETERMINE WHETHER THE
TARPAULINS ARE "POLITICAL ADVERTISEMENT" OR "ELECTION
PROPAGANDA" CONSIDERING THAT PETITIONER IS NOT A POLITICAL
CANDIDATE[;]
III.
WHETHER THE TARPAULINS ARE A FORM OR EXPRESSION
(PROTECTED SPEECH), OR ELECTION PROPAGANDA/POLITICAL
ADVERTISEMENT[;]
A. ASSUMING ARGUENDO THAT THE TARPAULINS ARE A
FORM OF EXPRESSION, WHETHER THE COMELEC
POSSESSES THE AUTHORITY TO REGULATE THE SAME[;]
B. WHETHER THIS FORM OF EXPRESSION MAY BE
REGULATED[;]
IV.
WHETHER THE 22 FEBRUARY 2013 NOTICE/ ORDER BY ELECTION
OFFICER MAJARUCON AND THE 27 FEBRUARY 2013 ORDER BY THE
COMELEC LAW DEPARTMENT VIOLATES THE PRINCIPLE OF
SEPARATION OF CHURCH AND STATE[;] [AND]
V.
WHETHER THE ACTION OF THE PETITIONERS IN POSTING ITS
TARPAULIN VIOLATES THE CONSTITUTIONAL PRINCIPLE OF
SEPARATION OF CHURCH AND STATE.
I
PROCEDURAL ISSUES
I.A
This court’s jurisdiction over COMELEC cases
Respondents ask that this petition be dismissed on the ground that
the notice and letter are not final orders, decisions, rulings, or
judgments of the COMELEC En Banc issued in the exercise of its
adjudicatory powers, reviewable via Rule 64 of the Rules of Court.21
Rule 64 is not the exclusive remedy for all acts of the COMELEC. Rule
65 is applicable especially to raise objections relating to a grave
abuse of discretion resulting in the ouster of jurisdiction.22 As a
special civil action, there must also be a showing that there be no
plain, speedy, and adequate remedy in the ordinary course of the 3) The issue involves the protection of labor;
law.
4) The decision or resolution sought tobe set aside is a
Respondents contend that the assailed notice and letter are not nullity; or
subject to review by this court, whose power to review is "limited
only to final decisions, rulings and orders of the COMELEC En Banc 5) The need for relief is extremely urgent and certiorari is
rendered in the exercise of its adjudicatory or quasi-judicial the only adequate and speedy remedy available.
power."23 Instead, respondents claim that the assailed notice and
letter are reviewable only by COMELEC itself pursuant to Article IX-
Ultimately, this court took jurisdiction in Repoland decided that the
C, Section 2(3) of the Constitution24 on COMELEC’s power to decide
status quo anteorder issued by the COMELEC Division was
all questions affecting elections.25 Respondents invoke the cases of
unconstitutional.
Ambil, Jr. v. COMELEC,26 Repol v. COMELEC,27 Soriano, Jr. v.
COMELEC,28 Blanco v. COMELEC,29 and Cayetano v. COMELEC,30 to
illustrate how judicialintervention is limited to final decisions, Respondents also cite Soriano, Jr. v. COMELEC.This case was also an
orders, rulings and judgments of the COMELEC En Banc.31 election protest case involving candidates for the city council of
Muntinlupa City.41 Petitioners in Soriano, Jr.filed before this court a
petition for certiorari against an interlocutory order of the COMELEC
These cases are not applicable.
First

In Ambil, Jr. v. COMELEC, the losing party in the gubernatorial race

Division.42 While the petition was pending in this court, the
of Eastern Samar filed the election protest.32 At issue was the
COMELEC First Division dismissed the main election protest
validity of the promulgation of a COMELEC Division resolution.33 No
case.43 Sorianoapplied the general rule that only final orders should
motion for reconsideration was filed to raise this issue before the
be questioned with this court. The ponencia for this court, however,
COMELEC En Banc. This court declared that it did not have
acknowledged the exceptions to the general rule in ABS-CBN.44
jurisdiction and clarified:

Blanco v. COMELEC, another case cited by respondents, was a

We have interpreted [Section 7, Article IX-A of the Constitution]34 to
disqualification case of one of the mayoralty candidates of
mean final orders, rulings and decisionsof the COMELEC rendered in
Meycauayan, Bulacan.45 The COMELEC Second Division ruled that
the exercise of its adjudicatory or quasi-judicial powers." This
petitioner could not qualify for the 2007 elections due to the
decision must be a final decision or resolution of the Comelec en
findings in an administrative case that he engaged in vote buying in
banc, not of a division, certainly not an interlocutory order of a
the 1995 elections.46No motion for reconsideration was filed before
division.The Supreme Court has no power to review viacertiorari, an
the COMELEC En Banc. This court, however, took cognizance of this
interlocutory order or even a final resolution of a Division of the
case applying one of the exceptions in ABS-CBN: The assailed
Commission on Elections.35 (Emphasis in the original, citations
resolution was a nullity.47
omitted)

Finally, respondents cited Cayetano v. COMELEC, a recent election

However, in the next case cited by respondents, Repol v. COMELEC,
protest case involving the mayoralty candidates of Taguig
this court provided exceptions to this general rule. Repolwas
City.48 Petitioner assailed a resolution of the COMELEC denying her
another election protest case, involving the mayoralty elections in
motion for reconsideration to dismiss the election protest petition
Pagsanghan, Samar.36 This time, the case was brought to this court
for lack of form and substance.49 This court clarified the general rule
because the COMELEC First Division issued a status quo ante order
and refused to take cognizance of the review of the COMELEC order.
against the Regional Trial Court executing its decision pending
While recognizing the exceptions in ABS-CBN, this court ruled that
appeal.37 This court’s ponencia discussed the general rule
these exceptions did not apply.50
enunciated in Ambil, Jr. that it cannot take jurisdiction to review
interlocutory orders of a COMELEC Division.38However, consistent
with ABS-CBN Broadcasting Corporation v. COMELEC,39 it clarified Ambil, Jr., Repol, Soriano, Jr., Blanco, and Cayetano cited by
the exception: respondents do not operate as precedents to oust this court from
taking jurisdiction over this case. All these cases cited involve
election protests or disqualification cases filed by the losing
This Court, however, has ruled in the past that this procedural
candidate against the winning candidate.
requirement [of filing a motion for reconsideration] may be glossed
over to prevent miscarriage of justice, when the issue involves the
principle of social justice or the protection of labor, when the In the present case, petitioners are not candidates seeking for public
decision or resolution sought to be set aside is a nullity, or when the office. Their petition is filed to assert their fundamental right to
need for relief is extremely urgent and certiorari is the only expression.
adequate and speedy remedy available.40
Furthermore, all these cases cited by respondents pertained to
Based on ABS-CBN, this court could review orders and decisions of COMELEC’s exercise of its adjudicatory or quasi-judicial power. This
COMELEC — in electoral contests — despite not being reviewed by case pertains to acts of COMELEC in the implementation of its
the COMELEC En Banc, if: regulatory powers. When it issued the notice and letter, the
COMELEC was allegedly enforcingelection laws.
1) It will prevent the miscarriage of justice;

2) The issue involves a principle of social justice;

I.B
Rule 65, grave abuse of discretion,
and limitations on political speech
The main subject of thiscase is an alleged constitutional violation:
the infringement on speech and the "chilling effect" caused by
respondent COMELEC’s notice and letter.
Petitioners allege that respondents committed grave abuse of
discretion amounting to lack or excess of jurisdiction in issuing the
notice51 dated February 22,2013 and letter52 dated February 27,
2013 ordering the removal of the tarpaulin.53 It is their position that
these infringe on their fundamental right to freedom of expression
and violate the principle of separation of church and state and, thus,
are unconstitutional.54
The jurisdiction of this court over the subject matter is determined
from the allegations in the petition. Subject matter jurisdiction is
defined as the authority "to hear and determine cases of the general
class to which the proceedings in question belong and is conferred
by the sovereign authority which organizes the court and defines its
powers."55Definitely, the subject matter in this case is different from
the cases cited by respondents.
Nothing less than the electorate’s political speech will be affected by
the restrictions imposed by COMELEC. Political speech is motivated
by the desire to be heard and understood, to move people to action.
It is concerned with the sovereign right to change the contours of
power whether through the election of representatives in a
republican government or the revision of the basic text of the
Constitution. The zeal with which we protect this kind of speech
does not depend on our evaluation of the cogency of the message.
Neither do we assess whether we should protect speech based on
the motives of COMELEC. We evaluate restrictions on freedom of
expression from their effects. We protect both speech and medium
because the quality of this freedom in practice will define the quality
of deliberation in our democratic society.
COMELEC’s notice and letter affect preferred speech. Respondents’
acts are capable of repetition. Under the conditions in which it was
issued and in view of the novelty of this case,it could result in a
"chilling effect" that would affect other citizens who want their
voices heard on issues during the elections. Other citizens who wish
to express their views regarding the election and other related
issues may choose not to, for fear of reprisal or sanction by the
COMELEC. Direct resort to this court is allowed to avoid such
proscribed conditions. Rule 65 is also the procedural platform for
raising grave abuse of discretion.
Both parties point to constitutional provisions on jurisdiction. For
petitioners, it referred to this court’s expanded exercise of certiorari
as provided by the Constitution as follows:
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable
and enforceable, and to determine whether ornot there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the
Government.56(Emphasis supplied)
On the other hand, respondents relied on its constitutional mandate
to decide all questions affectingelections. Article IX-C, Section 2(3) of
the Constitution, provides:
Sec. 2. The Commission on Elections shall exercise the following
powers and functions:
....
(3) Decide, except those involving the right to vote, all questions
affecting elections, including determination of the number and
location of polling places, appointment of election officials and
inspectors, and registration of voters.
Respondents’ reliance on this provision is misplaced.
We are not confronted here with the question of whether the
COMELEC, in its exercise of jurisdiction, gravely abused it. We are
confronted with the question as to whether the COMELEC had any
jurisdiction at all with its acts threatening imminent criminal action
effectively abridging meaningful political speech.
It is clear that the subject matter of the controversy is the effect of
COMELEC’s notice and letter on free speech. This does not fall under
Article IX-C, Section 2(3) of the Constitution. The use of the word
"affecting" in this provision cannot be interpreted to mean that
COMELEC has the exclusive power to decide any and allquestions
that arise during elections. COMELEC’s constitutional competencies
during elections should not operate to divest this court of its own
jurisdiction.
The more relevant provision for jurisdiction in this case is Article VIII,
Section 5(1) of the Constitution.This provision provides for this
court’s original jurisdiction over petitions for certiorari and
prohibition. This should be read alongside the expanded jurisdiction
of the court in Article VIII, Section 1 of the Constitution.
Certainly, a breach of the fundamental right of expression by
COMELEC is grave abuse of discretion. Thus, the constitutionality of
the notice and letter coming from COMELEC is within this court’s
power to review.
During elections, we have the power and the duty to correct any
grave abuse of discretion or any act tainted with unconstitutionality
on the part of any government branch or instrumentality. This
includes actions by the COMELEC. Furthermore, it is this court’s
constitutional mandate to protect the people against government’s
infringement of their fundamental rights. This constitutional
mandate out weighs the jurisdiction vested with the COMELEC.
It will, thus, be manifest injustice if the court does not take
jurisdiction over this case.
I.C
Hierarchy of courts
This brings us to the issue of whether petitioners violated the
doctrine of hierarchy of courts in directly filing their petition before
this court.
Respondents contend that petitioners’ failure to file the proper suit
with a lower court of concurrent jurisdiction is sufficient ground for
the dismissal of their petition.57 They add that observation of the
hierarchy of courts is compulsory, citing Heirs of Bertuldo Hinog v.
Melicor.58 While respondents claim that while there are exceptions
to the general rule on hierarchy of courts, none of these are present
in this case.59
On the other hand, petitioners cite Fortich v. Corona60 on this court’s
discretionary power to take cognizance of a petition filed directly to
it if warranted by "compelling reasons, or [by] the nature and
importance of the issues raised. . . ."61 Petitioners submit that there
are "exceptional and compelling reasons to justify a direct resort
[with] this Court."62
In Bañez, Jr. v. Concepcion,63 we explained the necessity of the
application of the hierarchy of courts:
The Court must enjoin the observance of the policy on the hierarchy
of courts, and now affirms that the policy is not to be ignored
without serious consequences. The strictness of the policy is
designed to shield the Court from having to deal with causes that
are also well within the competence of the lower courts, and thus
leave time to the Court to deal with the more fundamental and
more essential tasks that the Constitution has assigned to it. The
Court may act on petitions for the extraordinary writs of certiorari,
prohibition and mandamus only when absolutely necessary or when
serious and important reasons exist to justify an exception to the
policy.64
In Bañez, we also elaborated on the reasons why lower courts are
allowed to issue writs of certiorari, prohibition, and mandamus,
citing Vergara v. Suelto:65
The Supreme Court is a court of lastresort, and must so remain if it is
to satisfactorily perform the functions assigned to it by the
fundamental charter and immemorial tradition. It cannot and should
not be burdened with the task of dealing with causes in the first
instance. Its original jurisdiction to issue the so-called extraordinary
writs should be exercised only where absolutely necessary or where
serious and important reasons exist therefore. Hence, that
jurisdiction should generally be exercised relative to actions or
proceedings before the Court of Appeals, or before constitutional or
other tribunals, bodies or agencies whose acts for some reason or
another are not controllable by the Court of Appeals. Where the
issuance of an extraordinary writ is also within the competence of
the Court of Appeals or a Regional Trial Court, it is in either of these
courts that the specific action for the writ’s procurement must be
presented. This is and should continue to be the policy in this regard,
a policy that courts and lawyers must strictly observe.66 (Emphasis
omitted)
The doctrine that requires respect for the hierarchy of courts was
created by this court to ensure that every level of the judiciary
performs its designated roles in an effective and efficient manner.
Trial courts do not only determine the facts from the evaluation of
the evidence presented before them. They are likewise competent
to determine issues of law which may include the validity of an
ordinance, statute, or even an executive issuance in relation to the
Constitution.67 To effectively perform these functions, they are
territorially organized into regions and then into branches. Their
writs generally reach within those territorial boundaries.
Necessarily, they mostly perform the all-important task of inferring
the facts from the evidence as these are physically presented before
them. In many instances, the facts occur within their territorial
jurisdiction, which properly present the ‘actual case’ that makes ripe
a determination of the constitutionality of such action. The
consequences, of course, would be national in scope. There are,
however, some cases where resort to courts at their level would not
be practical considering their decisions could still be appealed
before the higher courts, such as the Court of Appeals.
The Court of Appeals is primarily designed as an appellate court that
reviews the determination of facts and law made by the trial courts.
It is collegiate in nature. This nature ensures more standpoints in the
review of the actions of the trial court. But the Court of Appeals also
has original jurisdiction over most special civil actions. Unlike the
trial courts, its writs can have a nationwide scope. It is competent to
determine facts and, ideally, should act on constitutional issues
thatmay not necessarily be novel unless there are factual questions
to determine.
This court, on the other hand, leads the judiciary by breaking new
ground or further reiterating — in the light of new circumstances or
in the light of some confusions of bench or bar — existing
precedents. Rather than a court of first instance or as a repetition of
the actions of the Court of Appeals, this court promulgates these
doctrinal devices in order that it truly performs that role.
In other words, the Supreme Court’s role to interpret the
Constitution and act in order to protect constitutional rights when
these become exigent should not be emasculated by the doctrine in
respect of the hierarchy of courts. That has never been the purpose
of such doctrine.
Thus, the doctrine of hierarchy of courts is not an iron-clad
rule.68 This court has "full discretionary power to take cognizance
and assume jurisdiction [over] special civil actions for certiorari . .
.filed directly with it for exceptionally compelling reasons69 or if
warranted by the nature of the issues clearly and specifically raised
in the petition."70 As correctly pointed out by petitioners,71 we have
provided exceptions to this doctrine:
First, a direct resort to this court is allowed when there are genuine
issues of constitutionality that must be addressed at the most
immediate time. A direct resort to this court includes availing of the
remedies of certiorari and prohibition toassail the constitutionality
of actions of both legislative and executive branches of the
government.72
In this case, the assailed issuances of respondents prejudice not only
petitioners’ right to freedom of expression in the present case, but
also of others in future similar cases. The case before this court
involves an active effort on the part of the electorate to reform the
political landscape. This has become a rare occasion when private
citizens actively engage the public in political discourse. To quote an
eminent political theorist:
[T]he theory of freedom of expression involves more than a
technique for arriving at better social judgments through democratic
procedures. It comprehends a vision of society, a faith and a whole
way of life. The theory grew out of an age that was awakened and
invigorated by the idea of new society in which man's mind was free,
his fate determined by his own powers of reason, and his prospects
of creating a rational and enlightened civilization virtually unlimited.
It is put forward as a prescription for attaining a creative,
progressive, exciting and intellectually robust community. It
contemplates a mode of life that, through encouraging toleration,
skepticism, reason and initiative, will allow man to realize his full
potentialities.It spurns the alternative of a society that is tyrannical,
conformist, irrational and stagnant.73
In a democracy, the citizen’s right tofreely participate in the
exchange of ideas in furtherance of political decision-making is
recognized. It deserves the highest protection the courts may
provide, as public participation in nation-building isa fundamental
principle in our Constitution. As such, their right to engage in free
expression of ideas must be given immediate protection by this
court.
A second exception is when the issuesinvolved are of transcendental
importance.74 In these cases, the imminence and clarity of the threat
to fundamental constitutional rights outweigh the necessity for
prudence. The doctrine relating to constitutional issues of
transcendental importance prevents courts from the paralysis of
procedural niceties when clearly faced with the need for substantial
protection.
In the case before this court, there is a clear threat to the
paramount right of freedom of speech and freedom of expression
which warrants invocation of relief from this court. The principles
laid down in this decision will likely influence the discourse of
freedom of speech in the future, especially in the context of
elections. The right to suffrage not only includes the right to vote for
one’s chosen candidate, but also the right to vocalize that choice to
the public in general, in the hope of influencing their votes. It may
be said that in an election year, the right to vote necessarily includes
the right to free speech and expression. The protection of these
fundamental constitutional rights, therefore, allows for the
immediate resort to this court.
Third, cases of first impression75 warrant a direct resort to this court.
In cases of first impression, no jurisprudence yet exists that will
guide the lower courts on this matter. In Government of the United
States v. Purganan,76 this court took cognizance of the case as a
matter of first impression that may guide the lower courts:
In the interest of justice and to settle once and for all the important
issue of bail in extradition proceedings, we deem it best to take
cognizance of the present case. Such proceedings constitute a
matter of first impression over which there is, as yet, no local
jurisprudence to guide lower courts.77
This court finds that this is indeed a case of first impression involving
as it does the issue of whether the right of suffrage includes the
right of freedom of expression. This is a question which this court
has yet to provide substantial answers to, through jurisprudence.
Thus, direct resort to this court is allowed.
Fourth, the constitutional issues raisedare better decided by this
court. In Drilon v. Lim,78 this court held that:
. . . it will be prudent for such courts, if only out of a becoming
modesty, to defer to the higher judgmentof this Court in the
consideration of its validity, which is better determined after a
thorough deliberation by a collegiate body and with the concurrence
of the majority of those who participated in its discussion.79 (Citation
omitted)
In this case, it is this court, with its constitutionally enshrined judicial
power, that can rule with finality on whether COMELEC committed
grave abuse of discretion or performed acts contrary to the
Constitution through the assailed issuances.
Fifth, the time element presented in this case cannot be ignored.
This case was filed during the 2013 election period. Although the
elections have already been concluded, future cases may be filed
that necessitate urgency in its resolution. Exigency in certain
situations would qualify as an exception for direct resort to this
court.
Sixth, the filed petition reviews the act of a constitutional organ.
COMELEC is a constitutional body. In Albano v. Arranz,80 cited by
petitioners, this court held that "[i]t is easy to realize the chaos that
would ensue if the Court of First Instance ofeach and every province
were [to] arrogate itself the power to disregard, suspend, or
contradict any order of the Commission on Elections: that
constitutional body would be speedily reduced to impotence."81
In this case, if petitioners sought to annul the actions of COMELEC
through pursuing remedies with the lower courts, any ruling on their
part would not have been binding for other citizens whom
respondents may place in the same situation. Besides, thiscourt
affords great respect to the Constitution and the powers and duties
imposed upon COMELEC. Hence, a ruling by this court would be in
the best interest of respondents, in order that their actions may be
guided accordingly in the future.
Seventh, petitioners rightly claim that they had no other plain,
speedy, and adequate remedy in the ordinary course of law that
could free them from the injurious effects of respondents’ acts in
violation of their right to freedom of expression.
In this case, the repercussions of the assailed issuances on this basic
right constitute an exceptionally compelling reason to justify the
direct resort to this court. The lack of other sufficient remedies in
the course of law alone is sufficient ground to allow direct resort to
this court.
Eighth, the petition includes questionsthat are "dictated by public
welfare and the advancement of public policy, or demanded by the
broader interest of justice, or the orders complained of were found
to be patent nullities, or the appeal was consideredas clearly an
inappropriate remedy."82 In the past, questions similar to these
which this court ruled on immediately despite the doctrine of
hierarchy of courts included citizens’ right to bear
arms,83 government contracts involving modernization of voters’
registration lists,84 and the status and existence of a public office.85
This case also poses a question of similar, if not greater import.
Hence, a direct action to this court is permitted.
It is not, however, necessary that all of these exceptions must occur
at the same time to justify a direct resort to this court. While
generally, the hierarchy of courts is respected, the present case falls
under the recognized exceptions and, as such, may be resolved by
this court directly.
I.D
The concept of a political question
Respondents argue further that the size limitation and its
reasonableness is a political question, hence not within the ambit of
this court’s power of review. They cite Justice Vitug’s separate
opinion in Osmeña v. COMELEC86 to support their position:
It might be worth mentioning that Section 26, Article II, of the
Constitution also states that the "State shall guarantee equal access
to opportunities for public service, and prohibit political dynasties as
may be defined by law." I see neither Article IX (C)(4) nor Section 26,
Article II, of the Constitution to be all that adversarial or
irreconcilably inconsistent with the right of free expression. In any
event, the latter, being one of general application, must yield to the
specific demands of the Constitution. The freedom of expression
concededly holds, it is true, a vantage point in hierarchy of
constitutionally-enshrined rights but, like all fundamental rights, it is
not without limitations.
The case is not about a fight between the "rich" and the "poor" or
between the "powerful" and the "weak" in our society but it is to me
a genuine attempt on the part of Congress and the Commission on
Elections to ensure that all candidates are given an equal chance to
media coverage and thereby be equally perceived as giving real life
to the candidates’ right of free expression rather than being viewed
as an undue restriction of that freedom. The wisdom in the
enactment of the law, i.e., that which the legislature deems to be
best in giving life to the Constitutional mandate, is not for the Court
to question; it is a matter that lies beyond the normal prerogatives
of the Court to pass upon.87
This separate opinion is cogent for the purpose it was said. But it is
not in point in this case.
The present petition does not involve a dispute between the rich
and poor, or the powerful and weak, on their equal opportunities for
media coverage of candidates and their right to freedom of
expression. This case concerns the right of petitioners, who are non-
candidates, to post the tarpaulin in their private property, asan
exercise of their right of free expression. Despite the invocation of
the political question doctrine by respondents, this court is not
proscribed from deciding on the merits of this case.
In Tañada v. Cuenco,88 this court previously elaborated on the
concept of what constitutes a political question:
What is generally meant, when it is said that a question is political,
and not judicial, is that it is a matter which is to be exercised by the
people in their primary political capacity, or that it has been
specifically delegated to some other department or particular officer
of the government, withdiscretionary power to act.89 (Emphasis
omitted)
It is not for this court to rehearse and re-enact political debates on
what the text of the law should be. In political forums, particularly
the legislature, the creation of the textof the law is based on a
general discussion of factual circumstances, broadly construed in
order to allow for general application by the executive branch. Thus,
the creation of the law is not limited by particular and specific facts
that affect the rights of certain individuals, per se.
Courts, on the other hand, rule on adversarial positions based on
existing facts established on a specific case-to-case basis, where
parties affected by the legal provision seek the courts’
understanding of the law.
The complementary nature of the political and judicial branches of
government is essential in order to ensure that the rights of the
general public are upheld at all times. In order to preserve this
balance, branches of government must afford due respectand
deference for the duties and functions constitutionally delegated to
the other. Courts cannot rush to invalidate a law or rule. Prudence
dictates that we are careful not to veto political acts unless we can
craft doctrine narrowly tailored to the circumstances of the case.
The case before this court does not call for the exercise of prudence
or modesty. There is no political question. It can be acted upon by
this court through the expanded jurisdiction granted to this court
through Article VIII, Section 1 of the Constitution.
A political question arises in constitutional issues relating to the
powers or competence of different agencies and departments of the
executive or those of the legislature. The political question doctrine
is used as a defense when the petition asks this court to nullify
certain acts that are exclusively within the domain of their
respective competencies, as provided by the Constitution or the law.
In such situation, presumptively, this court should act with
deference. It will decline to void an act unless the exercise of that
power was so capricious and arbitrary so as to amount to grave
abuse of discretion.
The concept of a political question, however, never precludes
judicial review when the act of a constitutional organ infringes upon
a fundamental individual or collective right. Even assuming
arguendo that the COMELEC did have the discretion to choose the
manner of regulation of the tarpaulin in question, it cannot do so by
abridging the fundamental right to expression.
Marcos v. Manglapus90 limited the use of the political question
doctrine:
When political questions are involved, the Constitution limits the
determination to whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of
the official whose action is being questioned. If grave abuse is not
established, the Court will not substitute its judgment for that of the
official concerned and decide a matter which by its nature or by law
is for the latter alone to decide.91
How this court has chosen to address the political question doctrine
has undergone an evolution since the timethat it had been first
invoked in Marcos v. Manglapus. Increasingly, this court has taken
the historical and social context of the case and the relevance of
pronouncements of carefully and narrowly tailored constitutional
doctrines. This trend was followed in cases such as Daza v.
Singson92 and Coseteng v. Mitra Jr.93
Daza and Coseteng involved a question as to the application of
Article VI, Section 18 of the 1987 Constitution involving the removal
of petitioners from the Commission on Appointments. In times past,
this would have involved a quint essentially political question as it
related to the dominance of political parties in Congress. However,
in these cases, this court exercised its power of judicial review
noting that the requirement of interpreting the constitutional
provision involved the legality and not the wisdom of a manner by
which a constitutional duty or power was exercised. This approach
was again reiterated in Defensor Santiago v. Guingona, Jr.94
In Integrated Bar of the Philippines v. Zamora,95 this court declared
again that the possible existence ofa political question did not bar an
examination of whether the exercise of discretion was done with
grave abuse of discretion. In that case, this court ruled on the
question of whether there was grave abuse of discretion in the
President’s use of his power to call out the armed forces to prevent
and suppress lawless violence.
In Estrada v. Desierto,96 this court ruled that the legal question as to
whether a former President resigned was not a political question
even if the consequences would be to ascertain the political
legitimacy of a successor President.
Many constitutional cases arise from political crises. The actors in
such crises may use the resolution of constitutional issues as
leverage. But the expanded jurisdiction of this court now mandates
a duty for it to exercise its power of judicial review expanding on
principles that may avert catastrophe or resolve social conflict.
This court’s understanding of the political question has not been
static or unbending. In Llamas v. Executive Secretary Oscar
Orbos,97 this court held:
While it is true that courts cannot inquire into the manner in which
the President's discretionary powers are exercised or into the
wisdom for its exercise, it is also a settled rule that when the issue
involved concerns the validity of such discretionary powers or
whether said powers are within the limits prescribed by the
Constitution, We will not decline to exercise our power of judicial
review. And such review does not constitute a modification or
correction of the act of the President, nor does it constitute
interference with the functions of the President.98
The concept of judicial power in relation to the concept of the
political question was discussed most extensively in Francisco v.
HRET.99 In this case, the House of Representatives arguedthat the
question of the validity of the second impeachment complaint that
was filed against former Chief Justice Hilario Davide was a political
question beyond the ambit of this court. Former Chief Justice
Reynato Puno elaborated on this concept in his concurring and
dissenting opinion:
To be sure, the force to impugn the jurisdiction of this Court
becomes more feeble in light of the new Constitution which
expanded the definition of judicial power as including "the duty of
the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch
or instrumentality of the Government." As well observed by retired
Justice Isagani Cruz, this expanded definition of judicial power
considerably constricted the scope of political question. He opined
that the language luminously suggests that this duty (and power) is
available even against the executive and legislative departments
including the President and the Congress, in the exercise of their
discretionary powers.100 (Emphasis in the original, citations omitted)
Francisco also provides the cases which show the evolution of the
political question, as applied in the following cases:
In Marcos v. Manglapus, this Court, speaking through Madame
Justice Irene Cortes, held: The present Constitution limits resort to
the political question doctrine and broadens the scope of judicial
inquiry into areas which the Court,under previous constitutions,
would have normally left to the political departments to decide. x x x
In Bengzon v. Senate Blue Ribbon Committee, through Justice
Teodoro Padilla, this Court declared:
The "allocation of constitutional boundaries" is a task that this Court
must perform under the Constitution. Moreover, as held in a recent
case, "(t)he political question doctrine neither interposes an
obstacle to judicial determination of the rival claims. The jurisdiction
to delimit constitutional boundaries has been given to this Court. It
cannot abdicate that obligation mandated by the 1987 Constitution,
although said provision by no means does away with the
applicability of the principle in appropriate cases." (Emphasis and
italics supplied)
And in Daza v. Singson, speaking through Justice Isagani Cruz, this
Court ruled:
In the case now before us, the jurisdictional objection becomes even
less tenable and decisive. The reason is that, even if we were to
assume that the issue presented before us was political in nature,
we would still not be precluded from resolving it under the
expanded jurisdiction conferred upon us that now covers, in proper
cases, even the political question.x x x (Emphasis and italics
supplied.)
....
In our jurisdiction, the determination of whether an issue involves a
truly political and non-justiciable question lies in the answer to the
question of whether there are constitutionally imposed limits on
powers or functions conferred upon political bodies. If there are,
then our courts are duty-bound to examine whether the branch or
instrumentality of the government properly acted within such
limits.101 (Citations omitted)
As stated in Francisco, a political question will not be considered
justiciable if there are no constitutionally imposed limits on powers
or functions conferred upon political bodies. Hence, the existence of
constitutionally imposed limits justifies subjecting the official actions
of the body to the scrutiny and review of this court.
In this case, the Bill of Rights gives the utmost deference to the right
to free speech. Any instance that this right may be abridged
demands judicial scrutiny. It does not fall squarely into any doubt
that a political question brings.
I.E
Exhaustion of administrative remedies
Respondents allege that petitioners violated the principle of
exhaustion of administrative remedies. Respondents insist that
petitioners should have first brought the matter to the COMELEC En
Banc or any of its divisions.102
Respondents point out that petitioners failed to comply with the
requirement in Rule 65 that "there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of
law."103 They add that the proper venue to assail the validity of the
assailed issuances was in the course of an administrative hearing to
be conducted by COMELEC.104 In the event that an election offense
is filed against petitioners for posting the tarpaulin, they claim that
petitioners should resort to the remedies prescribed in Rule 34 of
the COMELEC Rules of Procedure.105
The argument on exhaustion of administrative remedies is not
proper in this case.
Despite the alleged non-exhaustion of administrative remedies, it is
clear that the controversy is already ripe for adjudication. Ripeness
is the "prerequisite that something had by then been accomplished
or performed by either branch [or in this case, organ of government]
before a court may come into the picture."106
Petitioners’ exercise of their rightto speech, given the message and
their medium, had understandable relevance especially during the
elections. COMELEC’s letter threatening the filing of the election
offense against petitioners is already an actionable infringement of
this right. The impending threat of criminal litigation is enough to
curtail petitioners’ speech.
In the context of this case, exhaustion of their administrative
remedies as COMELEC suggested in their pleadings prolongs the
violation of their freedom of speech.
Political speech enjoys preferred protection within our
constitutional order. In Chavez v. Gonzales,107 Justice Carpio in a
separate opinion emphasized: "[i]f everthere is a hierarchy of
protected expressions, political expression would occupy the highest
rank, and among different kinds of political expression, the subject
of fair and honest elections would be at the top."108 Sovereignty
resides in the people.109 Political speech is a direct exercise of the
sovereignty. The principle of exhaustion of administrative remedies
yields in order to protect this fundamental right.
Even assuming that the principle of exhaustion of administrative
remedies is applicable, the current controversy is within the
exceptions to the principle. In Chua v. Ang,110 this court held:
On the other hand, prior exhaustion of administrative remedies may
be dispensed with and judicial action may be validly resorted to
immediately: (a) when there is a violation of due process; (b) when
the issue involved is purely a legal question; (c) when the
administrative action is patently illegal amounting to lack or excess
of jurisdiction; (d) when there is estoppel on the part ofthe
administrative agency concerned; (e) when there is irreparable
injury; (f) when the respondent is a department secretary whose
acts as analter ego of the President bear the implied and assumed
approval of the latter; (g) when to require exhaustion of
administrative remedies would be unreasonable; (h) when it would
amount to a nullification of a claim; (i) when the subject matter is a
private land in land case proceedings; (j) whenthe rule does not
provide a plain, speedy and adequate remedy; or (k) when there are
circumstances indicating the urgency of judicial
intervention."111 (Emphasis supplied, citation omitted)
The circumstances emphasized are squarely applicable with the
present case. First, petitioners allegethat the assailed issuances
violated their right to freedom of expression and the principle of
separation of church and state. This is a purely legal question.
Second, the circumstances of the present case indicate the urgency
of judicial intervention considering the issue then on the RH Law as
well as the upcoming elections. Thus, to require the exhaustion of
administrative remedies in this case would be unreasonable.
Time and again, we have held that this court "has the power to relax
or suspend the rules or to except a case from their operation when
compelling reasons so warrant, or whenthe purpose of justice
requires it, [and when] [w]hat constitutes [as] good and sufficient
cause that will merit suspension of the rules is discretionary upon
the court".112Certainly, this case of first impression where COMELEC
has threatenedto prosecute private parties who seek to participate
in the elections by calling attention to issues they want debated by
the publicin the manner they feel would be effective is one of those
cases.
II
SUBSTANTIVE ISSUES
II.A
COMELEC had no legal basis to regulate expressions made by private
citizens
Respondents cite the Constitution, laws, and jurisprudence to
support their position that they had the power to regulate the
tarpaulin.113 However, all of these provisions pertain to candidates
and political parties. Petitioners are not candidates. Neither do
theybelong to any political party. COMELEC does not have the
authority to regulate the enjoyment of the preferred right to
freedom of expression exercised by a non-candidate in this case.
II.A.1
First, respondents cite Article IX-C, Section 4 of the Constitution,
which provides:
Section 4. The Commission may,during the election period,
supervise or regulate the enjoyment or utilization of all franchises or
permits for the operation of transportation and other public utilities,
media of communication or information, all grants, special
privileges, or concessions granted by the Government or any
subdivision, agency, or instrumentality thereof, including any
government-owned or controlled corporation or its subsidiary. Such
supervision or regulation shall aim to ensure equal opportunity,
time, and space, and the right to reply, including reasonable, equal
rates therefor, for public information campaigns and forums among
candidates in connection with the objective of holding free, orderly,
honest, peaceful, and credible elections.114 (Emphasis supplied)
Sanidad v. COMELEC115 involved the rules promulgated by COMELEC
during the plebiscite for the creation of the Cordillera Autonomous
Region.116 Columnist Pablito V. Sanidad questioned the provision
prohibiting journalists from covering plebiscite issues on the day
before and on plebiscite day.117 Sanidad argued that the prohibition
was a violation of the "constitutional guarantees of the freedom of
expression and of the press. . . ."118 We held that the "evil sought to
be prevented by this provision is the possibility that a franchise
holder may favor or give any undue advantage to a candidate in
terms of advertising space or radio or television time."119 This court
found that "[m]edia practitioners exercising their freedom of
expression during plebiscite periods are neither the franchise
holders nor the candidates[,]"120 thus, their right to expression
during this period may not be regulated by COMELEC.121
Similar to the media, petitioners in the case at bar are neither
franchise holders nor candidates. II.A.2
Respondents likewise cite Article IX-C, Section 2(7) of the
Constitution as follows:122
Sec. 2. The Commission on Elections shall exercise the following
powers and functions:
....
(7) Recommend to the Congress effective measures to minimize
election spending, including limitation of places where propaganda
materials shall be posted, and to prevent and penalize all forms of
election frauds, offenses, malpractices, and nuisance candidates.
(Emphasis supplied) Based on the enumeration made on actsthat
may be penalized, it will be inferred that this provision only affects
candidates.
Petitioners assail the "Notice to Remove Campaign Materials" issued
by COMELEC. This was followed bythe assailed letter regarding the
"election propaganda material posted on the church vicinity
promoting for or against the candidates and party-list groups. . . ."123
Section 9 of the Fair Election Act124 on the posting of campaign
materials only mentions "parties" and "candidates":
Sec. 9. Posting of Campaign Materials. - The COMELEC may
authorize political parties and party-list groups to erect common
poster areas for their candidates in not more than ten (10) public
places such as plazas, markets, barangay centers and the like,
wherein candidates can post, display or exhibit election propaganda:
Provided, That the size ofthe poster areas shall not exceed twelve
(12) by sixteen (16) feet or its equivalent. Independent candidates
with no political parties may likewise be authorized to erect
common poster areas in not more than ten (10) public places, the
size of which shall not exceed four (4) by six (6) feet or its
equivalent. Candidates may post any lawful propaganda material in
private places with the consent of the owner thereof, and in public
places or property which shall be allocated equitably and impartially
among the candidates. (Emphasis supplied)
Similarly, Section 17 of COMELEC Resolution No. 9615, the rules and
regulations implementing the Fair Election Act, provides as follows:
SECTION 17. Posting of Campaign Materials. - Parties and candidates
may post any lawful campaign material in:
a. Authorized common poster areasin public places subject
to the requirements and/or limitations set forth in the
next following section; and
b. Private places provided it has the consent of the owner
thereof.
The posting of campaign materials in public places outside of the
designated common poster areas and those enumerated under
Section 7 (g) of these Rules and the like is prohibited. Persons
posting the same shall be liable together with the candidates and
other persons who caused the posting. It will be presumed that the
candidates and parties caused the posting of campaign materials
outside the common poster areas if they do not remove the same
within three (3) days from notice which shall be issued by the
Election Officer of the city or municipality where the unlawful
election propaganda are posted or displayed.
Members of the PNP and other law enforcement agencies called
upon by the Election Officeror other officials of the COMELEC shall
apprehend the violators caught in the act, and file the appropriate
charges against them. (Emphasis supplied)
Respondents considered the tarpaulin as a campaign material in
their issuances. The above provisions regulating the posting of
campaign materials only apply to candidates and political parties,
and petitioners are neither of the two.
Section 3 of Republic Act No. 9006on "Lawful Election Propaganda"
also states that these are "allowed for all registered political parties,
national, regional, sectoral parties or organizations participating
under the party-list elections and for all bona fide candidates
seeking national and local elective positions subject to the limitation
on authorized expenses of candidates and political parties. . . ."
Section 6 of COMELEC Resolution No. 9615 provides for a similar
wording. These provisions show that election propaganda refers to
matter done by or on behalf of and in coordination with candidates
and political parties. Some level of coordination with the candidates
and political parties for whom the election propaganda are released
would ensure that these candidates and political parties maintain
within the authorized expenses limitation.
The tarpaulin was not paid for byany candidate or political
party.125 There was no allegation that petitioners coordinated with
any of the persons named in the tarpaulin regarding its posting. On
the other hand, petitioners posted the tarpaulin as part of their
advocacy against the RH Law. Respondents also cite National Press
Club v. COMELEC126 in arguing that its regulatory power under the
Constitution, to some extent, set a limit on the right to free speech
during election period.127
National Press Club involved the prohibition on the sale and
donation of space and time for political advertisements, limiting
political advertisements to COMELEC-designated space and time.
This case was brought by representatives of mass media and two
candidates for office in the 1992 elections. They argued that the
prohibition on the sale and donation of space and time for political
advertisements is tantamount to censorship, which necessarily
infringes on the freedom of speech of the candidates.128
This court upheld the constitutionality of the COMELEC prohibition
in National Press Club. However, this case does not apply as most of
the petitioners were electoral candidates, unlike petitioners in the
instant case. Moreover, the subject matter of National Press Club,
Section 11(b) of Republic Act No. 6646,129 only refers to a particular
kind of media such as newspapers, radio broadcasting, or
television.130 Justice Feliciano emphasized that the provision did not
infringe upon the right of reporters or broadcasters to air their
commentaries and opinions regarding the candidates, their
qualifications, and program for government. Compared to
Sanidadwherein the columnists lost their ability to give their
commentary on the issues involving the plebiscite, National Press
Clubdoes not involve the same infringement.
In the case at bar, petitioners lost their ability to give a commentary
on the candidates for the 2013 national elections because of the
COMELEC notice and letter. It was not merelya regulation on the
campaigns of candidates vying for public office. Thus, National Press
Clubdoes not apply to this case.
Finally, Section 79 of Batas Pambansa Blg. 881, otherwise known as
the Omnibus Election Code, defines an"election campaign" as
follows:
....
(b) The term "election campaign" or "partisan political activity"
refers to an act designed to promote the election or defeat of a
particular candidate or candidates to a public office which shall
include:
(1) Forming organizations, associations, clubs, committees
or other groups of persons for the purpose of soliciting
votes and/or undertaking any campaign for or against a
candidate;
(2) Holding political caucuses, conferences, meetings,
rallies, parades, or other similar assemblies, for the
purpose of soliciting votes and/or undertaking any
campaign or propaganda for or against a candidate;
(3) Making speeches, announcements or commentaries, or
holding interviews for or against the election of any
candidate for public office;
(4) Publishing or distributing campaign literature or
materials designed to support or oppose the election of
any candidate; or
(5) Directly or indirectly soliciting votes, pledges or support
for or against a candidate.
The foregoing enumerated acts ifperformed for the purpose of
enhancing the chances of aspirants for nomination for candidacy to
a public office by a political party, aggroupment, or coalition of
parties shall not be considered as election campaign or partisan
election activity. Public expressions or opinions or discussions of
probable issues in a forthcoming electionor on attributes of or
criticisms against probable candidates proposed to be nominated in
a forthcoming political party convention shall not be construed as
part of any election campaign or partisan political activity
contemplated under this Article. (Emphasis supplied)
True, there is no mention whether election campaign is limited only
to the candidates and political parties themselves. The focus of the
definition is that the act must be "designed to promote the election
or defeat of a particular candidate or candidates to a public office."
In this case, the tarpaulin contains speech on a matter of public
concern, that is, a statement of either appreciation or criticism on
votes made in the passing of the RH law. Thus, petitioners invoke
their right to freedom of expression.
II.B
The violation of the constitutional right
to freedom of speech and expression
Petitioners contend that the assailed notice and letter for the
removal of the tarpaulin violate their fundamental right to freedom
of expression.
On the other hand, respondents contend that the tarpaulin is an
election propaganda subject to their regulation pursuant to their
mandate under Article IX-C, Section 4 of the Constitution. Thus, the
assailed notice and letter ordering itsremoval for being oversized are
valid and constitutional.131
II.B.1
Fundamental to the consideration of this issue is Article III, Section 4
of the Constitution:
Section 4. No law shall be passed abridging the freedom of speech,
of expression, or of the press, or the right of the people peaceably to
assemble and petition the government for redress of grievances. 132
No law. . .
While it is true that the present petition assails not a law but an
opinion by the COMELEC Law Department, this court has applied
Article III, Section 4 of the Constitution even to governmental acts.
In Primicias v. Fugoso,133 respondent Mayor applied by analogy
Section 1119 of the Revised Ordinances of 1927 of Manila for the
public meeting and assembly organized by petitioner
Primicias.134 Section 1119 requires a Mayor’s permit for the use of
streets and public places for purposes such as athletic games, sports,
or celebration of national holidays.135 What was questioned was not
a law but the Mayor’s refusal to issue a permit for the holding of
petitioner’s public meeting.136 Nevertheless, this court recognized
the constitutional right to freedom of speech, to peaceful assembly
and to petition for redress of grievances, albeit not absolute,137 and
the petition for mandamus to compel respondent Mayor to issue
the permit was granted.138
In ABS-CBN v. COMELEC, what was assailed was not a law but
COMELEC En Banc Resolution No. 98-1419 where the COMELEC
resolved to approve the issuance of a restraining order to stop ABS-
CBN from conducting exit surveys.139 The right to freedom of
expression was similarly upheld in this case and, consequently, the
assailed resolution was nullified and set aside.140
. . . shall be passed abridging. . .
All regulations will have an impact directly or indirectly on
expression. The prohibition against the abridgment of speech should
not mean an absolute prohibition against regulation. The primary
and incidental burden on speech must be weighed against a
compelling state interest clearly allowed in the Constitution. The
test depends on the relevant theory of speech implicit in the kind of
society framed by our Constitution.
. . . of expression. . .
Our Constitution has also explicitly included the freedom of
expression, separate and in addition to the freedom of speech and
of the press provided in the US Constitution. The word "expression"
was added in the 1987 Constitution by Commissioner Brocka for
having a wider scope:
MR. BROCKA: This is a very minor amendment, Mr. Presiding Officer.
On Section 9, page 2, line 29, it says: "No law shall be passed
abridging the freedom of speech." I would like to recommend to the
Committee the change of the word "speech" to EXPRESSION; or if
not, add the words AND EXPRESSION after the word "speech,"
because it is more expansive, it has a wider scope, and it would refer
to means of expression other than speech.
THE PRESIDING OFFICER (Mr.Bengzon): What does the Committee
say?
FR. BERNAS: "Expression" is more broad than speech. We accept it.
MR. BROCKA: Thank you.
THE PRESIDING OFFICER (Mr.Bengzon): Is it accepted?
FR. BERNAS: Yes.
THE PRESIDING OFFICER (Mr.Bengzon): Is there any objection?
(Silence) The Chair hears none; the amendment is approved.
FR. BERNAS: So, that provision will now read: "No law shall be
passed abridging the freedom of speech, expression or of the press .
. . ."141 Speech may be said to be inextricably linked to freedom itself
as "[t]he right to think is the beginning of freedom, and speech must
be protected from the government because speech is the beginning
of thought."142
II.B.2
Communication is an essential outcome of protected
speech.143 Communication exists when "(1) a speaker, seeking to
signal others, uses conventional actions because he orshe
reasonably believes that such actions will be taken by the audience
in the manner intended; and (2) the audience so takes the
actions."144 "[I]n communicative action[,] the hearer may respond to
the claims by . . . either accepting the speech act’s claims or
opposing them with criticism or requests for justification."145
Speech is not limited to vocal communication. "[C]onduct is treated
as a form of speech sometimes referred to as ‘symbolic
speech[,]’"146 such that "‘when ‘speech’ and ‘nonspeech’ elements
are combined in the same course of conduct,’ the ‘communicative
element’ of the conduct may be ‘sufficient to bring into play the
[right to freedom of expression].’"147
The right to freedom of expression, thus, applies to the entire
continuum of speech from utterances made to conduct enacted, and
even to inaction itself as a symbolic manner of communication.
In Ebralinag v. The Division Superintendent of Schools of
Cebu,148 students who were members of the religious sect Jehovah’s
Witnesses were to be expelled from school for refusing to salute the
flag, sing the national anthem, and recite the patriotic pledge. 149 In
his concurring opinion, Justice Cruz discussed how the salute is a
symbolic manner of communication and a valid form of
expression.150 He adds that freedom of speech includes even the
right to be silent:
Freedom of speech includes the right to be silent. Aptly has it been
said that the Bill of Rights that guarantees to the individual the
liberty to utter what is in his mind also guarantees to him the liberty
not to utter what is not in his mind. The salute is a symbolic manner
of communication that conveys its messageas clearly as the written
or spoken word. As a valid form of expression, it cannot be
compelled any more than it can be prohibited in the face of valid
religious objections like those raised in this petition. To impose it on
the petitioners is to deny them the right not to speak when their
religion bids them to be silent. This coercion of conscience has no
place in the free society.
The democratic system provides for the accommodation of diverse
ideas, including the unconventional and even the bizarre or
eccentric. The will of the majority prevails, but it cannot regiment
thought by prescribing the recitation by rote of its opinions or
proscribing the assertion of unorthodox or unpopular views as inthis
case. The conscientious objections of the petitioners, no less than
the impatience of those who disagree with them, are protected by
the Constitution. The State cannot make the individual speak when
the soul within rebels.151
Even before freedom "of expression" was included in Article III,
Section 4 of the present Constitution,this court has applied its
precedent version to expressions other than verbal utterances.
In the 1985 case of Gonzalez v. Chairman Katigbak,152 petitioners
objected to the classification of the motion picture "Kapit sa
Patalim" as "For Adults Only." They contend that the classification
"is without legal and factual basis and is exercised as impermissible
restraint of artistic expression."153 This court recognized that
"[m]otion pictures are important both as a medium for the
communication of ideas and the expression of the artistic
impulse."154 It adds that "every writer,actor, or producer, no matter
what medium of expression he may use, should be freed from the
censor."155 This court found that "[the Board’s] perception of what
constitutes obscenity appears to be unduly restrictive."156 However,
the petition was dismissed solely on the ground that there were not
enough votes for a ruling of grave abuse of discretion in the
classification made by the Board.157
II.B.3
Size does matter
The form of expression is just as important as the information
conveyed that it forms part of the expression. The present case is in
point.
It is easy to discern why size matters.
First, it enhances efficiency in communication. A larger tarpaulin
allows larger fonts which make it easier to view its messages from
greater distances. Furthermore, a larger tarpaulin makes it easier for
passengers inside moving vehicles to read its content. Compared
with the pedestrians, the passengers inside moving vehicles have
lesser time to view the content of a tarpaulin. The larger the fonts
and images, the greater the probability that it will catch their
attention and, thus, the greater the possibility that they will
understand its message.
Second, the size of the tarpaulin may underscore the importance of
the message to the reader. From an ordinary person’s perspective,
those who post their messages in larger fonts care more about their
message than those who carry their messages in smaller media. The
perceived importance given by the speakers, in this case petitioners,
to their cause is also part of the message. The effectivity of
communication sometimes relies on the emphasis put by the
speakers and onthe credibility of the speakers themselves. Certainly,
larger segments of the public may tend to be more convinced of the
point made by authoritative figures when they make the effort to
emphasize their messages.
Third, larger spaces allow for more messages. Larger spaces,
therefore, may translate to more opportunities to amplify, explain,
and argue points which the speakers might want to communicate.
Rather than simply placing the names and images of political
candidates and an expression of support, larger spaces can allow for
brief but memorable presentations of the candidates’ platforms for
governance. Larger spaces allow for more precise inceptions of
ideas, catalyze reactions to advocacies, and contribute more to a
more educated and reasoned electorate. A more educated
electorate will increase the possibilities of both good governance
and accountability in our government.
These points become more salient when it is the electorate, not the
candidates or the political parties, that speaks. Too often, the terms
of public discussion during elections are framed and kept hostage by
brief and catchy but meaningless sound bites extolling the character
of the candidate. Worse, elections sideline political arguments and
privilege the endorsement by celebrities. Rather than provide
obstacles to their speech, government should in fact encourage it.
Between the candidates and the electorate, the latter have the
better incentive to demand discussion of the more important issues.
Between the candidates and the electorate, the former have better
incentives to avoid difficult political standpoints and instead focus
on appearances and empty promises.
Large tarpaulins, therefore, are not analogous to time and
place.158 They are fundamentally part of expression protected under
Article III, Section 4 of the Constitution.
II.B.4
There are several theories and schools of thought that strengthen
the need to protect the basic right to freedom of expression.
First, this relates to the right ofthe people to participate in public
affairs, including the right to criticize government actions.
Proponents of the political theory on "deliberative democracy"
submit that "substantial, open, [and] ethical dialogue isa critical, and
indeed defining, feature of a good polity."159 This theory may be
considered broad, but it definitely "includes [a] collective decision
making with the participation of all who will beaffected by the
decision."160 It anchors on the principle that the cornerstone of
every democracy is that sovereignty resides in the people.161 To
ensure order in running the state’s affairs, sovereign powers were
delegated and individuals would be elected or nominated in key
government positions to represent the people. On this note, the
theory on deliberative democracy may evolve to the right of the
people to make government accountable. Necessarily, this includes
the right of the people to criticize acts made pursuant to
governmental functions.
Speech that promotes dialogue on publicaffairs, or airs out
grievances and political discontent, should thus be protected and
encouraged.
Borrowing the words of Justice Brandeis, "it is hazardous to
discourage thought, hope and imagination; that fear breeds
repression; that repression breeds hate; that hate menaces stable
government; that the path of safety lies in the opportunity to discuss
freely supposed grievances and proposed remedies."162
In this jurisdiction, this court held that "[t]he interest of society and
the maintenance of good government demand a full discussion of
public affairs."163 This court has, thus, adopted the principle that
"debate on public issues should be uninhibited, robust,and wide
open . . . [including even] unpleasantly sharp attacks on government
and public officials."164
Second, free speech should be encouraged under the concept of a
market place of ideas. This theory was articulated by Justice Holmes
in that "the ultimate good desired is better reached by [the] free
trade in ideas:"165
When men have realized that time has upset many fighting faiths,
they may come to believe even more than they believe the very
foundations of their own conduct that the ultimate good desired is
better reached by free trade in ideas - that the best test of truth is
the power of the thought to get itself accepted in the competition of
the market, and that truth is the only ground upon which their
wishes safely can be carried out.166
The way it works, the exposure to the ideas of others allows one to
"consider, test, and develop their own conclusions."167 A free, open,
and dynamic market place of ideas is constantly shaping new ones.
This promotes both stability and change where recurring points may
crystallize and weak ones may develop. Of course, free speech is
more than the right to approve existing political beliefs and
economic arrangements as it includes, "[t]o paraphrase Justice
Holmes, [the] freedom for the thought that we hate, no less than for
the thought that agrees with us."168 In fact, free speech may "best
serve its high purpose when it induces a condition of unrest, creates
dissatisfaction with conditions as they are, or even stirs people to
anger."169 It is in this context that we should guard against any
curtailment of the people’s right to participate in the free trade of
ideas.
Third, free speech involves self-expression that enhances human
dignity. This right is "a means of assuring individual self-
fulfillment,"170 among others. In Philippine Blooming Mills
Employees Organization v. Philippine Blooming Mills Co., Inc,171 this
court discussed as follows:
The rights of free expression, free assembly and petition, are not
only civil rights but also political rights essential to man's enjoyment
of his life, to his happiness and to his full and complete
fulfillment.Thru these freedoms the citizens can participate not
merely in the periodic establishment of the government through
their suffrage but also in the administration of public affairs as well
as in the discipline of abusive public officers. The citizen is accorded
these rights so that he can appeal to the appropriate governmental
officers or agencies for redress and protection as well as for the
imposition of the lawful sanctions on erring public officers and
employees.172 (Emphasis supplied)
Fourth, expression is a marker for group identity. For one,
"[v]oluntary associations perform [an] important democratic role [in
providing] forums for the development of civil skills, for deliberation,
and for the formation of identity and community spirit[,] [and] are
largely immune from [any] governmental interference."173 They also
"provide a buffer between individuals and the state - a free space for
the development of individual personality, distinct group identity,
and dissident ideas - and a potential source of opposition to the
state."174 Free speech must be protected as the vehicle to find those
who have similar and shared values and ideals, to join together and
forward common goals.
Fifth, the Bill of Rights, free speech included, is supposed to "protect
individuals and minorities against majoritarian abuses perpetrated
through [the] framework [of democratic governance]."175 Federalist
framers led by James Madison were concerned about two
potentially vulnerable groups: "the citizenry at large - majorities -
who might be tyrannized or plundered by despotic federal
officials"176 and the minorities who may be oppressed by "dominant
factions of the electorate [that] capture [the] government for their
own selfish ends[.]"177 According to Madison, "[i]t is of great
importance in a republic not only to guard the society against the
oppression of its rulers, but to guard one part of the society against
the injustice of the other part."178 We should strive to ensure that
free speech is protected especially in light of any potential
oppression against those who find themselves in the fringes on
public issues.
Lastly, free speech must be protected under the safety valve
theory.179 This provides that "nonviolent manifestations of dissent
reduce the likelihood of violence[.]"180 "[A] dam about to burst . . .
resulting in the ‘banking up of a menacing flood of sullen anger
behind the walls of restriction’"181 has been used to describe the
effect of repressing nonviolent outlets.182 In order to avoid this
situation and prevent people from resorting to violence, there is a
need for peaceful methods in making passionate dissent. This
includes "free expression and political participation"183 in that they
can "vote for candidates who share their views, petition their
legislatures to [make or] change laws, . . . distribute literature
alerting other citizens of their concerns[,]"184 and conduct peaceful
rallies and other similar acts.185 Free speech must, thus, be
protected as a peaceful means of achieving one’s goal, considering
the possibility that repression of nonviolent dissent may spill over to
violent means just to drive a point.
II.B.5
Every citizen’s expression with political consequences enjoys a high
degree of protection. Respondents argue that the tarpaulinis
election propaganda, being petitioners’ way of endorsing candidates
who voted against the RH Law and rejecting those who voted for
it.186 As such, it is subject to regulation by COMELEC under its
constitutional mandate.187 Election propaganda is defined under
Section 1(4) of COMELEC Resolution No. 9615 as follows: SECTION 1.
Definitions . . .
....
4. The term "political advertisement" or "election propaganda"
refers to any matter broadcasted, published, printed, displayed or
exhibited, in any medium, which contain the name, image, logo,
brand, insignia, color motif, initials, and other symbol or graphic
representation that is capable of being associated with a candidate
or party, and is intended to draw the attention of the public or a
segment thereof to promote or oppose, directly or indirectly, the
election of the said candidate or candidates to a public office. In
broadcast media, political advertisements may take the form of
spots, appearances on TV shows and radio programs, live or taped
announcements, teasers, and other forms of advertising messages
or announcements used by commercial advertisers. Political
advertising includes matters, not falling within the scope of personal
opinion, that appear on any Internet website, including, but not
limited to, social networks, blogging sites, and micro-blogging sites,
in return for consideration, or otherwise capable of pecuniary
estimation.
On the other hand, petitioners invoke their "constitutional right to
communicate their opinions, views and beliefs about issues and
candidates."188 They argue that the tarpaulin was their statement of
approval and appreciation of the named public officials’ act of voting
against the RH Law, and their criticism toward those who voted in its
favor.189It was "part of their advocacy campaign against the RH
Law,"190 which was not paid for by any candidate or political
party.191 Thus, "the questioned orders which . . . effectively
restrain[ed] and curtail[ed] [their] freedom of expression should be
declared unconstitutional and void."192
This court has held free speech and other intellectual freedoms as
"highly ranked in our scheme of constitutional values."193 These
rights enjoy precedence and primacy.194 In Philippine Blooming
Mills, this court discussed the preferred position occupied by
freedom of expression:
Property and property rights can belost thru prescription; but
human rights are imprescriptible. If human rights are extinguished
by the passage of time, then the Bill of Rights is a useless attempt to
limit the power of government and ceases to be an efficacious shield
against the tyranny of officials, of majorities, ofthe influential and
powerful, and of oligarchs - political, economic or otherwise.
In the hierarchy of civil liberties, the rights of free expression and of
assembly occupy a preferred position as they are essential to the
preservation and vitality of our civil and political institutions; and
such priority "gives these liberties the sanctity and the sanction not
permitting dubious intrusions."195 (Citations omitted)
This primordial right calls for utmost respect, more so "when what
may be curtailed is the dissemination of information to make more
meaningful the equally vital right of suffrage."196 A similar idea
appeared in our jurisprudence as early as 1969, which was Justice
Barredo’s concurring and dissenting opinion in Gonzales v.
COMELEC:197
I like to reiterate over and over, for it seems this is the fundamental
point others miss, that genuine democracy thrives only where the
power and right of the people toelect the men to whom they would
entrust the privilege to run the affairs of the state exist. In the
language of the declaration of principles of our Constitution, "The
Philippines is a republican state. Sovereignty resides in the people
and all government authority emanates from them" (Section 1,
Article II). Translating this declaration into actuality, the Philippines
is a republic because and solely because the people in it can be
governed only by officials whom they themselves have placed in
office by their votes. And in it is on this cornerstone that I hold it
tobe self-evident that when the freedoms of speech, press and
peaceful assembly and redress of grievances are being exercised in
relation to suffrage or asa means to enjoy the inalienable right of the
qualified citizen to vote, they are absolute and timeless. If our
democracy and republicanism are to be worthwhile, the conduct of
public affairs by our officials must be allowed to suffer incessant and
unabating scrutiny, favorable or unfavorable, everyday and at all
times. Every holder of power in our government must be ready to
undergo exposure any moment of the day or night, from January to
December every year, as it is only in this way that he can rightfully
gain the confidence of the people. I have no patience for those who
would regard public dissection of the establishment as an attribute
to be indulged by the people only at certain periods of time. I
consider the freedoms of speech, press and peaceful assembly and
redress of grievances, when exercised in the name of suffrage, as
the very means by which the right itself to vote can only be properly
enjoyed.It stands to reason therefore, that suffrage itself would be
next to useless if these liberties cannot be untrammelled [sic]
whether as to degree or time.198 (Emphasis supplied)
Not all speech are treated the same. In Chavez v. Gonzales, this
court discussed that some types of speech may be subject to
regulation:
Some types of speech may be subjected to some regulation by the
State under its pervasive police power, in order that it may not be
injurious to the equal right of others or those of the community or
society. The difference in treatment is expected because the
relevant interests of one type of speech, e.g., political speech, may
vary from those of another, e.g., obscene speech. Distinctionshave
therefore been made in the treatment, analysis, and evaluation
ofthe permissible scope of restrictions on various categories of
speech. We have ruled, for example, that in our jurisdiction slander
or libel, lewd and obscene speech, as well as "fighting words" are
not entitled to constitutional protection and may be
penalized.199 (Citations omitted)
We distinguish between politicaland commercial speech. Political
speech refers to speech "both intended and received as a
contribution to public deliberation about some issue," 200 "foster[ing]
informed and civicminded deliberation."201 On the other hand,
commercial speech has been defined as speech that does "no more
than propose a commercial transaction."202 The expression resulting
from the content of the tarpaulin is, however, definitely political
speech. In Justice Brion’s dissenting opinion, he discussed that "[t]he
content of the tarpaulin, as well as the timing of its posting, makes it
subject of the regulations in RA 9006 and Comelec Resolution No.
9615."203 He adds that "[w]hile indeed the RH issue, by itself,is not
an electoralmatter, the slant that the petitioners gave the issue
converted the non-election issue into a live election one hence,
Team Buhay and Team Patay and the plea to support one and
oppose the other."204
While the tarpaulin may influence the success or failure of the
named candidates and political parties, this does not necessarily
mean it is election propaganda. The tarpaulin was not paid for or
posted "in return for consideration" by any candidate, political
party, or party-list group.
The second paragraph of Section 1(4) of COMELEC Resolution No.
9615, or the rules and regulations implementing Republic Act No.
9006 as an aid to interpret the law insofar as the facts of this case
requires, states:
4. The term "political advertisement" or "election propaganda"
refers to any matter broadcasted, published, printed, displayed or
exhibited, in any medium, which contain the name, image, logo,
brand, insignia, color motif, initials, and other symbol or graphic
representation that is capable of being associated with a candidate
or party, and is intended to draw the attention of the public or a
segment thereof to promote or oppose, directly or indirectly, the
election of the said candidate or candidates to a public office. In
broadcast media, political advertisements may take the form of
spots, appearances on TV shows and radio programs, live or taped
announcements, teasers, and other forms of advertising messages
or announcements used by commercial advertisers. Political
advertising includes matters, not falling within the scope of personal
opinion, that appear on any Internet website, including, but not
limited to, social networks, blogging sites, and micro-blogging sites,
in return for consideration, or otherwise capable of pecuniary
estimation. (Emphasis supplied)
It is clear that this paragraph suggests that personal opinions are not
included, while sponsored messages are covered.
Thus, the last paragraph of Section 1(1) of COMELEC Resolution No.
9615 states:
SECTION 1. Definitions - As used in this Resolution:
1. The term "election campaign" or "partisan political activity" refers
to an act designed to promote the election or defeat of a particular
candidate or candidates to a public office, and shall include any of
the following:
....
Personal opinions, views, and preferences for candidates, contained
in blogs shall not be considered acts of election campaigning or
partisan politicalactivity unless expressed by government officials in
the Executive Department, the Legislative Department, the Judiciary,
the Constitutional Commissions, and members of the Civil Service.
In any event, this case does not refer to speech in cyberspace, and
its effects and parameters should be deemed narrowly tailored only
in relation to the facts and issues in this case. It also appears that
such wording in COMELEC Resolution No. 9615 does not similarly
appear in Republic Act No. 9006, the law it implements.
We should interpret in this manner because of the value of political
speech.
As early as 1918, in United States v. Bustos,205 this court recognized
the need for full discussion of public affairs. We acknowledged that
free speech includes the right to criticize the conduct of public men:
The interest of society and the maintenance of good government
demand a full discussion of public affairs. Complete liberty to
comment on the conduct of public men is a scalpel in the case of
free speech. The sharp incision of its probe relieves the abscesses of
official dom. Men in public life may suffer under a hostile and an
unjust accusation; the wound can be assuaged with the balm of a
clear conscience. A public officer must not be too thin-skinned with
reference to comment upon his official acts. Only thus can the
intelligence and dignity of the individual be exalted.206
Subsequent jurisprudence developed the right to petition the
government for redress of grievances, allowing for criticism, save for
some exceptions.207 In the 1951 case of Espuelas v. People,208 this
court noted every citizen’s privilege to criticize his or her
government, provided it is "specific and therefore constructive,
reasoned or tempered, and not a contemptuous condemnation of
the entire government set-up."209
The 1927 case of People v. Titular210 involved an alleged violation of
the Election Law provision "penaliz[ing] the anonymous criticism of a
candidate by means of posters or circulars."211 This court explained
that it is the poster’s anonymous character that is being
penalized.212 The ponente adds that he would "dislike very muchto
see this decision made the vehicle for the suppression of public
opinion."213
In 1983, Reyes v. Bagatsing214 discussed the importance of allowing
individuals to vent their views. According to this court, "[i]ts value
may lie in the fact that there may be something worth hearing from
the dissenter [and] [t]hat is to ensurea true ferment of ideas."215
Allowing citizens to air grievances and speak constructive criticisms
against their government contributes to every society’s goal for
development. It puts forward matters that may be changed for the
better and ideas that may be deliberated on to attain that purpose.
Necessarily, it also makes the government accountable for acts that
violate constitutionally protected rights.
In 1998, Osmeña v. COMELEC found Section 11(b) of Republic Act
No. 6646, which prohibits mass media from selling print space and
air time for campaign except to the COMELEC, to be a democracy-
enhancing measure.216This court mentioned how "discussion of
public issues and debate on the qualifications of candidates in an
election are essential to the proper functioning of the government
established by our Constitution."217
As pointed out by petitioners, "speech serves one of its greatest
public purposes in the context of elections when the free exercise
thereof informs the people what the issues are, and who are
supporting what issues."218 At the heart of democracy is every
advocate’s right to make known what the people need to
know,219 while the meaningful exercise of one’s right of suffrage
includes the right of every voter to know what they need to know in
order to make their choice.
Thus, in Adiong v. COMELEC,220 this court discussed the importance
of debate on public issues, and the freedom of expression especially
in relation to information that ensures the meaningful exercise of
the right of suffrage:
We have adopted the principle that debate on public issues should
be uninhibited, robust, and wide open and that it may well include
vehement, caustic and sometimes unpleasantly sharp attacks on
government and public officials. Too many restrictions will deny to
people the robust, uninhibited, and wide open debate, the
generating of interest essential if our elections will truly be free,
clean and honest.
We have also ruled that the preferred freedom of expression calls all
the more for the utmost respect when what may be curtailed is the
dissemination of information to make more meaningful the equally
vital right of suffrage.221(Emphasis supplied, citations omitted)
Speech with political consequences isat the core of the freedom of
expression and must be protected by this court.
Justice Brion pointed out that freedomof expression "is not the god
of rights to which all other rights and even government protection of
state interest must bow."222
The right to freedom of expression isindeed not absolute. Even some
forms of protected speech are still subjectto some restrictions. The
degree of restriction may depend on whether the regulation is
content-based or content-neutral.223 Content-based regulations can
either be based on the viewpoint of the speaker or the subject of
the expression.
II.B.6
Content-based regulation
COMELEC contends that the order for removal of the tarpaulin is a
content-neutral regulation. The order was made simply because
petitioners failed to comply with the maximum size limitation for
lawful election propaganda.224
On the other hand, petitioners argue that the present size regulation
is content-based as it applies only to political speech and not to
other forms of speech such as commercial speech.225 "[A]ssuming
arguendo that the size restriction sought to be applied . . . is a mere
time, place, and manner regulation, it’s still unconstitutional for lack
of a clear and reasonable nexus with a constitutionally sanctioned
objective."226
The regulation may reasonably be considered as either content-
neutral or content-based.227 Regardless, the disposition of this case
will be the same. Generally, compared with other forms of speech,
the proposed speech is content-based.
As pointed out by petitioners, the interpretation of COMELEC
contained in the questioned order applies only to posters and
tarpaulins that may affect the elections because they deliver
opinions that shape both their choices. It does not cover, for
instance, commercial speech.
Worse, COMELEC does not point to a definite view of what kind of
expression of non-candidates will be adjudged as "election
paraphernalia." There are no existing bright lines to categorize
speech as election-related and those that are not. This is especially
true when citizens will want to use their resources to be able to raise
public issues that should be tackled by the candidates as what has
happened in this case. COMELEC’s discretion to limit speech in this
case is fundamentally unbridled.
Size limitations during elections hit ata core part of expression. The
content of the tarpaulin is not easily divorced from the size of its
medium.
Content-based regulation bears a heavy presumption of invalidity,
and this court has used the clear and present danger rule as
measure.228 Thus, in Chavez v. Gonzales:
A content-based regulation, however, bears a heavy presumption of
invalidity and is measured against the clear and present danger rule.
The latter will pass constitutional muster only if justified by a
compelling reason, and the restrictions imposedare neither
overbroad nor vague.229 (Citations omitted)
Under this rule, "the evil consequences sought to be prevented must
be substantive, ‘extremely serious and the degree of imminence
extremely high.’"230 "Only when the challenged act has overcome
the clear and present danger rule will it pass constitutional muster,
with the government having the burden of overcoming the
presumed unconstitutionality."231
Even with the clear and present danger test, respondents failed to
justify the regulation. There is no compelling and substantial state
interest endangered by the posting of the tarpaulinas to justify
curtailment of the right of freedom of expression. There is no reason
for the state to minimize the right of non-candidate petitioners to
post the tarpaulin in their private property. The size of the tarpaulin
does not affect anyone else’s constitutional rights.
Content-based restraint or censorship refers to restrictions "based
on the subject matter of the utterance or speech."232 In contrast,
content-neutral regulation includes controls merely on the incidents
of the speech such as time, place, or manner of the speech.233
This court has attempted to define "content-neutral" restraints
starting with the 1948 case of Primicias v. Fugoso.234The ordinance
in this case was construed to grant the Mayor discretion only to
determine the public places that may be used for the procession
ormeeting, but not the power to refuse the issuance of a permit for
such procession or meeting.235 This court explained that free speech
and peaceful assembly are "not absolute for it may be so regulated
that it shall not beinjurious to the equal enjoyment of others having
equal rights, nor injurious to the rights of the community or
society."236
The earlier case of Calalang v. Williams237 involved the National
Traffic Commission resolution that prohibited the passing of animal-
drawn vehicles along certain roads at specific hours. 238 This court
similarly discussed police power in that the assailed rules carry
outthe legislative policy that "aims to promote safe transit upon and
avoid obstructions on national roads, in the interest and
convenience of the public."239
As early as 1907, United States v. Apurado240 recognized that "more
or less disorder will mark the public assembly of the people to
protest against grievances whether real or imaginary, because on
such occasions feeling is always wrought to a high pitch of
excitement. . . ."241 It is with this backdrop that the state is justified
in imposing restrictions on incidental matters as time, place, and
manner of the speech.
In the landmark case of Reyes v. Bagatsing, this court summarized
the steps that permit applicants must follow which include
informing the licensing authority ahead of time as regards the date,
public place, and time of the assembly.242 This would afford the
public official time to inform applicants if there would be valid
objections, provided that the clear and present danger test is the
standard used for his decision and the applicants are given the
opportunity to be heard.243 This ruling was practically codified in
Batas Pambansa No. 880, otherwise known as the Public Assembly
Act of 1985.
Subsequent jurisprudence have upheld Batas Pambansa No. 880 as a
valid content-neutral regulation. In the 2006 case of Bayan v.
Ermita,244 this court discussed how Batas Pambansa No. 880 does
not prohibit assemblies but simply regulates their time, place, and
manner.245 In 2010, this court found in Integrated Bar of the
Philippines v. Atienza246 that respondent Mayor Atienza committed
grave abuse of discretion when he modified the rally permit by
changing the venue from Mendiola Bridge to Plaza Miranda without
first affording petitioners the opportunity to be heard. 247
We reiterate that the regulation involved at bar is content-based.
The tarpaulin content is not easily divorced from the size of its
medium.
II.B.7
Justice Carpio and Justice Perlas-Bernabe suggest that the provisions
imposing a size limit for tarpaulins are content-neutral regulations as
these "restrict the mannerby which speech is relayed but not the
content of what is conveyed."248
If we apply the test for content-neutral regulation, the questioned
acts of COMELEC will not pass the three requirements for evaluating
such restraints on freedom of speech.249 "When the speech
restraints take the form of a content-neutral regulation, only a
substantial governmental interest is required for its validity,"250 and
it is subject only to the intermediate approach.251
This intermediate approach is based on the test that we have
prescribed in several cases.252 A content-neutral government
regulation is sufficiently justified:
[1] if it is within the constitutional power of the Government; [2] if it
furthers an important or substantial governmental interest; [3] if the
governmental interest is unrelated to the suppression of free
expression; and [4] if the incident restriction on alleged [freedom of
speech & expression] is no greater than is essential to the
furtherance of that interest.253
On the first requisite, it is not within the constitutional powers of the
COMELEC to regulate the tarpaulin. As discussed earlier, this is
protected speech by petitioners who are non-candidates. On the
second requirement, not only must the governmental interest be
important or substantial, it must also be compelling as to justify the
restrictions made.
Compelling governmental interest would include constitutionally
declared principles. We have held, for example, that "the welfare of
children and the State’s mandate to protect and care for them, as
parens patriae,254 constitute a substantial and compelling
government interest in regulating . . . utterances in TV broadcast."255
Respondent invokes its constitutional mandate to ensure equal
opportunity for public information campaigns among candidates in
connection with the holding of a free, orderly, honest, peaceful, and
credible election.256
Justice Brion in his dissenting opinion discussed that "[s]ize limits to
posters are necessary to ensure equality of public information
campaigns among candidates, as allowing posters with different
sizes gives candidates and their supporters the incentive to post
larger posters[,] [and] [t]his places candidates with more money
and/or with deep-pocket supporters at an undue advantage against
candidates with more humble financial capabilities."257
First, Adiong v. COMELEC has held that this interest is "not as
important as the right of [a private citizen] to freely express his
choice and exercise his right of free speech."258 In any case, faced
with both rights to freedom of speech and equality, a prudent
course would be to "try to resolve the tension in a way that protects
the right of participation."259
Second, the pertinent election lawsrelated to private property only
require that the private property owner’s consent be obtained when
posting election propaganda in the property.260 This is consistent
with the fundamental right against deprivation of property without
due process of law.261 The present facts do not involve such posting
of election propaganda absent consent from the property owner.
Thus, this regulation does not apply in this case.
Respondents likewise cite the Constitution262 on their authority to
recommend effective measures to minimize election spending.
Specifically, Article IX-C, Section 2(7) provides:
The restriction in the present case does not pass even the lower test
of intermediate scrutiny for content-neutral regulations.
The action of the COMELEC in thiscase is a strong deterrent to
further speech by the electorate. Given the stature of petitioners
and their message, there are indicators that this will cause a "chilling
effect" on robust discussion during elections.
The form of expression is just as important as the message itself. In
the words of Marshall McLuhan, "the medium is the
message."266 McLuhan’s colleague and mentor Harold Innis has
earlier asserted that "the materials on which words were written
down have often counted for more than the words themselves."267
III
Freedom of expression and equality
III.A

Sec. 2. The Commission on Elections shall exercise the following

The possibility of abuse
powers and functions:

Of course, candidates and political parties do solicit the help of

....
private individuals for the endorsement of their electoral campaigns.

(7) Recommend to the Congress effective measures to minimize

On the one extreme, this can take illicit forms such as when
election spending, including limitation of places where propaganda
endorsement materials in the form of tarpaulins, posters, or media
materials shall be posted, and to prevent and penalize all forms of
advertisements are made ostensibly by "friends" but in reality are
election frauds, offenses, malpractices, and nuisance candidates.
really paid for by the candidate or political party. This skirts the
(Emphasis supplied) This does not qualify as a compelling and
constitutional value that provides for equal opportunities for all
substantial government interest to justify regulation of the preferred
candidates.
right to freedom of expression.

However, as agreed by the parties during the oral arguments in this

The assailed issuances for the removal of the tarpaulin are based on
case, this is not the situation that confronts us. In such cases, it will
the two feet (2’) by three feet (3’) size limitation under Section 6(c)
simply be a matter for investigation and proof of fraud on the part of
of COMELEC Resolution No. 9615. This resolution implements the
the COMELEC.
Fair Election Act that provides for the same size limitation.263

The guarantee of freedom of expression to individuals without any

This court held in Adiong v. COMELEC that "[c]ompared to the
relationship to any political candidate should not be held hostage by
paramount interest of the State in guaranteeing freedom of
the possibility of abuse by those seeking to be elected. It is true that
expression, any financial considerations behind the regulation are of
there can be underhanded, covert, or illicit dealings so as to hide the
marginal significance."264 In fact, speech with political consequences,
candidate’s real levels of expenditures. However, labelling all
as in this case, should be encouraged and not curtailed. As
expressions of private parties that tend to have an effect on the
petitioners pointed out, the size limitation will not serve the
debate in the elections as election paraphernalia would be too
objective of minimizing election spending considering there is no
broad a remedy that can stifle genuine speech like in this case.
limit on the number of tarpaulins that may be posted.265
Instead, to address this evil, better and more effective enforcement
will be the least restrictive means to the fundamental freedom.
The third requisite is likewise lacking. We look not only at the
legislative intent or motive in imposing the restriction, but more so
On the other extreme, moved by the credentials and the message of
at the effects of such restriction, if implemented. The restriction
a candidate, others will spend their own resources in order to lend
must not be narrowly tailored to achieve the purpose. It must be
support for the campaigns. This may be without agreement between
demonstrable. It must allow alternative avenues for the actor to
the speaker and the candidate or his or her political party. In lieu of
make speech.
donating funds to the campaign, they will instead use their
resources directly in a way that the candidate or political party
In this case, the size regulation is not unrelated to the suppression of would have doneso. This may effectively skirt the constitutional and
speech. Limiting the maximum sizeof the tarpaulin would render statutory limits of campaign spending.
ineffective petitioners’ message and violate their right to exercise
freedom of expression.
Again, this is not the situation in this case.

The COMELEC’s act of requiring the removal of the tarpaulin has the
The message of petitioners in thiscase will certainly not be what
effect of dissuading expressions with political consequences. These
candidates and political parties will carry in their election posters or
should be encouraged, more so when exercised to make more
media ads. The message of petitioner, taken as a whole, is an
meaningful the equally important right to suffrage.
advocacy of a social issue that it deeply believes. Through rhetorical
devices, it communicates the desire of Diocese that the positions of
those who run for a political position on this social issue be
determinative of how the public will vote. It primarily advocates a
stand on a social issue; only secondarily — even almost incidentally
— will cause the election or non-election of a candidate.
The twin tarpaulins consist of satire of political parties. Satire is a
"literary form that employs such devices as sarcasm, irony and
ridicule to deride prevailing vices or follies,"268 and this may target
any individual or group in society, private and government alike. It
seeks to effectively communicate a greater purpose, often used for
"political and social criticism"269 "because it tears down facades,
deflates stuffed shirts, and unmasks hypocrisy. . . . Nothing is more
thoroughly democratic than to have the high-and-mighty
lampooned and spoofed."270 Northrop Frye, wellknown in this
literary field, claimed that satire had two defining features: "one is
wit or humor founded on fantasy or a sense of the grotesque and
absurd, the other is an object of attack."271 Thus, satire frequently
uses exaggeration, analogy, and other rhetorical devices.
The tarpaulins exaggerate. Surely, "Team Patay" does not refer to a
list of dead individuals nor could the Archbishop of the Diocese of
Bacolod have intended it to mean that the entire plan of the
candidates in his list was to cause death intentionally. The tarpaulin
caricatures political parties and parodies the intention of those in
the list. Furthermore, the list of "Team Patay" is juxtaposed with the
list of "Team Buhay" that further emphasizes the theme of its
author: Reproductive health is an important marker for the church
of petitioners to endorse.
The messages in the tarpaulins are different from the usual
messages of candidates. Election paraphernalia from candidates and
political parties are more declarative and descriptive and contain no
sophisticated literary allusion to any social objective. Thus, they
usually simply exhort the public to vote for a person with a brief
description of the attributes of the candidate. For example "Vote for
[x], Sipag at Tiyaga," "Vote for [y], Mr. Palengke," or "Vote for [z], Iba
kami sa Makati."
This court’s construction of the guarantee of freedom of expression
has always been wary of censorship or subsequent punishment that
entails evaluation of the speaker’s viewpoint or the content of one’s
speech. This is especially true when the expression involved has
political consequences. In this case, it hopes to affect the type of
deliberation that happens during elections. A becoming humility on
the part of any human institution no matter how endowed with the
secular ability to decide legal controversies with finality entails that
we are not the keepers of all wisdom.
Humanity’s lack of omniscience, even acting collectively, provides
space for the weakest dissent. Tolerance has always been a
libertarian virtue whose version is embedded in our Billof Rights.
There are occasional heretics of yesterday that have become our
visionaries. Heterodoxies have always given us pause. The
unforgiving but insistent nuance that the majority surely and
comfortably disregards provides us with the checks upon reality that
may soon evolve into creative solutions to grave social problems.
This is the utilitarian version. It could also be that it is just part of
human necessity to evolve through being able to express or
communicate.
However, the Constitution we interpret is not a theoretical
document. It contains other provisions which, taken together with
the guarantee of free expression, enhances each other’s value.
Among these are the provisions that acknowledge the idea of
equality. In shaping doctrine construing these constitutional values,
this court needs to exercise extraordinary prudence and produce
narrowly tailored guidance fit to the facts as given so as not to
unwittingly cause the undesired effect of diluting freedoms as
exercised in reality and, thus, render them meaningless.
III.B.
Speech and equality:
Some considerations We first establish that there are two paradigms
of free speech that separate at the point of giving priority to equality
vis-à-vis liberty.272
In an equality-based approach, "politically disadvantaged speech
prevails over regulation[,] but regulation promoting political equality
prevails over speech."273 This view allows the government leeway to
redistribute or equalize ‘speaking power,’ such as protecting, even
implicitly subsidizing, unpopular or dissenting voices often
systematically subdued within society’s ideological ladder.274 This
view acknowledges that there are dominant political actors who,
through authority, power, resources, identity, or status, have
capabilities that may drown out the messages of others. This is
especially true in a developing or emerging economy that is part of
the majoritarian world like ours.
The question of libertarian tolerance
This balance between equality and the ability to express so as to find
one’s authentic self or to participate in the self determination of
one’s communities is not new only to law. It has always been a
philosophical problematique.
In his seminal work, Repressive Tolerance, philosopher and social
theorist Herbert Marcuse recognized how institutionalized
inequality exists as a background limitation, rendering freedoms
exercised within such limitation as merely "protect[ing] the already
established machinery of discrimination."275 In his view, any
improvement "in the normal course of events" within an unequal
society, without subversion, only strengthens existing interests of
those in power and control.276
In other words, abstract guarantees of fundamental rights like
freedom of expression may become meaningless if not taken in a
real context. This tendency to tackle rights in the abstract
compromises liberties. In his words:
Liberty is self-determination, autonomy—this is almost a tautology,
but a tautology which results from a whole series of synthetic
judgments. It stipulates the ability to determine one’s own life: to be
able to determine what to do and what not to do, what to suffer and
what not. But the subject of this autonomy is never the contingent,
private individual as that which he actually is or happens to be; it is
rather the individual as a human being who is capable of being free
with the others. And the problem of making possible such a
harmony between every individual liberty and the other is not that
of finding a compromise between competitors, or between freedom
and law, between general and individual interest, common and
private welfare in an established society, but of creating the society
in which man is no longer enslaved by institutions which vitiate self-
determination from the beginning. In other words, freedom is still to
be created even for the freest of the existing societies.277 (Emphasis
in the original)
Marcuse suggests that the democratic argument — with all opinions
presented to and deliberated by the people — "implies a necessary
condition, namely, that the people must be capable of deliberating
and choosing on the basis of knowledge, that they must have access
to authentic information, and that, on this basis, their evaluation
must be the result of autonomous thought."278 He submits that
"[d]ifferent opinions and ‘philosophies’ can no longer compete
peacefully for adherence and persuasion on rational grounds: the
‘marketplace of ideas’ is organized and delimited by those who
determine the national and the individual interest."279 A slant
toward left manifests from his belief that "there is a ‘natural right’ of
resistance for oppressed and overpowered minorities to use
extralegal means if the legal ones have proved to be
inadequate."280 Marcuse, thus, stands for an equality that breaks
away and transcends from established hierarchies, power
structures, and indoctrinations. The tolerance of libertarian society
he refers to as "repressive tolerance."
Legal scholars
The 20th century also bears witness to strong support from legal
scholars for "stringent protections of expressive
liberty,"281 especially by political egalitarians. Considerations such as
"expressive, deliberative, and informational interests,"282 costs or
the price of expression, and background facts, when taken together,
produce bases for a system of stringent protections for expressive
liberties.283
Many legal scholars discuss the interest and value of expressive
liberties. Justice Brandeis proposed that "public discussion is a
political duty."284 Cass Sustein placed political speech on the upper
tier of his twotier model for freedom of expression, thus, warranting
stringent protection.285 He defined political speech as "both
intended and received as a contribution to public deliberation about
some issue."286
But this is usually related also tofair access to opportunities for such
liberties.287 Fair access to opportunity is suggested to mean
substantive equality and not mere formal equalitysince "favorable
conditions for realizing the expressive interest will include some
assurance of the resources required for expression and some
guarantee that efforts to express views on matters of common
concern will not be drowned out by the speech of betterendowed
citizens."288 Justice Brandeis’ solution is to "remedy the harms of
speech with more speech."289 This view moves away from playing
down the danger as merely exaggerated, toward "tak[ing] the costs
seriously and embrac[ing] expression as the preferred strategy for
addressing them."290 However, in some cases, the idea of more
speech may not be enough. Professor Laurence Tribe observed the
need for context and "the specification of substantive values before
[equality] has full meaning."291 Professor Catherine A. MacKinnon
adds that "equality continues to be viewed in a formal rather than a
substantive sense."292 Thus, more speech can only mean more
speech from the few who are dominant rather than those who are
not.
Our jurisprudence
This court has tackled these issues.
Osmeña v. COMELEC affirmed National Press Club v. COMELEC on
the validity of Section 11(b) ofthe Electoral Reforms Law of
1987.293 This section "prohibits mass media from selling or giving
free of charge print space or air time for campaign or other political
purposes, except to the Commission on Elections."294 This court
explained that this provision only regulates the time and manner of
advertising in order to ensure media equality among
candidates.295 This court grounded this measure on constitutional
provisions mandating political equality:296 Article IX-C, Section 4
Section 4. The Commission may, during the election period,
supervise or regulate the enjoyment or utilization of all franchises or
permits for the operation of transportation and other public utilities,
media of communication or information, all grants, special
privileges, or concessions granted by the Government or any
subdivision, agency, or instrumentality thereof, including any
government-owned or controlled corporation or its subsidiary. Such
supervision or regulation shall aim to ensure equal opportunity,
time, and space, and the right to reply, including reasonable, equal
rates therefor, for public information campaigns and forums among
candidates in connection with the objective of holding free, orderly,
honest, peaceful, and credible elections. (Emphasis supplied)
Article XIII, Section 1
Section 1. The Congress shall give highest priorityto the enactment
of measures that protect and enhance the right of all the people to
human dignity, reducesocial, economic, and political inequalities,
and remove cultural inequities by equitably diffusing wealth and
political power for the common good.
To this end, the State shall regulate the acquisition, ownership, use,
and disposition of property and its increments. (Emphasis supplied)
Article II, Section 26
Section 26. The State shall guarantee equal access to opportunities
for public service, and prohibit political dynasties as may be defined
by law. (Emphasis supplied)
Thus, in these cases, we have acknowledged the Constitution’s
guarantee for more substantive expressive freedoms that take
equality of opportunities into consideration during elections.
The other view
However, there is also the other view. This is that considerations of
equality of opportunity or equality inthe ability of citizens as
speakers should not have a bearing in free speech doctrine. Under
this view, "members of the public are trusted to make their own
individual evaluations of speech, and government is forbidden to
intervene for paternalistic or redistributive reasons . . . [thus,] ideas
are best left to a freely competitive ideological market."297 This is
consistent with the libertarian suspicion on the use of viewpoint as
well as content to evaluate the constitutional validity or invalidity of
speech.
The textual basis of this view is that the constitutional provision uses
negative rather than affirmative language. It uses ‘speech’ as its
subject and not ‘speakers’.298 Consequently, the Constitution
protects free speech per se, indifferent to the types, status, or
associations of its speakers.299 Pursuant to this, "government must
leave speakers and listeners in the private order to their own
devices in sorting out the relative influence of speech."300
Justice Romero’s dissenting opinion in Osmeña v. COMELEC
formulates this view that freedom of speech includes "not only the
right to express one’s views, but also other cognate rights relevant
to the free communication [of] ideas, not excluding the right to be
informed on matters of public concern."301 She adds:
And since so many imponderables may affect the outcome of
elections — qualifications of voters and candidates, education,
means of transportation, health, public discussion, private
animosities, the weather, the threshold of a voter’s resistance to
pressure — the utmost ventilation of opinion of men and issues,
through assembly, association and organizations, both by the
candidate and the voter, becomes a sine qua non for elections to
truly reflect the will of the electorate.302 (Emphasis supplied)
Justice Romero’s dissenting opinion cited an American case, if only
to emphasize free speech primacy such that"courts, as a rule are
wary to impose greater restrictions as to any attempt to curtail
speeches with political content,"303 thus:
the concept that the government may restrict the speech of some
elements in our society in order to enhance the relative voice of the
others is wholly foreign to the First Amendment which was designed
to "secure the widest possible dissemination of information from
diverse and antagonistic sources" and "to assure unfettered
interchange of ideas for the bringing about of political and social
changes desired by the people."304
This echoes Justice Oliver Wendell Holmes’ submission "that the
market place of ideas is still the best alternative to censorship."305
Parenthetically and just to provide the whole detail of the argument,
the majority of the US Supreme Court in the campaign expenditures
case of Buckley v. Valeo "condemned restrictions (even if content-
neutral) on expressive liberty imposed in the name of ‘enhanc[ing]
the relative voice of others’ and thereby ‘equaliz[ing] access to the
political arena."306 The majority did not use the equality-based
paradigm.
One flaw of campaign expenditurelimits is that "any limit placed on
the amount which a person can speak, which takes out of his
exclusive judgment the decision of when enough is enough, deprives
him of his free speech."307
Another flaw is how "[a]ny quantitative limitation on political
campaigning inherently constricts the sum of public information and
runs counter to our ‘profound national commitment that debate on
public issues should be uninhibited, robust, and wide-open.’"308
In fact, "[c]onstraining those who have funds or have been able to
raise funds does not ease the plight of those without funds in the
first place . . . [and] even if one’s main concern isslowing the
increase in political costs, it may be more effective torely on market
forces toachieve that result than on active legal
intervention."309 According to Herbert Alexander, "[t]o oppose
limitations is not necessarily to argue that the sky’s the limit
[because in] any campaign there are saturation levels and a point
where spending no longer pays off in votes per dollar."310
III. C.
When private speech amounts
to election paraphernalia
The scope of the guarantee of free expression takes into
consideration the constitutional respect for human potentiality and
the effect of speech. It valorizes the ability of human beings to
express and their necessity to relate. On the other hand, a complete
guarantee must also take into consideration the effects it will have
in a deliberative democracy. Skewed distribution of resources as
well as the cultural hegemony of the majority may have the effect of
drowning out the speech and the messages of those in the minority.
In a sense, social inequality does have its effect on the exercise and
effect of the guarantee of free speech. Those who have more will
have better access to media that reaches a wider audience than
those who have less. Those who espouse the more popular ideas
will have better reception than the subversive and the dissenters of
society.To be really heard and understood, the marginalized view
normally undergoes its own degree of struggle.
The traditional view has been to tolerate the viewpoint of the
speaker and the content of his or her expression. This view, thus,
restricts laws or regulation that allows public officials to make
judgments of the value of such viewpoint or message content. This
should still be the principal approach.
However, the requirements of the Constitution regarding equality in
opportunity must provide limits to some expression during electoral
campaigns.
Thus clearly, regulation of speech in the context of electoral
campaigns made by candidates or the members of their political
parties or their political parties may be regulated as to time, place,
and manner. This is the effect of our rulings in Osmeña v. COMELEC
and National Press Club v. COMELEC.
Regulation of speech in the context of electoral campaigns made by
persons who are not candidates or who do not speak as members of
a political party which are, taken as a whole, principally advocacies
of a social issue that the public must consider during elections is
unconstitutional. Such regulation is inconsistent with the guarantee
of according the fullest possible range of opinions coming from the
electorate including those that can catalyze candid, uninhibited, and
robust debate in the criteria for the choice of a candidate.
This does not mean that there cannot be a specie of speech by a
private citizen which will not amount toan election paraphernalia to
be validly regulated by law.
Regulation of election paraphernalia will still be constitutionally valid
if it reaches into speech of persons who are not candidates or who
do not speak as members of a political party if they are not
candidates, only if what is regulated is declarative speech that, taken
as a whole, has for its principal object the endorsement of a
candidate only. The regulation (a) should be provided by law, (b)
reasonable, (c) narrowly tailored to meet the objective of enhancing
the opportunity of all candidates to be heard and considering the
primacy of the guarantee of free expression, and (d) demonstrably
the least restrictive means to achieve that object. The regulation
must only be with respect to the time, place, and manner of the
rendition of the message. In no situation may the speech be
prohibited or censored onthe basis of its content. For this purpose, it
will notmatter whether the speech is made with or on private
property.
This is not the situation, however, in this case for two reasons. First,
as discussed, the principal message in the twin tarpaulins of
petitioners consists of a social advocacy.
Second, as pointed out in the concurring opinion of Justice Antonio
Carpio, the present law — Section 3.3 of Republic Act No. 9006 and
Section 6(c) of COMELEC Resolution No. 9615 — if applied to this
case, will not pass the test of reasonability. A fixed size for election
posters or tarpaulins without any relation to the distance from the
intended average audience will be arbitrary. At certain distances,
posters measuring 2 by 3 feet could no longer be read by the general
public and, hence, would render speech meaningless. It will amount
to the abridgement of speech with political consequences.
IV
Right to property
Other than the right to freedom of expression311 and the meaningful
exercise of the right to suffrage,312 the present case also involves
one’s right to property.313
Respondents argue that it is the right of the state to prevent the
circumvention of regulations relating to election propaganda by
applying such regulations to private individuals.314 Certainly, any
provision or regulation can be circumvented. But we are not
confronted with this possibility. Respondents agree that the
tarpaulin in question belongs to petitioners. Respondents have also
agreed, during the oral arguments, that petitioners were neither
commissioned nor paid by any candidate or political party to post
the material on their walls.
Even though the tarpaulin is readily seen by the public, the tarpaulin
remains the private property of petitioners. Their right to use their
property is likewise protected by the Constitution.
In Philippine Communications Satellite Corporation v. Alcuaz:315
Any regulation, therefore, which operates as an effective
confiscation of private property or constitutes an arbitrary or
unreasonable infringement of property rights is void, because it is
repugnant to the constitutional guaranties of due process and equal
protection of the laws.316 (Citation omitted)
This court in Adiong held that a restriction that regulates where
decals and stickers should be posted is "so broad that it
encompasses even the citizen’s private property."317 Consequently,
it violates Article III, Section 1 of the Constitution which provides
thatno person shall be deprived of his property without due process
of law. This court explained:
Property is more than the mere thing which a person owns, it
includes the right to acquire, use, and dispose of it; and the
Constitution, in the 14th Amendment, protects these essential
attributes.
Property is more than the mere thing which a person owns. It is
elementary that it includes the right to acquire, use, and dispose of
it. The Constitution protects these essential attributes of property.
Holden v. Hardy, 169 U.S. 366, 391, 41 L. ed. 780, 790, 18 Sup. Ct.
Rep. 383. Property consists of the free use, enjoyment, and disposal
of a person’s acquisitions without control or diminution save by the
law of the land. 1 Cooley’s Bl. Com. 127. (Buchanan v. Warley 245 US
60 [1917])318
This court ruled that the regulation in Adiong violates private
property rights:
The right to property may be subject to a greater degree of
regulation but when this right is joined by a "liberty" interest, the
burden of justification on the part of the Government must be
exceptionally convincing and irrefutable. The burden is not met in
this case.
Section 11 of Rep. Act 6646 is so encompassing and invasive that it
prohibits the posting or display of election propaganda in any place,
whether public or private, except inthe common poster areas
sanctioned by COMELEC. This means that a private person cannot
post his own crudely prepared personal poster on his own front
dooror on a post in his yard. While the COMELEC will certainly never
require the absurd, there are no limits to what overzealous and
partisan police officers, armed with a copy of the statute or
regulation, may do.319 Respondents ordered petitioners, who are
private citizens, to remove the tarpaulin from their own property.
The absurdity of the situation is in itself an indication of the
unconstitutionality of COMELEC’s interpretation of its powers.
Freedom of expression can be intimately related with the right to
property. There may be no expression when there is no place where
the expression may be made. COMELEC’s infringement upon
petitioners’ property rights as in the present case also reaches out to
infringement on their fundamental right to speech.
Respondents have not demonstrated thatthe present state interest
they seek to promote justifies the intrusion into petitioners’
property rights. Election laws and regulations must be reasonable. It
must also acknowledge a private individual’s right to exercise
property rights. Otherwise, the due process clause will be violated.
COMELEC Resolution No. 9615 and the Fair Election Act intend to
prevent the posting of election propaganda in private property
without the consent of the owners of such private property.
COMELEC has incorrectly implemented these regulations. Consistent
with our ruling in Adiong, we find that the act of respondents in
seeking to restrain petitioners from posting the tarpaulin in their
own private property is an impermissible encroachments on the
right to property.
V
Tarpaulin and its message are not religious speech
We proceed to the last issues pertaining to whether the COMELEC in
issuing the questioned notice and letter violated the right of
petitioners to the free exercise of their religion.
At the outset, the Constitution mandates the separation of church
and state.320 This takes many forms. Article III, Section 5 of the
Constitution, for instance provides:
Section 5. No law shall be made respecting an establishment of
religion, or prohibiting the free exercise thereof. The free exercise
and enjoyment of religious profession and worship, without
discrimination or preference, shall forever be allowed. Noreligious
test shall be required for the exercise of civil or political rights.
There are two aspects of this provision.321 The first is the none
stablishment clause.322 Second is the free exercise and enjoyment of
religious profession and worship.323
The second aspect is atissue in this case.
Clearly, not all acts done by those who are priests, bishops, ustadz,
imams, or any other religious make such act immune from any
secular regulation.324 The religious also have a secular existence.
They exist within a society that is regulated by law.
The Bishop of Bacolod caused the posting of the tarpaulin. But not
all acts of a bishop amounts to religious expression. This
notwithstanding petitioners’ claim that "the views and position of
the petitioners, the Bishop and the Diocese of Bacolod, on the RH
Bill is inextricably connected to its Catholic dogma, faith, and moral
teachings. . . ."325
The difficulty that often presents itself in these cases stems from the
reality that every act can be motivated by moral, ethical, and
religious considerations. In terms of their effect on the corporeal
world, these acts range from belief, to expressions of these faiths, to
religious ceremonies, and then to acts of a secular character that
may, from the point of view of others who do not share the same
faith or may not subscribe to any religion, may not have any
religious bearing.
Definitely, the characterizations ofthe religious of their acts are not
conclusive on this court. Certainly, our powers of adjudication
cannot be blinded by bare claims that acts are religious in nature.
Petitioners erroneously relied on the case of Ebralinag v. The
Division Superintendent of Schools of Cebu326 in claiming that the
court "emphatically" held that the adherents ofa particular religion
shall be the ones to determine whether a particular matter shall be
considered ecclesiastical in nature.327 This court in
Ebralinagexempted Jehovah’s Witnesses from participating in the
flag ceremony "out of respect for their religious beliefs, [no matter
how] "bizarre" those beliefsmay seem to others." 328 This court found
a balance between the assertion of a religious practice and the
compelling necessities of a secular command. It was an early
attempt at accommodation of religious beliefs.
In Estrada v. Escritor,329 this court adopted a policy of benevolent
neutrality:
With religion looked upon with benevolence and not hostility,
benevolent neutrality allows accommodation of religion under
certain circumstances. Accommodations are government policies
that take religion specifically intoaccount not to promote the
government’s favored form of religion, but to allow individuals and
groups to exercise their religion without hindrance. Their purpose or
effect therefore is to remove a burden on, or facilitate the exercise
of, a person’s or institution’s religion. As Justice Brennan explained,
the "government [may] take religion into account . . . to exempt,
when possible, from generally applicable governmental regulation
individuals whose religious beliefs and practices would otherwise
thereby be infringed, or to create without state involvement an
atmosphere in which voluntary religious exercise may flourish."330
This court also discussed the Lemon test in that case, such that a
regulation is constitutional when: (1) it has a secular legislative
purpose; (2) it neither advances nor inhibits religion; and (3) it does
not foster an excessive entanglement with religion.331
As aptly argued by COMELEC, however, the tarpaulin, on its face,
"does not convey any religious doctrine of the Catholic
church."332 That the position of the Catholic church appears to
coincide with the message of the tarpaulin regarding the RH Law
does not, by itself, bring the expression within the ambit of religious
speech. On the contrary, the tarpaulin clearly refers to candidates
classified under "Team Patay" and "Team Buhay" according to their
respective votes on the RH Law.
The same may be said of petitioners’ reliance on papal encyclicals to
support their claim that the expression onthe tarpaulin is an
ecclesiastical matter. With all due respect to the Catholic faithful,
the church doctrines relied upon by petitioners are not binding upon
this court. The position of the Catholic religion in the Philippines as
regards the RH Law does not suffice to qualify the posting by one of
its members of a tarpaulin as religious speech solely on such basis.
The enumeration of candidates on the face of the tarpaulin
precludes any doubtas to its nature as speech with political
consequences and not religious speech.
Furthermore, the definition of an "ecclesiastical affair" in Austria v.
National Labor Relations Commission333 cited by petitioners finds no
application in the present case. The posting of the tarpaulin does not
fall within the category of matters that are beyond the jurisdiction of
civil courts as enumerated in the Austriacase such as "proceedings
for excommunication, ordinations of religious ministers,
administration of sacraments and other activities withattached
religious significance."334
A FINAL NOTE
We maintain sympathies for the COMELEC in attempting to do what
it thought was its duty in this case. However, it was misdirected.
COMELEC’s general role includes a mandate to ensure equal
opportunities and reduce spending among candidates and their
registered political parties. It is not to regulate or limit the speech of
the electorate as it strives to participate inthe electoral exercise.
The tarpaulin in question may be viewed as producing a caricature
of those who are running for public office.Their message may be
construed generalizations of very complex individuals and party-list
organizations.
They are classified into black and white: as belonging to "Team
Patay" or "Team Buhay."
But this caricature, though not agreeable to some, is still protected
speech.
That petitioners chose to categorize them as purveyors of death or
of life on the basis of a single issue — and a complex piece of
legislation at that — can easily be interpreted as anattempt to
stereo type the candidates and party-list organizations. Not all may
agree to the way their thoughts were expressed, as in fact there are
other Catholic dioceses that chose not to follow the example of
petitioners.
Some may have thought that there should be more room to
consider being more broad-minded and non-judgmental. Some may
have expected that the authors would give more space to practice
forgiveness and humility.

But, the Bill of Rights enumerated in our Constitution is an

enumeration of our fundamental liberties. It is not a detailed code
that prescribes good conduct. It provides space for all to be guided
by their conscience, not only in the act that they do to others but
also in judgment of the acts of others.

Freedom for the thought we can disagree with can be wielded not
only by those in the minority. This can often be expressed by
dominant institutions, even religious ones. That they made their
point dramatically and in a large way does not necessarily mean that
their statements are true, or that they have basis, or that they have
been expressed in good taste.

Embedded in the tarpaulin, however, are opinions expressed by

petitioners. It is a specie of expression protected by our
fundamental law. It is an expression designed to invite attention,
cause debate, and hopefully, persuade. It may be motivated by the
interpretation of petitioners of their ecclesiastical duty, but their
parishioner’s actions will have very real secular consequences.
Certainly, provocative messages do matter for the elections.

What is involved in this case is the most sacred of speech forms:

expression by the electorate that tends to rouse the public to debate
contemporary issues. This is not speechby candidates or political
parties to entice votes. It is a portion of the electorate telling
candidates the conditions for their election. It is the substantive
content of the right to suffrage.

This. is a form of speech hopeful of a quality of democracy that we

should all deserve. It is protected as a fundamental and primordial
right by our Constitution. The expression in the medium chosen by
petitioners deserves our protection.

WHEREFORE, the instant petition is GRANTED. The temporary

restraining order previously issued is hereby made permanent. The
act of the COMELEC in issuing the assailed notice dated February 22,
2013 and letter dated February 27, 2013 is declared
unconstitutional.

SO ORDERED.
G.R. No. 149177 November 23, 2007 In the meantime, on June 20, 2000, the DPWH approved Nippon's
request for the replacement of Kitamura by a certain Y. Kotake as
KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS project manager of the BBRI Project.13
CO., LTD., Petitioners,
vs. On June 29, 2000, the RTC, invoking our ruling in Insular Government
MINORU KITAMURA, Respondent. v. Frank14 that matters connected with the performance of contracts
are regulated by the law prevailing at the place of
DECISION performance,15 denied the motion to dismiss.16 The trial court
subsequently denied petitioners' motion for
reconsideration,17 prompting them to file with the appellate court,
NACHURA, J.:
on August 14, 2000, their first Petition for Certiorari under Rule 65
[docketed as CA-G.R. SP No. 60205].18 On August 23, 2000, the CA
Before the Court is a petition for review on certiorari under Rule 45 resolved to dismiss the petition on procedural grounds—for lack of
of the Rules of Court assailing the April 18, 2001 Decision1 of the statement of material dates and for insufficient verification and
Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25, 2001 certification against forum shopping.19 An Entry of Judgment was
Resolution2 denying the motion for reconsideration thereof. later issued by the appellate court on September 20, 2000.20

On March 30, 1999, petitioner Nippon Engineering Consultants Co., Aggrieved by this development, petitioners filed with the CA, on
Ltd. (Nippon), a Japanese consultancy firm providing technical and September 19, 2000, still within the reglementary period,
management support in the infrastructure projects of foreign a second Petition for Certiorari under Rule 65 already stating therein
governments,3 entered into an Independent Contractor Agreement the material dates and attaching thereto the proper verification and
(ICA) with respondent Minoru Kitamura, a Japanese national certification. This second petition, which substantially raised the
permanently residing in the Philippines.4 The agreement provides same issues as those in the first, was docketed as CA-G.R. SP
that respondent was to extend professional services to Nippon for a No. 60827.21
year starting on April 1, 1999.5 Nippon then assigned respondent to
work as the project manager of the Southern Tagalog Access Road
Ruling on the merits of the second petition, the appellate court
(STAR) Project in the Philippines, following the company's
rendered the assailed April 18, 2001 Decision22finding no grave
consultancy contract with the Philippine Government.6
abuse of discretion in the trial court's denial of the motion to
dismiss. The CA ruled, among others, that the principle of lex loci
When the STAR Project was near completion, the Department of celebrationis was not applicable to the case, because nowhere in the
Public Works and Highways (DPWH) engaged the consultancy pleadings was the validity of the written agreement put in issue. The
services of Nippon, on January 28, 2000, this time for the detailed CA thus declared that the trial court was correct in applying instead
engineering and construction supervision of the Bongabon-Baler the principle of lex loci solutionis.23
Road Improvement (BBRI) Project.7 Respondent was named as the
project manager in the contract's Appendix 3.1.8
Petitioners' motion for reconsideration was subsequently denied by
the CA in the assailed July 25, 2001 Resolution.24
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's
general manager for its International Division, informed respondent
Remaining steadfast in their stance despite the series of denials,
that the company had no more intention of automatically renewing
petitioners instituted the instant Petition for Review
his ICA. His services would be engaged by the company only up to
on Certiorari25 imputing the following errors to the appellate court:
the substantial completion of the STAR Project on March 31, 2000,
just in time for the ICA's expiry.9
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN FINDING THAT THE TRIAL COURT VALIDLY EXERCISED
Threatened with impending unemployment, respondent, through
JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE
his lawyer, requested a negotiation conference and demanded that
THE FACT THAT THE CONTRACT SUBJECT MATTER OF THE
he be assigned to the BBRI project. Nippon insisted that
PROCEEDINGS A QUO WAS ENTERED INTO BY AND
respondent’s contract was for a fixed term that had already expired,
BETWEEN TWO JAPANESE NATIONALS, WRITTEN WHOLLY
and refused to negotiate for the renewal of the ICA.10
IN THE JAPANESE LANGUAGE AND EXECUTED IN TOKYO,
JAPAN.
As he was not able to generate a positive response from the
petitioners, respondent consequently initiated on June 1, 2000 Civil
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED
Case No. 00-0264 for specific performance and damages with the
IN OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE
Regional Trial Court of Lipa City.11
TO THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT
OF RECENT DEVELOPMENT[S] IN PRIVATE INTERNATIONAL
For their part, petitioners, contending that the ICA had been LAWS.26
perfected in Japan and executed by and between Japanese
nationals, moved to dismiss the complaint for lack of jurisdiction.
The pivotal question that this Court is called upon to resolve is
They asserted that the claim for improper pre-termination of
whether the subject matter jurisdiction of Philippine courts in civil
respondent's ICA could only be heard and ventilated in the proper
cases for specific performance and damages involving contracts
courts of Japan following the principles of lex loci
executed outside the country by foreign nationals may be assailed
celebrationis and lex contractus.12
on the principles of lex loci celebrationis, lex contractus, the "state of
the most significant relationship rule," or forum non conveniens.
However, before ruling on this issue, we must first dispose of the
procedural matters raised by the respondent.
Kitamura contends that the finality of the appellate court's decision
in CA-G.R. SP No. 60205 has already barred the filing of the second
petition docketed as CA-G.R. SP No. 60827 (fundamentally raising
the same issues as those in the first one) and the instant petition for
review thereof.
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on
account of the petition's defective certification of non-forum
shopping, it was a dismissal without prejudice.27 The same holds
true in the CA's dismissal of the said case due to defects in the
formal requirement of verification28 and in the other requirement in
Rule 46 of the Rules of Court on the statement of the material
dates.29 The dismissal being without prejudice, petitioners can re-file
the petition, or file a second petition attaching thereto the
appropriate verification and certification—as they, in fact did—and
stating therein the material dates, within the prescribed period30 in
Section 4, Rule 65 of the said Rules.31
The dismissal of a case without prejudice signifies the absence of a
decision on the merits and leaves the parties free to litigate the
matter in a subsequent action as though the dismissed action had
not been commenced. In other words, the termination of a case not
on the merits does not bar another action involving the same
parties, on the same subject matter and theory.32
Necessarily, because the said dismissal is without prejudice and has
no res judicata effect, and even if petitioners still indicated in the
verification and certification of the second certiorari petition that
the first had already been dismissed on procedural
grounds,33 petitioners are no longer required by the Rules to
indicate in their certification of non-forum shopping in the instant
petition for review of the second certiorari petition, the status of the
aforesaid first petition before the CA. In any case, an omission in the
certificate of non-forum shopping about any event that will not
constitute res judicata and litis pendentia, as in the present case, is
not a fatal defect. It will not warrant the dismissal and nullification
of the entire proceedings, considering that the evils sought to be
prevented by the said certificate are no longer present.34
The Court also finds no merit in respondent's contention that
petitioner Hasegawa is only authorized to verify and certify, on
behalf of Nippon, the certiorari petition filed with the CA and not the
instant petition. True, the Authorization35 dated September 4, 2000,
which is attached to the second certiorari petition and which is also
attached to the instant petition for review, is limited in scope—its
wordings indicate that Hasegawa is given the authority to sign for
and act on behalf of the company only in the petition filed with the
appellate court, and that authority cannot extend to the instant
petition for review.36 In a plethora of cases, however, this Court has
liberally applied the Rules or even suspended its application
whenever a satisfactory explanation and a subsequent fulfillment of
the requirements have been made.37 Given that petitioners herein
sufficiently explained their misgivings on this point and appended to
their Reply38 an updated Authorization39 for Hasegawa to act on
behalf of the company in the instant petition, the Court finds the
same as sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the
defect in the verification and certification. As respondent pointed
out, and to which we agree, Hasegawa is truly not authorized to act
on behalf of Nippon in this case. The aforesaid September 4, 2000
Authorization and even the subsequent August 17, 2001
Authorization were issued only by Nippon's president and chief
executive officer, not by the company's board of directors. In not a
few cases, we have ruled that corporate powers are exercised by the
board of directors; thus, no person, not even its officers, can bind
the corporation, in the absence of authority from the
board.40 Considering that Hasegawa verified and certified the
petition only on his behalf and not on behalf of the other petitioner,
the petition has to be denied pursuant to Loquias v. Office of the
Ombudsman.41 Substantial compliance will not suffice in a matter
that demands strict observance of the Rules.42 While technical rules
of procedure are designed not to frustrate the ends of justice,
nonetheless, they are intended to effect the proper and orderly
disposition of cases and effectively prevent the clogging of court
dockets.43
Further, the Court has observed that petitioners incorrectly filed a
Rule 65 petition to question the trial court's denial of their motion to
dismiss. It is a well-established rule that an order denying a motion
to dismiss is interlocutory, and cannot be the subject of the
extraordinary petition for certiorari or mandamus. The appropriate
recourse is to file an answer and to interpose as defenses the
objections raised in the motion, to proceed to trial, and, in case of
an adverse decision, to elevate the entire case by appeal in due
course.44 While there are recognized exceptions to this
rule,45 petitioners' case does not fall among them.
This brings us to the discussion of the substantive issue of the case.
Asserting that the RTC of Lipa City is an inconvenient forum,
petitioners question its jurisdiction to hear and resolve the civil case
for specific performance and damages filed by the respondent. The
ICA subject of the litigation was entered into and perfected in Tokyo,
Japan, by Japanese nationals, and written wholly in the Japanese
language. Thus, petitioners posit that local courts have no
substantial relationship to the parties46 following the [state of the]
most significant relationship rule in Private International Law.47
The Court notes that petitioners adopted an additional but different
theory when they elevated the case to the appellate court. In the
Motion to Dismiss48 filed with the trial court, petitioners never
contended that the RTC is an inconvenient forum. They merely
argued that the applicable law which will determine the validity or
invalidity of respondent's claim is that of Japan, following the
principles of lex loci celebrationis and lex contractus.49 While not
abandoning this stance in their petition before the appellate court,
petitioners on certiorari significantly invoked the defense of forum
non conveniens.50 On petition for review before this Court,
petitioners dropped their other arguments, maintained the forum
non conveniens defense, and introduced their new argument that
the applicable principle is the [state of the] most significant
relationship rule.51
Be that as it may, this Court is not inclined to deny this petition
merely on the basis of the change in theory, as explained
in Philippine Ports Authority v. City of Iloilo.52 We only pointed out
petitioners' inconstancy in their arguments to emphasize their
incorrect assertion of conflict of laws principles.
To elucidate, in the judicial resolution of conflicts problems, three
consecutive phases are involved: jurisdiction, choice of law, and
recognition and enforcement of judgments. Corresponding to these
phases are the following questions: (1) Where can or should
litigation be initiated? (2) Which law will the court apply? and (3)
Where can the resulting judgment be enforced?53
Analytically, jurisdiction and choice of law are two distinct
concepts.54 Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further
question whether the application of a substantive law which will
determine the merits of the case is fair to both parties. The power to
exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law. While jurisdiction and
the choice of the lex fori will often coincide, the "minimum contacts"
for one do not always provide the necessary "significant contacts"
for the other.55 The question of whether the law of a state can be
applied to a transaction is different from the question of whether
the courts of that state have jurisdiction to enter a judgment.56
In this case, only the first phase is at issue—
jurisdiction.1âwphi1 Jurisdiction, however, has various aspects. For a
court to validly exercise its power to adjudicate a controversy, it
must have jurisdiction over the plaintiff or the petitioner, over the
defendant or the respondent, over the subject matter, over the
issues of the case and, in cases involving property, over the res or
the thing which is the subject of the litigation.57 In assailing the trial
court's jurisdiction herein, petitioners are actually referring to
subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is
conferred by the sovereign authority which establishes and
organizes the court. It is given only by law and in the manner
prescribed by law.58 It is further determined by the allegations of the
complaint irrespective of whether the plaintiff is entitled to all or
some of the claims asserted therein.59 To succeed in its motion for
the dismissal of an action for lack of jurisdiction over the subject
matter of the claim,60 the movant must show that the court or
tribunal cannot act on the matter submitted to it because no law
grants it the power to adjudicate the claims.61
In the instant case, petitioners, in their motion to dismiss, do not
claim that the trial court is not properly vested by law with
jurisdiction to hear the subject controversy for, indeed, Civil Case
No. 00-0264 for specific performance and damages is one not
capable of pecuniary estimation and is properly cognizable by the
RTC of Lipa City.62 What they rather raise as grounds to question
subject matter jurisdiction are the principles of lex loci
celebrationis and lex contractus, and the "state of the most
significant relationship rule."
The Court finds the invocation of these grounds unsound.
Lex loci celebrationis relates to the "law of the place of the
ceremony"63 or the law of the place where a contract is made.64 The
doctrine of lex contractus or lex loci contractus means the "law of
the place where a contract is executed or to be performed."65 It
controls the nature, construction, and validity of the contract66 and
it may pertain to the law voluntarily agreed upon by the parties or
the law intended by them either expressly or implicitly. 67 Under the
"state of the most significant relationship rule," to ascertain what
state law to apply to a dispute, the court should determine which
state has the most substantial connection to the occurrence and the
parties. In a case involving a contract, the court should consider
where the contract was made, was negotiated, was to be
performed, and the domicile, place of business, or place of
incorporation of the parties.68 This rule takes into account several
contacts and evaluates them according to their relative importance
with respect to the particular issue to be resolved.69
Since these three principles in conflict of laws make reference to the
law applicable to a dispute, they are rules proper for the second
phase, the choice of law.70 They determine which state's law is to be
applied in resolving the substantive issues of a conflicts
problem.71 Necessarily, as the only issue in this case is that of
jurisdiction, choice-of-law rules are not only inapplicable but also
not yet called for.
Further, petitioners' premature invocation of choice-of-law rules is
exposed by the fact that they have not yet pointed out any conflict
between the laws of Japan and ours. Before determining which law
should apply, first there should exist a conflict of laws situation
requiring the application of the conflict of laws rules.72 Also, when
the law of a foreign country is invoked to provide the proper rules
for the solution of a case, the existence of such law must be pleaded
and proved.73
It should be noted that when a conflicts case, one involving a foreign
element, is brought before a court or administrative agency, there
are three alternatives open to the latter in disposing of it: (1) dismiss
the case, either because of lack of jurisdiction or refusal to assume
jurisdiction over the case; (2) assume jurisdiction over the case and
apply the internal law of the forum; or (3) assume jurisdiction over
the case and take into account or apply the law of some other State
or States.74 The court’s power to hear cases and controversies is
derived from the Constitution and the laws. While it may choose to
recognize laws of foreign nations, the court is not limited by foreign
sovereign law short of treaties or other formal agreements, even in
matters regarding rights provided by foreign sovereigns.75
Neither can the other ground raised, forum non conveniens,76 be
used to deprive the trial court of its jurisdiction herein. First, it is not
a proper basis for a motion to dismiss because Section 1, Rule 16 of
the Rules of Court does not include it as a ground.77 Second,
whether a suit should be entertained or dismissed on the basis of
the said doctrine depends largely upon the facts of the particular
case and is addressed to the sound discretion of the trial court.78 In
this case, the RTC decided to assume jurisdiction. Third, the
propriety of dismissing a case based on this principle requires a
factual determination; hence, this conflicts principle is more
properly considered a matter of defense.79
Accordingly, since the RTC is vested by law with the power to
entertain and hear the civil case filed by respondent and the
grounds raised by petitioners to assail that jurisdiction are
inappropriate, the trial and appellate courts correctly denied the
petitioners’ motion to dismiss.
WHEREFORE, premises considered, the petition for review
on certiorari is DENIED.
SO ORDERED.
G.R. No. 190071 August 15, 2012
UNION BANK OF THE PHILIPPINES, Petitioner,
vs.
MAUNLAD HOMES, INC. and all other persons or entities claiming
rights under it, Respondents.
VILLARAMA, JR.,*
DECISION
BRION, J.:
Before the Court is the petition for review on certiorari1 under Rule
45 of the Rules of Court filed by petitioner Union Bank of the
Philippines (Union Bank), assailing the decision dated October 28,
20092 of the Court of Appeals (CA) in CA-G.R. SP No. 107772.
THE FACTS
Union Bank is the owner of a commercial complex located in
Malolos, Bulacan, known as the Maunlad Shopping Mall.
Sometime in August 2002, Union Bank, as seller, and respondent
Maunlad Homes, Inc. (Maunlad Homes), as buyer, entered into a
contract to sell3 involving the Maunlad Shopping Mall. The contract
set the purchase price at ₱ 151 million, ₱ 2.4 million of which was to
be paid by Maunlad Homes as down payment payable on or before
July 5, 2002, with the balance to be amortized over the succeeding
180-month period.4 Under the contract, Union Bank authorized
Maunlad Homes to take possession of the property and to build or
introduce improvements thereon. The parties also agreed that if
Maunlad Homes violates any of the provisions of the contract, all
payments made will be applied as rentals for the use and possession
of the property, and all improvements introduced on the land will
accrue in favor of Union Bank.5 In the event of rescission due to
failure to pay or to comply with the terms of the contract, Maunlad
Homes will be required to immediately vacate the property and
must voluntarily turn possession over to Union Bank.6
When Maunlad Homes failed to pay the monthly amortization,
Union Bank sent the former a Notice of Rescission of Contract7 dated
February 5, 2003, demanding payment of the installments due
within 30 days from receipt; otherwise, it shall consider the contract
automatically rescinded. Maunlad Homes failed to comply. Hence,
on November 19, 2003, Union Bank sent Maunlad Homes a letter
demanding payment of the rentals due and requiring that the
subject property be vacated and its possession turned over to the
bank. When Maunlad Homes continued to refuse, Union Bank
instituted an ejectment suit before the Metropolitan Trial Court
(MeTC) of Makati City, Branch 64, on February 19, 2004. Maunlad
Homes resisted the suit by claiming, among others, that it is the
owner of the property as Union Bank did not reserve ownership of
the property under the terms of the contract.8 By virtue of its
ownership, Maunlad Homes claimed that it has the right to possess
the property.
On May 18, 2005, the MeTC dismissed Union Bank’s ejectment
complaint.9 It found that Union Bank’s cause of action was based on
a breach of contract and that both parties are claiming a better right
to possess the property based on their respective claims of
ownership of the property.
The MeTC ruled that the appropriate action to resolve these
conflicting claims was an accion reivindicatoria, over which it had no
jurisdiction.
On appeal, the Regional Trial Court (RTC) of Makati City, Branch 139,
affirmed the MeTC in its decision dated July 17, 2008;10 it agreed
with the MeTC that the issues raised in the complaint extend
beyond those commonly involved in an unlawful detainer suit. The
RTC declared that the case involved a determination of the rights of
the parties under the contract. Additionally, the RTC noted that the
property is located in Malolos, Bulacan, but the ejectment suit was
filed by Union Bank in Makati City, based on the contract stipulation
that "the venue of all suits and actions arising out or in connection
with the Contract to Sell shall be in Makati City."11 The RTC ruled
that the proper venue for the ejectment action is in Malolos,
Bulacan, pursuant to the second paragraph of Section 1, Rule 4 of
the Rules of Court, which states:
Section 1. Venue of real actions. - Actions affecting title to or
possession of real property, or interest therein, shall be commenced
and tried in the proper court which has jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated.
Forcible entry and detainer actions shall be commenced and tried in
the municipal trial court of the municipality or city wherein the real
property involved, or a portion thereof, is situated. [emphasis ours]
The RTC declared that Union Bank cannot rely on the waiver of
venue provision in the contract because ejectment is not an action
arising out of or connected with the contract.
Union Bank appealed the RTC decision to the CA through a petition
for review under Rule 42 of the Rules of Court. The CA affirmed the
RTC decision in its October 28, 2009 decision,12 ruling that Union
Bank’s claim of possession is based on its claim of ownership which
in turn is based on its interpretation of the terms and conditions of
the contract, particularly, the provision on the consequences of
Maunlad Homes’ breach of contract. The CA determined that Union
Bank’s cause of action is premised on the interpretation and
enforcement of the contract and the determination of the validity of
the rescission, both of which are matters beyond the jurisdiction of
the MeTC. Therefore, it ruled that the dismissal of the ejectment suit
was proper. The CA, however, made no further ruling on the issue of
venue of the action.
From the CA’s judgment, Union Bank appealed to the Court by filing
the present petition for review on certiorariunder Rule 45 of the
Rules of Court.
THE PARTIES’ ARGUMENTS
Union Bank disagreed with the CA’s finding that it is claiming
ownership over the property through the ejectment action. It
claimed that it never lost ownership over the property despite the
execution of the contract, since only the right to possess was
conceded to Maunlad Homes under the contract; Union Bank never
transferred ownership of the property to Maunlad Homes. Because
of Maunlad Homes’ failure to comply with the terms of the contract,
Union Bank believes that it rightfully rescinded the sale, which
rescission terminated Maunlad Homes’ right to possess the subject
property. Since Maunlad Homes failed to turn over the possession of
the subject property, Union Bank believes that it correctly instituted
the ejectment suit.
The Court initially denied Union Bank’s petition in its Resolution
dated March 17, 2010.13 Upon motion for reconsideration filed by
Union Bank, the Court set aside its Resolution of March 17, 2010 (in
a Resolution dated May 30, 201114 ) and required Maunlad Homes to
comment on the petition.
Maunlad Homes contested Union Bank’s arguments, invoking the
rulings of the lower courts. It considered Union Bank’s action as
based on the propriety of the rescission of the contract, which, in
turn, is based on a determination of whether Maunlad Homes
indeed failed to comply with the terms of the contract; the propriety
of the rescission, however, is a question that is within the RTC’s
jurisdiction. Hence, Maunlad Homes contended that the dismissal of
the ejectment action was proper.
THE COURT’S RULING
We find the petition meritorious.
The authority of the MeTC to
interpret contracts in an unlawful
detainer action
In any case involving the question of jurisdiction, the Court is guided
by the settled doctrine that the jurisdiction of a court is determined
by the nature of the action pleaded by the litigant through the
allegations in his complaint.15
Unlawful detainer is an action to recover possession of real property
from one who unlawfully withholds possession after the expiration
or termination of his right to hold possession under any contract,
express or implied. The possession of the defendant in unlawful
detainer is originally legal but became illegal due to expiration or
termination of the right to possess.16 Under Section 1, Rule 70 of the
Rules of Court, the action must be filed "within one (1) year after the
unlawful deprivation or withholding of possession." Thus, to fall
within the jurisdiction of the MeTC, the complaint must allege that –
1. the defendant originally had lawful possession of the
property, either by virtue of a contract or by tolerance of
the plaintiff; 2. eventually, the defendant’s possession of
the property becameillegal or unlawful upon notice by the
plaintiff to defendant of the expiration or the termination
of the defendant’s right of possession;
3. thereafter, the defendant remained in possession of the
property and deprived the plaintiff the enjoyment thereof;
and
4. within one year from the unlawful deprivation or
withholding of possession, the plaintiff instituted the
complaint for ejectment.17
Contrary to the findings of the lower courts, all four requirements
were alleged in Union Bank’s Complaint. Union Bank alleged that
Maunlad Homes "maintained possession of the subject properties"
pursuant to the Contract to Sell.18 Maunlad Homes, however, "failed
to faithfully comply with the terms of payment," prompting Union
Bank to "rescind the Contract to Sell in a Notice of Rescission dated
February 5, 2003."19 When Maunlad Homes "refused to turn over
and vacate the subject premises,"20 Union Bank sent another
Demand Letter on November 19, 2003 to Maunlad Homes requiring
it (1) "[t]o pay the equivalent rentals-in-arrears as of October 2003
in the amount of ₱ 15,554,777.01 and monthly thereafter until the
premises are fully vacated and turned over" to Union Bank, and (2)
to vacate the property peacefully and turn over possession to Union
Bank.21 As the demand went unheeded, Union Bank instituted an
action for unlawful detainer before the MeTC on February 19, 2004,
within one year from the date of the last demand. These allegations
clearly demonstrate a cause of action for unlawful detainer and
vested the MeTC jurisdiction over Union Bank’s action.
Maunlad Homes denied Union Bank’s claim that its possession of the
property had become unlawful. It argued that its failure to make
payments did not terminate its right to possess the property
because it already acquired ownership when Union Bank failed to
reserve ownership of the property under the contract. Despite
Maunlad Homes’ claim of ownership of the property, the Court rules
that the MeTC retained its jurisdiction over the action; a defendant
may not divest the MeTC of its jurisdiction by merely claiming
ownership of the property.22 Under Section 16, Rule 70 of the Rules
of Court, "when the defendant raises the defense of ownership in
his pleadings and the question of possession cannot be resolved
without deciding the issue of ownership, the issue of ownership
shall be resolved only to determine the issue of possession." Section
18, Rule 70 of the Rules of Court, however, states that "the
judgment x x x shall be conclusive with respect to the possession
only and shall in no wise bind the title or affect the ownership of the
land or building."
The authority granted to the MeTC to preliminarily resolve the issue
of ownership to determine the issue of possession ultimately allows
it to interpret and enforce the contract or agreement between the
plaintiff and the defendant. To deny the MeTC jurisdiction over a
complaint merely because the issue of possession requires the
interpretation of a contract will effectively rule out unlawful
detainer as a remedy. As stated, in an action for unlawful detainer,
the defendant’s right to possess the property may be by virtue of a
contract, express or implied; corollarily, the termination of the
defendant’s right to possess would be governed by the terms of the
same contract. Interpretation of the contract between the plaintiff
and the defendant is inevitable because it is the contract that
initially granted the defendant the right to possess the property; it is
this same contract that the plaintiff subsequently claims was
violated or extinguished, terminating the defendant’s right to
possess. We ruled in Sps. Refugia v. CA23that –
where the resolution of the issue of possession hinges on a
determination of the validity and interpretation of the document of
title or any other contract on which the claim of possession is
premised, the inferior court may likewise pass upon these issues.
The MeTC’s ruling on the rights of the parties based on its
interpretation of their contract is, of course, not conclusive, but is
merely provisional and is binding only with respect to the issue of
possession.
Thus, despite the CA’s opinion that Union Bank’s "case involves a
determination of the rights of the parties under the Contract to
Sell,"24 it is not precluded from resolving this issue. Having acquired
jurisdiction over Union Bank’s action, the MeTC can resolve the
conflicting claims of the parties based on the facts presented and
proved.
The right to possess the property was
extinguished when the contract to
sell failed to materialize
Maunlad Homes acquired possession of the property based on its
contract with Union Bank. While admitting that it suspended
payment of the installments,25 Maunlad Homes contended that the
suspension of payment did not affect its right to possess the
property because its contract with Union Bank was one of sale and
not to sell; hence, ownership of the
property has been transferred to it, allowing it to retain possession
notwithstanding nonpayment of installments. The terms of the
contract, however, do not support this conclusion.
etc., et al.,31 the Court upheld the validity of a stipulation in a
contract providing for a venue for ejectment actions other than that
stated in the Rules of Court. Since the unlawful detainer action is
connected with the contract, Union Bank rightfully filed the
complaint with the MeTC of Makati City.
WHEREFORE, we hereby GRANT the petition and SET ASIDE the
decision dated October 28, 2009 of the Court of Appeals in CA-G.R.
SP No. 107772. Respondent Maunlad Homes, Inc. is ORDERED TO
VACATE the Maunlad Shopping Mall, the property subject of the
case, immediately upon the finality of this Decision. Respondent
Maunlad Homes, Inc. is further ORDERED TO PAY the rentals-in-
arrears, as well as rentals accruing in the interim until it vacates the
property.

Section 11 of the contract between Union Bank and Maunlad Homes
provides that "upon payment in full of the Purchase Price of the
Property x x x, the SELLER shall execute and deliver a Deed of
Absolute Sale conveying the Property to the
BUYER."26 "Jurisprudence has established that where the seller
promises to execute a deed of absolute sale upon the completion by
the buyer of the payment of the price, the contract is only a contract
to sell."27The presence of this provision generally identifies the
contract as being a mere contract to sell.28 After reviewing the terms
of the contract between Union Bank and Maunlad Homes, we find
no reasonable ground to exempt the present case from the general
rule; the contract between Union Bank and Maunlad Homes is a
contract to sell.
The case is REMANDED to the Metropolitan Trial Court of Makati
City, Branch 64, to determine the amount of rentals due. In addition
to the amount determined as unpaid rent, respondent Maunlad
Homes, Inc. is ORDERED TO PAY legal interest of six percent (6o/o)
per annum, from November 19, 2003, when the demand to pay and
to vacate was made, up to the finality of this Decision. Thereafter,
an interest of twelve percent ( 12%) per annum shall be imposed on
the total amount due until full payment is made.
SO ORDERED.

In a contract to sell, the full payment of the purchase price is a

positive suspensive condition whose non-fulfillment is not a breach
of contract, but merely an event that prevents the seller from
conveying title to the purchaser. "The non-payment of the purchase
price renders the contract to sell ineffective and without force and
effect."29 Maunlad Homes’ act of withholding the installment
payments rendered the contract ineffective and without force and
effect, and ultimately deprived itself of the right to continue
possessing Maunlad Shopping Mall.

The propriety of filing the unlawful

detainer action in Makati City
pursuant to the venue stipulation in
the contract

Maunlad Homes questioned the venue of Union Bank’s unlawful

detainer action which was filed in Makati City while the contested
property is located in Malolos, Bulacan. Citing Section 1, Rule 4 of
the Rules of Court, Maunlad Homes claimed that the unlawful
detainer action should have been filed with the municipal trial court
of the municipality or city where the real property involved is
situated. Union Bank, on the other hand, justified the filing of the
complaint with the MeTC of Makati City on the venue stipulation in
the contract which states that "the venue of all suits and actions
arising out of or in connection with this Contract to Sell shall be at
Makati City."30

While Section 1, Rule 4 of the Rules of Court states that ejectment

actions shall be filed in "the municipal trial court of the municipality
or city wherein the real property involved x x x is situated," Section 4
of the same Rule provides that the rule shall not apply "where the
parties have validly agreed in writing before the filing of the action
on the exclusive venue thereof." Precisely, in this case, the parties
provided for a different venue. In Villanueva v. Judge Mosqueda,
G.R. No. 208232 March 10, 2014
SURVIVING HEIRS OF ALFREDO R. BAUTISTA, namely: EPIFANIA G.
BAUTISTA and ZOEY G. BAUTISTA,Petitioners,
vs.
FRANCISCO LINDO and WELHILMINA LINDO; and HEIRS OF FILIPINA
DAQUIGAN, namely: MA. LOURDES DAQUIGAN, IMELDA
CATHERINE DAQUIGAN, IMELDA DAQUIGAN and CORSINO
DAQUIGAN, REBECCA QUIAMCO and ANDRES QUIAMCO, ROMULO
LORICA and DELIA LORICA, GEORGE CAJES and LAURA CAJES,
MELIDA BANEZ and FRANCISCO BANEZ, MELANIE GOFREDO, GERV
ACIO CAJES and ISABEL CAJES, EGMEDIO SEGOVIA and VERGINIA
SEGOVIA, ELSA N. SAM, PEDRO M. SAM and LINA SAM, SANTIAGO
MENDEZ and MINA MENDEZ, HELEN M. BURTON and LEONARDO
BURTON, JOSE JACINTO and BIENVENIDA JACINTO, IMELDA
DAQUIGAN, LEO MA TIGA and ALICIA MATIGA, FLORENCIO ACEDO
JR., and LYLA VALERIO, Respondents.
DECISION
VELASCO, JR., J.:
The Case
This is a Petition for Review on Certiorari under Rule 45 assailing the
April 25, 2013 Order of the Regional Trial Court (RTC) in Civil Case
No. (1798)-021 as well as its Order of July 3, 2013 denying
reconsideration.
The Facts
Alfredo R. Bautista (Bautista), petitioner’s predecessor, inherited in
1983 a free-patent land located in Poblacion, Lupon, Davao Oriental
and covered by Original Certificate of Title (OCT) No. (1572) P-6144.
A few years later, he subdivided the property and sold it to several
vendees, herein respondents, via a notarized deed of absolute sale
dated May 30, 1991. Two months later, OCT No. (1572) P-6144 was
canceled and Transfer Certificates of Title (TCTs) were issued in favor
of the vendees.1
Three years after the sale, or on August 5, 1994, Bautista filed a
complaint for repurchase against respondents before the RTC,
Branch 32, Lupon, Davao Oriental, docketed as Civil Case No.
1798,2 anchoring his cause of action on Section 119 of
Commonwealth Act No. (CA) 141, otherwise known as the "Public
Land Act," which reads:
SECTION 119. Every conveyance of land acquired under the free
patent or homestead provisions, when proper, shall be subject to
repurchase by the applicant, his widow, or legal heirs, within a
period of five years from the date of the conveyance.
Respondents, in their Answer, raised lack of cause of action,
estoppel, prescription, and laches, as defenses.
Meanwhile, during the pendency of the case, Bautista died and was
substituted by petitioner Epifania G. Bautista (Epifania).
Respondents Francisco and Welhilmina Lindo later entered into a
compromise agreement with petitioners, whereby they agreed to
cede to Epifania a three thousand two hundred and thirty square
meter (3,230 sq.m.)-portion of the property as well as to waive,
abandon, surrender, and withdraw all claims and counterclaims
against each other. The compromise was approved by the RTC in its
Decision dated January 27, 2011, the fallo of which reads:
WHEREFORE, a DECISION is hereby rendered based on the above-
quoted Compromise Agreement and the parties are enjoined to
strictly comply with the terms and conditions of the same.
SO ORDERED.3
Other respondents, however, filed a Motion to Dismiss4 dated
February 4, 2013, alleging that the complaint failed to state the
value of the property sought to be recovered. Moreover, they
asserted that the total selling price of all the properties is only
sixteen thousand five hundred pesos (PhP 16,500), and the selling
price or market value of a property is always higher than its assessed
value. Since Batas Pambansa Blg. (BP) 129, as amended, grants
jurisdiction to the RTCs over civil actions involving title to or
possession of real property or interest therein where the assessed
value is more than PhP 20,000, then the RTC has no jurisdiction over
the complaint in question since the property which Bautista seeks to
repurchase is below the PhP 20,000 jurisdictional ceiling.
RTC Ruling5
Acting on the motion, the RTC issued the assailed order dismissing
the complaint for lack of jurisdiction. The trial court found that
Bautista failed to allege in his complaint that the value of the subject
property exceeds 20 thousand pesos. Furthermore, what was only
stated therein was that the total and full refund of the purchase
price of the property is PhP 16,500. This omission was considered by
the RTC as fatal to the case considering that in real actions,
jurisdictional amount is determinative of whether it is the municipal
trial court or the RTC that has jurisdiction over the case.
With respect to the belated filing of the motion, the RTC, citing
Cosco Philippines Shipping, Inc. v. Kemper Insurance Company,6 held
that a motion to dismiss for lack of jurisdiction may be filed at any
stage of the proceedings, even on appeal, and is not lost by waiver
or by estoppel. The dispositive portion of the assailed Order reads:
WHEREFORE, the complaint for Repurchase, Consignation, with
Preliminary Injunction and Damages is hereby dismissed for lack of
jurisdiction.
SO ORDERED.7
Assignment of Errors
Their motion for reconsideration having been denied, petitioners
now seek recourse before this Court with the following assigned
errors:
I
THE PUBLIC RESPONDENT RTC ERRED IN ADMITTING THE MOTION
TO DISMISS DATED FEBRUARY 4, 2013, BELATEDLY FILED BY THE
PRIVATE RESPONDENTS IN THE CASE.
II
THE PUBLIC RESPONDENT RTC ERRED IN HOLDING THAT THE
INSTANT CASE FOR REPURCHASE IS A REAL ACTION.8
The Issue
Stated differently, the issue for the Court’s resolution is: whether or
not the RTC erred in granting the motion for the dismissal of the
case on the ground of lack of jurisdiction over the subject matter.
Arguments
Petitioners argue that respondents belatedly filed their Motion to
Dismiss and are now estopped from seeking the dismissal of the
case, it having been filed nine (9) years after the filing of the
complaint and after they have actively participated in the
proceedings. Additionally, they allege that an action for repurchase
is not a real action, but one incapable of pecuniary estimation, it
being founded on privity of contract between the parties. According
to petitioners, what they seek is the enforcement of their right to
repurchase the subject property under Section 119 of CA 141.
Respondents, for their part, maintain that since the land is no longer
devoted to agriculture, the right of repurchase under said law can no
longer be availed of, citing Santana v. Mariñas.9 Furthermore, they
suggest that petitioners intend to resell the property for a higher
profit, thus, the attempt to repurchase. This, according to
respondents, goes against the policy and is not in keeping with the
spirit of CA 141 which is the preservation of the land gratuitously
given to patentees by the State as a reward for their labor in
cultivating the property. Also, the Deed of Absolute Sale presented
in evidence by Bautista was unilaterally executed by him and was
not signed by respondents. Lastly, respondents argue that
repurchase is a real action capable of pecuniary estimation.
Our Ruling
The petition is meritorious.
Jurisdiction of courts is granted by the Constitution and pertinent
laws.
Jurisdiction of RTCs, as may be relevant to the instant petition, is
provided in Sec. 19 of BP 129, which reads:
Sec. 19. Jurisdiction in civil cases.―Regional Trial Courts shall
exercise exclusive original jurisdiction:
1) In all civil actions in which the subject of the litigation is
incapable of pecuniary estimation;
2) In all civil actions which involve the title to, or
possession of, real property, or any interest therein, where
the assessed value of the property involved exceeds
Twenty thousand pesos (₱20,000.00) or, for civil actions in
Metro Manila, where such value exceeds Fifty thousand
pesos (₱50,000.00) except actions for forcible entry into
and unlawful detainer of lands or buildings, original
jurisdiction over which is conferred upon the Metropolitan
Trial Courts, Municipal Trial Courts, and Municipal Circuit
Trial Courts.
On the other hand, jurisdiction of first level courts is prescribed in
Sec. 33 of BP 129, which provides:
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in civil
cases.―Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts shall exercise:
xxxx
3) Exclusive original jurisdiction in all civil actions which involve title
to, or possession of, real property, or any interest therein where the
assessed value of the property or interest therein does not exceed
Twenty thousand pesos (₱20,000.00) or, in civil actions in Metro
Manila, where such assessed value does not exceed Fifty thousand
pesos (₱50,000.00) exclusive of interest, damages of whatever kind,
attorney’s fees, litigation expenses and costs: Provided, That in cases
of land not declared for taxation purposes, the value of such
property shall be determined by the assessed value of the adjacent
lots.
The core issue is whether the action filed by petitioners is one
involving title to or possession of real property or any interest
therein or one incapable of pecuniary estimation.
The course of action embodied in the complaint by the present
petitioners’ predecessor, Alfredo R. Bautista, is to enforce his right
to repurchase the lots he formerly owned pursuant to the right of a
free-patent holder under Sec. 119 of CA 141 or the Public Land Act.
The Court rules that the complaint to redeem a land subject of a free
patent is a civil action incapable of pecuniary estimation.
It is a well-settled rule that jurisdiction of the court is determined by
the allegations in the complaint and the character of the relief
sought.10 In this regard, the Court, in Russell v. Vestil,11 wrote that
"in determining whether an action is one the subject matter of
which is not capable of pecuniary estimation this Court has adopted
the criterion of first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a sum of money,
the claim is considered capable of pecuniary estimation, and
whether jurisdiction is in the municipal courts or in the RTCs would
depend on the amount of the claim." But where the basic issue is
something other than the right to recover a sum of money, where
the money claim is purely incidental to, or a consequence of, the
principal relief sought, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in
terms of money, and, hence, are incapable of pecuniary estimation.
These cases are cognizable exclusively by RTCs.12
Settled jurisprudence considers some civil actions as incapable of
pecuniary estimation, viz:
1. Actions for specific performance;
2. Actions for support which will require the determination
of the civil status;
3. The right to support of the plaintiff;
4. Those for the annulment of decisions of lower courts;
 5. Those for the rescission or reformation of contracts;13
6. Interpretation of a contractual stipulation.14
The Court finds that the instant cause of action to redeem the land is
one for specific performance.
The facts are clear that Bautista sold to respondents his lots which
were covered by a free patent. While the deeds of sale do not
explicitly contain the stipulation that the sale is subject to
repurchase by the applicant within a period of five (5) years from the
date of conveyance pursuant to Sec. 119 of CA 141, still, such legal
provision is deemed integrated and made part of the deed of sale as
prescribed by law. It is basic that the law is deemed written into
every contract.15 Although a contract is the law between the parties,
the provisions of positive law which regulate contracts are deemed
written therein and shall limit and govern the relations between the
parties.16 Thus, it is a binding prestation in favor of Bautista which he
may seek to enforce. That is precisely what he did. He filed a
complaint to enforce his right granted by law to recover the lot
subject of free patent. Ergo, it is clear that his action is for specific
performance, or if not strictly such action, then it is akin or
analogous to one of specific performance. Such being the case, his
action for specific performance is incapable of pecuniary estimation
and cognizable by the RTC.
Respondents argue that Bautista’s action is one involving title to or
possession of real property or any interests therein and since the
selling price is less than PhP 20,000, then jurisdiction is lodged with
the MTC. They rely on Sec. 33 of BP 129.
Republic Act No. 769117 amended Sec. 33 of BP 129 and gave
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts exclusive original jurisdiction in all civil actions
which involve title to, or possession of, real property, or any interest
therein where the assessed value of the property or interest therein
does not exceed twenty thousand pesos (PhP 20,000) or, in civil
actions in Metro Manila, where such assessed value does not exceed
fifty thousand pesos (PhP 50,000) exclusive of interest, damages of
whatever kind, attorney’s fees, litigation expenses and costs.
At first blush, it appears that the action filed by Bautista involves
title to or possession of the lots he sold to respondents. Since the
total selling price is less than PhP 20,000, then the MTC, not the RTC,
has jurisdiction over the case. This proposition is incorrect for the re-
acquisition of the lots by Bautista or herein successors-in-interests,
the present petitioners, is but incidental to and an offshoot of the
exercise of the right by the latter to redeem said lots pursuant to
Sec. 119 of CA 141. The reconveyance of the title to petitioners is
solely dependent on the exercise of such right to repurchase the lots
in question and is not the principal or main relief or remedy sought.
Thus, the action of petitioners is, in reality, incapable of pecuniary
estimation, and the reconveyance of the lot is merely the outcome
of the performance of the obligation to return the property
conformably to the express provision of CA 141.
Even if we treat the present action as one involving title to real
property or an interest therein which falls under the jurisdiction of
the first level court under Sec. 33 of BP 129, as the total selling price
is only PhP 16,000 way below the PhP 20,000 ceiling, still, the
postulation of respondents that MTC has jurisdiction will not hold
water. This is because respondents have actually participated in the
proceedings before the RTC and aggressively defended their
position, and by virtue of which they are already barred to question
the jurisdiction of the RTC following the principle of jurisdiction by
estoppel.
In Heirs of Jose Fernando v. De Belen, it was held that the party
raising defenses to the complaint, actively participating in the
proceedings by filing pleadings, presenting his evidence, and
invoking its authority by asking for an affirmative relief is deemed
estopped from questioning the jurisdiction of the court.18
Here, we note that aside from the belated filing of the motion to
dismiss––it having been filed nine (9) years from the filing of the
complaint––respondents actively participated in the proceedings
through the following acts:
1. By filing their Answer and Opposition to the Prayer for
Injunction19 dated September 29, 1994 whereby they even
interposed counterclaims, specifically: PhP 501,000 for
unpaid survey accounts, PhP 100,000 each as litigation
expenses, PhP 200,000 and PhP 3,000 per daily
appearance by way of attorney’s fees, PhP 500,000 as
moral damages, PhP 100,000 by way of exemplary
damages, and costs of suit;
2. By participating in Pre-trial;
3. By moving for the postponement of their presentation
of evidence;20
4. By presenting their witness;21 and
5. By submitting the compromise agreement for
approval.22
Having fully participated in all stages of the case, and even invoking
the RTC’s authority by asking for affirmative reliefs, respondents can
no longer assail the jurisdiction of the said trial court. Simply put,
considering the extent of their participation in the case, they are, as
they should be, considered estopped from raising lack of jurisdiction
as a ground for the dismissal of the action.1âwphi1
WHEREFORE, premises considered, the instant petition is hereby
GRANTED. The April 25, 2013 and July 3, 2013 Orders of the Regional
Trial Court in Civil Case No. (1798)-021 are hereby REVERSED and
SET ASIDE.
The Regional Trial Court, Branch 32 in Lupon, Davao Oriental is
ORDERED to proceed with dispatch in resolving Civil Case No.
(1798)-021.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 138896 June 20, 2000
BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner,
vs.
Heirs of FRANCISCO PASTOR namely: EUGENIO SYLIANCO,
TEODORO SYLIANCO, TEODORO SYLIANCO, ISABEL SYLIANCO,
EUGENIA S. ONG, LAWRENCE SYLIANCO, LAWSON SYLIANCO,
LAWINA S. NOTARIO, LEONARDO SYLIANCO JR. and LAWFORD
SYLIANCO, respondents.
PANGANIBAN, J.:
An expropriation suit is incapable of pecuniary estimation.
Accordingly, it falls within the jurisdiction of the regional trial courts,
regardless of the value of the subject property.
The Case
Before us is a Petition for Review on Certiorari assailing the March
29, 1999 Order1 of the Regional Trial Court (RTC) of Cebu City
(Branch 58) in Civil Case No. CEB-21978, in which it dismissed a
Complaint for eminent domain. It ruled as follows:
Premises considered, the motion to dismiss is hereby granted on the
ground that this Court has no jurisdiction over the case. Accordingly,
the Orders dated February 19, 1999 and February 26, 1999, as well
as the Writ of Possession issued by virtue of the latter Order are
hereby recalled for being without force and effect.2
Petitioner also challenges the May 14, 1999 Order of the RTC
denying reconsideration.
The Facts
Petitioner filed before the Municipal Trial Court (MTC) of Talisay,
Cebu (Branch 1)3 a Complaint to expropriate a property of the
respondents. In an Order dated April 8, 1997, the MTC dismissed the
Complaint on the ground of lack of jurisdiction. It reasoned that
"[e]minent domain is an exercise of the power to take private
property for public use after payment of just compensation. In an
action for eminent domain, therefore, the principal cause of action is
the exercise of such power or right. The fact that the action also
involves real property is merely incidental. An action for eminent
domain is therefore within the exclusive original jurisdiction of the
Regional Trial Court and not with this Court."4
Assailed RTC Ruling
The RTC also dismissed the Complaint when filed before it, holding
that an action for eminent domain affected title to real property;
hence, the value of the property to be expropriated would
determine whether the case should be filed before the MTC or the
RTC. Concluding that the action should have been filed before the
MTC since the value of the subject property was less than P20,000,
the RTC ratiocinated in this wise:
The instant action is for eminent domain. It appears from the
current Tax Declaration of the land involved that its assessed value is
only One Thousand Seven Hundred Forty Pesos (P1,740.00).
Pursuant to Section 3, paragraph (3), of Republic Act No. 7691, all
civil actions involving title to, or possession of, real property with an
assessed value of less than P20,000.00 are within the exclusive
original jurisdiction of the Municipal Trial Courts. In the case at bar,
it is within the exclusive original jurisdiction of the Municipal Trial
Court of Talisay, Cebu, where the property involved is located.
The instant action for eminent domain or condemnation of real
property is a real action affecting title to or possession of real
property, hence, it is the assessed value of the property involved
which determines the jurisdiction of the court. That the right of
eminent domain or condemnation of real, property is included in a
real action affecting title to or possession of real property, is
pronounced by retired Justice Jose Y. Feria, thus, "Real actions are
those affecting title to or possession of real property. These include
partition or condemnation of, or foreclosures of mortgage on, real
property. . . ."5
Aggrieved, petitioner appealed directly to this Court, raising a pure
question of law.6 In a Resolution dated July 28, 1999, the Court
denied the Petition for Review "for being posted out of time on July
2, 1999, the due date being June 2, 1999, as the motion for
extension of time to file petition was denied in the resolution of July
14, 1999."7 In a subsequent Resolution dated October 6, 1999, the
Court reinstated the Petition.8
Issue
In its Memorandum, petitioner submits this sole issue for the
consideration of this Court:
Which court, MTC or RTC, has jurisdiction over cases for eminent
domain or expropriation where the assessed value of the subject
property is below Twenty Thousand (P20,000.00) Pesos?9
This Court's Ruling
The Petition is meritorious.
Main Issue:
Jurisdiction over an Expropriation Suit
In support of its appeal, petitioner cites Section 19 (1) of BP 129,
which provides that RTCs shall exercise exclusive original jurisdiction
over "all civil actions in which the subject of the litigation is
incapable of pecuniary estimation; . . . . ." It argues that the present
action involves the exercise of the right to eminent domain, and that
such right is incapable of pecuniary estimation.
Respondents, on the other hand, contend that the Complaint for
Eminent Domain affects the title to or possession of real property.
Thus, they argue that the case should have been brought before the
MTC, pursuant to BP 129 as amended by Section 3 (3) of RA 7691.
This law provides that MTCs shall have exclusive original jurisdiction
over all civil actions that involve title to or possession of real
property, the assessed value of which does not exceed twenty
thousand pesos or, in civil actions in Metro Manila, fifty thousand
pesos exclusive of interest, damages of whatever kind, attorney's
fees, litigation expenses and costs.
We agree with the petitioner that an expropriation suit is incapable
of pecuniary estimation. The test to determine whether it is so was
laid down by the Court in this wise:
 A review of the jurisprudence of this Court indicates that
in determining whether an action is one the subject matter
of which is not capable of pecuniary estimation, this Court
has adopted the criterion of first ascertaining the nature of
the principal action or remedy sought. If it is primarily for
the recovery of a sum of money, the claim is considered
capable of pecuniary estimation, and whether jurisdiction
is in the municipal courts or in the courts of first instance
would depend on the amount of the claim. However,
where the basic issue is something other than the right to
recover a sum of money, or where the money claim is
purely incidental to, or a consequence of, the principal
relief sought, like in suits to have the defendant perform
his part of the contract (specific performance) and in
actions for support, or for annulment of a judgment or to
foreclose a mortgage, this Court has considered such
actions as cases where the subject of the litigation may not
be estimated in terms of money, and are cognizable
exclusively by courts of first instance. The rationale of the
rule is plainly that the second class cases, besides the
determination of damages, demand an inquiry into other
factors which the law has deemed to be more within the
competence of courts of first instance, which were the
lowest courts of record at the time that the first organic
laws of the Judiciary were enacted allocating jurisdiction
(Act 136 of the Philippine Commission of June 11, 1901). 10
In the present case, an expropriation suit does not involve the
recovery of a sum of money. Rather, it deals with the exercise by the
government of its authority and right to take private property for
public use. 11 In National Power Corporation v. Jocson, 12 the Court
ruled that expropriation proceedings have two phases:
The first is concerned with the determination of the
authority of the plaintiff to exercise the power of eminent
domain and the propriety of its exercise in the context of
the facts involved in the suit. It ends with an order, if not
of dismissal of the action, "of condemnation declaring that
the plaintiff has a lawful right to take the property sought
to be condemned, for the public use or purpose described
in the complaint, upon the payment of just compensation
to be determined as of the date of the filing of the
complaint." An order of dismissal, if this be ordained,
would be a final one, of course, since it finally disposes of
the action and leaves nothing more to be done by the
Court on the merits. So, too, would an order of
condemnation be a final one, for thereafter as the Rules
expressly state, in the proceedings before the Trial Court,
"no objection to the exercise of the right of condemnation
(or the propriety thereof) shall be filed or heard."
instrumentalities has complied with the requisites for the taking of
private property. Hence, the courts determine the authority of the
government entity, the necessity of the expropriation, and the
observance of due process. 1 In the main, the subject of an
expropriation suit is the government's exercise of eminent domain, a
matter that is incapable of pecuniary estimation.
True, the value of the property to be expropriated is estimated in
monetary terms, for the court is duty-bound to determine the just
compensation for it.1avvphi1 This, however, is merely incidental to
the expropriation suit. Indeed, that amount is determined only after
the court is satisfied with the propriety of the expropriation.
Verily, the Court held in Republic of the Philippines v. Zurbano that
"condemnation proceedings are within the jurisdiction of Courts of
First Instance," 14 the forerunners of the regional trial courts. The
said case was decided during the effectivity of the Judiciary Act of
1948 which, like BP 129 in respect to RTCs, provided that courts of
first instance had original jurisdiction over "all civil actions in which
the subject of the litigation is not capable of pecuniary
estimation." 15 The 1997 amendments to the Rules of Court were not
intended to change these jurisprudential precedents.
We are not persuaded by respondents' argument that the present
action involves the title to or possession of a parcel of land. They cite
the observation of retired Justice Jose Y. Feria, an eminent authority
in remedial law, that condemnation or expropriation proceedings
are examples of real actions that affect the title to or possession of a
parcel of land. 16
Their reliance is misplaced. Justice Feria sought merely to distinguish
between real and personal actions. His discussion on this point
pertained to the nature of actions, not to the jurisdiction of courts.
In fact, in his pre-bar lectures, he emphasizes that jurisdiction over
eminent domain cases is still within the RTCs under the 1997 Rules.
To emphasize, the question in the present suit is whether the
government may expropriate private property under the given set of
circumstances. The government does not dispute respondents' title
to or possession of the same. Indeed, it is not a question of who has
a better title or right, for the government does not even claim that it
has a title to the property. It merely asserts its inherent sovereign
power to "appropriate and control individual property for the public
benefit, as the public necessity, convenience or welfare may
demand." 17
WHEREFORE, the Petition is hereby GRANTED and the assailed
Orders SET ASIDE. The Regional Trial Court is directed to HEAR the
case. No costs.

The second phase of the eminent domain action is SO ORDERED.

concerned with the determination by the court of "the just
compensation for the property sought to be taken." This is
done by the Court with the assistance of not more than
three (3) commissioners. The order fixing the just
compensation on the basis of the evidence before, and
findings of, the commissioners would be final, too. It
would finally dispose of the second stage of the suit, and
leave nothing more to be done by the Court regarding the
issue. . . .

It should be stressed that the primary consideration in an

expropriation suit is whether the government or any of its
G.R. No. 176020 September 29, 2014
HEIRS OF TELESFORO JULAO, namely, ANITA VDA. DE ENRIQUEZ,
SONIA J. TOLENTINO and RODERICK JULAO, Petitioners,
vs.
SPOUSES ALEJANDRO and MORENITA DE JESUS, Respondents.
DECISION
DEL CASTILLO, J.:
Jurisdiction over the subject matter is conferred by law and is
determined by the material allegations of the complaint.1 Thus, it
cannot be acquired through, or waived by, any act or omission of the
parties;2 nor can it be cured by their silence, acquiescence, or even
express consent.3
This Petition for Review on Certiorari4 under Rule 45 of the Rules of
Court assails the Decision5 dated December 4, 2006 of the Court of
Appeals (CA) in CA-G.R. CV No. 72845.
Factual Antecedents
Sometime in the 1960's, Telesforo Julao (Telesforo)6 filed before the
Department of Environment and Natural Resources (DENR), Baguio
City, two Townsite Sales Applications (TSA), TSA No. V-2132 and TSA
No. V-6667.7Upon his death on June 1, 1971, his applications were
transferred to his heirs.8
On April 30, 1979,9 Solito Julao (Solito) executed a Deed of Transfer
of Rights,10 transferring his hereditary share in the property covered
by TSA No. V-6667 to respondent spouses Alejandro and Morenita
De Jesus. In 1983, respondent spouses constructed a house on the
property they acquired from Solito.11 In 1986, Solito went missing.12
On March 15, 1996, the DENR issued an Order: Rejection and
Transfer of Sales Rights,13 to wit:
WHEREFORE, premises considered and it appearing that herein
applicant is a holder of two (2) applications in violation with
established policy in the disposition [of] public lands in the City of
Baguio, TSA V-6667 is hereby ordered dropped from the records.
Accordingly, it is henceforth ordered that TSA 2132 in the name
ofTELESFORO JULAO be, as [it is] hereby transferred to the heirs of
TELESFORO JULAO, represented by ANITA VDA. DE ENRIQUEZ, and
as thus transferred, the same shall continue to be given due course.
For convenience of easy reference, it is directed that the [pertinent]
records be consolidated in the name of the latter.
SO ORDERED.14
Consequently, on December 21, 1998, Original Certificate of Title
(OCT) No. P-2446,15 covering a 641-square meter property, was
issued in favor of the heirs of Telesforo.16
On March 2, 1999, petitioners Anita Julao vda. De Enriquez, Sonia J.
Tolentino and Roderick Julao,17 representing themselves to be the
heirs of Telesforo, filed before the Regional Trial Court (RTC), Baguio
City, a Complaint or Recovery of Possession of Real
Property,18 docketed as Civil Case No. 4308-R,19 against respondent
spouses. Petitioners alleged that they are the true and lawful
owners of a 641-square meter parcel of land located at Naguilian
Road, Baguio City, covered by OCT No. P-2446;20 that the subject
property originated from TSA No. V-2132;21 that respondent
spouses' house encroached on 70 square meters of the subject
property;22 that on August 4, 1998, petitioners sent a demand letter
to respondent spouses asking them to return the subject
property;23 that respondent spouses refused to accede to the
demand, insisting that they acquired the subject property from
petitioners' brother, Solito, by virtue of a Deed of Transfer of
Rights;24 that in the Deed of Transfer of Rights, Solito expressly
transferred in favor of respondent spouses his hereditary share in
the parcel of land covered by TSA No. V-6667;25 that TSA No. V-6667
was rejected by the DENR;26 and that respondent spouses have no
valid claim over the subject property because it is covered by a
separate application, TSA No. V-2132.27
Respondent spouses filed a Motion to Dismiss28 on the ground of
prescription, which the RTC denied for lack of merit.29 Thus, they
filed an Answer30 contending that they are the true and lawful
owners and possessors of the subject property;31 that they acquired
the said property from petitioners' brother, Solito;32 and that
contrary to the claim of petitioners, TSA No. V-6667 and TSA No. V-
2132 pertain to the same property.33
During the trial, petitioners disputed the validity of the Deed of
Transfer of Rights executed by Solito. They presented evidence to
show that Telesforo submitted two applications, TSA No. V-2132 and
TSA No. V-6667.34 The first one, TSA No. V-2132, resulted in the
issuance of OCT No. P-2446 in favor of the heirs ofTelesforo, while
the second one, TSA No. V-6667, was dropped from the
records.35 They also presented evidence to prove that Solito had no
hereditary share in the estate of Telesforo because Solito was not
Telesforo's biological son, but his stepson, and that Solito 's real
name was Francisco Bognot.36
After petitioners rested their case, respondent spouses filed a
Motion for Leave of Court to File a Demurrer to Evidence.37 The RTC,
however, denied the Motion.38
The heirs of Solito then moved to intervene and filed an Answer-
lnlntervention,39 arguing that their father, Solito, is a legitimate son
ofTelesforo and that Solito sold his hereditary share in the estate of
his father to respondent spouses by virtue of a Deed of Transfer of
Rights.40
To refute the evidence presented by petitioners, respondent
spouses presented two letters from the DENR: ( 1) a letter dated
April 27, 1999 issued by Amando I. Francisco, the Officer-In-Charge
of CENRO-Baguio City, stating that "it can be concluded that TSA No.
V-2132 and TSA No. V-6667 referred to one and the same
application covering one and the same lot;"41 and (2) a letter42 dated
September 30, 1998 from the DENR stating that "the land applied
for with assigned number TSA No. V-2132 was renumbered as TSA
No. V-6667 as per 2nd Indorsement dated November 20, 1957 x x
x."43 They also presented two affidavits,44 both dated August 31,
1994, executed by petitioners Sonia Tolentino and Roderick
Julao,45 acknowledging that Solito was their co-heir and that he was
the eldest son of Telesforo.46 Ruling of the Regional Trial Court
On August 10, 2001, the RTC rendered a Decision47 in favor of
petitioners.1âwphi1 The RTC found that although petitioners failed
to prove their allegation that Solito was not an heir of
Telesforo,48 they were nevertheless able to convincingly show that
Telesforo filed with the DENR two applications, covering two
separate parcels of land, and that it was his first application, TSA No.
V-2132, which resulted in the issuance of OCT No. P-2446.49 And
since what Solito transferred to respondent spouses was his
hereditary share in the parcel of land covered by TSA No. V-6667,
respondent spouses acquired no right over the subject property,
which was derived from a separate application, TSA No. V-
2132.50 Thus, the RTC disposed of the case in this wise:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the [petitioners] and against the [respondents] who are
hereby ordered to restore the possession of the land in question
consisting of an area of 70 square meters, more or less, which is a
portion of the land covered by [OCT] No. P-2446. The [respondents]
are ordered to remove the house and/or other improvements that
they constructed over the said parcel of land and to vacate the same
upon the finality of this decision.
SO ORDERED.51
Ruling of the Court of Appeals
Aggrieved, respondent spouses elevated the case to the CA.
On December 4, 2006, the CA reversed the ruling of the RTC. The CA
found the Complaint dismissible on two grounds: (1) failure on the
part of petitioners to identify the property sought to be recovered;
and (2) lack of jurisdiction. The CA noted that petitioners failed to
pinpoint the property sought to be recovered.52 In fact, they did not
present any survey plan to show that respondent spouses actually
encroached on petitioners' property.53Moreover, the CA was not
fully convinced that the two applications pertain to two separate
parcels of land since respondent spouses were able to present
evidence to refute such allegation.54 The CA likewise pointed out
that the Complaint failed to establish that the RTC had jurisdiction
over the case as petitioners failed to allege the assessed value of the
subject property.55 Thus:
WHEREFORE, premises considered, the appeal is GRANTED. The
decision appealed from is REVERSED and SET ASIDE. The complaint is
DISMISSED.
SO ORDERED.56
Issues
Hence, petitioners filed the instant Petition for Review on Certiorari,
raising the following errors:
I Fifty Thousand Pesos (₱50,000.00) exclusive of interest, damages of
THE [CA] COMMITTED REVERSIBLE ERROR IN RULING THAT
PETITIONERS FAILED TO PROVE THE IDENTITY OF THE PROPERTY IN
QUESTION.
II
THE [CA] COMMITTED REVERSIBLE ERROR IN RULING THAT THE
TRIAL COURT DID NOT ACQUIRE JURISDICTION OVER THE
COMPLAINT.57
At this juncture, it must be mentioned that in the Resolution58 dated
March 19, 2007, we required respondent spouses to file their
Comment to the Petition which they failed to comply with. Thus, in
the Resolution59 dated March 11, 2013, we dispensed with the filing
of respondent spouses' Comment. At the same time, we required
petitioners to manifest whether they are willing to submit the case
for resolution based on the pleadings filed. To date, petitioners have
not done so.
Our Ruling
The Petition lacks merit.
The assessed value must be alleged in the complaint to determine
which court has jurisdiction over the action.
Jurisdiction as we have said is conferred by law and is detennined by
the allegations in the complaint, which contains the concise
statement of the ultimate facts of a plaintiffs cause of action.60
Section 19(2) and Section 33(3) of Batas Pambansa Big. 129, as
amended by Republic Act No. 7691, provide:
SEC. 19. Jurisdiction in Civil Cases. - Regional Trial Courts shall
exercise exclusive original jurisdiction:
xxxx
(2) In all civil actions which involve the title to, or possession of, real
property, or any interest therein, where the assessed value of the
property involved exceeds twenty thousand pesos (₱20,000.00) or
for civil actions in Metro Manila, where such value exceeds Fifty
thousand pesos (₱50,000.00) except actions for forcible entry into
and unlawful detainer of lands or buildings, original jurisdiction over
which is conferred upon the Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts:
xxxx
SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in Civil Cases. –
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts shall exercise:
x x x x (3) Exclusive original jurisdiction in all civil actions which
involve title to, or possession of, real property, or any interest
therein where the assessed value of the property or interest therein
does not exceed Twenty Thousand Pesos (₱20,000.00) or, in civil
actions in Metro Manila, where such assessed value does not exceed
whatever kind, attorney's fees, litigation expenses and costs:
Provided, That in cases of land not declared for taxation purposes,
the value of such property shall be determined by the assessed
value of the adjacent lots.
Based on the foregoing, it is clear that in an action for recovery of
possession, the assessed value of the property sought to be
recovered determines the court's jurisdiction.61
In this case, for the RTC to exercise jurisdiction, the assessed value
of the subject property must exceed ₱20,000.00. Since petitioners
failed to allege in their Complaint the assessed value of the subject
property, the CA correctly dismissed the Complaint as petitioners
failed to establish that the RTC had jurisdiction over it. In fact, since
the assessed value of the property was not alleged, it cannot be
determined which trial court had original and exclusive jurisdiction
over the case.

Furthermore, contrary to the claim of petitioners, the issue of lack of

jurisdiction was raised by respondents in their Appellant's
Brief62 And the fact that it was raised for the first time on appeal is
of no moment. Under Section 1,63Rule 9 of the Revised Rules of
Court, defenses not pleaded either in a motion to dismiss or in the
answer are deemed waived, except for lack of jurisdiction, litis
pendentia, res judicata, and prescription, which must be apparent
from the pleadings or the evidence on record. In other words, the
defense of lack of jurisdiction over the subject matter may be raised
at any stage of the proceedings, even for the first time on
appeal.64 In fact, the court may motu proprio dismiss a complaint at
any time when it appears from the pleadings or the evidence on
record that lack of jurisdiction exists.65

In an action to recover, the property must be identified

Moreover, Article 434 of the Civil Code states that "[i]n an action to
recover, the property must be identified, and the plaintiff must rely
on the strength of his title and not on the weakness of the
defendant's claim." The plaintiff, therefore, is duty-bound to clearly
identify the land sought to be recovered, in accordance with the title
on which he anchors his right of ownership.66 It bears stressing that
the failure of the plaintiff to establish the identity of the property
claimed is fatal to his case.67

In this case, petitioners failed to identify the property they seek to

recover as they failed to describe the location, the area, as well as
the boundaries thereof. In fact, as aptly pointed out by the CA, no
survey plan was presented by petitioners to prove that respondent
spouses actually encroached upon the 70-square meter portion of
petitioners' property.68 Failing to prove their allegation, petitioners
are not entitled to the relief prayed for in their Complaint.

All told, we find no error on the part of the CA in dismissing the

Complaint for lack of jurisdiction and for failing to identify the
property sought to be recovered.

WHEREFORE, the Petition is hereby DENIED. The Decision dated

December 4, 2006 of the Court of Appeals in CA-G.R. CV No. 72845 is
hereby AFFIRMED.

SO ORDERED.
G.R. No. 204314
HEIRS OF DANILO ARRIENDA, ROSA G ARRIENDA, MA. CHARINA
ROSE ARRIENDA-ROMANO, MA. CARMELLIE ARRIENDA-MARA,
DANILO MARIA ALVIN G. ARRIENDA, JR., and JESUS FRANCIS
DOMINIC G ARRIENDA, Petitioners,
vs.
ROSARIO KALAW, Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari seeking to
reverse and set aside the Decision 1 and Resolution2of the Court of
Appeals (CA), dated April 26, 2012 and October 30, 2012,
respectively, in CA-G.R. SP No. 118687. The assailed CA Decision
reversed and set aside the Decision of the Regional Trial
Court (RTC) of Calamba City, Branch 35, in an unlawful detainer case
docketed as Civil Case No. 3361-03-C, while the CA Resolution
denied petitioners' motion for reconsideration.
The facts of the case are as follows:
On January 18, 2001, Danilo Arrienda (Arrienda) filed against herein
respondent and three other persons a Complaint3 for unlawful
detainer with the Municipal Trial Court (MTC) of Calauan, Laguna,
alleging that: he is the owner of an 11,635 square-meter parcel of
land located along National Road, Barangay Lamot 2, Calauan,
Laguna; the seller of the property warranted that the same is not
tenanted and is free from any occupants or claimants; despite such
warranty, Arrienda later discovered, that a portion of it was actually
being occupied by herein respondent and the other defendants;
after talking to respondent and the other defendants, petitioner
allowed them to continue occupying the premises in which they
have settled, subject to the condition that they will immediately
vacate the same upon prior notice by Arrienda that he will be
needing it; sometime in November 2000, Arrienda, informed
respondent and the other defendants of his intention to use the
subject land; despite repeated demands, the last of which was a
letter dated December 7, 2000, respondent and the other
defendants failed and refused to vacate the disputed premises.
Hence, the complaint, praying that respondent and the other
defendants be ordered to vacate the premises and restore
possession thereof to Arrienda; to pay a reasonable amount for the
use and occupation of the same; and to pay moral and exemplary
damages, attorney's fees and costs of suit.
In her Answer with Counterclaims,4 respondent denied the material
allegations in Arrienda's Complaint and contended that: the MTC has
no jurisdiction over the nature of the action, considering that the
main issue in
the case is the ownership of the disputed lot and not simply who
among the parties is entitled to possession de facto of the same; the
issue of ownership converts the unlawful detainer suit into one
which is incapable of pecuniary
estimation and, as such, the case should be placed under the
exclusive jurisdiction of the RTC; the subject lot is an agricultural
land of which respondent was a tenant; she and her family later
obtained ownership over the subject property when their landlord
donated the said property to them; Arrienda failed to secure a
Certification from the Department of Agrarian Reform that the
disputed premises is not really an agricultural land, which is a
condition precedent in the filing of the case. As counterclaim,
respondent alleged that, by reason of Arrienda's bad faith, greed
and malice in filing the complaint, she suffered from anxiety,
wounded feelings and similar injuries and was forced to engage the
services of a counsel to defend her rights. As such, she prayed that
Arrienda be ordered to pay moral damages, attorney's fees,
litigation expenses and other reliefs which the court may deem just
and equitable.
The other defendants adopted respondent's Answer with
Counterclaim.
After Arrienda filed his Reply,5 the parties subsequently submitted
their Position Papers.
On November 20, 2002, the MTC rendered its Decision6 dismissing
the complaint on the ground of lack of jurisdiction, holding as
follows:
xxxx
[I]t is well settled that the mere allegation by the defendant in an
ejectment case that he is the owner of the property involved therein
does not and cannot divest the inferior court of its jurisdiction over
the case. But if [it] appears during the trial that by the nature of
proof presented, the question of possession cannot be properly
determined without settling that of ownership, then the jurisdiction
of the court is lost and action should be DISMISSED. x x x Further,
Plaintiff must not only prove his ownership of the property but must
also identify the land he claim[s] to remove uncertainties.7
xxxx
The counterclaims of respondent and the other defendants were
likewise dismissed on the ground that the complaint was not
maliciously filed.
On appeal by Arrienda, the RTC agreed with the MTC that
jurisdiction lies with the RTC. The RTC then took cognizance of the
case and conducted trial. On April 6, 2010, the RTC rendered its
Decision disposing as follows:
WHEREFORE, premises considered, judgment is hereby rendered
ordering the defendants-appellees Rosario Kalaw, Felix Taklan,
Maximo Valenzuela and Felicidad Ulan and all persons claiming
rights under them to vacate the parcel of land situated at National
Road, Barangay Lamot 2, Calauan, Laguna, covered by Transfer
Certificate of Title No. T-204409 containing an area of 11,635 square
meters, more or less, and restore the same to the plaintiff-appellant
Danilo T. Arrienda. The defendants are likewise ordered to pay
plaintiff the sum of P10,000.00 as attorney's fees and the sum of
P500.00 per month as reasonable rental for the use and occupation
of the premises beginning January 2001 until the premises are finally
vacated.
SO ORDERED.[[8]]
In so ruling, the RTC held that since it was established that Arrienda
is the owner of the subject lot, he is, under the law, entitled to all
the attributes of ownership of the property, including possession
thereof.
Aggrieved by the RTC Decision, respondent filed a petition for
review with the CA. Pending resolution of respondent's appeal,
Arrienda died and was substituted by his heirs.
On April 26, 2012, the CA promulgated its assailed Decision
reversing and setting aside the RTC Decision. The CA held that the
RTC did not acquire jurisdiction over the case for Arrienda's failure
to allege the assessed value of the subject property and, as a
consequence, the assailed RTC Decision is null and void.
Herein petitioners filed their Motion for Reconsideration, but the CA
denied it in its October 30, 2012 Resolution.
Hence, the instant petition based on the following grounds:
I Under the said amendments, Metropolitan Trial Courts (MeTCs),
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS MUST
HAVE BEEN CONFUSED WITH THE ORIGINAL AND APPELLATE
JURISDICTION OF THE REGIONAL TRIAL COURTS.
II
IT BEING OBVIOUS, AND AS SO ADMITTED BY THE HONORABLE
COURT OF APPEALS THAT "IN THIS CASE, ARRIENDA'S COMPLAINT
FOR UNLAWFUL DETAINER DATED 17 JANUARY 2001 WAS FIRST
FILED WITH THE MTC OF CALAUAN, LAGUNA," THE HONORABLE
COURT OF APPEALS GRAVELY ERRED IN RULING: "THUS, FOR
FAILURE OF ARRIENDA TO DISCLOSE THE ASSESSED VALUE OF THE
SUBJECT PROPERTY IN HIS COMPLAINT, THE COURT A QUO IS
BEREFT OF JURISDICTION OF TAKING COGNIZANCE OF THE CASE.
WITHOUT ANY JURISDICTION THEN, THE ASSAILED DECISION AND
RESOLUTION ARE NULL AND VOID."
III
WITH ALL DUE RESPECT, THE QUESTIONED APRIL 26, 2012 DECISION
AND OCTOBER 30, 2012 RESOLUTION OF THE HONORABLE COURT
OF APPEALS WOULD WIPE OUT SECTION 8, RULE 40 ON "APPEAL
FROM ORDERS DISMISSING CASE WITHOUT TRIAL; LACK OF
JURISDICTION" FROM THE 1997 RULES OF CIVIL PROCEDURE, IF NOT
NULLIFIED BY THIS HONORABLE SUPREME COURT.9
The petition is meritorious.
The basic issue in the instant petition is whether or not the RTC has
jurisdiction over Arrienda's appeal of the MTC Decision.
The Court rules in the affirmative.
It bears to reiterate that under Batas Pambansa Bilang. 129 (B.P. Blg.
129), as amended by Republic Act No. 7691 (RA 7691), RTCs are
endowed with original and appellate jurisdictions.
For purposes of the present petition, Section 19 of B.P. Blg. 129, as
amended, provides for the RTCs’ exclusive original jurisdiction in civil
cases involving title to or possession of real property or any interest
therein, pertinent portions of which read as follows:
Section 19. Jurisdiction in civil cases.– Regional Trial Courts shall
exercise exclusive original jurisdiction:
xxxx
In all civil actions which involve the title to, or possession of, real
property, or any interest therein, where the assessed value of the
property involved exceeds Twenty thousand pesos (P20,000.00) or
for civil actions in Metro Manila, where such value exceeds Fifty
thousand pesos (P50,000.00), except actions for forcible entry into
and unlawful detainer of lands or buildings, original jurisdiction over
which is conferred upon Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts.
xxx
Based on the amendments introduced by RA 7691, real actions no
longer reside under the exclusive original jurisdiction of the RTCs.
Municipal Trial Courts (MTCs) and Municipal Circuit Trial Courts
(MCTCs) now have jurisdiction over real actions if the assessed value
of the property involved does not exceed P20,000.00, or in Metro
Manila, where such assessed value does not exceed P50,000.00.
Otherwise, if the assessed value exceeds P20,000.00 or P50,000.00,
as the case may be, jurisdiction is with the RTC.
On the other hand, the RTCs’ appellate jurisdiction, as contrasted to
its original jurisdiction, is provided in Section 22 of B.P. Blg. 129, as
amended,thus:
SECTION 22. Appellate jurisdiction. – Regional Trial Courts shall
exercise appellate jurisdiction over all cases decided by
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts in their respective territorial jurisdictions.
Such cases shall be decided on the basis of the entire record of the
proceedings
had in the court of origin such memoranda and/or briefs as may be
submitted by the parties or required by the Regional Trial Courts.10
From the above-quoted provision, it is clear that the RTC exercises
appellate jurisdiction over all cases decided by first level courts in
their respective territorial jurisdictions.1âwphi1
Thus, in the present case, when the RTC took cognizance of
Arrienda's appeal from the adverse decision of the MTC in the
ejectment suit, it (RTC) was unquestionably exercising its appellate
jurisdiction as mandated by law. Perforce, its decision may not be
annulled on the basis of lack of jurisdiction as the RTC has, beyond
question, jurisdiction to decide the appeal and its decision should be
deemed promulgated in the exercise of that jurisdiction.1âwphi1
The Court does not agree with the ruling of the CA that the RTC lacks
jurisdiction over the case on the ground that Arrienda failed to
allege the assessed value of the subject land in his Complaint.
It is true that under the prevailing law, as discussed above, in actions
involving title to or possession of real property or any interest
therein, there is a need to allege the assessed value of the real
property subject of the action, or the interest therein, for purposes
of determining which court (MeTC/MTC/MCTC or RTC) has
jurisdiction over the action. However, it must be clarified that this
requirement applies only if these courts are in the exercise of their
original jurisdiction.11 In the present case, the RTC was exercising its
appellate, not original, jurisdiction when it took cognizance of
Arrienda's appeal and Section 22 of B.P. Blg. 129 does not provide
any amount or value of the subject property which would limit the
RTC's exercise of its appellate jurisdiction over cases decided by first
level courts. Clearly then, in the instant case, contrary to the ruling
of the CA, the assessed value of the disputed lot is immaterial for
purposes of the RTC’s appellate jurisdiction.12 Indeed, all cases
decided by the MTC are generally appealable to the RTC irrespective
of the amount involved.13 Hence, the CA erred in nullifying the RTC
decision for lack of jurisdiction.

Finally, in coming up with its Decision, the RTC made an exhaustive

and definitive finding on Arrienda's main cause of action. It is within
the RTC's competence to make this finding in the exercise of its
appellate jurisdiction, as it would, in the exercise of its original
jurisdiction.14

WHEREFORE, the instant petition is GRANTED. The Decision and

Resolution of the Court of Appeals, dated April 26, 2012 and October
30, 2012, respectively, in CA-G.R. SP No. 118687 are SET ASIDE. The
Decision of the Regional Trial Court of Calamba City, Branch 35,
dated April 6, 2010, in Civil Case No. 3361-03-C, is REINSTATED.

SO ORDERED.
G.R. No. 141375 April 30, 2003
MUNICIPALITY OF KANANGA, Represented by its Mayor, Hon.
GIOVANNI M. NAPARI, petitioner,
vs.
Hon. FORTUNITO L. MADRONA, Presiding Judge, Regional Trial
Court of Ormoc City (Branch 35); and the CITY OF ORMOC,
Represented by its Mayor, Hon. EUFROCINO M. CODILLA
SR., respondents.
PANGANIBAN, J.:
Since there is no legal provision specifically governing jurisdiction
over boundary disputes between a municipality and an independent
component city, it follows that regional trial courts have the power
and the authority to hear and determine such controversy.
The Case
Certiorari1
Before us is a Petition for under Rule 65 of the Rules of
Court, seeking to annul the October 29, 1999 Order2 issued by the
Regional Trial Court (RTC) of Ormoc City (Branch 35) in Civil Case No.
3722-O. The decretal portion of the assailed Order reads as follows:
"For the foregoing considerations, this Court is not inclined
to approve and grant the motion to dismiss[,] although the
municipality has all the right to bring the matter or issue to
the Supreme Court by way of certiorari purely on question
of law."3
The Facts
A boundary dispute arose between the Municipality of Kananga and
the City of Ormoc. By agreement, the parties submitted the issue to
amicable settlement by a joint session of the Sangguniang
Panlungsod of Ormoc City and the Sangguniang Bayan of
Kananga on October 31, 1997.
No amicable settlement was reached. Instead, the members of the
joint session issued Resolution No. 97-01, which in part reads:
"x x x IT IS HEREBY RESOLVED x x x to pass a resolution
certifying that both the Sangguniang Panlungsod of Ormoc
City and the Sangguniang Bayan of Kananga, Leyte have
failed to settle amicably their boundary dispute and have
agreed to elevate the same to the proper court for
settlement by any of the interested party (sic)."4
To settle the boundary dispute, the City of Ormoc filed before the
RTC of Ormoc City (Branch 35) on September 2, 1999, a Complaint
docketed as Civil Case No. 3722-O.
On September 24, 1999, petitioner filed a Motion to Dismiss on the
following grounds:
"(1) That the Honorable Court has no jurisdiction over the
subject matter of the claim;
"(2) That there is no cause of action; and
"(3) That a condition precedent for filing the complaint has
not been complied with[.]"5
Ruling of the Trial Court
In denying the Municipality of Kananga’s Motion to Dismiss, the RTC
held that it had jurisdiction over the action under Batas Pambansa
Blg. 129. It further ruled that Section 118 of the Local Government
Code had been substantially complied with, because both parties
already had the occasion to meet and thresh out their differences. In
fact, both agreed to elevate the matter to the trial court via
Resolution No. 97-01. It also held that Section 118 governed venue;
hence, the parties could waive and agree upon it under Section 4(b)
of Rule 4 of the Rules of Court.
Not satisfied with the denial of its Motion, the Municipality of
Kananga filed this Petition.6
Issue
In their respective Memoranda, both parties raise the lone issue of
whether respondent court may exercise original jurisdiction over the
settlement of a boundary dispute between a municipality and an
independent component city.
The Court’s Ruling
The Petition has no merit.
Sole Issue:
Jurisdiction
Jurisdiction is the right to act on a case or the power and the
authority to hear and determine a cause.7 It is a question of law.8 As
consistently ruled by this Court, jurisdiction over the subject matter
is vested by law.9 Because it is "a matter of substantive law, the
established rule is that the statute in force at the time of the
commencement of the action determines the jurisdiction of the
court."10
Both parties aver that the governing law at the time of the filing of
the Complaint is Section 118 of the 1991 Local Government Code
(LGC),11 which provides:
"Sec. 118. Jurisdictional Responsibility for Settlement of
Boundary Disputes. – Boundary disputes between and
among local government units shall, as much as possible,
be settled amicably. To this end:
"(a) Boundary disputes involving two (2) or
more barangays in the same city or municipality shall be
referred for settlement to the sangguniang
panlungsod or sangguniang bayan concerned.
"(b) Boundary disputes involving two (2) or more
municipalities within the same province shall be referred
for settlement to the sangguniang
panlalawigan concerned.
"(c) Boundary disputes involving municipalities or
component cities of different provinces shall be jointly
 referred for settlement to the sanggunians of the
provinces concerned.
"(d) Boundary disputes involving a component city or
municipality on the one hand and a highly urbanized city
on the other, or two (2) or more highly urbanized cities,
shall be jointly referred for settlement to the
respective sanggunians of the parties.
"(e) In the event the sanggunian fails to effect an amicable
settlement within sixty (60) days from the date the dispute
was referred thereto, it shall issue a certification to that
effect. Thereafter, the dispute shall be formally tried by
the sanggunian concerned which shall decide the issue
within sixty (60) days from the date of the certification
referred to above."
Under this provision, the settlement of a boundary dispute between
a component city or a municipality on the one hand and a highly
urbanized city on the other -- or between two or more highly
urbanized cities -- shall be jointly referred for settlement to the
respective sanggunians of the local government units involved.
There is no question that Kananga is a municipality constituted
under Republic Act No. 542.12 By virtue of Section 442(d) of the LGC,
it continued to exist and operate as such.
However, Ormoc is not a highly urbanized, but an independent
component, city created under Republic Act No. 179.13 Section 89
thereof reads:
"Sec. 89. Election of provincial governor and members of
the Provincial Board of the Province of Leyte. – The
qualified voters of Ormoc City shall not be qualified and
entitled to vote in the election of the provincial governor
and the members of the provincial board of the Province
of Leyte."
Under Section 451 of the LGC, a city may be either component or
highly urbanized. Ormoc is deemed an independent component city,
because its charter prohibits its voters from voting for provincial
elective officials. It is a city independent of the province. In fact, it is
considered a component, not a highly urbanized, city of Leyte in
Region VIII by both Batas Pambansa Blg. 643,14 which calls for a
plebiscite; and the Omnibus Election Code,15 which apportions
representatives to the defunct Batasang Pambansa. There is neither
a declaration by the President of the Philippines nor an allegation by
the parties that it is highly urbanized. On the contrary, petitioner
asserted in its Motion to Dismiss that Ormoc was an independent
chartered city.16
Section 118 of the LGC applies to a situation in which a component
city or a municipality seeks to settle a boundary dispute with a
highly urbanized city, not with an independent component city.
While Kananga is a municipality, Ormoc is an independent
component city. Clearly then, the procedure referred to in Section
118 does not apply to them.
Nevertheless, a joint session was indeed held, but no amicable
settlement was reached. A resolution to that effect was issued, and
the sanggunians of both local government units mutually agreed to
bring the dispute to the RTC for adjudication. The question now is:
Does the regional trial court have jurisdiction over the subject
matter of the claim?
We rule in the affirmative.
As previously stated, "jurisdiction is vested by law and cannot be
conferred or waived by the parties."17 It must exist as a matter of
law and cannot be conferred by the consent of the parties or by
estoppel.18 It should not be confused with venue.
Inasmuch as Section 118 of the LGC finds no application to the
instant case, the general rules governing jurisdiction should then be
used. The applicable provision is found in Batas Pambansa Blg.
129,19 otherwise known as the Judiciary Reorganization Act of 1980,
as amended by Republic Act No. 7691.20 Section 19(6) of this law
provides:
"Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts
shall exercise exclusive original jurisdiction:
xxx xxx xxx
"(6) In all cases not within the exclusive jurisdiction of any
court, tribunal, person or body exercising judicial or quasi-
judicial functions[."
Since there is no law providing for the exclusive jurisdiction of any
court or agency over the settlement of boundary disputes between
a municipality and an independent component city of the same
province, respondent court committed no grave abuse of discretion
in denying the Motion to Dismiss. RTCs have general jurisdiction to
adjudicate all controversies except those expressly withheld from
their plenary powers.21 They have the power not only to take judicial
cognizance of a case instituted for judicial action for the first time,
but also to do so to the exclusion of all other courts at that stage.
Indeed, the power is not only original, but also exclusive.
In Mariano Jr. v. Commission on Elections,22 we held that boundary
disputes should be resolved with fairness and certainty. We ruled as
follows:
"The importance of drawing with precise strokes the
territorial boundaries of a local unit of government cannot
be overemphasized. The boundaries must be clear for they
define the limits of the territorial jurisdiction of a local
government unit. It can legitimately exercise powers of
government only within the limits of its territorial
jurisdiction. Beyond these limits, its acts are ultra vires.
Needless to state, any uncertainty in the boundaries of
local government units will sow costly conflicts in the
exercise of governmental powers which ultimately will
prejudice the people’s welfare. x x x."
Indeed, unresolved boundary disputes have sown costly conflicts in
the exercise of governmental powers and prejudiced the people’s
welfare. Precisely because of these disputes, the Philippine National
Oil Company has withheld the share in the proceeds from the
development and the utilization of natural wealth, as provided for in
Section 289 of the LGC.23
WHEREFORE, the Petition is DENIED and the challenged
Order AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 202664 November 20, 2015
MANUEL LUIS C. GONZALES AND FRANCIS MARTIN D.
GONZALES, Petitioner,
vs.
GJH LAND INC., CHANG HWAN JANG,SANG RAK KIM, MARIECHU N.
YAP, and ATTY. ROBERTO MALLARI II, Respondent.
DECISION
PERLAS-BERNABE, J.:
This is a direct recourse to the Court, via a petition for review
on certiorari,1 from the Orders dated April 17, 20122 and July 9,
20123 of the Regional Trial Court (RTC) of Muntinlupa City, Branch
276 (Branch 276) dismissing Civil Case No. 11-077 for lack of
jurisdiction.
The Facts
On August 4, 2011, petitioners Manuel Luis C. Gonzales4 and Francis
Martin D. Gonzales (petitioners) filed a Complaint5 for "Injunction
with prayer for Issuance of Status Quo Order, Three (3) and Twenty
(20)-Day Temporary Restraining Orders, and Writ of Preliminary
Injunction with Damages" against respondents GJH Land, Inc.
(formerly known as S.J. Land, Inc.), Chang Hwan Jang, Sang Rak Kim,
Mariechu N. Yap, and Atty. Roberto P. Mallari II6 (respondents)
before the RTC of Muntinlupa City seeking to enjoin the sale of S.J.
Land, Inc.'s shares which they purportedly bought from S.J. Global,
Inc. on February 1, 2010. Essentially, petitioners alleged that the
subscriptions for the said shares were already paid by them in full in
the books of S.J. Land, Inc.,7 but were nonetheless offered for sale
on July 29, 2011 to the corporation's stockholders,8 hence, their plea
for injunction.
The case was docketed as Civil Case No. 11-077 and raffled
to Branch 276, which is not a Special Commercial Court. On August
9, 2011, said branch issued a temporary restraining order,9 and later,
in an Order10 dated August 24, 2011, granted the application for a
writ of preliminary injunction.
After filing their respective answers11 to the complaint, respondents
filed a motion to dismiss12 on the ground of lack of jurisdiction over
the subject matter, pointing out that the case involves an intra-
corporate dispute and should, thus, be heard by the designated
Special Commercial Court of Muntinlupa City.13
The RTC Ruling
In an Order14 dated April 17, 2012, Branch 276 granted the motion
to dismiss filed by respondents. It found that the case involves an
intra-corporate dispute that is within the original and exclusive
jurisdiction of the RTCs designated as Special Commercial Courts. It
pointed out that the RTC of Muntinlupa City, Branch 256 (Branch
256) was specifically designated by the Court as the Special
Commercial Court, hence, Branch 276 had no jurisdiction over the
case and cannot lawfully exercise jurisdiction on the matter,
including the issuance of a Writ of Preliminary
Injunction.15 Accordingly, it dismissed the case.
Dissatisfied, petitioners filed a motion for reconsideration,16 arguing
that they filed the case with the Office of the Clerk of Court of the
RTC of Muntinlupa City which assigned the same to Branch 276
by raffle.17 As the raffle was beyond their control, they should not be
made to suffer the consequences of the wrong assignment of the
case, especially after paying the filing fees in the amount of
P235,825.00 that would be for naught if the dismissal is
upheld.18 They further maintained that the RTC has jurisdiction over
intra-corporate disputes under Republic Act No. (RA) 8799,19 but
since the Court selected specific branches to hear and decide such
suits, the case must, at most, be transferred or raffled off to the
proper branch.20
In an Order21 dated July 9, 2012, Branch 276 denied the motion for
reconsideration, holding that it has no authority or power to order
the transfer of the case to the proper Special Commercial Court,
citing Calleja v. Panday22 (Calleja); hence, the present petition.
The Issue Before the Court
The essential issue for the Court's resolution is whether or not
Branch 276 of the RTC of Muntinlupa City erred in dismissing the
case for lack of jurisdiction over the subject matter.
The Court's Ruling
The petition is meritorious.
At the outset, the Court finds Branch 276 to have correctly
categorized Civil Case No. 11-077 as a commercial case, more
particularly, an intra-corporate dispute,23 considering that it relates
to petitioners' averred rights over the shares of stock offered for
sale to other stockholders, having paid the same in full. Applying
the relationship test and the nature of the controversy test, the suit
between the parties is clearly rooted in the existence of an intra-
corporate relationship and pertains to the enforcement of their
correlative rights and obligations under the Corporation Code and
the internal and intra-corporate regulatory rules of the
corporation,24 hence, intra-corporate, which should be heard by the
designated Special Commercial Court as provided under A.M. No.
03-03-03-SC25 dated June 17, 2003 in relation to Item 5.2, Section 5
of RA 8799.
The present controversy lies, however, in the procedure to be
followed when a commercial case - such as the instant intra-
corporate dispute -has been properly filed in the official station of
the designated Special Commercial Court but is, however, later
wrongly assigned by raffle to a regular branch of that station.
As a basic premise, let it be emphasized that a court's acquisition of
jurisdiction over a particular case's subject matter is different from
incidents pertaining to the exercise of its jurisdiction. Jurisdiction
over the subject matter of a case is conferred by law, whereas a
court's exercise of jurisdiction, unless provided by the law itself, is
governed by the Rules of Court or by the orders issued from time to
time by the Court.26 In Lozada v. Bracewell,27 it was recently held
that the matter of whether the RTC resolves an issue in the
exercise of its general jurisdiction or of its limited jurisdiction as a
special court is only a matter of procedure and has nothing to do
with the question of jurisdiction.
Pertinent to this case is RA 8799 which took effect on August 8,
2000. By virtue of said law, jurisdiction over cases enumerated in
Section 528 of Presidential Decree No. 902-A29 was transferred from
the Securities and Exchange Commission (SEC) to the RTCs, being
courts of general jurisdiction. Item 5.2, Section 5 of RA 8799
provides:chanRoblesvirtualLawlibrary
SEC. 5. Powers and Functionsof the Commission. - x x x
xxxx
5.2 The Commission's jurisdiction over all cases enumerated under
Section 5 of Presidential Decree No. 902-A is hereby transferred to
the Courts of general jurisdiction or the appropriate Regional Trial
Court: Provided, that the Supreme Court in the exercise of its
authority may designate the Regional Trial Court branches that
shall exercise jurisdiction over the cases. The Commission shall
retain jurisdiction over pending cases involving intra-corporate
disputes submitted for final resolution which should be resolved
within one (1) year from the enactment of this Code. The
Commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until finally
disposed. (Emphasis supplied)cralawlawlibrary
The legal attribution of Regional Trial Courts as courts of general
jurisdiction stems from Section 19 (6), Chapter II of Batas Pambansa
Bilang (BP) 129,30 known as "The Judiciary Reorganization Act of
1980":chanRoblesvirtualLawlibrary
Section 19. Jurisdiction in civil cases.- Regional Trial Courts shall
exercise exclusive original jurisdiction:chanRoblesvirtualLawlibrary
xxxx
(6) In all cases not within the exclusive jurisdiction of any court,
tribunal, person or body exercising jurisdiction or any court, tribunal,
person or body exercising judicial or quasi-judicial functions; x x x x
cralawlawlibrary
As enunciated in Durisol Philippines, Inc. v.
CA:31chanroblesvirtuallawlibrary
The regional trial court, formerly the court of first instance, is a court
of general jurisdiction. All cases, the jurisdiction over which is not
specifically provided for by law to be within the jurisdiction of any
other court, fall under the jurisdiction of the regional trial
court.32ChanRoblesVirtualawlibrary
cralawlawlibrary
To clarify, the word "or" in Item 5.2, Section 5 of RA 8799 was
intentionally used by the legislature to particularize the fact that the
phrase "the Courts of general jurisdiction" is equivalent to the
phrase "the appropriate Regional Trial Court." In other words, the
jurisdiction of the SEC over the cases enumerated under Section 5 of
PD 902-A was transferred to the courts of general jurisdiction, that is
to say (or, otherwise known as), the proper Regional Trial Courts.
This interpretation is supported by San Miguel Corp. v. Municipal
Council,33 wherein the Court held that:chanRoblesvirtualLawlibrary
[T]he word "or" may be used as the equivalent of "that is to say" and
gives that which precedes it the same significance as that which
follows it. It is not always disjunctive and is sometimes interpretative
or expository of the preceding word.34cralawlawlibrary
Further, as may be gleaned from the following excerpt of the
Congressional deliberations:chanRoblesvirtualLawlibrary
Senator [Raul S.] Roco: x x x.
xxxx
x x x. The first major departure is as regards the Securities and
Exchange Commission. The Securities and Exchange Commission has
been authorized under this proposal to reorganize itself. As an
administrative agency, we strengthened it and at the same time we
take away the quasi-judicial functions. The quasi-judicial functions
are now given back to the courts of general jurisdiction - the
Regional Trial Court, except for two categories of cases.
In the case of corporate disputes, only those that are now submitted
for final determination of the SEC will remain with the SEC. So, all
those cases, both memos of the plaintiff and the defendant, that
have been submitted for resolution will continue. At the same time,
cases involving rehabilitation, bankruptcy, suspension of payments
and receiverships that were filed before June 30, 2000 will continue
with the SEC. in other words, we are avoiding the possibility, upon
approval of this bill, of people filing cases with the SEC, in manner of
speaking, to select their court.35
x x x x (Emphasis supplied)cralawlawlibrary
Therefore, one must be disabused of the notion that the transfer of
jurisdiction was made only in favor of particular RTC branches, and
not the RTCs in general.
Consistent with the foregoing, history depicts that when the transfer
of SEC cases to the RTCs was first implemented, they were
transmitted to the Executive Judges of the RTCs for raffle between
or among its different branches, unless a specific branch has been
designated as a Special Commercial Court, in which instance, the
cases were transmitted to said branch.36 It was only on November
21, 2000 that the Court designated certain RTC branches to try and
decide said SEC cases37 without, however, providing for the transfer
of the cases already distributed to or filed with the regular branches
thereof. Thus, on January 23, 2001, the Court issued SC
Administrative Circular No. 08-200138 directing the transfer of said
cases to the designated courts (commercial SEC courts). Later, or on
June 17, 2003, the Court issued A.M. No. 03-03-03-SC consolidating
the commercial SEC courts and the intellectual property
courts39 in one RTC branch in a particular locality, i.e., the Special
Commercial Court, to streamline the court structure and to
promote expediency.40 Accordingly, the RTC branch so designated
was mandated to try and decide SEC cases, as well as those involving
violations of intellectual property rights, which were, thereupon,
required to be filed in the Office of the Clerk of Court in the official
station of the designated Special Commercial Courts, to
wit:chanRoblesvirtualLawlibrary
1. The Regional Courts previously designated as SEC Courts through
the: (a) Resolutions of this Court dated 21 November 2000, 4 July
2001, 12 November 2002, and 9 July 2002 all issued in A.M. No. 00-
11-03-SC; (b) Resolution dated 27 August 2001 in A.M. No. 01-5-298-
RTC; and (c) Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC
are hereby DESIGNATED and shall be CALLED as Special Commercial
Courts to try and decide cases involving violations of Intellectual
Property Rights which fall within their jurisdiction and those cases
formerly cognizable by the Securities and Exchange
Commission:chanRoblesvirtualLawlibrary
xxxx
4. The Special Commercial Courts shall have jurisdiction over cases
arising within their respective territorial jurisdiction with respect to
the National Capital Judicial Region and within the respective
provinces with respect to the First to Twelfth Judicial Regions.
Thus, cases shall be filed in the Office of the Clerk of Court in the
official station of the designated Special Commercial Court;41
x x x x (Underscoring supplied)cralawlawlibrary
It is important to mention that the Court's designation of Special
Commercial Courts was made in line with its constitutional authority
to supervise the administration of all courts as provided under
Section 6, Article VIII of the 1987
Constitution:chanRoblesvirtualLawlibrary
Section 6. The Supreme Court shall have administrative supervision
over all courts and the personnel thereof.cralawlawlibrary
The objective behind the designation of such specialized courts is to
promote expediency and efficiency in the exercise of the RTCs'
jurisdiction over the cases enumerated under Section 5 of PD 902-A.
Such designation has nothing to do with the statutory conferment of
jurisdiction to all RTCs under RA 8799 since in the first place, the
Court cannot enlarge, diminish, or dictate when jurisdiction shall be
removed, given that the power to define, prescribe, and apportion
jurisdiction is, as a general rule, a matter of legislative
prerogative.42 Section 2, Article VIII of the 1987 Constitution
provides:chanRoblesvirtualLawlibrary
Section 2. The Congress shall have the power to define, prescribe,
and apportion the jurisdiction of the various courts but may not
deprive the Supreme Court of its jurisdiction over cases enumerated
in Section 5 hereof.
xxxx
cralawlawlibrary
Here, petitioners filed a commercial case, i.e., an intra-corporate
dispute, with the Office of the Clerk of Court in the RTC of
Muntinlupa City, which is the official station of the designated
Special Commercial Court, in accordance with A.M. No. 03-03-03-
SC. It is, therefore, from the time of such filing that the RTC of
Muntinlupa City acquired jurisdiction over the subject matter or
the nature of the action.43 Unfortunately, the commercial case was
wrongly raffled to a regular branch, e.g., Branch 276, instead of
being assigned44to the sole Special Commercial Court in the RTC of
Muntinlupa City, which is Branch 256. This error may have been
caused by a reliance on the complaint's caption, i.e., "Civil Case for
Injunction with prayer for Status Quo Order, TRO and
Damages,"45 which, however, contradicts and more importantly,
cannot prevail over its actual allegations that clearly make out an
intra-corporate dispute:chanRoblesvirtualLawlibrary
16. To the surprise of MLCG and FMDG, however, in two identical
letters both dated 13 May 2011, under the letterhead of GJH Land,
Inc., Yap, now acting as its President, Jang and Kim demanded
payment of supposed unpaid subscriptions of MLCG and FMDG
amounting to P10,899,854.30 and P2,625,249.41, respectively.
16.1 Copies of the letters dated 13 May 2011 are attached hereto
and made integral parts hereof as Annexes "J" and "K", repectively.
17. On 29 July 2011, MLCG and FMDG received an Offer Letter
addressed to stockholders of GJH Land, Inc. from Yap informing all
stockholders that GJH Land, Inc. is now offering for sale the unpaid
shares of stock of MLCG and FMDG. The same letter states that the
offers to purchase these shares will be opened on 10 August 2011
with payments to be arranged by deposit to the depository bank of
GJH Land, Inc.
17.1 A copy of the undated Offer Letter is attached hereto and made
and made an integral part hereof as Annex "L".
18. The letter of GJH Land, Inc. through Yap, is totally without legal
and factual basis because as evidenced by the Deeds of Assignment
signed and certified by Yap herself, all the S.J. Land, Inc. shares
acquired by MLCG and FMDG have been fully paid in the books of
S.J. Land, Inc.
19. With the impending sale of the alleged unpaid subscriptions on
10 August 2011, there is now a clear danger that MLCG and FMDG
would be deprived of these shares without legal and factual basis.
20. Furthermore, if they are deprived of these shares through the
scheduled sale, both MLCG and FMDG would suffer grave and
irreparable damage incapable of pecuniary estimation.
21. For this reason, plaintiffs now come to the Honorable Court for
injunctive relief so that after trial on the merits, a permanent
injunction should be issued against the defendants preventing them
from selling the shares of the plaintiffs, there being no basis for such
sale.46cralawlawlibrary
According to jurisprudence, "it is not the caption but the allegations
in the complaint or other initiatory pleading which give meaning to
the pleading and on the basis of which such pleading may be legally
characterized."47 However, so as to avert any future confusion, the
Court requires henceforth, that all initiatory pleadings state the
action's nature both in its caption and the body, which parameters
are defined in the dispositive portion of this Decision.
Going back to the case at bar, the Court nonetheless deems that the
erroneous raffling to a regular branch instead of to a Special
Commercial Court is only a matter of procedure - that is, an incident
related to the exercise of jurisdiction - and, thus, should not negate
the jurisdiction which the RTC of Muntinlupa City had already
acquired. In such a scenario, the proper course of action was not for
the commercial case to be dismissed; instead, Branch 276 should
have first referred the case to the Executive Judge for re-docketing
as a commercial case; thereafter, the Executive Judge should then
assign said case to the only designated Special Commercial Court in
the station, i.e.,Branch 256.
Note that the procedure would be different where the RTC acquiring
jurisdiction over the case has multiple special commercial court
branches; in such a scenario, the Executive Judge, after re-docketing
the same as a commercial case, should proceed to order its re-
raffling among the said special branches.
Meanwhile, if the RTC acquiring jurisdiction has no branch
designated as a Special Commercial Court, then it should refer the
case to the nearest RTC with a designated Special Commercial Court
branch within the judicial region.48 Upon referral, the RTC to which
the case was referred to should re-docket the case as a commercial
case, and then: (a) if the said RTC has only one branch designated as
a Special Commercial Court, assign the case to the sole special
branch; or (b) if the said RTC has multiple branches designated as
Special Commercial Courts, raffle off the case among those special
branches.
In all the above-mentioned scenarios, any difference regarding the
applicable docket fees should be duly accounted for. On the other
hand, all docket fees already paid shall be duly credited, and any
excess, refunded.
At this juncture, the Court finds it fitting to clarify that the RTC
mistakenly relied on the Calleja case to support its ruling. In Calleja,
an intra-corporate dispute49 among officers of a private corporation
with principal address at Goa, Camarines Sur, was filed with the RTC
of San Jose, Camarines Sur, Branch 58 instead of the RTC of Naga
City, which is the official station of the designated Special
Commercial Court for Camarines Sur. Consequently, the Court set
aside the RTC of San Jose, Camarines Sur's order to transfer the case
to the RTC of Naga City and dismissed the complaint considering
that it was filed before a court which, having no internal branch
designated as a Special Commercial Court, had no jurisdiction over
those kinds of actions, i.e., intra-corporate disputes. Calleja involved
two different RTCs, i.e., the RTC of San Jose, Camarines Sur and the
RTC of Naga City, whereas the instant case only involves one
RTC, i.e., the RTC of Muntinlupa City, albeit involving two different
branches of the same court, i.e.,Branches 256 and 276. Hence,
owing to the variance in the facts attending, it was then improper
for the RTC to rely on the Calleja ruling.
Besides, the Court observes that the fine line that distinguishes
subject matter jurisdiction and exercise of jurisdiction had been
clearly blurred in Calleja. Harkening back to the statute that had
conferred subject matter jurisdiction, two things are apparently
clear: (a) that the SEC's subject matter jurisdiction over intra-
corporate cases under Section 5 of Presidential Decree No. 902-A
was transferred to the Courts of general jurisdiction, i.e., the
appropriate Regional Trial Courts; and (b) the designated branches
of the Regional Trial Court, as per the rules promulgated by the
Supreme Court, shall exercise jurisdiction over such cases. Item 5.2,
Section 5 of RA 8799 provides:chanRoblesvirtualLawlibrary
SEC. 5. Powers and Functions of the Commission. - x x x
xxxx
5.2 The Commission's jurisdiction over all cases enumerated under
Section 5 of Presidential Decree No. 902-A is hereby transferred to
the Courts of general jurisdiction or the appropriate Regional Trial
Court: Provided, that the Supreme Court in the exercise of its
authority may designate the Regional Trial Court branches that
shall exercise jurisdiction over the cases, x x x.cralawlawlibrary
In contrast, the appropriate jurisprudential reference to this case
would be Tan v. Bausch & Lomb, Inc.,50which involves a criminal
complaint for violation of intellectual property rights filed before the
RTC of Cebu City but was raffled to a regular branch thereof (Branch
21), and not to a Special Commercial Court. As it turned out, the
regular branch subsequently denied the private complainant's
motion to transfer the case to the designated special court of
the same RTC, on the ground of lack of jurisdiction. The CA reversed
the regular branch and, consequently, ordered the transfer of the
case to the designated special court at that time (Branch 9). The
Court, affirming the CA, declared that the RTC had acquired
jurisdiction over the subject matter. In view, however, of the
designation of another court as the Special Commercial Court in the
interim (Branch 11 of the same Cebu City RTC), the Court accordingly
ordered the transfer of the case and the transmittal of the records
to said Special Commercial Court instead.51Similarly, the transfer of
the present intra-corporate dispute from Branch 276 to Branch 256
of the same RTC of Muntinlupa City, subject to the parameters
above-discussed is proper and will further the purposes stated in
A.M. No. 03-03-03-SC of attaining a speedy and efficient
administration of justice.
For further guidance, the Court finds it apt to point out that the
same principles apply to the inverse situation of ordinary civil cases
filed before the proper RTCs but wrongly raffled to its branches
designated as Special Commercial Courts. In such a scenario,
the ordinary civil case should then be referred to the Executive
Judge for re-docketing as an ordinary civil case; thereafter, the
Executive Judge should then order the raffling of the case to all
branches of the same RTC, subject to limitations under existing
internal rules, and the payment of the correct docket fees in case
of any difference. Unlike the limited assignment/raffling of a
commercial case only to branches designated as Special Commercial
Courts in the scenarios stated above, the re-raffling of an ordinary
civil case in this instance to all courts is permissible due to the fact
that a particular branch which has been designated as a Special
Commercial Court does not shed the RTC's general jurisdiction over
ordinary civil cases under the imprimatur of statutory law, i.e., Batas
Pambansa Bilang (BP) 129.52To restate, the designation of Special
Commercial Courts was merely intended as a procedural tool to
expedite the resolution of commercial cases in line with the
court's exercise of jurisdiction. This designation was not made by
statute but only by an internal Supreme Court rule under its
authority to promulgate rules governing matters of procedure and
its constitutional mandate to supervise the administration of all
courts and the personnel thereof.53 Certainly, an internal rule
promulgated by the Court cannot go beyond the commanding
statute. But as a more fundamental reason, the designation of
Special Commercial Courts is, to stress, merely an incident related to
the court's exercise of jurisdiction, which, as first discussed, is
distinct from the concept of jurisdiction over the subject matter. The
RTC's general jurisdiction over ordinary civil cases is therefore not
abdicated by an internal rule streamlining court procedure.
In fine, Branch 276's dismissal of Civil Case No. 11-077 is set aside
and the transfer of said case to Branch 256, the designated Special
Commercial Court of the same RTC of Muntinlupa City, under the
parameters above-explained, is hereby ordered.
WHEREFORE, the petition is GRANTED. The Orders dated April 17,
2012 and July 9, 2012 of the Regional Trial Court (RTC) of
Muntinlupa City, Branch 276 in Civil Case No. 11-077 are
hereby REVERSED and SET ASIDE. Civil Case No. 11-077
is REFERRED to the Executive Judge of the RTC of Muntinlupa City
for re-docketing as a commercial case. Thereafter, the Executive
Judge shall ASSIGNsaid case to Branch 256, the sole designated
Special Commercial Court in the RTC of Muntinlupa City, which
is ORDERED to resolve the case with reasonable dispatch. In this
regard, the Clerk of Court of said RTC shall DETERMINE the
appropriate amount of docket fees and, in so doing, ORDER the
payment of any difference or, on the other hand, refund any excess.
Furthermore, the Court hereby RESOLVES that henceforth, the
following guidelines shall be observed:
1. If a commercial case filed before the proper RTC is wrongly raffled
to its regular branch, the proper courses of action are as follows:
1.1 If the RTC has only one branch designated as a Special
Commercial Court, then the case shall be referred to the Executive
Judge for re-docketing as a commercial case, and thereafter,
assigned to the sole special branch;
1.2 If the RTC has multiple branches designated as Special
Commercial Courts, then the case shall be referred to the Executive
Judge for re-docketing as a commercial case, and thereafter, raffled
off among those special branches; and
1.3 If the RTC has no internal branch designated as a Special
Commercial Court, then the case shall be referred to the nearest
RTC with a designated Special Commercial Court branch within the
judicial region. Upon referral, the RTC to which the case was
referred to should re- docket the case as a commercial case, and
then: (a) if the said RTC has only one branch designated as a Special
Commercial Court, assign the case to the sole special branch; or (b)
if the said RTC has multiple branches designated as Special
Commercial Courts, raffle off the case among those special
branches.
2. If an ordinary civil case filed before the proper RTC is wrongly
raffled to its branch designated as a Special Commercial Court, then
the case shall be referred to the Executive Judge for re-docketing as
an ordinary civil case. Thereafter, it shall be raffled off to all courts
of the same RTC (including its designated special branches which, by
statute, are equally capable of exercising general jurisdiction same
as regular branches), as provided for under existing rules.

3. All transfer/raffle of cases is subject to the payment of the

appropriate docket fees in case of any difference. On the other
hand, all docket fees already paid shall be duly credited, and any
excess, refunded.

4. Finally, to avert any future confusion, the Court requires that all
initiatory pleadings state the action's nature both in its caption and
body. Otherwise, the initiatory pleading may, upon motion or by
order of the court motu proprio, be dismissed without prejudice to
its re-filing after due rectification. This last procedural rule is
prospective in application.

5. All existing rules inconsistent with the foregoing are deemed

superseded.cralawlawlibrary

SO ORDERED.
G.R. No. 203678
CONCORDE CONDOMINIUM, INC., by itself and comprising the Unit
Owners of Concorde Condominium Building, Petitioner,
vs.
AUGUSTO H. BACULIO; NEW PPI CORPORATION; ASIAN SECURITY
and INVESTIGATION AGENCY and its security guards; ENGR.
NELSON B. MORALES, in his capacity as Building Official of the
Makati City Engineering Department; SUPT. RICARDO C.
PERDIGON, in his capacity as City Fire Marshal of the Makati City
Fire Station; F/C SUPT. SANTIAGO E. LAGUNA, in his capacity as
Regionaf Director of the Bureau of Fire Protection-NCR, and any
and all persons acting with or under them, Respondents.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of
the Rules of Court, seeking to reverse and set aside the Order dated
June 28, 2012 and Resolution dated September 20, 2012 of the
Regional Trial Court (RTC) of Makati City, Branch 149,1 which
dismissed Civil Case No. 12-309 for Injunction with Damages for lack
of jurisdiction.
The antecedent facts are as follows:
On April 16, 2012, petitioner Concorde Condominium, Inc., by itself
and comprising the Unit Owners of Concorde Condominium
Building, (petitioner) filed with the Regional Trial Court (RTC) of
Makati City a Petition for Injunction [with Damages with prayer for
the issuance of a Temporary Restraining Order (TRO), Writ of
Preliminary (Prohibitory) Injunction, and Writ of Preliminary
Mandatory Injunction] against respondents New PPI Corporation
and its President Augusto H. Baculio; Asian Security and
Investigation Agency and its security guards, Engr. Nelson B. Morales
in his capacity as Building Official of the Makati City Engineering
Department; Supt. Ricardo C. Perdigon in his capacity as City Fire
Marshal of the Makati City Fire Station; F/C Supt. Santiago E. Laguna,
in his capacity as Regional Director of the Bureau of Fire Protection -
NCR, and any and all persons acting with or under
them (respondents).
Petitioner seeks (1) to enjoin respondents Baculio and New PPI
Corporation from misrepresenting to the public, as well as to private
and government offices/agencies, that they are the owners of the
disputed lots and Concorde Condominium Building, and from
pushing for the demolition of the building which they do not even
own; (2) to prevent respondent Asian Security and Investigation
Agency from deploying its security guards within the perimeter of
the said building; and (3) to restrain respondents Engr. Morales,
Supt. Perdigon and F/C Supt. Laguna from responding to and acting
upon the letters being sent by Baculio, who is a mere impostor and
has no legal personality with regard to matters concerning the
revocation or building and occupancy permits, and the fire safety
issues of the same building. It also prays to hold respondents
solidarily liable for actual damages, moral damages, exemplary
damages, attorney's fees, litigation expenses and costs of suit.
The case was docketed as Civil Case No. No. 12-309 and raffled to
the Makati RTC, Branch 149, which was designated as a Special
Commercial Court.2
On April 24, 2012, the RTC called the case for hearing to determine
the propriety of issuing a TRO, during which one Mary Jane Prieto
testified and identified some documents. While she was undergoing
crossexamination by a counsel from the Office of the Solicitor
General (OSG) relative to the fire deficiencies of petitioner's
building, the RTC interrupted her testimony to find a better solution
to the problem, and issued an Order which reads:
Wherefore, this court ordered Supt. Ricardo C. Perdigon, Fire
Marshal of Makati City, to conduct an inspection of Concorde
Condominium Building. He is hereby ordered to submit a report on
his investigation not later than 5:00 o'clock in the afternoon
tomorrow.
In the same manner, the Building Official of Makati City, being
represented by Atty. Fabio is also hereby ordered to conduct an
investigation on the status of the said building to ascertain whether
it [isl still structurally sound to stand. Such report shall be submitted
to this court not later than 5:00 o'clock in the afternoon tomorrow.
If the report of the Building Official is negative, the unit owners of
the condominium will be given the opportunity to be heard on
whether to condemn the building or not.
In the same manner, the alleged owner of the land, who should have
transferred it to the condominium corporation once the latter was
created, and it appears that it was not complied with, they are also
given the opportunity to get their own structural engineer to
ascertain the structural soundness of the building. Afterwhich, the
court will issue the necessary order whether to condemn or not the
building and the President of the condominium corporation has
acceded to such undertaking because that's the only way how to
give them fair play and be heard on their right as condominium
owner of Concorde Building located at 200 Benavidez corner Salcedo
Streets, Legaspi Village, Makati City.
The President of the condominium corporation is hereby given, if
there is still a chance to repair, four (4) months from April 30, 2012
or up to August 30, 2012 to r.emedy all those problems and/or
deficiencies of the building.
The other parties are hereby enjoined not to threaten, interfere or
molest the condominium unit owners of said building. Any other
party, including the herein parties, who will obstruct the smooth
implementation of this Order, is already considered to have
committed a direct contempt of the order of the court.
Let the continuation of the testimony of Ms. Mary Jane Prieto be set
on September 17, 2012 at 8:30 in the morning.
SO ORDERED.3
Meanwhile, respondents Bactllio and New PPI Corporation filed an
Urgent Motion to Re-Raffle dated April 25, 2012, claiming that it is a
regular court, not a Special Commercial Court, which has jurisdiction
over the case.
In an Order dated April 26, 2012, the RTC denied the motion to
rcraffle on the ground of failure to comply with Sections 44 and 55 of
Rule 15 of the Rules of Court.
In their Motion to Vacate Order and Motion to Dismiss dated May 8,
2012, respondents Baculio and New PPI Corporation assailed the
RTC Order dated April 24, 2012, stating that the case is beyond its
jurisdiction as a Special Commercial Court. Respondents claimed
that the petition seeks to restrain or compel certain individuals and
government officials to stop doing or performing patiicular acts, and
that there is no showing that the case involves a matter embraced in
Section 5 of Presidential Decree (P.D.) No. 902-A, which enumerates
the cases over which the SEC [now the RTC acting as Special
Commercial Court pursuant to Republic Act (R.A.) No.
8799] exercises exclusive jurisdiction. They added that petitioner
failed to exhaust administrative remedies, which is a condition
precedent before filing the said petition.
In an Order dated June 28, 2012, the RTC dismissed the case for lack
of jurisdiction. It noted that by petitioner's own allegations and
admissions, respondents Bactllio and New PPI Corporation are not
owners of the two subject lots and the building. Due to the absence
of intra-corporate relations between the parties, it ruled that the
case docs not involve an intra-corporate controversy cognizable by it
sitting as a Special Commercial Court. It also held that there is no
more necessity to discuss the other issues raised in the motion to
dismiss, as well as the motion to vacate order, for lack or jurisdiction
over the case.
Petitioner filed a motion for reconsideration of the Order dated June
28, 2012, which the RTC denied for lack of merit.6 Hence, this
petition for review on certiorari.
Petitioner raises a sole question of law in support of its petition:
A.
THE REGIONAL TRIAL COURT COMMITTED A MANIFEST ERROR OF
LAW AND ACTED IN A MANNER CONTRARY TO LAW AND
ESTABLISHED JURISPRUDENCE IN DISMISSING THE PETITION ON THE
GROUND OF LACK OF JURISDICTION.7
Petitioner contends that its petition for injunction with damages is
an ordinary civil case correctly filed with the RTC which has
jurisdiction over actions where the subject matter is incapable of
pecuniary estimation. However, petitioner claims that through no
fault on its part, the petition was raffled to Branch 149 of the Makati
RTC, a designated Special Commercial Court tasked to hear intra-
corporate disputes.
Petitioner notes that R.A. 8799 merely transferred the Securities and
Exchange Commission's jurisdiction over cases enumerated under
Section 5 of P.D. No. 902-A to the courts of general jurisdiction or
the appropriate Regional Trial Court, and that there is nothing in
R.A. 8799 or in A.M. No. 00-11-03-SC which would limit or diminish
the jurisdiction of those RTCs designated as Special Commercial
Comis. Petitioner stresses that such courts shall continue to
participate in the raffle of other cases, pursuant to OCA Circular No.
82-2003 on Consolidation of Intellectual Property Courts with
Commercial Court. It insists that for purposes of determining the
jurisdiction of the RTC, the different branches thereof (in case of a
multiple sala court) should not be taken as a separate or
compartmentalized unit. It, thus, concludes that the designation by
the Supreme Court of Branch 149 as a Special Commercial Court did
not divest it of its power as a court of general jurisdiction.
Petitioner also submits that prior to the issuance of the Order
setting the case for hearing on April 24, 2012, the Presiding Judge of
Branch 149 had already determined from the averments in the
petition that it is an ordinary civil action and not an intra-corporate
matter; thus, he should have referred it back to the Executive Judge
or the Office of the Clerk of Court for re-raffle to other branches of
the RTC, instead of calendaring it for hearing or dismissing it.
For public respondents Superintendent Ricardo C. Pedrigon and Fire
Chief Superintendent Santiago E. Laguna, the OSG avers that the
petition for review on certiorari should be denied for lack of merit. It
points out that petitioner failed to exhaust administrative
remedies, i.e., appeal the revocation of the building and occupancy
permits with the Department of Public Works and
Highways (DPWfI) Secretary, pursuant to Section 307 of the National
Building Code (Presidential Decree No. 1096); hence, the filing of a
petition for injunction with damages is premature and immediately
dismissible for lack of cause of action.
The OSG further argues that even if the case is remanded back to
the RTC, the same will not prosper due to procedural and
substantive defects, and will only further clog the trial court's
dockets, for the following reasons: (1) petitioner failed to imp lead
an indispensable party, namely, the DPWH Secretary to whom the
power to reinstate the building permit and the occupancy permit is
lodged; (2) with regard to the occupancy permit and the "water
sprinkler" clearance, they cannot be issued without a building
permit; and (3) the said clearance cannot also be issued due to lack
of certification from either the Building Official or Tandem, the
structural engineers personally hired by petition, that the structural
integrity of Concorde Condominium Building can withstand the
necessary damage and load that would be caused by the installation
of the water sprinkler system.
For their part, respondents Baculio and New PPI Corporation aver
that the petition filed before the RTC should be dismissed for lack of
proper verification. They likewise assert that Branch 149 has no
jurisdiction over the same petition because (l) such case is not an
intra-corporate controversy; (2) petitioner failed to exhaust
administrative remedies which is a condition precedent before filing
such case; (3) the subject building is a threat to the safety of
members of petitioner themselves and of the public in general; (4)
the two lots allegedly owned by petitioner are both registered in the
name of New PPI Corporation; and (5) the engineering firm hired by
petitioner could not even guarantee the building's structural
capacity.
Meanwhile, respondent Asian Security & Investigation Agency claims
that petitioner's allegations against it are already moot and
academic because it had already terminated its security contract
with respondents New PPI Corporation and Baculio, and pulled out
its guards from petitioner's premises. At any rate, it manifests that it
is adopting as part of its Comment the said respondents'
Comment/Opposition to the petition for review on certiorari.
Respondent Office of the Building Official of Makati City,
represented by Engineer Mario V. Badillo, likewise contends that the
petition for review on certiorari should be dismissed for these
reasons: (1) that petitioner failed to exhaust administrative
remedies which is a mandatory requirement before filing the case
with the RTC of Makati City; (2) that Branch l 49, as a Special
Commercial Court, has jurisdiction over the said case because it is
not an intra-corporate controversy; and (3) petitioner's building is
old and dilapidated, and ocular inspections conducted show that
several violations of the National Building Code were not corrected,
despite several demands and extensions made by the Building
Official.
The petition is impressed with merit.
In resolving the issue of whether Branch 149 of the Makati RTC, a
designated Special Commercial Court, erred in dismissing the
petition for injunction with damages for lack of jurisdiction over the
subject matter, the CoUii is guided by the rule "that jurisdiction over
the subject matter of a case is conferred by law and determined by
the allegations in the complaint which comprise a concise statement
of the ultimate facts constituting the plaintiff's cause of action. The
nature of an action, as well as which court or body has jurisdiction
over it, is determined based on the allegations contained in the
complaint of the plaintiff, irrespective of whether or not the plaintiff
is entitled to recover upon all or some of the claims asserted
therein. The averments in the complaint and the character of the
relief sought are the ones to be consulted. Once vested by the
allegations in the complaint, jurisdiction also remains vested
irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein."8
As a rule, actions for injunction and damages lie within the
jurisdiction of the RTC, pursuant to Section 19 of Batas Pambansa
Blg. 129, otherwise known as the Judiciary Reorganization Act of
1980, as amended by R.A. 7691:9
Sec. 19 . .Jurisdiction in civil cases. Regional Trial Courts shall
exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigations is
incapable of pecuniary estimation;
xxxx
(6) In all cases not within the exclusive jurisdiction of any court,
tribunal, person or body exercising x x x judicial or quasi-judicial
functions;
xxxx
(8) In all other cases in which the demand, exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses, and
costs or the value of the property in controversy exceeds Three
hundred thousand pesos (P300,000.00) or, in such other cases in
Metro Manila, where the demand exclusive of the above-mentioned
items exceeds Four hundred thousand pesos (P400,000.00).
Meanwhile, Section 6 (a) of P.D. No. 902-A empowered the SEC to
issue preliminary or permanent injunctions, whether prohibitory or
mandatory, in all cases in which it exercises original and exclusive
jurisdiction,10 to wit :
(a) Devices or schemes employed by or any acts, of the board of
directors, business associates, its officers or partnership, amounting
to fraud and misrepresentation which may be detrimental to the
interest of the public and/or of the stockholder, partners, members
of associations or organizations registered with the Commission;
(b) Controversies arising out of intra-corporate or partnership
relations, between and among stockholders, members or associates;
between any or all of them and the corporation, partnership or
association of which they are stockholders, members or associates,
respectively; and between such corporation, partnership or
association and the state insofar as it concerns their individual
franchise or right to exist as such entity; and
(c) Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnerships or
associations.11
However, jurisdiction of the SEC over intra-corporate cases was
transferred to Courts of general jurisdiction or the appropriate
Regional Trial Court when R.A. No. 8799 took effect on August 8,
2000. Section 5.2 of R.A. No. 8799 provides:
SEC. 5.2 The Commission's jurisdiction over all cases enumerated
under Section 5 of Presidential Decree No. 902-A is hereby
transferred to the Courts of general jurisdiction or the appropriate
Regional Trial Court: Provided, that the Supreme Court in the
exercise of its authority may designate the Regional Trial Court
branches that shall exercise jurisdiction over these cases. The
Commission shall retain jurisdiction over pending cases involving
intra-corporate disputes submitted for final resolution which should
be resolved within one (1) year from the enactment of this Code.
The Commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until rinally
disposed.
In GD Express rVorldwide N. V, et al. v. Court of Appeals (4th Div.) et
al.,12 the Comi stressed that Special Commercial Courts are still
considered courts of general jurisdiction which have the power to
hear and decide cases of all nature, whether civil, criminal or special
proceedings, thus:
x x x Section 5.2 of R.A. No. 8799 directs merely the Supreme Court's
designation of RTC branches that shall exercise jurisdiction over
intra-corporate disputes. Nothing in the language of the law
suggests the diminution of jurisdiction of those R TCs to be
designated as SCCs. The assignment of intra-corporate disputes to
secs is only for the purpose of streamlining the workload of the R
TCs so that certain branches thereof like the secs can focus only on a
particular subject matter.
The designation of certain RTC branches to handle specific cases is
nothing new. For instance, pursuant to the provisions of R.A. No.
6657 or the Comprehensive Agrarian Reform Law, the Supreme
Court has assigned certain RTC branches to hear and decide cases
under Sections 56 and 57 of R.A. No. 6657.
The RTC exercising jurisdiction over an intra-corporate dispute can
be likened to an RTC exercising its probate jurisdiction or sitting as a
special agrarian court. The designation of the SCCs as such has not in
any way limited their jurisdiction to hear and decide cases of all
nature, whether civil, criminal or special proceedings.13
In Manuel Luis C. Gonzales and Francis Alfartin D. Gonzales v. GJH
Land, Inc. (formerly known as SJ Land Inc.), Chang Hwan Jang a.k.a.
Steve Jang, Sang Rak Kim, Mariechu N. Yap and Atty. Roberto P.
Mallari II,14 the Court en bane, voting 12-1, 15 explained why
transfer of jurisdiction over cases enumerated in Section 5 of P.D.
902-A was made to the RTCs in general, and not only in favor of
particular RTC branches (Special Commercial Courts), to wit:
As a basic premise, let it be emphasized that a court's acquisition of
jurisdiction over a particular case's subject matter is different from
incidents pertaining to the exercise of its jurisdiction. Jurisdiction
over the subject matter of a case is conferred by law, whereas a
court's exercise of jurisdiction, unless provided by the law itself is
governed by the Rules of Court or by the orders issued from time to
time by the Court. In Lozada v. Bracewell, it was recently held
that the matter of whether the RTC resolves an issue in the
exercise of its general jurisdiction or of its limited jurisdiction as a
special court is only a matter of procedure and has nothing to do
with the question of jurisdiction.
Pertinent to this case is RA 8799 which took effect on August 8,
2000. By virtue of said Jaw, jurisdiction over cases enumerated in
Section 5 of Presidential Decree No. 902-A was transferred from the
Securities and Exchange Commission (SEC) to the RTCs, being courts
of general jurisdiction. Item 5.2, Section 5 of RA 8799 provides:
SEC. 5. Powers and Functions <~lthe Commission. -
xxxx
5.2 The Commission's jurisdiction over all cases enumerated under
Section 5 of Presidential Decree No. 902-A is hereby transferred to
the Courts of general jurisdiction or the appropriate Regional Trial
Court: Provided, that the Supreme Court in the exercise of its
authority may designate the Regional Trial Court branches that
shall exercise ,jurisdiction over the cases. The Commission shall
retain jurisdiction over pending cases involving intra-corporate
disputes submitted for final resolution which should be resolved
within one (1) year from the enactment of this code. The
Commission shall retain jurisdiction over pending suspension of
payment/rehabilitation cases filed as of 30 June 2000 until finally
disposed. (Emphasis supplied)
The legal attribution of Regional Trial Court as courts of general
Jurisdiction sterns from Section 19 (6) Chapter II or Batas Pambansa
Bilang (BP) 129, known as "The Judiciary Reorganization Act of
1980:"
Section 19. Jurisdiction in civil cases. ~ Regional Trial Courts shall
exercise exclusive original jurisdiction:
xxxx
(6) In all cases not within the exclusive jurisdiction of any court,
tribunal, person or body exercising judicial or quasijudicial functions:
....
As enunciated in Durisol Philippines, Inc. v. CA:
The regional trial court, formerly the court of first instance, is a court
of general jurisdiction. All cases, the jurisdiction over which is not
specifically provided for by law to be within the jurisdiction of any
other court, fall under the jurisdiction of the regional trial court.
To clarify, the word "or" in Item 5.2, Section 5 of RA 8799 was
intentionally used by the legislature to particularize the fact that the
phrase "the Courts of general jurisdiction" is equivalent to the
phrase "the appropriate Regional Trial Court." In other words, the
jurisdiction of the SEC over the cases enumerated under Section 5
PD 902-A was transferred to the courts of general jurisdiction, that is
to say (or, otherwise known as), the proper Regional Trial Courts.
This interpretation is supported by San Miguel Corp. v. Municipal
Council, wherein the Court held that:
[T]he word "or" may be used as the equivalent of "that is to say" and
gives that which precedes it the same significance as that which
follows it. It is not always disjunctive and is sometimes interpretative
or expository of the preceding word.
Further, as may be gleaned from the following excerpt of the
Congressional deliberations:
Senator [Raul S.] Roco:
x x x x The first major departure is as regards the Securities and
Exchange Commission. The Securities and Exchange Commission has
been authorized under this proposal to reorganize itself. As an
administrative agency, we strengthened it and at the same time we
take away the quasi-judicial functions. The quasi-judicial functions
are not given back to the court of general jurisdiction – The
Regional Trial Court, except for two categories of cases.
In the case of corporate disputes, only those that are now submitted
for final determination of the SEC will remain with the SEC. So, all
those cases, both memos of the plaintiff and the defendant, that
have been submitted for resolution will continue. At the same time
cases involving rehabilitation, bankruptcy, suspension of payments
and receiverships that were filed before June 30, 2000 will continue
with the SEC. In other words, we are avoiding the possibility, upon
approval of this bill, of people filing cases with the SEC, in manner of
speaking, to select their court.
x x x (Emphasis supplied)
Therefore, one must be disabused of the notion that the transfer of
jurisdiction was made only in favor of particular RTC branches, and
not the RTCs in general.
Having clearly settled that as courts of general jurisdiction, the
designated Special Commercial Courts and the regular RTCs are both
conferred by law the power to hear and decide civil cases in which
the subject of the litigation is incapable of pecuniary estimation,
such as an action for injunction, the Court will now examine the
material allegations in the petition for injunction with damages, in
order to determine whether Branch 149 of the Makati RTC has
jurisdiction over the subject matter of the case.
In its petition for injunction with damages, Concorde Condominium,
Inc. (CCI), by itself and comprising the unit owners of Concorde
Condominium Building, alleged that:
8. CCI is the duly constituted Corporation or Association which
owns the common areas in the project that comprises: (a) Lot 1
where the condominium stands and Lot 2 which serves as the
parking lot for the benefit of the unit owners; and (b) Concorde
Condominium Building ("the building") that was developed by Pulp
and Paper Distributors, Inc. (now, allegedly [as claimed by
respondent Baculio], the "New PPI Corp.").
8.1 Petitioner's ownership of both the two (2) lots and the building
(except only the units specifically owned by unit owners) is
undisputable, as can be clearly gleaned in the following provisions of
the Master Deed with Declaration of Restrictions ("Master Deed"),
as well as the Amended By-laws of petitioner Concorde
Condominium, Inc.
xxxx
8.4 At any rate, considering that the condominium corporation
(herein petitioner) had already been established or incorporated
many years ago, and that the Developer (or any subsequent
transferor) had already sold the units in the building to the present
unit owners/members, it therefore follows that Developer had
thereby lost its beneficial ownership over Lots 1 and 2 in favor of
herein petitioner.
9. Unfortunately, PPI, as developer and engaging in unsound real
estate business practice, altered the condominium plan to
segregate a lot (Lot 2) from the common areas and fraudulently
cause the issuance of a separate title thereof in the name of PPI.
10. CCI has questioned said fraudulent act of PPI in Housing and
Land Use Regulatory Board (HLURB) Case No. REM-050500-10982
entitled "Concorde Condominium, [ncorporated vs. Pulp and Paper,
Inc. ct al." The same case was elevated on appeal to the HLURB
Board of Commissioners in a case entitled "Concorde Condominium,
Incorporated, complainant vs. Pulp and Paper, Inc., ct al.,
respondents, vs. Landmark Philippines Incorporated, et al.,
Intervenors." In both cases, the HLURB ruled in favor of CCI.
11. PPI did not anymore appeal the aforementioned decision of the
HLURB Board of Commissioners to the Office of the President,
hence. the decision as against PPI is already final and executory.
xxxx
12. Although HLURB has already decided that CCI or all the unit
owners have vested rights over the subject lots, recent events have
compelled petitioner to urgently seek from this Honorable Court the
reliefs prayed for in the instant case, such as the immediate issuance
of a temporary restraining order (TRO) and/or writ of preliminary
injunction against respondents.
xxxx
14. At present, a certain Augusto H. Baculio (respondent herein},
by himself and on behalf of New PPI Corp., deliberately, actively
and with patent bad faith misrepresents and misleads the public
and certain government offices/agencies that the lot where the
building stands and the lot which serves as parking area arc owned
by New PPI Corp.
xxxx
14.1 In a letter dated 31 January 2011, respondent Augusto Baculio,
on behalf of New PPI Corp., representing themselves as owners of
the above-mentioned lots, requested from the Makati Fire Station
that the building be subjected to ocular inspection, x x x.
xxxx
14.3 On 12 August 2011, respondent Augusto H. Baculio, with the
same misrepresentation, sent another letter to respondent Supt.
Ricardo C. Perdigon, City Fire Marshal of Makati requesting for
verification or inspection of Concorde, x x x.
xxxx
14.4 Worth noting in the aforementioned letter of respondent
Baculio dated 12 August 2011 x x x is that, not only did he
misrepresent that he or New PPI Corp. owns the two lots, but he
likewise openly misrepresented that he owns the building, x x x and
even requested "xxx to address its 'demolition' as the Concorde is
already 40 years old."
xxxx
14.7 In a letter dated 07 September 2011, respondent Supt. Ricardo
C. Perdigon forwarded or elevated to respondent F/C Supt. Santiago
E. Laguna, Regional Director of the Bureau of Fire Protection – NCR
the matter about Concorde Condominium Building.
xxxx
14.8 On 21 October 2011, CCI sent a letter to respondent F/C Supt.
Santiago E. Laguna, informing the latter of the misrepresentations of
respondents Augusto Baculio and New PPI Corp.
xxxx
14.9 The misrepresentation of respondents Baculio and New PPJ
Corp. did not stop there. On 17 November 2011, Mr. Baculio
requested from Meralco for the cutting off of electricity in Concorde
Condominium Building, apparently with the misrepresentation that
he
owns the building.
xxxx
14.14 Moreover, on 7 March 2012, one of the unit owners in the
building, Sister Lioba Tiamson, OSB, sought the assistance and
intervention of Honorable Mayor Jejomar Erwin S. Binay, Jr. when
Concorde received a letter dated 17 February 2012 from respondent
Engr. Nelson B. Morales informing Concorde of the revocation of the
building and occupancy permits even if the period of sixty (60) days
to comply has not yet lapsed.
xxxx
16. Moreover, sometime in November 2011, petitioner and its unit
owners noted that security guards from Asian Security and
Investigation Agency have stationed themselves on rotation basis 7
days a week/24 hours a day, within the perimeter of the building.
Upon inquiry of one of the administration personnel, it was
discovered that they were hired by respondent August H.
Baculio/New PPl Corp.
xxxx
16.5 The presence of respondent security agency and its security
guards within the perimeter of the building poses threat to and sows
serious fear and anxiety to the unit owners. Thus, they should be
ordered to leave the premises.
17. Respondent Baculio and New PPI Corp.'s misleading, false,
baseless and unauthorized acts of claiming ownership over the
subject lots and building arc clear violation of the rights of
petitioner and its unit owners to maintain their undisturbed
ownership, possession and peaceful enjoyment of their property.
Hence, should be immediately estopped, restrained and
permanently en.joined.
18. Moreover, respondents Baculio and New PPI Corp., by deceit
and misrepresentation, are surreptitiously attempting to
dispossess petitioner of Concorde building to the extent of using
the instrumentality of the government to achieve this purpose.
19. Worse, respondent Baculio and New PPI Corp. by writing letters
to Makati City Engineering Department, are pushing for the
demolition of the building which they do not even own.
20. Surprisingly, respondent Engr. Nelson B. Morales has been
responding to and acting upon the above-mentioned letters being
sent by respondent Baculio despite the latter being a mere
impostor and has no legal personality whatsoever with regard to
the matters concerning the lots and Concorde Condominium
Building.
xxxx
20.9 It is therefore necessary that respondent Engr. Nelson
Morales be enjoined frorr1 entertaining and acting upon the
letters of respondent Baculio.1âwphi1
20.10 Respondent En gr. Morales should he immediately restrained
from implementing the revocation of petitioner's building and
occupancy permit.
20.11 Respondent Engr. Morales should also be immediately
restrained from ordering the possible demolition of the building, as
the building is structurally sound and stable, and docs not pose any
safety risks to occupants and passers-by.
xxxx
21. Respondents Supt. Ricardo C. Perdigon and F/C Supt. Santiago
E. Laguna have likewise been responding to and acting upon the
above-mentioned letters being sent by respondent Baculio despite
the latter being a mere impostor and has no legal personality
whatsoever with regard to matters concerning the building.
22. Moreover, respondents Supt. Ricardo C. Pcnligon and F/C Supt.
Santiago E. Laguna unjustifiably refused, and continuously refuses
to issue the necessary permit for the contractor xxx engaged by
petitioner to be able to commence with the installation of a fire
sprinkler system and to correct other fire safety deficiencies in the
building.
22. l Thus, it is certainly ironic that the Bureau of Fire Protection
headed by said respondents x x x issued compliance order on
petitioner to correct fire safety deficiencies, and yet, they refused to
issue the necessary work permit to the contractor hired by
petitioner.
22.2 Hence, respondents Supt. Perdigon and F/C Supt. Laguna
should be directed to issue the necessary permit to the contractor
engaged by petitioner.16
The concept of an action for injunction, as an ordinary civil action,
was discussed in BPI v. Hong, et al.7as follows:
An action for injunction is a suit which has for its purpose the
enjoinment of the defendant, perpetually or for a particular time,
from the commission or continuance of a specific act, or his
compulsion to continue performance of a particular act. It has an
independent existence, and is distinct from the ancillary remedy of
preliminary injunction which cannot exist except only as a part or an
incident of an independent action or proceeding. In an action for
injunction, the auxiliary remedy of preliminary iajunction,
prohibitory or mandatory, may issue.
There is no doubt that the petition filed before the RTC is an action
for injunction, as can be gleaned from the allegations made and
reliefs sought by petitioner, namely: (1) to enjoin respondents
Baculio and New PPI Corporation from misrepresenting to the
public, as well as to private and government offices/agencies, that
they are the owners of the disputed lots and Concorde
Condominium Building, and from pushing for the demolition of the
building which they do not even own; (2) to prevent respondent
Asian Security and Investigation Agency from deploying its security
guards within the perimeter of the said building; and (3) to restrain
respondents Engr. Morales, Supt. Perdigon and F/C Supt. Laguna
from responding to and acting upon the letters being sent by
Bactllio, who is a mere impostor and has no legal personality with
regard to matters concerning the revocation of building and
occupancy permits, and the fire safety issues of the same building.
Applying the relationship test18and the nature of the controversy
test19in determining whether a dispute constitutes an intra-
corporate controversy, as enunciated in Medical Plaza Makati
Condominium Corporation v. Cullen,20the Court agrees with Branch
149 that Civil Case No. 12-309 for injunction with damages is an
ordinary civil case, and not an intra-corporate controversy.
A careful review of the allegations in the petition for injunction with
damages indicates no intra-corporate relations exists between the
opposing parties, namely (1) petitioner condominium corporation,
by itself and comprising all its unit owners, on the one hand, and (2)
respondent New PPI Corporation which BaCLllio claims to be the
owner of the subject properties, together with the respondents
Building Official and City Fire Marshal of Makati City, the Regional
Director of the Bureau of Fire Protection, and the private security
agency, on the other hand. Moreover, the petition deals with the
conflicting claims of ownership over the lots where Concorde
Condominium Building stands and the parking lot for unit owners,
which were developed by Pulp and Paper Distributors, Inc. (now
claimed by respondent Baculio as the New PPI Corporation), as well
as the purported violations of the National Building Code which
resulted in the revocation or the building and occupancy permits by
the Building Official of Makati City. Clearly, as the suit between
petitioner and respondents neither arises from an intra-corporate
relationship nor does it pertain to the enforcement of their
correlative rights and obligations under the Corporation Code, and
the internal and intra-corporate regulatory rules of the corporation,
Branch 149 correctly found that the subject matter of the petition is
in the nature or an ordinary civil action.
The Court is mindful of the recent guideline laid down in the recent
case of Manuel Luis C. Gonzales and Francis Martin D. Gonzales v.
GJH Land, Inc. (formerly known as SJ land Inc.), Chang flwan Jang
a.k.a. Steve Jang, Sang Rak Kim, Mariechu N Yap and Atty. Roberto
P. Mallari II,21 to wit:
2012 issued by the Regional Trial Court ofMakati City, Branch 149, in
Civil Case No. 12-309, are hereby REVERSED and SET ASIDE. Civil
Case No. l 2-309 is REINSTATED in the docket of the same branch
which is further ORDERED to resolve the case with reasonable
dispatch.

For further guidance, the Court finds it apt to point out that the This Decision is immediately executory.
same principles apply to the inverse situation of ordinary civil cases
filed before the proper RTCs but wrongly rafiled to its branches SO ORDERED.
designated as Special Commercial Courts. In such a scenario, the
ordinary civil case should then be referred to the Executive Judge for
re-docketing as an ordinary civil case; thereafter, the Executive
Judge should then order the raffling of the case to all branches of
the same RTC, subject to limitations under existing internal rules,
and the payment of the correct docket fees in case of any
difference. Unlike the limited assignment/raffling of a commercial
case only to branches designated as Special Commercial Courts in
the scenarios stated above, the re-raffling of an ordinary civil case in
this instance to all courts is permissible due to the fact that a
particular branch which has been designated as a Special
Commercial Court does not shed the RTC's general jurisdiction over
ordinary civil cases under the imprimatur of statutory law, i.e., Batas
Pambansa Bilang (BP 129). To restate, the designation of Special
Commercial Court was merely intended as a procedural tool to
expedite the resolution of commercial cases in line with the court's
exercise of jurisdiction. This designation was not made by statute
but only by an internal Supreme Court rule under its authority to
promulgate rules governing matters of procedure and its
constitutional mandate to supervise the administration of all courts
and the personnel thereof Certainly, an internal rule promulgated by
the Court cannot go beyond the commanding statute. But as a more
fundamental reason, the designation of Special Commercial Courts
is, to stress, merely an incident related to the court's exercise of
jurisdiction, which, as first discussed, is distinct from the concept of
jurisdiction over the subject matter. The RTC's general jurisdiction
over ordinary civil cases is therefore not abdicated by an internal
rule streamlining court procedure.22

It is apt to note, however, that the foregoing guideline applies only

in a situation where the ordinary civil case filed before the proper
RTCs was "wrongly raffled" to its branches designated as Special
Commercial Courts, which situation does not obtain in this case.
Here, no clear and convincing evidence is shown to overturn the
legal presumption that official duty has been regularly performed
when the Clerk of Court of the Makati RTC docketed the petition for
injunction with damages as an ordinary civil case - not as a
commercial case - and, consequently, raffled it among all branches
of the same RTC, and eventually assigned it to Branch 149. To recall,
the designation of the said branch as a Special Commercial Court by
no means diminished its power as a court of general jurisdiction to
hear and decide cases of all nature, whether civil, criminal or special
proceedings. There is no question, therefore, that the Makati RTC,
Branch 149 erred in dismissing the petition for injunction with
damages, which is clearly an ordinary civil case. As a court of general
jurisdiction, it still has jurisdiction over the subject matter thereof.

In view of the above discussion, the Court finds no necessity to delve

into the other contentions raised by the parties, as they should be
properly addressed by the Makati RTC, Branch 149 which has
jurisdiction over the subject matter of the petition for injunction
with damages.

WHEREFORE, the petition for review on certiorari is GRANTED. The

Order dated June 28, 2012 and Resolution dated September 20,
G.R. No. 199601 November 23, 2015
PHILIPPINE COMMERCIAL INTERNATIONAL BANK (now BDO
UNIBANK, INC.), Petitioner,
vs.
JOSEPHINE D. GOMEZ, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari under Rule 45 of the
Rules of Court1 filed by Philippine Commercial International Bank
(PCIB) assailing the May 23, 2011 decision2 and the December 7,
2011 resolution3 of the Court of Appeals (CA) in CA-G.R. CV No.
68288. The CA affirmed the May 25, 1999 decision of the Regional
Trial Court of Makati City, Branch 145 (RTC) in toto.
FACTUAL ANTECEDENTS
Josephine D. Gomez (Josephine) was a teller at the Domestic Airport
Branch of the PCIB when a certain Colin R. Harrington opened
Savings Account No. 373-28010-6 with said branch in January 1985.
The following day, Harrington presented two (2) genuine bank drafts
dated January 3, 1985, issued by the Bank of New Zealand. The first
draft was in the sum of US$724.57 payable to "C.R. Harrington,"
while the second draft was in the sum of US$2,004.76 payable to
"Servants C/C.R. Harrington."
The PCIB, on the other hand, alleged that it was a certain Sophia
La'O, as a representative of Harrington, who presented the bank
drafts for deposit.
Upon receipt of the bank drafts, Josephine asked her immediate
supervisor, Eleanor Flores, whether the drafts payable to "Servants
C/C.R. Harrington" were acceptable for deposit to the savings
account of Harrington. When Flores answered in the affirmative, and
after receiving from the bank's foreign exchange supervision a
Philippine Currency conversion of the amounts reflected in the
drafts, Josephine received the deposit slip. Thereafter, the deposits
were duly entered in Harrington's savings account.
On two (2) separate dates, a certain individual representing himself
as Harrington withdrew the sums of P45,000.00 and P5,600.00.
Subsequently, the bank discovered that the person who made the
withdrawals was an impostor. Thus, the bank had to pay Harrington
P50,600.00 representing the amounts of the bank drafts in his name.
The PCIB issued a memorandum asking Josephine to explain why no
disciplinary action should be taken against her for having accepted
the bank drafts for deposits. Josephine reasoned that being a new
teller she was not yet fully oriented with the various aspects of the
job. She further alleged that she had asked the approval of her
immediate supervisor prior to receiving the deposits.
On November 14, 1985, the PCIB deducted the amount of P-423.38
from Josephine's salary. Josephine wrote the PCIB to ask why the
deduction was made.
After due investigation on the matter, the PCIB issued another
memorandum finding Josephine grossly negligent and liable for
performing acts in violation of established operating procedures.
The memorandum required Josephine to pay the amount of P-
50,600.00 through deductions in her salary, allowance, bonuses, and
profit sharing until the amount is fully paid.
Josephine wrote the PCIB to ask for the basis of its findings that she
was grossly negligent and liable to pay the amount of P50,600.00.
During trial, the RTC found that the PCIB did not even respond to
this letter. PCIB, however, alleged that it had replied to Josephine's
letter, and explained that she was afforded due process and the
deductions made prior to January 15, 1986, were merely a
withholding pending the investigation.
The PCIB also admitted that as early as January 15, 1986, it had
started to deduct the amount of P 200.00 from Josephine's salary as
well as 50% of her bonuses and profit sharing.
On February 10, 1986, Josephine filed a complaint for damages with
prayer for preliminary injunction before the RTC of Makati City. She
claimed that the PCIB had abused its right by gradually deducting
from her salary the amount the bank had to pay Harrington.
The PCIB filed its answer with counterclaims and a separate
complaint with the RTC of Makati City, which was raffled to Branch
149.
In its May 25, 1999 decision, the RTC rendered judgment in favor of
Josephine and ordered the PCIB to pay her actual damages in the
amount of P5,006.00 plus 12% interest from filing of the complaint;
moral damages in the amount of PI 50,000.00; and attorney's fees in
the amount of P-50,000.00.
The RTC considered the PCIB's manner of deducting from the salary
and allowance of Josephine as having been rendered in bad faith
and contrary to morals, good custom, and public policy. This was
borne out by the fact that the PCIB had already deducted from her
salary before Josephine received the memorandum finding her liable
for the P50,600.00. In addition, while there were other individuals
involved in this incident, it appeared that it was only Josephine who
was made solely responsible.
On appeal, the PCIB argued that the RTC had no jurisdiction over the
case because it was a labor dispute, which the labor tribunals are
more competent to resolve. It also maintained that there was no
factual or legal basis for the RTC to make it liable for damages and to
pay Josephine.
In its May 23, 2011 decision, the CA affirmed the May 25, 1999 RTC
decision. It held that the PCIB was estopped from questioning the
jurisdiction of the RTC because it had filed an answer with
counterclaims and even initiated a separate case before a different
branch of the RTC. It upheld the RTC's findings and conclusion in
awarding damages and attorney's fees to Josephine because there
was no reason to disturb them.
The CA, subsequently, denied the PCIB's motion for reconsideration
on December 7, 2011; hence, the PCIB filed the present petition.
First, the PCIB contends that the CA gravely erred in ruling that its
actions were in total and wanton disregard of Articles 19 and 21 of
the Civil Code because the courts a quo summarily imputed bad faith
on how it had treated Josephine.
Second, the PCIB maintains that the CA gravely erred in awarding
moral damages and attorney's fees to Josephine absent any basis for
it while averring that bad faith cannot be presumed and that
Josephine had failed to prove it with clear and convincing evidence.
 OUR RULING
We DENY the present petition for lack of merit.
The civil courts have jurisdiction
over a case when the cause of action
does not have a reasonable causal
connection from the employer-employee
relationship.
Although the PCIB opted not to raise the issue before this Court, we
find it prudent and imperative to justify why the RTC had jurisdiction
to take cognizance of Josephine's complaint despite the fact that her
cause of action arose because her employer arbitrarily deducted
from her salary - an act expressly prohibited by our labor laws.4
Article 224 [217] of the Labor Code provides that the Labor Arbiters
have original and exclusive jurisdiction to hear and decide claims for
actual, moral, exemplary, and other forms of damages arising from
employer-employee relations. The legislative intent appears clear to
allow Labor Arbiters to award to an employee not only the reliefs
provided by our labor laws, but also moral and other forms of
damages governed by the Civil Code. Specifically, we have
mentioned, in fact, that a complaint for damages under Articles 19,
20, and 21 of the Civil Code would not suffice to keep the case
without the jurisdictional boundaries of our labor courts -especially
when the claim for damages is interwoven with a labor dispute.5
Nevertheless, when the cause of action has no reasonable
connection with any of the claims provided for in Article 224 of the
Labor Code, jurisdiction over the action is with the regular
courts. 6 Here, since Josephine's cause of action is based on a quasi-
delict or tort under Article 19 in relation to Article 21 of the Civil
Code, the civil courts (not the labor tribunals) have jurisdiction over
the subject matter of this case.
To be sure, the case of Singapore Airlines Ltd. v. Ernani Cruz Paño is
enlightening:chanRoblesvirtualLawlibrary
Upon the facts and issues involved, jurisdiction over the present
controversy must be held to belong to the civil courts. While
seemingly petitioner's claim for damages arises from employer-
employee relations, and the latest amendment to Article 217 of the
Labor Code under PD No. 1691 and BP Big. 130 provides that all
other claims arising from employer-employee relationship are
cognizable by Labor Arbiters, in essence, petitioner's claim for
damages is grounded on the "wanton failure and refusal" without
just cause of private respondent Cruz to report for duty despite
repeated notices served upon him of the disapproval of his
application for leave of absence without pay. This, coupled with the
further averment that Cruz "maliciously and with bad faith" violated
the terms and conditions of the conversion training course
agreement to the damage of petitioner removes the present
controversy from the coverage of the Labor Code and brings it
within the purview of Civil Law.
Clearly, the complaint was anchored not on the abandonment per se
by private respondent Cruz of his job as the latter was not required
in the Complaint to report back to work but
on the manner and consequent effects of such abandonment of
work translated in terms of the damages which petitioner had to
suffer.7 [emphasis and underscoring supplied]cralawlawlibrary
In the present case, Josephine filed a civil complaint for damages
against the PCIB based on how her employer quickly concluded that
she was negligent and hence arbitrarily started to deduct from her
salary. Clearly, without having to dwell on the merits of the case,
Josephine opted to invoke the jurisdiction of our civil courts because
her right to fair treatment was violated.
The discussion in Quisaba v. Sta. Ines-Melale Veneer & Plywood, Inc.
is just as relevant as it is illuminating on the present case, to
wit:chanRoblesvirtualLawlibrary
Although the acts complained of seemingly appear to constitute
"matters involving employee-employer relations" as Quisaba's
dismissal was the severance of a preexisting employee-employer
relation, his complaint is grounded not on his dismissal per se as in
fact he does not ask for reinstatement or backwages, but on
the manner of his dismissal and the consequent effects of such
dismissal.
xxx
The "right" of the respondents to dismiss Quisaba should not be
confused with the mannerin which the right was exercised and the
effects flowing therefrom. If the dismissal was done anti-socially or
oppressively, as the complaint alleges, then the respondents
violated article 1701 of the Civil Code which prohibits acts of
oppression by either capital or labor against the other, and article
21, which makes a person liable for damages if he willfully causes
loss or injury to another in a manner that is contrary to morals, good
customs or public policy, the sanction for which, by way of moral
damages, is provided in article 2219, no. 10. (Cf. Phil. Refining Co. v.
Garcia, L-21962, Sept. 27, 1966, 18 SCRA 107).8cralawlawlibrary
From the foregoing, the case at bar is intrinsically concerned with a
civil dispute because it has something to do with Josephine's right
under Article 19 of the Civil Code, and does not involve an existing
employer-employee relation within the meaning of Article 224 of
the Labor Code. Josephine's complaint was, therefore, properly filed
with and exclusively cognizable by the RTC.
Questions on whether there was a
preponderance of evidence to justify the
award of damages or whether there was
a causal connection between the given
set of facts and the damage suffered by
the private complainant are questions of fact.
The Court's jurisdiction under a Rule 45 review is limited to
reviewing perceived errors of law, which the lower courts may have
committed. The resolution of factual issues is the function of the
lower courts whose findings, when aptly supported by evidence,
bind this Court. This is especially true when the CA affirms the RTC's
findings. While this Court, under established exceptional
circumstances, had deviated from the above rule, we do not find this
case to be under any of the exceptions.
Essentially, what the PCIB seeks is a relief from the Court on the
issue of the propriety of the award of damages. On this point alone,
the petition must fail, as a Rule 45 petition bars us from the
consideration of factual issues, especially when both the RTC and
the CA were consistent with their rulings.
Nevertheless, we still affirm the assailed CA rulings even if we were
to disregard these established doctrinal rules.
Article 19 of the Civil Code provides that every person in the exercise
of his rights and in the performance of his duties must act with
justice, give everyone his due, and observe honesty and good faith.
The principle embodied in this provision is more commonly known
as the "abuse of right principle." The legal sanctions for violations of
this fundamental principle are found in Articles 209 and 2110 of the
Civil Code. We explained how these two provisions correlate with
each other in GF Equity, Inc. v.
Valenzona:chanRoblesvirtualLawlibrary

[Article 19], known to contain what is commonly referred to as the

principle of abuse of rights, sets certain standards which must be
observed not only in the exercise of one's rights but also in the
performance of one's duties. These standards are the following: to
act with justice; to give everyone his due; and to observe honesty
and good faith. The law, therefore, recognizes a primordial
limitation on all rights; that in their exercise, the norms of human
conduct set forth in Article 19 must be observed. A right, though by
itself legal because recognized or granted by law as such, may
nevertheless become the source of some illegality. When a right is
exercised in a manner which does not conform with the norms
enshrined in Article 19 and results in damage to another, a legal
wrong is thereby committed for which the wrongdoer must be held
responsible. But while Article 19 lays down a rule of conduct for the
government of human' relations and for the maintenance of social
order, it does not provide a remedy for its violation. Generally, an
action for damages under either Article 20 or Article 21 would be
proper.11 [Emphasis supplied]cralawlawlibrary

Both the RTC and the CA found the acts of the PCIB were in clear
violation of Article 19 of the Civil Code and held the PCIB liable for
damages. While the PCIB has a right to penalize employees for acts
of negligence, the right must not be exercised unjustly and illegally.
In the instant case, the PCIB made deductions on Josephine's salary
even if the investigation was still pending. Belatedly, the PCIB issued
a memorandum finding Josephine grossly negligent and requiring
her to pay the amount which the bank erroneously paid to
Harrington's impostor. When Josephine asked for legal and factual
basis for the finding of negligence, the PCIB refused to give any.
Moreover, the PCIB continued to make deductions on Josephine's
salary, allowances, and bonuses.

The trial court and the CA also noted that while Josephine was
penalized, other employees of the bank involved in the subject
transactions were not. It was Josephine who was made solely
responsible for the loss without giving any basis therefor. It was
emphasized that the subject deposit could not have been received
by the bank and entered in Harrington's savings account without the
participation of the other bank employees. The PCIB could have
exercised prudence before taking oppressive actions against
Josephine.

All told, we find nothing in the record which would warrant the
reversal of the position held by the RTC and the CA. Based on the
above discussion, we find the award of moral damages and
attorney's fees in Josephine's favor proper.

WHEREFORE, the petition for review on certiorari is DENIED and

consequently, the May 23, 2011 decision and the December 7, 2011
resolution of the Court of Appeals in CA-G.R. CV No. 68288
are AFFIRMED in toto.

SO ORDERED.c

G.R. No. 146726 June 16, 2006
MULTI-REALTY DEVELOPMENT CORPORATION, Petitioner,
vs.
CONDOMINIUM CORPORATION, Respondent.
DECISION
CALLEJO, SR., J.:
Before this Court is a petition for review on certiorari of the
Decision1 of the Court of Appeals in CA-G.R. CV No. 44696 dismissing
the appeal of Multi-Realty Development Corporation on the ground
of prescription.
Multi-Realty is a domestic corporation engaged in the real estate
business, and the construction and development of condominiums.
It developed, among others, the Ritz Towers Condominium, and the
former Galeria de Magallanes, both built in the Municipality (now
city) of Makati.
In the 1970s, Multi-Realty constructed a 26-storey condominium at
the corner of Ayala Avenue and Fonda Street in Makati City, known
as the Makati Tuscany Condominium Building (Makati Tuscany, for
short). The building was one of the Philippines’ first condominium
projects, making it necessary for Multi-Realty and the government
agencies concerned with the project, to improve and formulate rules
and regulations governing the project as construction progressed.
Makati Tuscany consisted of 160 condominium units, with 156 units
from the 2nd to the 25th floors, and 4 penthouse units in the 26th
floor. Two hundred seventy (270) parking slots were built therein for
apportionment among its unit owners. One hundred sixty-four (164)
of the parking slots were so allotted, with each unit at the 2nd to the
25th floors being allotted one (1) parking slot each, and each
penthouse unit with two slots. Eight (8) other parking slots, found on
the ground floor of the Makati Tuscany were designated as guest
parking slots, while the remaining 98 were to be retained by Multi-
Realty for sale to unit owners who would want to have additional
slots.
According to Multi-Realty, the intention to allocate only 8 parking
slots to the Makati Tuscany’s common areas was reflected in its
color-coded ground floor plan, upper basement plan and lower
basement plan prepared by its architect, C.D. Arguelles and
Associates. These plans, which depict common areas as yellow zones
and areas reserved for unit owners as red zones, clearly show that,
of the 270 parkings slots, 262 were designated red zones, and only 8
first-floor parking slots were designated yellow zones or common
areas.
Pursuant to Republic Act No. 4726, otherwise known as the
Condominium Act, the Makati Tuscany Condominium Corporation
(MATUSCO) was organized and established to manage the
condominium units.
In 1975, Multi-Realty executed a Master Deed and Declaration of
Restrictions2 (Master Deed, for short) of the Makati Tuscany.
Sections 5 and 7 provide:
SEC. 5. Accessories to Units. – To be considered as part of each unit
and reserved for the exclusive use of its owner are the balconies
adjacent thereto and the parking lot or lots which are to be assigned
to each unit.
xxxx
SEC. 7. The Common Areas. – The common elements or areas of the
Makati Tuscany shall comprise of all the parts of the project other
than the units, including without limitation the following:
xxxx
(d) All driveways, playgrounds, garden areas and PARKING AREAS
OTHER THAN THOSE ASSIGNED TO EACH UNIT UNDER SEC. 5
ABOVE;3
The Master Deed was filed with the Register of Deeds in 1977. Multi-
Realty executed a Deed of Transfer in favor of MATUSCO over these
common areas. However, the Master Deed and the Deed of Transfer
did not reflect or specify the ownership of the 98 parking slots.
Nevertheless, Multi-Realty sold 26 of them in 1977 to 1986 to
condominium unit buyers who needed additional parking slots.
MATUSCO did not object, and certificates of title were later issued
by the Register of Deeds in favor of the buyers. MATUSCO issued
Certificates of Management covering the condominium units and
parking slots which Multi-Realty had sold.
At a meeting of MATUSCO’s Board of Directors on March 13, 1979, a
resolution was approved, authorizing its President, Jovencio Cinco,
to negotiate terms under which MATUSCO would buy 36 of the
unallocated parking slots from Multi-Realty. During another meeting
of the Board of Directors on June 14, 1979, Cinco informed the
Board members of Multi-Realty’s proposal to sell all of the
unassigned parking lots at a discounted price of P15,000.00 per lot,
or some 50% lower than the then prevailing price of P33,000.00
each. The Board agreed to hold in abeyance any decision on the
matter to enable all its members to ponder upon the matter.
In the meantime, the fair market value of the unallocated parking
slots reached P250,000.00 each, or a total of P18,000,000.00 for the
72 slots.
In September 1989, Multi-Realty, through its President, Henry Sy,
who was also a member of the Board of Directors of MATUSCO,
requested that two Multi-Realty executives be allowed to park their
cars in two of Makati Tuscany’s remaining 72 unallocated parking
slots. In a letter, through its counsel, MATUSCO denied the request,
asserting, for the first time, that the remaining unallocated parking
slots were common areas owned by it. In another letter, MATUSCO
offered, by way of goodwill gesture, to allow Multi-Realty to use two
unallocated parking slots, which offer was rejected by the latter.
On April 26, 1990, Multi-Realty, as plaintiff, filed a complaint,
docketed as Civil Case No. 90-1110, against MATUSCO, as defendant,
for Damages and/or Reformation of Instrument with prayer for
temporary restraining order and/or preliminary injunction. The case
was raffled to Branch 59 of the Makati RTC.
Multi-Realty alleged therein that it had retained ownership of the 98
unassigned parking slots. Considering, however, that Makati Tuscany
was one of its first condominium projects in the Philippines, this was
not specified in Section 7(d) of the Master Deed since the
documentation and the terms and conditions therein were all of first
impression. It was further alleged that the mistake was discovered
for the first time when MATUSCO rejected its request to allow its
(Multi-Realty’s) executives to park their cars in two of the
unassigned parking lots.
In its Answer with counterclaim, MATUSCO alleged that Multi-Realty
had no cause of action against it for reformation of their contract. By
its own admission, Multi-Realty sold various parking slots to third
parties despite its knowledge that the parking areas, other than
those mentioned in Sec. 5 of the Master Deed, belonged to
MATUSCO. MATUSCO prayed that judgment be rendered in its favor
dismissing the complaint; and, on its counterclaim, to order the
plaintiff to render an accounting of the proceeds of the sale of the
parking slots other than those described in Sec. 5 of the Master
Deed; to pay actual damages equivalent to the present market value
of the parking areas other than those described in Sec. 5 of the
Master Deed, amounting to no less than P250,000.00 per slot plus
reasonable rentals thereon at no less than P400.00 per slot per
month from date of sale until payment by plaintiff to defendant of
the market value of these parking areas.
After trial, the RTC rendered a decision, the dispositive portion of
which reads:
Premises considered, this case is dismissed. Defendant’s
counterclaim is, likewise, dismissed, the same not being compulsory
and no filing fee having been paid. Plaintiff is, however, ordered to
pay defendant attorney’s fees in the amount of P50,000.00.
Cost against plaintiff.
SO ORDERED.4
The trial court ruled that Multi-Realty failed to prove any ground for
the reformation of its agreement with MATUSCO relative to the
ownership of the common areas. There is no evidence on record to
prove that the defendant acted fraudulently or inequitably to the
prejudice of the plaintiff, and the latter was estopped, by deed, from
claiming that it owned the common areas. It also held that the
defendant was not estopped from assailing plaintiff’s ownership
over the disputed parking slots.
Multi-Realty appealed the decision to the CA via a petition under
Rule 41 of the Rules of Court, contending that:
THE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT AND
DISALLOWING THE PLAINTIFF-APPELLANT FROM REFORMING THE
MASTER DEED BECAUSE:
THERE IS VALID GROUND FOR REFORMATION OF THE MASTER DEED
SINCE THE MASTER DEED DID NOT REFLECT THE TRUE INTENTION OF
THE PARTIES REGARDING THE OWNERSHIP OF THE EXTRA NINETY-
EIGHT PARKING [SLOTS] DUE TO MISTAKE.
II
THE REGISTRATION OF THE MASTER DEED WITH THE REGISTER OF
DEEDS DID NOT MAKE PLAINTIFF-APPELLANT GUILTY OF ESTOPPEL
BY DEED.
III
THE TRIAL COURT ERRED IN FINDING THAT DEFENDANT-APPELLEE IS
NOT ESTOPPED FROM QUESTIONING THE OWNERSHIP OF
PLAINTIFF-APPELLANT OVER THE DISPUTED PARKING LOTS.5
In support of its appeal, Multi-Realty reiterated its contentions in
the trial court, insisting that it had adduced evidence to prove all the
requisites for the reformation of Section 7(d) of the Master Deed
under Article 1359 of the New Civil Code. It was never its intention
to designate the 98 unassigned parking slots as common areas, and,
as shown by the evidence on record, this was known to MATUSCO.
Under Article 1364 of the New Civil Code, an instrument may be
reformed if, due to lack of skill on the part of the drafter, the deed
fails to express the true agreement or intention of the parties
therein. Since MATUSCO knew that it (Multi-Realty) owned the 98
parking slots when the Master Deed was executed, its registration
did not make Multi-Realty guilty of estoppel by deed. In fact,
MATUSCO failed to object to the sale of some of the parking slots to
third parties. It was also pointed out that Multi-Realty remained in
possession thereof.
Multi-Realty further claimed that the trial court erred in not
declaring that MATUSCO was estopped from assailing the ownership
over the parking slots, as it not only conformed to the sale of some
of the unassigned parking slots but likewise failed to assail the
ownership thereon for a period of 11 years. It insisted that the sale
of the said parking slots was made in accord with law, morals and
public order, and that MATUSCO’s claim of ownership of the
unassigned parking slots was merely an afterthought.
MATUSCO, for its part, appealed the trial court’s dismissal of its
counterclaim.
On Multi-Realty’s appeal, MATUSCO countered that the 270 parking
slots were to be apportioned as follows:
1 parking lot for each ordinary unit -
2 parking lots for each of the 4 Penthouse Apartment Units -
of the remaining 106 parking lots, 34 parking lots were designated
and allocated as part of "common areas" which would be allocate
purely for visitors, while the remaining 72 units would become pa
of the Condominium Corporation’s income-earning "common
areas" -
It was further averred that Multi-Realty, through Henry Sy, executed
the Master Deed in July 1975 and the Deed of Transfer in 1977, in
which the ownership of the common areas was unconditionally
transferred to MATUSCO; Multi-Realty sold 26 of the 34 parking
slots in bad faith, which had been allocated purposely for visitors of
unit owners, amounting to millions of pesos; the action for
reformation has no legal basis because the transfer of the 106
unassigned parking slots which form part of the common areas is
contrary to Section 167 of the Condominium Act.
MATUSCO further pointed out that the unassigned parking slots
could be transferred only by the affirmative votes of all the
members of Multi-Realty, and that the Master Deed and the Deed of
Transfer were prepared by the latter with the assistance of its
renowned lawyers. If there was a mistake in the drafting of the
Master Deed in 1975, the deed should have been corrected in 1977
upon the execution of the Deed of Transfer. With the social and
economic status of Henry Sy, Multi-Realty’s President, it is incredible
that the Master Deed and the Deed of Transfer failed to reflect the
true agreement of the parties. MATUSCO went on to state that
Multi-Realty failed to adduce a preponderance of evidence to prove
the essential requirements for reformation of the questioned
documents. Even if there was a mistake in drafting the deeds,
reformation could not be given due course absent evidence that
defendant-appellee acted fraudulently or inequitably.
On its claim of ownership over the unassigned parking slots,
MATUSCO averred that it is not estopped to do so because the sales
thereof were illegal, and it had no knowledge that Multi-Realty had
been selling the same. Having acted fraudulently and illegally, Multi-
Realty cannot invoke estoppel against it.
On the RTC decision dismissing its counterclaim, MATUSCO averred
that said decision is erroneous, as it had adduced evidence to prove
its entitlement to said counterclaim.
In reply, Multi-Realty averred that MATUSCO’s counterclaim had
already prescribed because it was filed only in 1990, long after the
period therefor had elapsed in 1981.
On August 21, 2000, the CA rendered its decision dismissing Multi-
Realty’s appeal on the ground that its action below had already
prescribed. The dispositive portion of the decision reads:
WHEREFORE, foregoing premises considered, the appeal having no
merit in fact and in law, is hereby ORDERED DISMISSED, and the
judgment of the trial court is MODIFIED by deleting the award of
attorney’s fees not having been justified but AFFIRMED as to its
Order dismissing both the main complaint of plaintiff-appellant and
the counterclaim of defendant-appellant. With costs against both
parties.8
The appellate court ruled that it was justified in dismissing Multi-
Realty’s appeal on the ground of prescription as it was clothed with
ample authority to review the lower court’s rulings even those not
assigned as errors on appeal, especially if the consideration of the
matter is necessary to arrive at a just decision of the case, and to
avoid dispensing "piecemeal justice." The CA cited the rulings of this
Court in Servicewide Specialists, Inc. v. Court of Appeals,9 and Dinio
v. Laguesma.10
Multi-Realty filed a motion for reconsideration of the decision,
contending that:
THIS HONORABLE COURT VIOLATED SECTION 8 OF RULE 51 OF THE
RULES OF COURT TO MRDC’S SUBSTANTIAL AND UNFAIR PREJUDICE
BY RESOLVING MRDC’S APPEAL ON THE GROUND OF PRESCRIPTION,
EVEN THOUGH NEITHER PARTY HAD ASSIGNED OR ARGUED AS AN
ERROR THE TRIAL COURT’S FAILURE TO DISMISS THE ACTION FILED
BY MRDC BELOW AS PRESCRIBED.
THIS HONORABLE COURT ERRED IN COUNTING THE RUNNING OF
THE PRESCRIPTIVE PERIOD FROM THE DATE OF EXECUTION OF THE
MASTER DEED IN 1975, BECAUSE UNDER ARTICLE 1150 OF THE CIVIL
CODE, AND THE SUPREME COURT’S DECISIONS IN TORMON VS.
CUTANDA, AND VELUZ VS. VELUZ, MRDC’S PERIOD TO FILE A SUIT
FOR REFORMATION ONLY BEGAN RUNNING IN 1989, AFTER
DEFENDANT-APPELLANT MAKATI TUSCANY CONDOMINIUM
CORPORATION’S REPUDIATION OF THE PARTIES’ TRUE AGREEMENT
GAVE RISE TO MRDC’S RIGHT OF ACTION.11
Multi-Realty further averred that the appellate court misapplied
Rule 51, Section 8 of the 1997 Rules of Court as well as the ruling of
this Court in the Servicewide Specialists case. It pointed out that,
when it filed its Brief, as appellee, Rule 51, Section 7 of the 1964
Rules of Court was still in effect, under which an error which does
not affect the jurisdiction over the subject matter will not be
considered unless stated in the assignment of error and properly
assigned in the Brief, as the court may pass upon plain and clerical
errors only. Multi-Realty insisted that the parties did not raise the
issue of whether its action had already prescribed when it filed its
complaint in their pleadings below and in the respondent’s Brief. It
claimed that it was deprived of its right to due process when the
appellate court denied its appeal based on a ruling of this Court
under the 1997 Rules of Civil Procedure. It insisted that the ruling of
this Court in Servicewide Specialist, Inc. was promulgated when the
1997 Rules of Civil Procedure was in effect.
On January 18, 2001, the CA issued a Resolution denying Multi-
Realty’s motion for reconsideration. The appellate court cited the
ruling of this Court in Rosello-Bentir v. Hon. Leanda,12 to support its
ruling that the action of petitioner had already prescribed when it
was filed with the RTC. Multi-Realty received its copy of said Order
of denial on January 29, 2001.
Multi-Realty, now petitioner, filed the instant petition for review on
certiorari, alleging that:
THE HONORABLE COURT OF APPEALS DECIDED A QUESTION OF
SUBSTANCE IN A MANNER INCONSISTENT WITH LAW, AND
DEPARTED WITH UNFAIRLY PREJUDICIAL EFFECT FROM THE USUAL
COURSE OF JUDICIAL PROCEEDINGS LAID DOWN IN SECTION 8 OF
RULE 51 OF THE RULES OF COURT WHEN IT DISMISSED MULTI-
REALTY’S "APPEAL" ON THE BASIS OF PRESCRIPTION, EVEN THOUGH
NEITHER PARTY RAISED [NOR] DISCUSSED THE TRIAL COURT’S
FAILURE TO ENFORCE THE ALLEGEDLY APPLICABLE TIME BAR AS AN
ERROR IN THEIR BRIEFS.
THE HONORABLE COURT OF APPEALS DECIDED A MATTER OF
SUBSTANCE IN A MANNER PROBABLY NOT IN ACCORD WITH
ARTICLE 1150 OF THE CIVIL CODE, WHEN IT DISREGARDED THIS
HONORABLE COURT’S RULINGS IN TORMON V. CUTANDA AND
VELUZ V. VELUZ, AND RULED THAT THE PRESCRIPTIVE PERIOD
APPLICABLE TO AN ACTION FOR REFORMATION BEGINS TO RUN
FROM THE DATE THE INSTRUMENT TO BE REFORMED IS EXECUTED,
RATHER THAN FROM THE DATE ON WHICH THE TRUE AGREEMENT
THE REFORMATION IS MEANT TO EXPRESS IS VIOLATED.
THE HONORABLE COURT OF APPEALS OVERLOOKED RELEVANT
FACTS SUSTAINING A DECISION ALLOWING REFORMATION OF THE
MASTER DEED WHEN IT FAILED TO REVERSE THE TRIAL COURT’S
DECISION AND FIND THAT MATUSCO’S CONSISTENT RECOGNITION
OF, AND PARTICIPATION IN, THE SALES OF UNALLOCATED PARKING
SLOTS MADE BY MULTI-REALTY, AND ITS EFFORTS TO BUY THE
UNALLOCATED PARKING SLOTS FROM MULTI-REALTY, ESTOP IT
FROM ASSERTING TITLE TO THE UNALLOCATED PARKING SLOTS.13
The Court is to resolve two issues: (1) whether the CA erred in
dismissing petitioner’s appeal on the ground of prescription; and (2)
whether petitioner’s action had already prescribed when it was filed
in 1990.
On the issue of prescription, petitioner asserts that under Article
1150 in relation to Article 1144 of the New Civil Code, its action for
reformation of the Master Deed accrued only in 1989, when
respondent, by overt acts, made known its intention not to abide by
their true agreement; since the complaint below was filed in 1990,
the action was filed within the prescriptive period therefor.
Petitioner cites the rulings of this Court in Tormon v.
Cutanda,14 Veluz v. Veluz,15 and Español v. Chairman, Philippine
Veterans Administration16 to bolster its claim.
In its comment on the petition, respondent avers that, as held by
this Court in Rosello-Bentir v. Hon. Leanda,17 the prescriptive period
for the petitioner to file its complaint commenced in 1975, upon the
execution of the Master Deed in its favor. Considering that the
action was filed only in 1990, the same, by then, had already
prescribed.
On the first issue, we sustain petitioner’s contention that the CA
erred in dismissing its appeal solely on its finding that when
petitioner filed its complaint below in 1990, the action had already
prescribed. It bears stressing that in respondent’s answer to
petitioner’s complaint, prescription was not alleged as an affirmative
defense. Respondent did not raise the issue throughout the
proceedings in the RTC. Indeed, the trial court did not base its ruling
on the prescription of petitioner’s action; neither was this matter
assigned by respondent as an error of the RTC in its brief as
defendant-appellant in the CA.
Settled is the rule that no questions will be entertained on appeal
unless they have been raised below. Points of law, theories, issues
and arguments not adequately brought to the attention of the lower
court need not be considered by the reviewing court as they cannot
be raised for the first time on appeal. Basic considerations of due
process impel this rule.18
Truly, under Section 7, Rule 51 of the 1964 Rules of Court, no error
which does not affect the jurisdiction over the subject matter will be
considered unless stated in the assignment of errors and properly
argued in the brief, save as the Court, at its option, may pass upon
plain errors not specified, and clerical errors. Even at that time, the
appellate court was clothed with ample authority to review matters
even if not assigned as errors in their appeal if it finds that their
consideration is necessary in arriving at a just decision of the
case.19 It had ample authority to review and resolve matters not
assigned and specified as errors by either of the parties on appeal if
it found that the matter was essential and indispensable in order to
arrive at a just decision of the case. It has broad discretionary power,
in the resolution of a controversy, to take into consideration matters
on record unless the parties fail to submit to the court specific
questions for determination. Where the issues already raised also
rest on other issues not specifically presented, as long as the latter
issues bear relevance and close relation to the former and as long as
they arise from matters on record, the appellate court has authority
to include them in its discussion of the controversy as well as to pass
upon them. In brief, in those cases wherein questions not
particularly raised by the parties surface as necessary for the
complete adjudication of the rights and obligations of the parties
and such questions fall within the issues already framed by the
parties, the interests of justice dictate that the court consider and
resolve them.20
When the appeals of the petitioner and that of the respondent were
submitted to the CA for decision, the 1997 Rules of Civil Procedure
was already in effect. Section 8, Rule 51 of said Rules, reads:
SEC. 8. Questions that may be decided. – No error which does not
affect the jurisdiction over the subject matter or the validity of the
judgment appealed from or the proceedings therein will be
considered unless stated in the assignment of errors, or closely
related to or dependent on an assigned error and properly argued in
the brief, save as the court may pass upon plain errors and clerical
errors.
This provision was taken from the former rule with the addition of
errors affecting the validity of the judgment or closely related to or
dependent on an assigned error.21 The authority of the appellate
court to resolve issues not raised in the briefs of the parties is even
broader.
Nevertheless, given the factual backdrop of the case, it was
inappropriate for the CA, motu proprio, to delve into and resolve the
issue of whether petitioner’s action had already prescribed. The
appellate court should have proceeded to resolve petitioner’s
appeal on its merits instead of dismissing the same on a ground not
raised by the parties in the RTC and even in their pleadings in the CA.
Even if we sustain the ruling of the CA that it acted in accordance
with the Rules of Court in considering prescription in denying
petitioner’s appeal, we find and so rule that it erred in holding that
petitioner’s action had already prescribed when it was filed in the
RTC on April 26, 1990.
Prescription is rightly regarded as a statute of repose whose object is
to suppress fraudulent and stale claims from springing up at great
distances of time and surprising the parties or their representatives
when the facts have become obscure from the lapse of time or the
defective memory or death or removal of witnesses. The essence of
the statute of limitations is to prevent fraudulent claims arising from
unwarranted length of time and not to defeat actions asserted on
the honest belief that they were sufficiently submitted for judicial
determination.22 Our laws do not favor property rights hanging in
the air, uncertain, over a long span of time.23
Article 1144 of the New Civil Code provides that an action upon a
written contract must be brought within ten (10) years from the
time the right of action accrues:
Art. 1144. The following actions must be brought within ten years
from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
In relation thereto, Article 1150 of the New Civil Code provides that
the time for prescription of all actions, when there is no special
provision which ordains otherwise, shall be counted from the day
they may be brought. It is the legal possibility of bringing the action
that determines the starting point for the computation of the period
of prescription.24
The term "right of action" is the right to commence and maintain an
action. In the law of pleadings, right of action is distinguished from a
cause of action in that the former is a remedial right belonging to
some persons while the latter is a formal statement of the
operational facts that give rise to such remedial right. The former is
a matter of right and depends on the substantive law while the
latter is a matter of statute and is governed by the law of procedure.
The right of action springs from the cause of action, but does not
accrue until all the facts which constitute the cause of action have
occurred.25
A cause of action must always consist of two elements: (1) the
plaintiff’s primary right and the defendant’s corresponding primary
duty, whatever may be the subject to which they relate – person,
character, property or contract; and (2) the delict or wrongful act or
omission of the defendant, by which the primary right and duty have
been violated.26
To determine when all the facts which constitute a cause of action
for reformation of an instrument may be brought and when the
right of the petitioner to file such action accrues, the second
paragraph of Section 1, Rule 63, must be considered because an
action for the reformation of an instrument may be brought under
said Rule:
SECTION 1. Who may file petition. – Any person interested under a
deed, will, contract or other written instrument, whose rights are
affected by a statute, executive order or regulation, ordinance, or
any other governmental regulation may, before breach or violation
thereof, bring an action in the appropriate Regional Trial Court to
determine any question of construction or validity arising, and for a
declaration of his rights or duties, thereunder.
An action for the reformation of an instrument, to quiet title to real
property or remove clouds therefrom, or to consolidate ownership
under Article 1607 of the Civil Code, may be brought under this Rule
(emphasis supplied).
Such a petition is a special civil action determinative of the rights of
the parties to the case. It is permitted on the theory that courts
should be allowed to act, not only when harm is actually done and
rights jeopardized by physical wrongs or physical attack upon
existing legal relations, but also when challenge, refusal, dispute or
denial thereof is made amounting to a live controversy. The
uncertainty and insecurity which may thereby be avoided may
hamper or disturb the freedom of the parties to transact business or
to make improvements on their property rights. A situation is thus
created when a judicial declaration may serve to prevent a dispute
from ripening into violence or destruction.27
The concept and meaning of the term cause of action in proceedings
for declaratory relief, vis-à-vis an ordinary civil action, is broadened.
It is not, as in ordinary civil action, the wrong or delict by which the
plaintiff’s rights are violated, but it is extended to a mere denial,
refusal or challenge raising at least an uncertainty or insecurity
which is injurious to plaintiff’s rights.28
For a petition for declaratory relief to prosper, the following
conditions sine qua non must concur: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose
interests are adverse; (3) the party seeking declaratory relief must
have a legal interest in the controversy; and (4) the issue involved
must be ripe for judicial determination.29
To controvert is to dispute; to deny, to oppose or contest; to take
issue on.30 The controversy must be definite and concrete, touching
on the legal relations of the parties having adverse legal interests. It
must be a real and substantial controversy admitting of specific
relief through a decree of a conclusive character as distinguished
from an opinion advising what the law would be upon a hypothetical
state of facts.31
The fact that the plaintiff’s desires are thwarted by its own doubts,
or by the fears of others, does not confer a cause of action. No
defendant has wronged the plaintiff or has threatened to do
so.32 However, the doubt becomes a justiciable controversy when it
is translated into a claim of right which is actually contested.33 As
explained by this Court, a dispute between the parties is justiciable
when there is an active antagonistic assertion of a legal right on one
side and a denial thereof on the other, concerning a real, not merely
a theoretical question or issue.34
In sum, one has a right of action to file a complaint/petition for
reformation of an instrument when his legal right is denied,
challenged or refused by another; or when there is an antagonistic
assertion of his legal right and the denial thereof by another
concerning a real question or issue; when there is a real, definitive
and substantive controversy between the parties touching on their
legal relations having adverse legal interests. This may occur shortly
after the execution of the instrument or much later.35
A party to an instrument is under no obligation to seek a
reformation of an instrument while he is unaware that any
opposition will be made to carry out the actual agreement.36 The
statute of limitations does not begin to run against an equitable
cause of action for the reformation of an instrument because of
mistake until the mistake has been discovered or ought to have
been discovered.37 The mere recording of a deed does not charge
the grantor with constructive notice of a mistake therein, but is to
be considered with other facts and circumstances in determining
whether the grantor be charged with notice actual or constructive.38
In State ex rel. Pierce County v. King County,39 the appellate court
ruled that:
In equitable actions for reformation on the ground of mistake the
rule on the question of when the period of limitation or laches
commences to run is as stated by this Court in State v. Lorenz, 22
Wash. 289, 60 P. 644, 647:
* * * that the statute did not begin to run against the right of
appellant to reform the deed [because of a mistake therein] until
the assertion on the part of respondents of their adverse claim.
In Chebalgoity v. Branum, 16 Wash.2d 251, 133 P.2d 288, 290, we
said:
‘Nor is his right to maintain it [an action for reformation grounded
on mistake] impaired by lapse of time, for the bar of the statue of
limitations does not begin to run until the assertion of an adverse
claim against the party seeking reformation.’
The rule is also stated in 53 C.J. 1003, reformation of instruments, as
follows:
‘[§ 155] C. Time for Bringing Action. An action to reform an
instrument may be brought as soon as the cause of action accrues. *
* * On the other hand, a party to an instrument is under no
obligation to seek its correction before his cause of action is finally
vested or while he is unaware that any opposition will be made in
carrying out the actual agreement, where for a long time the rights
and duties of the parties are the same under the writing and under
the terms which it is alleged were intended, and the failure to take
any action toward reformation until his right vests or opposition is
manifest does not prejudice his suit.’40
In this case, before petitioner became aware of respondent’s denial
of its right under their true contract, petitioner could not be
expected to file an action for the reformation of the Master Deed.
As Justice Jose BL Reyes, ratiocinated in Tormon v. Cutanda: 41
It follows that appellant’s cause of action arose only when the
appellees made known their intention, by overt acts, not to abide by
the true agreement; and the allegations of the complaint establish
that this happened when the appellees executed the affidavit of
consolidation of the title allegedly acquired by appellees under the
fictitious pacto de retro sale. It was then, and only then, that the
appellant’s cause of action arose to enforce the true contract and
have the apparent one reformed or disregarded, and the period of
extinctive prescription began to run against her. Since the
consolidation affidavit was allegedly made only in September 1960,
and the complaint was filed in Court the following November 1960,
just two months afterward, the action of appellant had not
prescribed.42
The Court’s ruling in the Tormon case was reiterated in Veluz v.
Veluz.43
In the more recent case of Naga Telephone Co., Inc. v. Court of
Appeals,44 the Court made the following declaration:
Article 1144 of the New Civil Code provides, inter alia, that an action
upon a written contract must be brought within ten (10) years from
the time the right of action accrues. Clearly, the ten (10) years
period is to be reckoned from the time the right of action accrues
which is not necessarily the date of execution of the contract. As
correctly ruled by respondent court, private respondent’s right of
action arose "sometime during the latter part of 1982 or in 1983
when according to Atty. Luis General, Jr. x x x, he was asked by
(private respondent’s) Board of Directors to study said contract as it
already appeared disadvantageous to (private respondent) (p. 31,
tsn, May 8, 1989). Private respondent’s cause of action to ask for
reformation of said contract should thus be considered to have
arisen only in 1982 or 1983, and from 1982 to January 2, 1989 when
the complaint in this case was filed, ten (10) years had not yet
elapsed.45
This ruling was reiterated in Pilipinas Shell Petroleum Corporation v.
John Bordman Ltd. of Iloilo, Inc., 46 where the Court declared that
the cause of action of respondent therein arose upon its discovery of
the short deliveries with certainty, since prior thereto, it had no
indication that it was not getting what it was paying for. The Court
declared that before then, there was yet no issue to speak of, and as
such, respondent could not have brought an action against
petitioner. It was stressed that "it was only after the discovery of the
short deliveries that respondent got into position to bring an action
for specific performance." Thus, the Court declared that the action
was brought within the prescriptive period.47
In the present case, petitioner executed the Master Deed in 1975.
However, petitioner had no doubt about its ownership of the
unassigned parking lots, and even sold some of them. Respondent
did not even object to these sales, and even offered to buy some of
the parking slots. Respondent assailed petitioner’s ownership only in
1989 and claimed ownership of the unassigned parking slots, and it
was then that petitioner discovered the error in the Master Deed;
the dispute over the ownership of the parking slots thereafter
ensued. It was only then that petitioner’s cause of action for a
reformation of the Master Deed accrued. Since petitioner filed its
complaint in 1990, the prescriptive period had not yet elapsed.
The CA erred in relying on the ruling of this Court in Rosello-Bentir v.
Hon. Leanda.48 In that case, the Leyte Gulf Traders, Inc. leased a
parcel of land owned by Yolando Rosello-Bentir. The lease
agreement was entered into on May 5, 1968 and was for a period of
20 years. The parties therein agreed, inter alia, that:
"4. IMPROVEMENT. The lessee shall have the right to erect on the
leased premises any building or structure that it may desire without
the consent or approval of the Lessor x x x provided that any
improvements existing at the termination of the lease shall remain
as the property of the Lessor without right to reimbursement to the
Lessee of the cost or value thereof."49
On May 5, 1989, the lessor Rosello-Bentir sold the property and the
corporation questioned the sale, alleging that they had a verbal
agreement that the lessor has the right to equal the offers of
prospective buyers of the property. It insisted, however, that the
said agreement was inadvertently omitted in the contract. On May
15, 1992, the corporation filed a complaint for reformation of
instrument, specific performance, annulment of conditional sale and
damages with a prayer for a writ of preliminary injunction, alleging
that the contract of lease failed to reflect the true agreement of the
parties.
In his answer to the complaint, the lessor alleged that the
corporation was guilty of laches for not bringing the case for
reformation of the lease contract within the prescriptive period of
10 years from its execution. On December 15, 1995, the trial court
issued an Order dismissing the complaint on the ground that the
action had already prescribed. Plaintiff filed a motion for the
reconsideration of the Order and, on May 10, 1996, the trial court
granted the motion and set aside its Order, this time, declaring that
its Order dated December 15, 1995 dismissing the complaint was
"premature and precipitate" and denied the corporation its right to
due process. The trial court declared that, aside from plaintiff’s
cause of action for reformation of lease contract, plaintiff had other
causes of action such as specific performance, annulment of
conditional sale and damages, which must first be resolved before
the trial on the merits of its case.
On appeal to the CA, the lessor alleged that the RTC committed
grave abuse of discretion amounting to excess or lack of jurisdiction
in setting aside the December 15, 1995 Order of the RTC. For its
part, the CA rendered judgment dismissing the petition for certiorari
on its finding that the complaint had not yet prescribed when it was
filed in the court below. The CA declared that the prescriptive period
for the action for reformation of the lease contract should be
reckoned not from the execution of the contract of lease in 1968,
but from the date of the four-year extension of the lease contract
after it expired in 1988. According to the CA, the extended period of
the lease was an "implied new lease" within the contemplation of
Article 1670 of the New Civil Code under which provision, the other
terms of the original contract were deemed revived in the implied
new lease.

However, we reversed this CA decision and declared that the action

for reformation of the lease contract was inappropriate because
petitioner had already breached the deed. 50 Even supposing that the
four-year extended lease could be considered as an implied new
lease under Article 1670 of the New Civil Code, the "other terms"
contemplated therein were only those terms which are germane to
the lessee’s right of continued enjoyment of the leased property.
We concluded that the prescriptive period of 10 years, as provided
for in Article 1144 of the Civil Code, applies by operation of law and
not by the will of the parties, and that, therefore, the right of action
for reformation accrues from the date of the execution of the
contract of lease in 1968.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The

Decision of the Court of Appeals in CA-G.R. CV No. 44696 is SET
ASIDE. The Court of Appeals is directed to resolve petitioner’s appeal
with reasonable dispatch. No costs.

ORDERED.
G.R. No. 173783 June 17, 2015
RIVIERA GOLF CLUB, INC., Petitioner,
vs.
CCA HOLDINGS, B.V., Respondent.
DECISION
BRION, J.:
Before the Court is the petition for review on certiorari1 filed by
Riviera Golf Club, Inc. (Riviera Golf) assailing the January 11, 2006
decision2 and the July 5, 2006 resolution3 of the Court of Appeals
(CA) in CA-G.R. CV No. 83824.
Background Facts
Riviera Golf, a domestic corporation, is the owner of Riviera Golf
Club (Club), a 36-hole golf course and recreational facility in Silang,
Cavite. On October 11, 1996, Riviera Golf entered into a
Management Agreement with CCA Holdings, B.V. (CCA Holdings), a
foreign corporation, for the management and operation of the Club.
The Management Agreement was for a period of five (5) years.
Under this agreement, Riviera Golf would pay CCA Holdings a
monthly Base Management Fee of 5.5% of the Adjusted Gross
Revenue equivalent to US$16,500.00 per month, adjusted to4.5%
per month from the opening date, plus an incentive Management
Fee of 10% of the Gross Operating Profit.
The parties also entered into a co-terminous Royalty Agreement that
would allow Riviera Golf and the Club’s developer, Armed Forces of
the Philippines’ Retirement and Separation Benefits System (AFP-
RSBS), to use CCA Holdings’ name and facilities to market the Club’s
shares. In consideration of the license to use CCA Holdings’ name,
Riviera Golf and AFP-RSBS will pay CCA Holdings a gross licensing fee
of 1% on all membership fees paid in the sale of shares, an
additional gross licensing fee of 4% on all club shares, and 7% on
non-golf memberships sold. Riviera Golf initially paid the agreed
fees, but defaulted in its payment of the licensing fees and the
reimbursement claims in September 1997. Riviera Golf likewise
failed to pay the monthly management and incentive fees in June
1999, prompting CCA Holdings to demand the amounts due under
both agreements.
On October 29, 1999, Riviera Golf sent CCA Holdings a letter
informing the latter that it was pre-terminating the Management
Agreement purportedly to alleviate the financial crisis that the AFP-
RSBS was experiencing. The Royalty Agreement was also deemed
pre-terminated.
CCA Holdings protested the termination of the agreement and
demanded that Riviera Golf settle its unpaid management and
royalty fees. Riviera Golf however refused on the ground that CCA
Holdings violated the terms of the agreement.
In April 2001, CCA Holdings filed before the Regional Trial Court
(RTC), Branch 146, Makati City, a complaint for sum of money with
damages docketed as Civil Case No. 01-611 (first complaint) against
Riviera Golf. During the pendency of the case, the parties tried to
extrajudicially settle their differences and executed a Compromise
Agreement.
On April 25, 2002, the RTC rendered a decision4 approving the
parties’ Compromise Agreement. Paragraph 4 of the agreement
reads:
4) It is understood that the execution of this compromise agreement
or the payment of the aforementioned sum of money shall not be
construed as a waiver of or with prejudice to plaintiff’s rights/cause
of action, if any, arising from or relative to the pre-termination of
the parties’ Management and Royalty Agreements by the defendant
subject to whatever claims and defenses may have relative thereto;
(Emphasis supplied.)
Subsequently, or on November 22, 2002, CCA Holdings again sent a
letter to Riviera Golf, this time, demanding the sum of
US$390,768.00 representing the projected net income or expected
business profits it was supposed to derive for the unexpired two-
year term of the Management Agreement. As its demands went
unheeded, CCA Holdings filed another complaint for sum of money
and damages docketed as Civil Case No. 03-399 (second complaint)
before Branch 57 of the RTC of Makati City.
Noting that the first and second complaints involve the same
parties, the same subject matter, and the same causes of action,
Riviera Golf filed on August 6, 2003, a Motion to Dismiss on the
grounds of res judicata and violation of the rule against splitting of
causes of action. CCA Holdings opposed the motion contending that
there is no splitting of causes of action since the two cases are
entirely independent of each other. CCA Holdings also justified its
belated filing of the second complaint, arguing that the needed
financial records were in Riviera Golf’s possession.
The RTC Ruling
The RTC, Branch 57, Makati City granted the motion to dismiss,
holding that the first and second complaints have identical causes of
action and subject matter. Since the claims in Civil Case No. 01-611
and Civil Case No. 03-399 arose from alleged violations of the terms
and conditions of the Management and Royalty Agreements, the
rules on res judicata and splitting of causes of action apply.
The RTC also noted that CCA Holdings had every opportunity to raise
the issue of pre-termination when it filed Civil Case No. 01-611. That
CCA Holdings did not do so and opted instead to reserve it for future
litigation only show that it was speculating on the results of the
litigation.
The RTC likewise pointed out that the reservation clause or the
"non-waiver clause" that the parties inserted in the Compromise
Agreement was qualified by the phrase subject to whatever claims
and defenses the defendant may have relative there to. The RTC
held that the defenses that Riviera Golf could raise are not limited
only to those relating to the legality of the pre-termination of the
agreements, but could also include all other claims and defenses
such as res judicata and splitting of a single cause of action.
CCA Holdings appealed the dismissal of its complaint to the CA.
The CA Ruling
In its decision dated January 11, 2006, the CA set aside the order
granting the motion to dismiss, and remanded the case to the RTC
for adjudication on the merits. The CA held that res judicata and
splitting of a single cause of action were not committed based on
the following reasons: First, there is no identity of causes of action in
the two civil cases. The test to determine the identity of causes of
action is to ascertain whether the same evidence is necessary to
sustain the two suits. In this case, the sets of evidence in the two
complaints were different.
Second, there is no splitting of a single cause of action because
Riviera Golf violated separate primary rights of CCA Holdings under
the management contract.
Third, Riviera Golf recognized CCA Holdings’ right to seek damages
arising from or relative to the premature termination of the
Management Agreement. This view isevident from the literal
interpretation of Paragraph 4 (or the "non waiver clause") of the
parties’ compromise agreement. Riviera Golf moved for the
reconsideration of the decision, but the CA denied its motion in its
resolution of July 5, 2006; hence, the present recourse to us
pursuant to Rule 45 of the Rules of Court.
The Petition
Riviera Golf asks the Court to set aside the CA decision, contending
that the appellate court committed a grave error in not holding that
the filing of the second complaint amounted to res judicata and
splitting of a single cause of action. Riviera Golf submits that based
on the allegations in the two complaints, the facts that are necessary
to support the second case (Civil Case No. 03-399) would have been
sufficient to authorize recovery in the first case (Civil Case No. 01-
611).
Moreover, the documentary evidence that CCA Holdings submitted
to support both complaints are also the same. Thus, both civil cases
involve not only the same facts and the same subject matter, but
also the same cause of action, i.e., breach of the Management and
Royalty Agreements.
Riviera Golf also argued that although there seems to be several
rights violated, there is only one delict or wrong committed and
consequently, only one cause of action that should have been
alleged in a single complaint. Since the alleged breach of contract in
this case was already total at the time of the filing of Civil Case No.
01-611, the filing of the second complaint for the recovery of
damages for the pre-termination of the Management and Royalty
Agreements constitutes splitting a single cause of action that is
expressly prohibited by the Rules of Court. Riviera Golf likewise
disagrees with the CA’s interpretation of the non-waiver clause. It
argues that the phrase if any and the condition that the causes of
action are subject to whatever claims and defenses the defendant
may have relative thereto in the non-waiver clause limited its
recognition of CCA Holdings’ rights and causes of action. It also
maintains that the filing of the motion to dismiss based on res
judicata and splitting of causes of action clearly falls within the non-
waiver clause’s limitation.
The Case for the Respondent
CCA Holdings reiterates that there was absolutely no identity of
subject matter and causes of action because the first case sought
the payment for the services it already rendered, while the second
case sought the recovery of damages representing the projected net
income that it failed to realize by reason of the unilateral and
premature termination of the Management and Royalty
Agreements. Thus, the principles of res judicata and splitting of a
single cause of action do not apply.
Even assuming that the prohibition against res judicata operates in
this case, CCA Holdings contends that Riviera Golf is already
estopped from questioning the filing of the second complaint in view
of the non-waiver clause inserted in the compromise agreement.
The Issues
As defined by the parties, the issues before us are limited to:
1. Whether the CCA Holdings violated the prohibitions
against res judicata and splitting a single cause of action
when it filed the claim for damages for unrealized profits;
and
2. Whether the CA’s interpretation of paragraph 4 of the
compromise agreement is correct. If in the affirmative,
whether the parties may stipulate on an agreement
violating the prohibitions against res judicata and splitting
a single cause of action.
Our Ruling
We find the petition meritorious.
The Second Complaint is Barred by Res Judicata
Res judicatais defined as a matter adjudged; a thing judicially acted
upon or decided; or a thing or matter settled by judgment. Under
this rule, a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive as to the rights of the parties or
their privies in all later suits, and on all points and matters
determined in the former suit.5
The concept of res judicata is embodied in Section 47(b) and (c) of
Rule 39 of the Rules of Court, which reads:
SEC. 47. Effect of judgments or final orders. — The effect of a
judgment or final order rendered by a court of the Philippines,
having jurisdiction to pronounce the judgment or final order, may be
as follows:
(a) In case of a judgment or final order against a specific
thing or in respect to the probate of a will, or the
administration of the estate of a deceased person, or in
respect to the personal, political, or legal condition or
status of a particular person or his relationship to another,
the judgment or final order is conclusive upon the title to
the thing, the will or administration, or the condition,
status or relationship of the person; however, the probate
of a will or granting of letters of administration shall only
be prima facie evidence of the death of the testator or
intestate;
(b) In other cases, the judgment or final order is, with
respect to the matter directly adjudged or as to any other
matter that could have been raised in relation thereto,
conclusive between the parties and their successors in
interest by title subsequent to the commencement of the
 action or special proceeding, litigating for the same thing
and under the same title and in the same capacity; and,
(c) In any other litigation between the same parties or
their successors in interest, that only is deemed to have
been adjudged in a former judgment or final order which
appears upon its face to have been so adjudged, or which
was actually and necessarily included therein or necessary
thereto.
Res judicata requires the concurrence of the following requisites: (1)
the former judgment must be final; (2) it must have been rendered
by a court having jurisdiction of the subject matter and the parties;
(3) it must be a judgment on the merits; and (4) there must be,
between the first and second actions (a) identity of parties, (b)
identity of subject matter, and (c) identity of causes of action.6
All the Elements of Res Judicata are Present
There is no dispute as to the presence of the first three elements in
the present case. The decision in Civil Case No. 01-611 is a final
judgment on the merits rendered by a court which had jurisdiction
over the subject matter and over the parties. Since a judicial
compromise operates as an adjudication on the merits, it has the
force of law and the effect of res judicata.7
With respect to the fourth element, a careful examination of the
allegations in the two complaints shows that the cases involve the
same parties and the same subject matter. While Civil Case No. 01-
611 is for the collection of unpaid management and royalty fees, and
Civil Case No. 03-399 on the other hand, is for recovery of damages
for the premature termination of the parties’ agreements, both
cases were nevertheless filed on the basis of the same Management
and Royalty Agreements. Thus, we agree that these two cases refer
to the same subject matter.
The Court is also convinced that there is identity of causes of action
between the first and the second complaints.
A cause of action may give rise to several reliefs, but only one action
can be filed.8 A single cause of action or entire claim or demand
cannot be split up or divided into two or more different actions. The
rule on prohibiting the splitting of a single cause of action is clear.
Section 4, Rule 2 of the Rules of Court expressly states:
Section 4. Splitting a single cause of action; effect of. – If two or
more suits are instituted on the basis of the same cause of action,
the filing of one or a judgment upon the merits in any one is
available as a ground for the dismissal of the others.
In both Civil Case No. 01-611 and Civil Case No. 03-399, CCA
Holdings imputed the same wrongful act – the alleged violations of
the terms and conditions of the Management and Royalty
Agreements. In Civil Case No. 01-611, CCA Holdings’ cause of action
rests on Riviera Golf’s failure to pay the licensing fees,
reimbursement claims, and monthly management and incentive
fees. In Civil Case No. 03-399 on the other hand, CCA Holdings’ cause
of action hinges on the damages it allegedly incurred as a result of
Riviera Golf’s premature termination of the Management and
Royalty Agreements (i.e., the expected business profits it was
supposed to derive for the unexpired two-year term of the
Management Agreement). Although differing in form, these two
cases are ultimately anchored on Riviera Golf’s breach of the
Management and Royalty Agreements. Thus, we conclude that they
have identical causes of action.
Same Evidence Support and Establish Both
the Present and the Former Cause of Action
It is a settled rule that the application of the doctrine of res judicata
to identical causes of action does not depend on the similarity or
differences in the forms of the two actions. A party cannot, by
varying the form of the action or by adopting a different method of
presenting his case, escape the operation of the doctrine of res
judicata.9 The test of identity of causes of action rests on whether
the same evidence would support and establish the former and the
present causes of action.10
We held in Esperas v. The Court of Appeals11 that the ultimate test in
determining the presence of identity of cause of action is to consider
whether the same evidence would support the cause of action in
both the first and the second cases. Under the same evidence test,
when the same evidence support and establish both the present and
the former causes of action, there is likely an identity of causes of
action.12
The pleadings and record of the present case show that there is a
glaring similarity in the documentary evidence submitted to prove
the claims under the two complaints. The pieces of evidence both in
the collection of unpaid management and royalty fees, and the
recovery of damages for the expected business profits aim at
establishing the breach of the Management and Royalty
Agreements.
Furthermore, the evidence in the first complaint will have to be
reexamined to support the cause of action in the second complaint.
We specifically note that at least four (4) documents were presented
in both actions, namely:
(1) the Management Agreement between Riviera Golf and
CCA Holdings;
(2) the Royalty Agreement between Riviera Golf and CCA
Holdings;
(3) the Fees Receivable Report of CCA Holdings as of
October 1999, amounting to USD 97,122.00; and
(4) the letter dated October 29, 1999, stating the
termination of the Management Agreement.
Based on the allegations in the two complaints, the facts that are
necessary to support the second complaint would have been
sufficient to allow CCA Holdings to recover in the first complaint. The
similarity in the pieces of evidence in these two cases therefore
strongly suggests the identity of their causes of action.
We held in this regard in Stilianopulos v. The City of Legaspi:13
The underlying objectives or reliefs sought in both the quieting-of
title and the annulment-of-title cases are essentially the same –
adjudication of the ownership of the disputed lot and nullification of
one of the two certificates of title. Thus, it becomes readily apparent
that the same evidence or set of facts as those considered in the
quieting-of-title case would also be used in this Petition. The
difference in form and nature of the two actions is immaterial and is
not a reason to exempt petitioner from the effects of res judicata.
The philosophy behind this rule prohibits the parties from litigating
the same issue more than once. When a right or fact has been
judicially tried and determined by a court of competent jurisdiction
or an opportunity for such trial has been given, the judgment of the
court, as long as it remains unreversed, should be conclusive upon
the parties and those in privity with them. Verily, there should be an
end to litigation by the same parties and their privies over a subject,
once it is fully and fairly adjudicated. (Citations omitted.) At the Time
the First Complaint was Filed
The Breach of the Agreements was Already Total
We likewise note that the non-payment of fees and the premature
termination of the contract occurred as early as 1999. In other
words, the violation of both the Management and Royalty
Agreements preceded the filing of the first complaint. Consequently,
when CCA Holdings filed its first complaint in 2001, the breach of the
agreements was already complete and total; and the ground for the
recovery of damages was available and in existence. Thus, allowing
CCA Holdings now to file two separate and independent claims
anchored on the same breach of contract (i.e., breach of the
Management and Royalty Agreements), constitutes a blatant
disregard of our prohibition against res judicata and splitting of a
single cause of action.
In contracts providing several obligations, each obligation may give
rise to a single and independent cause of action.1âwphi1 But if
several obligations have matured, or if the entire contract is
breached at the time of the filing of the complaint, all obligations are
integrated into one cause of action. Hence, the claim arising from
such cause of action that is not included in the complaint is barred
forever. The Court’s explanation in Blossom and Company, Inc. v.
Manila Gas Corporation,14 citing US jurisprudence on the matter, is
instructive, viz:
34 Corpus Juris, p. 839, it is said:
As a general rule[,] a contract to do several things at several times in
its nature, so as to authorize successive actions; and a judgment
recovered for a single breach of a continuing contract or covenant is
no bar to a suit for a subsequent breach thereof. But where the
covenant or contract is entire, and the breach total, there can be
only one action, and [the] plaintiff must therein recover all his
damages.
In the case of Rhoelm v. Horst, 178 U. U., 1; 44 Law. ed., 953, that
court said:
An unqualified and positive refusal to perform a contract, though
the performance thereof is not yet due, may, if the renunciation
goes to the whole contract, be treated as a complete breach which
will entitle the injured party to bring his action at once.
In the present case, CCA Holdings’ claim for the unpaid management
and royalty fees as well as the damages for its expected business
profits constituted an indivisible demand. Verily, CCA Holdings
should have included and alleged the recovery of damages for its
expected business profits as a second cause of action in Civil Case
No. 01-611. CCA Holdings cannot be permitted to split up a single
cause of action and make that single cause of action the basis of
several suits.
All told, the Court finds that the filing of the second complaint is
barred by res judicata.
The "Non-Waiver Clause" Stipulated
in the Compromise Agreement is Null and Void
CCA Holdings contends that Riviera Golf is already estopped from
questioning the filing of the second complaint because the non-
waiver clause of the Compromise Agreement recognized CCA
Holdings’ prerogative to seek damages arising from the premature
termination of the Management Agreement.
We do not see any merit in this contention.
A compromise is a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one
already commenced.15 Like any other contract, a compromise
agreement must be consistent with the requisites and principles of
contracts. While it is true that the agreement is binding between the
parties and becomes the law between them, it is also a rule that to
be valid, a compromise agreement must not be contrary to law,
morals, good customs, and public policy.16
In the present case, a reading of paragraph 4 of the Compromise
Agreement shows that it allows the filing of complaints based on the
same cause of action(i.e., breach of the Management and Royalty
Agreements), to wit:
4) It is understood that the execution of this compromise agreement
or the payment of the aforementioned sum of money shall not be
construed as a waiver of or with prejudice to plaintiff’s rights/cause
of action, if any, arising from or relative to the pre-termination of
the parties’ Management and Royalty Agreements by the defendant
subject to whatever claims and defenses may have relative thereto;
(Emphasis supplied.)
Since paragraph 4 allows the splitting of causes of action and res
judicata, this provision of the Compromise Agreement should be
invalidated for being repugnant to our public policy.
The well-settled rule is that the principle or rule of res judicata is
primarily one of public policy. It is based on the policy against
multiplicity of suits,17 whose primary objective is to avoid unduly
burdening the dockets of the courts.
Speaking through Justice J.B.L. Reyes, the Court in Aguila v. J.M.
Tuason & Co., Inc.18 held that:
Public policy is firmly set against unnecessary multiplicity of suits;
the rule of res judicata, like that against splitting causes of action,
are all applications of the same policy, that matters once settled by a
Court's final judgment should not thereafter be invoked against.
Relitigation of issues already settled merely burdens the Courts and
the taxpayers, creates uneasiness and confusion, and wastes
valuable time and energy that could be devoted to worthier cases.
As the Roman maxim goes, Non bis in idem.19 (Emphasis supplied.)
Because it is contrary to our policy against multiplicity of suits, we
cannot uphold paragraph 4 of the Compromise Agreement to be
valid, for we would then render legitimate the splitting of causes of
action and negate the prohibition against res judicata. Under Article
1409 of the Civil Code, contracts which are contrary to public policy
and those expressly prohibited or declared void by law are
considered in existent and void from the beginning.

In sum, we declare paragraph 4 of the Compromise Agreement null

and void for being contrary to public policy.

WHEREFORE, premises considered, we GRANT the petition. The

decision dated January 11, 2006, of the Court of Appeals in CA-G.R.
CV No. 83824 is hereby REVERSED and SET ASIDE. Accordingly, the
decision dated September 29, 2004, of the Regional Trial Court,
Branch 57,

Makati City, in Civil Case No. 03-399 is REINSTATED.

SO ORDERED.
G.R. No. 201892 JULY 22, 2015
NORLINDA S. MARILAG, Petitioner,
vs.
MARCELINO B. MARTINEZ, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the
Decision2 dated November 4, 2011 and the Resolution 3dated May
14, 2012 of the Court of Appeals (CA) in CA-G.R. CV No. 81258 which
recalled and set aside the Orders dated November 3, 2003 4 and
January 14, 2004 5 of the Regional Trial Court (RTC) of Las Piñas City,
Branch 202 (court a quo) in Civil Case No. 980156, and reinstated the
Decision 6 dated August 28, 2003 directing petitioner Norlinda S.
Marilag (petitioner) to return to respondent Marcelino B. Martinez
(respondent) the latter's excess payment, plus interest, and to pay
attorney's fees and the costs of suit.
The Facts
On July 30, 1992, Rafael Martinez (Rafael), respondent's father,
obtained- from petitioner a loan in the amount of ₱160,000.00, with
a stipulated monthly interest of five percent ( 5% ), payable within a
period of (6) months. The loan was secured by a real estate
mortgage over a parcel of land covered by Transfer Certificate of
Title (TCT) No. T-208400. Rafael failed'. to settle his obligation upon
maturity and despite repeated demands, prompting petitioner to
file a Complaint for Judicial Foreclosure of Real Estate Mortgage
before the RTC of Imus, Cavite, Branch 90 7(RTC-lmus) on November
10, 1995, 8 docketed as Civil Case No. 1208-95 (judicial foreclosure
case).
Rafael failed to file his answer and, upon petitioner's motion, was
declared in default. After an ex parte presentation of petitioner's
evidence, the RTC-lmus issued a Decision 9 dated January 30, 1998,
(January 30, 1998 Decision) in the foreclosure case, declaring the
stipulated 5% monthly interest to be usurious and reducing the
same to 12% per annum (p.a.). Accordingly, it ordered Rafael to pay
petitioner the amount of ₱229,200.00, consisting of the principal of
₱160,000.00 and accrued interest of ₱59,200.00 from July 30, 1992
to September 30, 1995. 10 Records do not show that this Decision
had already attained finality.
Meanwhile, prior to Rafael's notice of the above decision,
respondent agreed to pay Rafael's obligation to petitioner which
was pegged at ₱689,000.00. After making a total payment of
₱400,000.00,11 he executed a promissory note 12 dated February 20,
1998 (subject PN), binding himself to pay on or before March 31,
1998 the amount of ₱289,000.00, "representing the balance of the
agreed financial obligation of [his] father to [petitioner]." 13 After
learning of the January 30, 1998 Decision, respondent refused to pay
the amount covered by the subject PN despite demands, prompting
petitioner to file a complaint 14 for sum of money and damages
before the court a quo on July 2, 1998, docketed as Civil Case No.
98-0156 (collection case).
Respondent filed his answer, 15 contending that petitioner has no
cause of action against him. He averred that he has fully settled
Rafael's obligation and that he committed a mistake in paying more
than the amount due under the loan, i.e., the amount of
₱229,200.00 as adjudged by the RTC-Imus in the judicial foreclosure
case which, thus, warranted the return of the excess payment. He
therefore prayed for the dismissal of the complaint, and interposed
a compulsory counterclaim for the release of the mortgage, the
return of the excess payment, and the payment of moral and
exemplary damages, attorney's fees and litigation expenses. 16
The Court A Quo's Ruling
In a Decision 17 dated August 28, 2003 (August 28, 2003 Decision),
the court a quo denied recovery on the subject PN. It found that the
consideration for its execution was Rafael's indebtedness to
petitioner, the extinguishment of which necessarily results in the
consequent extinguishment of the cause therefore. Considering that
the RTC-Imus had adjudged Rafael liable to petitioner only for the
amount of ₱229,200.00, for which a total of ₱400,000.00 had
already been paid, the court a quo found no valid or compelling
reason to allow petitioner to recover further on the subject PN.
There being an excess payment of Pl 71,000.00, it declared that a
quasi-contract (in the concept of solution indebiti) exists between
the parties and, accordingly, directed petitioner to return the said
amount to respondent, plus 6% interest p.a.18 reckoned from the
date of judicial demand 19 on August 6, 1998 until fully paid, and to
pay attorney's fees and the costs of suit. 20
In an Order 21 dated November 3, 2003 (November 3, 2003 Order),
however, the court a quo granted petitioner's motion for
reconsideration, and recalled and set aside its August 28, 2003
Decision. It declared that the causes of action in the collection and
foreclosure cases are distinct, and respondent's failure to comply
with his obligation under the subject PN justifies petitioner to seek
judicial relief. It further opined that the stipulated 5% monthly
interest is no longer usurious and is binding on respondent
considering the suspension of the Usury Law pursuant to Central
Bank Circular 905, series of 1982. Accordingly, it directed
respondent to pay the amount of ₱289,000.00 due under the
subject PN, plus interest at the legal rate reckoned from the last
extra judicial demand on May 15, 1998, until fully paid, as well as
attorney's fees and the costs of suit.22
Aggrieved, respondent filed a motion for reconsideration 23 which
was denied in an Order 24 dated January 14, 2004, prompting him to
elevate the matter to the CA. 25
The CA Ruling
In a Decision 26 dated November 4, 2011, the CA recalled and set
aside the court a quo 's November 3, 2003 and January 14, 2004
Orders, and reinstated the August 28, 2003 Decision. It held that the
doctrine of res judicata finds application in the instant
case, 27 considering that both the judicial foreclosure and collection
cases were filed as a consequence of the non-payment of Rafael's
loan, which was the principal obligation secured by the real estate
mortgage and the primary consideration for the execution of the
subject PN. Since res judicata only requires substantial, not actual,
identity of causes of action and/or identity of issue, 28 it ruled that
the judgment in the judicial foreclosure case relating to Rafael's
obligation to petitioner is final and conclusive on the collection case.
Petitioner's motion for reconsideration was denied in a
Resolution 29 dated May 14, 2012; hence, this petition.
The Issue before the Court
The essential issue for the Court's resolution is whether or not the
CA committed reversible error in upholding the dismissal of the
collection case.
The Court's Ruling
The petition lacks merit.
A case is barred by prior judgment or res judicata when the
following elements concur: (a) the judgment sought to bar the new
action must be final; ( b) the decision must have been rendered by a
court having jurisdiction over the subject matter and the parties; (c)
the disposition of the case must be a judgment on the merits; and (
d) there must be as between the first and second action, identity of
parties, subject matter, and causes of action.30
After a punctilious review of the records, the Court finds the
principle of res judicata to be inapplicable to the present case. This is
because the records are bereft of any indication that the August 28,
2003 Decision in the judicial foreclosure case had already attained
finality, evidenced, for instance, by a copy of the entry of judgment
in the said case. Accordingly, with the very first element of res
judicata missing, said principle cannot be made to obtain.
This notwithstanding, the Court holds that petitioner's prosecution
of the collection case was barred, instead, by the principle of litis
pendentia in view of the substantial identity of parties and
singularity of the causes of action in the foreclosure and collection
cases, such that the prior foreclosure case barred petitioner's
recourse to the subsequent collection case.
To lay down the basics, litis pendentia, as a ground for the dismissal
of a civil action, refers to that situation where in another action is
pending; between the same parties for the same cause of action,
such that the second action becomes unnecessary and
vexatious. For the bar of litis pendentia to be invoked, the following
requisites must concur: (a) identity of parties, or at least such parties
as represent the same interests in both actions; ( b) identity of rights
asserted and relief prayed for, the relief being founded on the same
facts; and ( c) the identity of the two preceding particulars is such
that any judgment rendered in the pending case, regardless of which
party is successful would amount to res judicata in the other. 31 The
underlying principle of litis pendentia is the theory that a party is not
allowed to vex another more than once regarding the same subject
matter and for the same cause of action. This theory is founded on
the public policy that the same subject matter should not be the
subject of controversy in courts more than once, in order that
possible conflicting judgments may be avoided for the sake of the
stability of the rights and status of persons, and also to avoid the
costs and expenses incident to numerous suits. 32 Consequently, a
party will not be permitted to split up a single cause of action and
make it a basis for several suits as the whole cause must be
determined in one action.33 To be sure, splitting a cause of action is
a mode of forum shopping by filing multiple cases based on the
same cause of action, but with different prayers, where the ~round
of dismissal is litis pendentia (or res judicata, as the case may
be). 34
In this relation, it must be noted that the question of whether a
cause of action is single and entire or separate is not always easy to
determine and the same must often be resolved, not by the general
rules, but by reference to the facts and circumstances of the
particular case. The true rule, therefore, is whether the entire
amount arises from one and the same act or contract which must,
thus, be sued for in one action, or the several parts arise from
distinct and different acts or contracts, for which a party may
maintain separate suits.35
In loan contracts secured by a real estate mortgage, the rule is that
the creditor-mortgagee has a single cause of action against the
debtor-mortgagor, i.e., to recover the debt, through the filing of a
personal action for collection of sum of money or the institution of a
real action to foreclose on the mortgage security. The two remedies
are alternative,36 not cumulative or successive, 37 and each remedy
is complete by itself. Thus, if the creditor-mortgagee opts to
foreclose the real estate mortgage, he waives the action for the
collection of the unpaid debt,38 except only for the recovery of
whatever deficiency may remain in the outstanding obligation of the
debtor-mortgagor after deducting the bid price in the public auction
sale of the mortgaged properties. 39 Accordingly, a deficiency
judgment shall only issue after it is established that the mortgaged
property was sold at public auction for an amount less than the
outstanding obligation.
In the present case, records show that petitioner, as creditor-
mortgagee, instituted an action for judicial foreclosure pursuant to
the provisions of Rule 68 of the Rules of Court in order to recover on
Rafael's debt. In light of the foregoing discussion, the availment of
such remedy thus bars recourse to the subsequent filing of a
personal action for collection of the same debt, in this case, under
the principle of litis pendentia, considering that the foreclosure case
only remains pending as it was not shown to have attained finality.
While the ensuing collection case was anchored on the promissory
note executed by respondent who was not the original debtor, the
same does not constitute a separate and distinct contract of loan
which would have given rise to a separate cause of action upon
breach. Notably, records are bereft of any indication that
respondent's agreement to pay Rafael's loan obligation and the
execution of the subject PN extinguished by novation 40 the contract
of loan between Rafael and petitioner, in the absence of express
agreement or any act of equal import. Well-settled is the rule that
novation is never presumed, but must be clearly and unequivocally
shown. Thus, in order for a new agreement to supersede the old
one, the parties to a contract must expressly agree that they are
abrogating their old contract in favor of a new one, 41 which was not
shown here.
On the contrary, it is significant to point out that: (a) the
consideration for the subject PN was the same consideration that
supported the original loan obligation of Rafael; (b) respondent
merely assumed to pay Rafael's remaining unpaid balance in the
latter's behalf, i.e., as Rafael's agent or representative; 42 and (c) the
subject PN was executed after respondent had assumed to pay
Rafael's obligation and made several payments thereon. Case law
states that the fact that the creditor accepts payments from a third
person, who has assumed the obligation, will result merely in the
addition of debtors, not novation, and the creditor may enforce the
obligation against both debtors. 43 for ready reference, the subject
PN reads in full:
February 20, 1998
PROMISSORY NOTE
₱289, 000.00
===========
I, MARCELINO B. MARTINEZ son of Mr. RAFAEL MARTINEZ, of legal
age, Filipino, married and a resident of No. 091 Anabu I-A, Imus,
Cavite, by these presents do hereby specifically and categorically
PROMISE, UNDERTAKE and bind myself in behalf of my father, to pay
to Miss NORLINDA S. MARILAG, Mortgagee-Creditor of my said
father, the sum of TWO HUNDRED EIGHTY NINE THOUSAND PESOS
(₱289,000.00), Philippine Currency, on or before MARCH 31, 1998,
representing the balance of the agreed financial obligation of my
said father to her. (Emphases supplied)
Executed at Pamplona I, Las Piñas City, Metro Manila, this 20th day
of February, 1998.
Sgd.
MARCELINO B. MARTINEZ
Promissory 44
Petitioner's contention that the judicial foreclosure and collection
cases enforce independent rights 45 must, therefore, fail because the
Deed of Real Estate Mortgage 46 and the subject PN both refer to
one and the same obligation, i.e., Rafael's loan obligation. As such,
there exists only one cause of action for a single breach of that
obligation. Petitioner cannot split her cause of action on Rafael's
unpaid loan obligation by filing a petition for the judicial foreclosure
of the real estate mortgage covering the said loan, and, thereafter, a
personal action for the collection of the unpaid balance of said
obligation not comprising a deficiency arising from foreclosure,
without violating the proscription against splitting a single cause of
action, where the ground for dismissal is either res judicata or litis
pendentia, as in this case.
As elucidated by this Court in the landmark case of Bachrach Motor
Co., Inc. v. lcaranga!. 47
For non-payment of a note secured by mortgage, the creditor has a
single cause of action against the debtor. This single cause of action
consists in the recovery of the credit with execution of the security.
In other words, the creditor in his action may make two demands,
the payment of the debt and the foreclosure · of his mortgage. But
both demands arise from the same cause, the nonpayment of the
debt, and, for that reason, they constitute a single cause of action.
Though the debt and the mortgage constitute separate agreements,
the latter is subsidiary to the former, and both refer to one and the
same obligation. Consequently, there exists only one cause of action
for a single breach of that obligation. Plaintiff. then, by applying the
rule above stated, cannot split up his single cause of action by filing
a complaint (or payment of the debt, and thereafter another
complaint (or foreclosure of the mortgage. If he does so, the filing of
the first complaint will bar the subsequent complaint. By allowing
the creditor to file two separate complaints simultaneously or
successively, one to recover his credit and another to foreclose his
mortgage, we will, in effect, be authorizing him plural redress for a
single breach of contract at so much cost to the courts and with so
much vexation and oppression to the debtor. (Emphases and
underscoring supplied)
Further on the point, the fact that no foreclosure sale appears to
have been conducted is of no moment because the remedy of
foreclosure of mortgage is deemed chosen upon the filing of the
complaint there for.48 In Suico Rattan & Buri Interiors, Inc. v. CA, 49 it
was explained:
x x x x In sustaining the rule that prohibits mortgage creditors from
pursuing both the remedies of a personal action for debt or a real
action to foreclose the mortgage, the Court held in the case of
Bachrach Motor Co., Inc. v. Esteban Icarangal, et al. that a rule which
would authorize the plaintiff to bring a personal action against the
debtor and simultaneously or successively another action against
the mortgaged property, would result not only in multiplicity of suits
so offensive to justice and obnoxious to law and equity, but also in
subjecting the defendant to the vexation of being sued in the place
of his residence or of the residence of the plaintiff, and then again in
the place where the property lies. Hence, a remedy is deemed
chosen upon the filing of the suit for collection or upon the filing of
the complaint in an action for foreclosure of mortgage, pursuant to
the provisions of Rule 68 of the Rules of Court. As to extrajudicial
foreclosure, such remedy is deemed elected by the mortgage
creditor upon filing of the petition not with any court of justice but
with the office of the sheriff of the province where the sale is to be
made, in accordance with the provisions of Act No. 3135, as
amended by Act No. 4118. (Emphases supplied)
As petitioner had already instituted judicial foreclosure
proceedings over the mortgaged property, she is now barred from
availing herself of an ordinary action for collection, regardless of
whether or not the decision in the foreclosure case had attained
finality. In fine, the dismissal of the collection case is in order.
Considering, however, that respondent's claim for return of excess
payment partakes of the nature of a compulsory counterclaim and,
thus, survives the dismissal of petitioner's collection suit, the same
should be resolved based on its own merits and evidentiary
support. 50
Records show that other than the matter of interest, the principal
loan obligation and the payments made were not disputed by the
parties.1âwphi1 Nonetheless, the Court finds the stipulated 5%
monthly interest to be excessive and unconscionable. In a plethora
of cases, the Court has affirmed that stipulated interest rates of
three percent (3°/o) per month and higher are excessive, iniquitous,
unconscionable, and exorbitant, 51 hence, illegal 52 and void for
being contrary to morals.53 In Agner v. BPI Family Savings Bank,
Inc., 54 the Court had the occasion to rule:
Settled is the principle which this Court has affirmed in a number of
cases that stipulated interest rates of three percent (3%) per month
and higher are excessive, iniquitous, unconscionable, and
exorbitant. While Central Bank Circular No. 905-82, which took
effect on January 1, 1983, effectively removed the ceiling on interest
rates for both secured and unsecured loans, regardless of maturity,
nothing in the said circular could possibly be read as granting carte
blanche authority to lenders to raise interest rates to levels which
would either enslave their borrowers or lead to a hemorrhaging of
their assets. Since the stipulation on the interest rate is void for
being contrary to morals, if not against the law, it is as if there was
no express contract on said interest rate; thus, the interest rate may
be reduced as reason and equity demand. (Emphases supplied)
As such, the stipulated 5% monthly interest should be equitably
reduced to l % per month or 12% p.a. reckoned from the execution
of the real estate mortgage on July 30, 1992. In order to determine
whether there was any overpayment as claimed by respondent, we
first compute the interest until January 30, 1998 55 when he made a
payment in the amount of ₱300,000.00 on Rafael's loan obligation.
Accordingly, the amount due on the loan as of the latter date is
hereby computed as follows:

₱160,
Principal
000.00
Add: Interest from 07/30/1992 to
01/30/1998
(₱160, 000.00 x 12% x 5.5 yrs.) 105,600.00
₱265,
Amount due on the loan
600.00
Less: Payment made on 01/30/98 (300,000.00)
(P 56
Overpayment as of 01/30/98
34,400.00)

Thus, as of January 30, 1998, only the amount of ₱265,600.00 was

due under the loan contract, and the receipt of an amount more
than that renders petitioner liable for the return of the excess.
Respondent, however, made further payment in the amount of Pl
00,000.0057 on the belief that the subject loan obligation had not yet
been satisfied. Such payments were, therefore, clearly made by
mistake, giving rise to the quasi-contractual obligation of solutio
indebiti under Article 2154 58 in relation to Article 2163 59 of the Civil
Code. Not being a loan or forbearance of money, an interest of 6%
p.a. should be imposed on the amount to be refunded and on the
damages and attorney's fees awarded, if any, computed from the
time of demand 60 until its satisfaction. 61 Consequently, petitioner
must return to respondent the excess payments in the total amount
of ₱134,400.00, with legal interest at the rate of 6% p.a. from the
filing of the Answer on August 6, 1998 62 interposing a counterclaim
for such overpayment, until fully settled.

However, inasmuch as the court a quo failed to state in the body of

its decision the factual or legal basis for the award of attorney's fees
to the respondent, as required under Article 2208 63 of the New Civil
Code, the Court resolves to delete the same. The rule is well-settled
that the trial court must clearly state the reasons for awarding
attorney's fees in the body of its decision, not merely in its
dispositive portion, as the appellate courts are precluded from
supplementing the bases for such award. 64

Finally, in the absence of showing that the court a quo 's award of
the costs of suit in favor of respondent was patently
capricious, 65 the Court finds no reason to disturb the same.

WHEREFORE, the petition is DENIED. The Decision dated November

4, 2011 and the Resolution dated May 14, 2012 of the Court of
Appeals in CA-G.R. CV No. 81258 reinstating the court a quo's
Decision dated August 28, 2003 in Civil Case No. 98-0156 are hereby
AFFIRMED with the MODIFICATIONS: (a) directing petitioner
Norlinda S. Marilag to return to respondent Marcelino B. Martinez
the latter's excess payments in the total amount of ₱134,400.00,
plus legal interest at the rate of 6% p.a. from the filing of the Answer
on August 6, 1998 until full satisfaction; and (b) deleting the award
of attorney's fees.

SO ORDERED.
G.R. No. 175914 February 10, 2009
RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT
CORPORATION, Petitioner,
vs.
HON. PABLO C. FORMARAN III, Presiding Judge of Regional Trial
Court Branch 21, Naga City, as Pairing Judge for Regional Trial
Court Branch 22, Formerly Presided By HON. NOVELITA VILLEGAS-
LLAGUNO (Retired 01 May 2006), ROMEO Y. TAN, ROBERTO L.
OBIEDO and ATTY. TOMAS A. REYES, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45
of the Rules of Court seeking the reversal of the Decision1 dated 22
November 2006 of the Court of Appeals in CA-G.R. SP No. 94800.
The Court of Appeals, in its assailed Decision, affirmed the
Order2 dated 24 March 2006 of the Regional Trial Court (RTC),
Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering
petitioner Ruby Shelter Builders and Realty Development
Corporation to pay additional docket/filing fees, computed based on
Section 7(a) of Rule 141 of the Rules of Court, as amended.
The present Petition arose from the following facts:
Petitioner obtained a loan3 in the total amount of ₱95,700,620.00
from respondents Romeo Y. Tan (Tan) and Roberto L. Obiedo
(Obiedo), secured by real estate mortgages over five parcels of land,
all located in Triangulo, Naga City, covered by Transfer Certificates of
Title (TCTs) No. 38376,4 No. 29918,5 No. 38374,6 No. 39232,7 and No.
39225,8 issued by the Registry of Deeds for Naga City, in the name of
petitioner. When petitioner was unable to pay the loan when it
became due and demandable, respondents Tan and Obiedo agreed
to an extension of the same.
In a Memorandum of Agreement9 dated 17 March 2005,
respondents Tan and Obiedo granted petitioner until 31 December
2005 to settle its indebtedness, and condoned the interests,
penalties and surcharges accruing thereon from 1 October 2004 to
31 December 2005 which amounted to ₱74,678,647.00. The
Memorandum of Agreement required, in turn, that petitioner
execute simultaneously with the said Memorandum, "by way of
dacion en pago," Deeds of Absolute Sale in favor of respondents Tan
and Obiedo, covering the same parcels of land subject of the
mortgages. The Deeds of Absolute Sale would be uniformly dated 2
January 2006, and state that petitioner sold to respondents Tan and
Obiedo the parcels of land for the following purchase prices:
TCT No. Purchase Price
38376 ₱ 9,340,000.00
29918 ₱ 28,000,000.00
38374 ₱ 12,000,000.00
39232 ₱ 1,600,000.00
39225 ₱ 1,600,000.00
Petitioner could choose to pay off its indebtedness with individual or
all five parcels of land; or it could redeem said properties by paying
respondents Tan and Obiedo the following prices for the same,
inclusive of interest and penalties:
TCT No. Redemption Price
38376 ₱ 25,328,939.00
29918 ₱ 35,660,800.00
38374 ₱ 28,477,600.00
39232 ₱ 6,233,381.00
39225 ₱ 6,233,381.00
In the event that petitioner is able to redeem any of the afore-
mentioned parcels of land, the Deed of Absolute Sale covering the
said property shall be nullified and have no force and effect; and
respondents Tan and Obiedo shall then return the owner’s duplicate
of the corresponding TCT to petitioner and also execute a Deed of
Discharge of Mortgage. However, if petitioner is unable to redeem
the parcels of land within the period agreed upon, respondents Tan
and Obiedo could already present the Deeds of Absolute Sale
covering the same to the Office of the Register of Deeds for Naga
City so respondents Tan and Obiedo could acquire TCTs to the said
properties in their names.
The Memorandum of Agreement further provided that should
petitioner contest, judicially or otherwise, any act, transaction, or
event related to or necessarily connected with the said
Memorandum and the Deeds of Absolute Sale involving the five
parcels of land, it would pay respondents Tan and Obiedo
₱10,000,000.00 as liquidated damages inclusive of costs and
attorney’s fees. Petitioner would likewise pay respondents Tan and
Obiedo the condoned interests, surcharges and penalties.10 Finally,
should a contest arise from the Memorandum of Agreement, Mr.
Ruben Sia (Sia), President of petitioner corporation, personally
assumes, jointly and severally with petitioner, the latter’s monetary
obligation to respondent Tan and Obiedo.
Respondent Atty. Tomas A. Reyes (Reyes) was the Notary Public who
notarized the Memorandum of Agreement dated 17 March 2005
between respondent Tan and Obiedo, on one hand, and petitioner,
on the other.
Pursuant to the Memorandum of Agreement, petitioner,
represented by Mr. Sia, executed separate Deeds of Absolute
Sale,11 over the five parcels of land, in favor of respondents Tan and
Obiedo. On the blank spaces provided for in the said Deeds,
somebody wrote the 3rd of January 2006 as the date of their
execution. The Deeds were again notarized by respondent Atty.
Reyes also on 3 January 2006.
Without payment having been made by petitioner on 31 December
2005, respondents Tan and Obiedo presented the Deeds of Absolute
Sale dated 3 January 2006 before the Register of Deeds of Naga City
on 8 March 2006, as a result of which, they were able to secure TCTs
over the five parcels of land in their names.
On 16 March 2006, petitioner filed before the RTC a
Complaint12 against respondents Tan, Obiedo, and Atty. Reyes, for
declaration of nullity of deeds of sales and damages, with prayer for
the issuance of a writ of preliminary injunction and/or temporary
restraining order (TRO). The Complaint was docketed as Civil Case
No. 2006-0030.
On the basis of the facts already recounted above, petitioner raised
two causes of action in its Complaint.
As for the first cause of action, petitioner alleged that as early as 27
December 2005, its President already wrote a letter informing
respondents Tan and Obiedo of the intention of petitioner to pay its
loan and requesting a meeting to compute the final amount due.
The parties held meetings on 3 and 4 January 2006 but they failed to
arrive at a mutually acceptable computation of the final amount of
loan payable. Respondents Tan and Obiedo then refused the request
of petitioner for further dialogues. Unbeknownst to petitioner,
despite the ongoing meetings, respondents Tan and Obiedo, in
evident bad faith, already had the pre-executed Deeds of Absolute
Sale notarized on 3 January 2006 by respondent Atty. Reyes. Atty.
Reyes, in connivance with respondents Tan and Obiedo, falsely
made it appear in the Deeds of Absolute Sale that Mr. Sia had
personally acknowledged/ratified the said Deeds before Atty. Reyes.
Asserting that the Deeds of Absolute Sale over the five parcels of
land were executed merely as security for the payment of its loan to
respondents Tan and Obiedo; that the Deeds of Absolute Sale,
executed in accordance with the Memorandum of Agreement,
constituted pactum commisorium and as such, were null and void;
and that the acknowledgment in the Deeds of Absolute Sale were
falsified, petitioner averred:
13. That by reason of the fraudulent actions by the [herein
respondents], [herein petitioner] is prejudiced and is now in danger
of being deprived, physically and legally, of the mortgaged
properties without benefit of legal processes such as the remedy of
foreclosure and its attendant procedures, solemnities and remedies
available to a mortgagor, while [petitioner] is desirous and willing to
pay its obligation and have the mortgaged properties released.13
In support of its second cause of action, petitioner narrated in its
Complaint that on 18 January 2006, respondents Tan and Obiedo
forcibly took over, with the use of armed men, possession of the five
parcels of land subject of the falsified Deeds of Absolute Sale and
fenced the said properties with barbed wire. Beginning 3 March
2006, respondents Tan and Obiedo started demolishing some of the
commercial spaces standing on the parcels of land in question which
were being rented out by petitioner. Respondents Tan and Obiedo
were also about to tear down a principal improvement on the
properties consisting of a steel-and-concrete structure housing a
motor vehicle terminal operated by petitioner. The actions of
respondents Tan and Obiedo were to the damage and prejudice of
petitioner and its tenants/lessees. Petitioner, alone, claimed to have
suffered at least ₱300,000.00 in actual damages by reason of the
physical invasion by respondents Tan and Obiedo and their armed
goons of the five parcels of land.
Ultimately, petitioner’s prayer in its Complaint reads:
WHEREFORE, premises considered, it is most respectfully prayed of
this Honorable Court that upon the filing of this complaint, a 72-
hour temporary restraining order be forthwith issued ex parte:
(a) Restraining [herein respondents] Tan and Obiedo, their
agents, privies or representatives, from committing act/s
tending to alienate the mortgaged properties from the
[herein petitioner] pending the resolution of the case,
including but not limited to the acts complained of in
paragraph "14", above;
(b) Restraining the Register of Deeds of Naga City from
entertaining moves by the [respondents] to have
[petitioner’s] certificates of title to the mortgaged
properties cancelled and changed/registered in
[respondents] Tan’s and Obiedo’s names, and/or released
to them;
(c) After notice and hearing, that a writ of preliminary
injunction be issued imposing the same restraints
indicated in the next preceding two paragraphs of this
prayer; and
(d) After trial, judgment be rendered:
1. Making the injunction permanent;
2. Declaring the provision in the Memorandum
of Agreement requiring the [petitioner] to
execute deed of sales (sic) in favor of the
[respondents Tan and Obiedo] as dacion en pago
in the event of non-payment of the debt as
pactum commissorium;
3. Annulling the Deed[s] of Sale for TCT Nos.
29918, 38374, 38376, 39225 and 39232, all
dated January 3, 2006, the same being in
contravention of law;
4. Ordering the [respondents] jointly and
solidarily to pay the [petitioner] actual damages
of at least ₱300,000.00; attorney’s fees in the
amount of ₱100,000.00 plus P1,000.00 per court
attendance of counsel as appearance fee;
litigation expenses in the amount of at least
₱10,000.00 and exemplary damages in the
amount of ₱300,000.00, plus the costs.
[Petitioner] further prays for such other reliefs as may be proper,
just and equitable under the premises.14
Upon filing its Complaint with the RTC on 16 March 2006, petitioner
paid the sum of ₱13,644.25 for docket and other legal fees, as
assessed by the Office of the Clerk of Court. The Clerk of Court
initially considered Civil Case No. 2006-0030 as an action incapable
of pecuniary estimation and computed the docket and other legal
fees due thereon according to Section 7(b)(1), Rule 141 of the Rules
of Court.
Only respondent Tan filed an Answer15 to the Complaint of
petitioner. Respondent Tan did admit that meetings were held with
Mr. Sia, as the representative of petitioner, to thresh out Mr. Sia’s
charge that the computation by respondents Tan and Obiedo of the
interests, surcharges and penalties accruing on the loan of petitioner
was replete with errors and uncertainties. However, Mr. Sia failed to
back up his accusation of errors and uncertainties and to present his
own final computation of the amount due. Disappointed and
exasperated, respondents Tan and Obiedo informed Mr. Sia that
they had already asked respondent Atty. Reyes to come over to
notarize the Deeds of Absolute Sale. Respondent Atty. Reyes asked
Mr. Sia whether it was his signature appearing above his printed
name on the Deeds of Absolute Sale, to which Mr. Sia replied yes.
On 4 January 2006, Mr. Sia still failed to establish his claim of errors
and uncertainties in the computation of the total amount which
petitioner must pay respondent Tan and Obiedo. Mr. Sia, instead,
sought a nine-month extension for paying the loan obligation of
petitioner and the reduction of the interest rate thereon to only one
percent (1%) per month. Respondents Tan and Obiedo rejected both
demands.
Respondent Tan maintained that the Deeds of Absolute Sale were
not executed merely as securities for the loan of petitioner. The
Deeds of Absolute Sale over the five parcels of land were the
consideration for the payment of the total indebtedness of
petitioner to respondents Tan and Obiedo, and the condonation of
the 15-month interest which already accrued on the loan, while
providing petitioner with the golden opportunity to still redeem all
or even portions of the properties covered by said Deeds.
Unfortunately, petitioner failed to exercise its right to redeem any of
the said properties.
Belying that they forcibly took possession of the five parcels of land,
respondent Tan alleged that it was Mr. Sia who, with the aid of
armed men, on board a Sports Utility Vehicle and a truck, rammed
into the personnel of respondents Tan and Obiedo causing melee
and disturbance. Moreover, by the execution of the Deeds of
Absolute Sale, the properties subject thereof were, ipso jure,
delivered to respondents Tan and Obiedo. The demolition of the
existing structures on the properties was nothing but an exercise of
dominion by respondents Tan and Obiedo.
Respondent Tan, thus, sought not just the dismissal of the Complaint
of petitioner, but also the grant of his counterclaim. The prayer in
his Answer is faithfully reproduced below:
Wherefore, premises considered, it is most respectfully prayed that,
after due hearing, judgment be rendered dismissing the complaint,
and on the counterclaim, [herein petitioner] and Ruben Sia, be
ordered to indemnify, jointly and severally [herein respondents Tan
and Obiedo] the amounts of not less than ₱10,000,000.00 as
liquidated damages and the further sum of not less than
₱500,000.00 as attorney’s fees. In the alternative, and should it
become necessary, it is hereby prayed that [petitioner] be ordered
to pay herein [respondents Tan and Obiedo] the entire principal loan
of ₱95,700,620.00, plus interests, surcharges and penalties
computed from March 17, 2005 until the entire sum is fully paid,
including the amount of ₱74,678,647.00 foregone interest covering
the period from October 1, 2004 to December 31, 2005 or for a total
of fifteen (15) months, plus incidental expenses as may be proved in
court, in the event that Annexes "G" to "L" be nullified. Other relief
and remedies as are just and equitable under the premises are
hereby prayed for.16
Thereafter, respondent Tan filed before the RTC an Omnibus Motion
in which he contended that Civil Case No. 2006-0030 involved real
properties, the docket fees for which should be computed in
accordance with Section 7(a), not Section 7(b)(1), of Rule 141 of the
Rules of Court, as amended by A.M. No. 04-2-04-SC which took
effect on 16 August 2004. Since petitioner did not pay the
appropriate docket fees for Civil Case No. 2006-0030, the RTC did
not acquire jurisdiction over the said case. Hence, respondent Tan
asked the RTC to issue an order requiring petitioner to pay the
correct and accurate docket fees pursuant to Section 7(a), Rule 141
of the Rules of Court, as amended; and should petitioner fail to do
so, to deny and dismiss the prayer of petitioner for the annulment of
the Deeds of Absolute Sale for having been executed in
contravention of the law or of the Memorandum of Agreement as
pactum commisorium.
As required by the RTC, the parties submitted their Position Papers
on the matter. On 24 March 2006, the RTC issued an
Order17 granting respondent Tan’s Omnibus Motion. In holding that
both petitioner and respondent Tan must pay docket fees in
accordance with Section 7(a), Rule 141 of the Rules of Court, as
amended, the RTC reasoned:
It must be noted that under paragraph (b) 2. of the said Section 7, it
is provided that QUIETING OF TITLE which is an action classified as
beyond pecuniary estimation "shall be governed by paragraph (a)".
Hence, the filing fee in an action for Declaration of Nullity of Deed
which is also classified as beyond pecuniary estimation, must be
computed based on the provision of Section 7(A) herein-above, in
part, quoted.
Since [herein respondent], Romeo Tan in his Answer has a
counterclaim against the plaintiff, the former must likewise pay the
necessary filling (sic) fees as provided for under Section 7 (A) of
Amended Administrative Circular No. 35-2004 issued by the
Supreme Court.18
Consequently, the RTC decreed on the matter of docket/filing fees:
WHEREFORE, premises considered, the [herein petitioner] is hereby
ordered to pay additional filing fee and the [herein respondent],
Romeo Tan is also ordered to pay docket and filing fees on his
counterclaim, both computed based on Section 7(a) of the Supreme
Court Amended Administrative Circular No. 35-2004 within fifteen
(15) days from receipt of this Order to the Clerk of Court, Regional
Trial Court, Naga City and for the latter to compute and to collect
the said fees accordingly.19
Petitioner moved20 for the partial reconsideration of the 24 March
2006 Order of the RTC, arguing that Civil Case No. 2006-0030 was
principally for the annulment of the Deeds of Absolute Sale and, as
such, incapable of pecuniary estimation. Petitioner submitted that
the RTC erred in applying Section 7(a), Rule 141 of the Rules of
Court, as amended, to petitioner’s first cause of action in its
Complaint in Civil Case No. 2006-0030.
In its Order21 dated 29 March 2006, the RTC refused to reconsider its
24 March 2006 Order, based on the following ratiocination:
Analyzing, the action herein pertains to real property, for as
admitted by the [herein petitioner], "the deeds of sale in question
pertain to real property" x x x. The Deeds of Sale subject of the
instant case have already been transferred in the name of the
[herein respondents Tan and Obiedo].
Compared with Quieting of Title, the latter action is brought when
there is cloud on the title to real property or any interest therein or
to prevent a cloud from being cast upon title to the real property
(Art. 476, Civil Code of the Philippines) and the plaintiff must have
legal or equitable title to or interest in the real property which is the
subject matter of the action (Art. 447, ibid.), and yet plaintiff in
QUIETING OF TITLE is required to pay the fees in accordance with
paragraph (a) of Section 7 of the said Amended Administrative
Circular No. 35-2004, hence, with more reason that the [petitioner]
who no longer has title to the real properties subject of the instant
case must be required to pay the required fees in accordance with
Section 7(a) of the Amended Administrative Circular No. 35-2004
afore-mentioned.
Furthermore, while [petitioner] claims that the action for
declaration of nullity of deed of sale and memorandum of
agreement is one incapable of pecuniary estimation, however, as
argued by the [respondent Tan], the issue as to how much filing and
docket fees should be paid was never raised as an issue in the case
of Russell vs. Vestil, 304 SCRA 738.
xxxx
WHEREFORE, the Motion for Partial Reconsideration is hereby
DENIED.22
In a letter dated 19 April 2006, the RTC Clerk of Court computed,
upon the request of counsel for the petitioner, the additional docket
fees petitioner must pay for in Civil Case No. 2006-0030 as directed
in the afore-mentioned RTC Orders. Per the computation of the RTC
Clerk of Court, after excluding the amount petitioner previously paid
on 16 March 2006, petitioner must still pay the amount of
₱720,392.60 as docket fees.23
Petitioner, however, had not yet conceded, and it filed a Petition for
Certiorari with the Court of Appeals; the petition was docketed as
CA-G.R. SP No. 94800. According to petitioner, the RTC24 acted with
grave abuse of discretion, amounting to lack or excess of
jurisdiction, when it issued its Orders dated 24 March 2006 and 29
March 2006 mandating that the docket/filing fees for Civil Case No.
2006-0030, an action for annulment of deeds of sale, be assessed
under Section 7(a), Rule 141 of the Rules of Court, as amended. If
the Orders would not be revoked, corrected, or rectified, petitioner
would suffer grave injustice and irreparable damage.
On 22 November 2006, the Court of Appeals promulgated its
Decision wherein it held that:
Clearly, the petitioner’s complaint involves not only the annulment
of the deeds of sale, but also the recovery of the real properties
identified in the said documents. In other words, the objectives of
the petitioner in filing the complaint were to cancel the deeds of
sale and ultimately, to recover possession of the same. It is
therefore a real action.
Consequently, the additional docket fees that must be paid cannot
be assessed in accordance with Section 7(b). As a real action, Section
7(a) must be applied in the assessment and payment of the proper
docket fee.
Resultantly, there is no grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of the court a quo. By grave
abuse of discretion is meant capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, and mere abuse of
discretion is not enough – it must be grave. The abuse must be grave
and patent, and it must be shown that the discretion was exercised
arbitrarily and despotically.1avvphi1
Such a situation does not exist in this particular case. The evidence is
insufficient to prove that the court a quo acted despotically in
rendering the assailed orders. It acted properly and in accordance
with law. Hence, error cannot be attributed to it.25
Hence, the fallo of the Decision of the appellate court reads:
WHEREFORE, the petition for certiorari is DENIED. The assailed
Orders of the court a quo are AFFIRMED.26
Without seeking reconsideration of the foregoing Decision with the
Court of Appeals, petitioner filed its Petition for Review on Certiorari
before this Court, with a lone assignment of error, to wit:
18. The herein petitioner most respectfully submits that the Court of
Appeals committed a grave and serious reversible error in affirming
the assailed Orders of the Regional Trial Court which are clearly
contrary to the pronouncement of this Honorable Court in the case
of Spouses De Leon v. Court of Appeals, G.R. No. 104796, March 6,
1998, not to mention the fact that if the said judgment is allowed to
stand and not rectified, the same would result in grave injustice and
irreparable damage to herein petitioner in view of the prohibitive
amount assessed as a consequence of said Orders.27
In Manchester Development Corporation v. Court of Appeals,28 the
Court explicitly pronounced that "[t]he court acquires jurisdiction
over any case only upon the payment of the prescribed docket fee."
Hence, the payment of docket fees is not only mandatory, but also
jurisdictional.
In Sun Insurance Office, Ltd. (SIOL) v. Asuncion,29 the Court laid
down guidelines for the implementation of its previous
pronouncement in Manchester under particular circumstances, to
wit:
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed
docket fee, that vests a trial court with jurisdiction over
the subject matter or nature of the action. Where the
filing of the initiatory pleading is not accompanied by
payment of the docket fee, the court may allow payment
of the fee within a reasonable time but in no case beyond
the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims,
third-party claims and similar pleadings, which shall not be
considered filed until and unless the filing fee prescribed
therefor is paid. The court may also allow payment of said
fee within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim
by the filing of the appropriate pleading and payment of
the prescribed filing fee but, subsequently, the judgment
awards a claim not specified in the pleading, or if specified
the same has been left for determination by the court, the
additional filing fee therefor shall constitute a lien on the
judgment. It shall be the responsibility of the Clerk of
Court or his duly authorized deputy to enforce said lien
and assess and collect the additional fee.
In the Petition at bar, the RTC found, and the Court of Appeals
affirmed, that petitioner did not pay the correct amount of docket
fees for Civil Case No. 2006-0030. According to both the trial and
appellate courts, petitioner should pay docket fees in accordance
with Section 7(a), Rule 141 of the Rules of Court, as amended.
Consistent with the liberal tenor of Sun Insurance, the RTC, instead
of dismissing outright petitioner’s Complaint in Civil Case No. 2006-
0030, granted petitioner time to pay the additional docket fees.
Despite the seeming munificence of the RTC, petitioner refused to
pay the additional docket fees assessed against it, believing that it
had already paid the correct amount before, pursuant to Section
7(b)(1), Rule 141 of the Rules of Court, as amended.
Relevant to the present controversy are the following provisions
under Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-
04-SC30 and Supreme Court Amended Administrative Circular No.
35-200431 :
SEC. 7. Clerks of Regional Trial Courts. –
(a) For filing an action or a permissive OR COMPULSORY
counterclaim, CROSS-CLAIM, or money claim against an estate not
based on judgment, or for filing a third-party, fourth-party, etc.
complaint, or a complaint-in-intervention, if the total sum claimed,
INCLUSIVE OF INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF
WHATEVER KIND, AND ATTORNEY’S FEES, LITIGATIO NEXPENSES
AND COSTS and/or in cases involving property, the FAIR MARKET
value of the REAL property in litigation STATED IN THE CURRENT TAX
DECLARATION OR CURRENT ZONAL VALUATION OF THE BUREAU OF
INTERNAL REVENUE, WHICHEVER IS HIGHER, OR IF THERE IS NONE,
THE STATED VALUE OF THE PROPERTY IN LITIGATION OR THE VALUE
OF THE PERSONAL PROPERTY IN LITIGATION OR THE VALUE OF THE
PERSONAL PROPERTY IN LITIGATION AS ALLEGED BY THE CLAIMANT,
is:
[Table of fees omitted.]
If the action involves both a money claim and relief pertaining to
property, then THE fees will be charged on both the amounts
claimed and value of property based on the formula prescribed in
this paragraph a.
(b) For filing:
1. Actions where the value of the subject matter cannot be
estimated
2. Special civil actions, except judicial foreclosure of
mortgage, EXPROPRIATION PROCEEDINGS, PARTITION
AND QUIETING OF TITLE which will
3. All other actions not involving property
[Table of fees omitted.]
The docket fees under Section 7(a), Rule 141, in cases involving real
property depend on the fair market value of the same: the higher
the value of the real property, the higher the docket fees due. In
contrast, Section 7(b)(1), Rule 141 imposes a fixed or flat rate of
docket fees on actions incapable of pecuniary estimation.
In order to resolve the issue of whether petitioner paid the correct
amount of docket fees, it is necessary to determine the true nature
of its Complaint. The dictum adhered to in this jurisdiction is that the
nature of an action is determined by the allegations in the body of
the pleading or Complaint itself, rather than by its title or
heading.32However, the Court finds it necessary, in ascertaining the
true nature of Civil Case No. 2006-0030, to take into account
significant facts and circumstances beyond the Complaint of
petitioner, facts and circumstances which petitioner failed to state in
its Complaint but were disclosed in the preliminary proceedings
before the court a quo.
Petitioner persistently avers that its Complaint in Civil Case No.
2006-0030 is primarily for the annulment of the Deeds of Absolute
Sale. Based on the allegations and reliefs in the Complaint alone,
one would get the impression that the titles to the subject real
properties still rest with petitioner; and that the interest of
respondents Tan and Obiedo in the same lies only in the Deeds of
Absolute Sale sought to be annulled.
What petitioner failed to mention in its Complaint was that
respondents Tan and Obiedo already had the Memorandum of
Agreement, which clearly provided for the execution of the Deeds of
Absolute Sale, registered on the TCTs over the five parcels of land,
then still in the name of petitioner. After respondents Tan and
Obiedo had the Deeds of Absolute Sale notarized on 3 January 2006
and presented the same to Register of Deeds for Naga City on 8
March 2006, they were already issued TCTs over the real properties
in question, in their own names. Respondents Tan and Obiedo have
also acquired possession of the said properties, enabling them, by
petitioner’s own admission, to demolish the improvements thereon.
It is, thus, suspect that petitioner kept mum about the afore-
mentioned facts and circumstances when they had already taken
place before it filed its Complaint before the RTC on 16 March 2006.
Petitioner never expressed surprise when such facts and
circumstances were established before the RTC, nor moved to
amend its Complaint accordingly.1avvphi1.zw+ Even though the
Memorandum of Agreement was supposed to have long been
registered on its TCTs over the five parcels of land, petitioner did not
pray for the removal of the same as a cloud on its title. In the same
vein, although petitioner alleged that respondents Tan and Obiedo
forcibly took physical possession of the subject real properties,
petitioner did not seek the restoration of such possession to itself.
And despite learning that respondents Tan and Obiedo already
secured TCTs over the subject properties in their names, petitioner
did not ask for the cancellation of said titles. The only logical and
reasonable explanation is that petitioner is reluctant to bring to the
attention of the Court certain facts and circumstances, keeping its
Complaint safely worded, so as to institute only an action for
annulment of Deeds of Absolute Sale. Petitioner deliberately
avoided raising issues on the title and possession of the real
properties that may lead the Court to classify its case as a real
action.
No matter how fastidiously petitioner attempts to conceal them, the
allegations and reliefs it sought in its Complaint in Civil Case No.
2006-0030 appears to be ultimately a real action, involving as they
do the recovery by petitioner of its title to and possession of the five
parcels of land from respondents Tan and Obiedo.
A real action is one in which the plaintiff seeks the recovery of real
property; or, as indicated in what is now Section 1, Rule 4 of the
Rules of Court, a real action is an action affecting title to or recovery
of possession of real property.33
Section 7, Rule 141 of the Rules of Court, prior to its amendment by
A.M. No. 04-2-04-SC, had a specific paragraph governing the
assessment of the docket fees for real action, to wit:
In a real action, the assessed value of the property, or if there is
none, the estimated value thereof shall be alleged by the claimant
and shall be the basis in computing the fees.
It was in accordance with the afore-quoted provision that the Court,
in Gochan v. Gochan,34 held that although the caption of the
complaint filed by therein respondents Mercedes Gochan, et al. with
the RTC was denominated as one for "specific performance and
damages," the relief sought was the conveyance or transfer of real
property, or ultimately, the execution of deeds of conveyance in
their favor of the real properties enumerated in the provisional
memorandum of agreement. Under these circumstances, the case
before the RTC was actually a real action, affecting as it did title to or
possession of real property. Consequently, the basis for determining
the correct docket fees shall be the assessed value of the property,
or the estimated value thereof as alleged in the complaint. But since
Mercedes Gochan failed to allege in their complaint the value of the
real properties, the Court found that the RTC did not acquire
jurisdiction over the same for non-payment of the correct docket
fees.
Likewise, in Siapno v. Manalo,35 the Court disregarded the
title/denomination of therein plaintiff Manalo’s amended petition as
one for Mandamus with Revocation of Title and Damages; and
adjudged the same to be a real action, the filing fees for which
should have been computed based on the assessed value of the
subject property or, if there was none, the estimated value thereof.
The Court expounded in Siapno that:
In his amended petition, respondent Manalo prayed that NTA’s sale
of the property in dispute to Standford East Realty Corporation and
the title issued to the latter on the basis thereof, be declared null
and void. In a very real sense, albeit the amended petition is styled
as one for "Mandamus with Revocation of Title and Damages," it is,
at bottom, a suit to recover from Standford the realty in question
and to vest in respondent the ownership and possession thereof. In
short, the amended petition is in reality an action in res or a real
action. Our pronouncement in Fortune Motors (Phils.), Inc. vs. Court
of Appeals is instructive. There, we said:
A prayer for annulment or rescission of contract does not operate to
efface the true objectives and nature of the action which is to
recover real property. (Inton, et al., v. Quintan, 81 Phil. 97, 1948)
An action for the annulment or rescission of a sale of real property is
a real action. Its prime objective is to recover said real property.
(Gavieres v. Sanchez, 94 Phil. 760, 1954)
An action to annul a real estate mortgage foreclosure sale is no
different from an action to annul a private sale of real property.
(Muñoz v. Llamas, 87 Phil. 737, 1950).
While it is true that petitioner does not directly seek the recovery of
title or possession of the property in question, his action for
annulment of sale and his claim for damages are closely intertwined
with the issue of ownership of the building which, under the law, is
considered immovable property, the recovery of which is
petitioner's primary objective. The prevalent doctrine is that an
action for the annulment or rescission of a sale of real property does
not operate to efface the fundamental and prime objective and
nature of the case, which is to recover said real property. It is a real
action.
Unfortunately, and evidently to evade payment of the correct
amount of filing fee, respondent Manalo never alleged in the body
of his amended petition, much less in the prayer portion thereof, the
assessed value of the subject res, or, if there is none, the estimated
value thereof, to serve as basis for the receiving clerk in computing
and arriving at the proper amount of filing fee due thereon, as
required under Section 7 of this Court’s en banc resolution of 04
September 1990 (Re: Proposed Amendments to Rule 141 on Legal
Fees).
Even the amended petition, therefore, should have been expunged
from the records.
In fine, we rule and so hold that the trial court never acquired
jurisdiction over its Civil Case No. Q-95-24791.36
It was in Serrano v. Delica,37 however, that the Court dealt with a
complaint that bore the most similarity to the one at bar. Therein
respondent Delica averred that undue influence, coercion, and
intimidation were exerted upon him by therein petitioners Serrano,
et al. to effect transfer of his properties. Thus, Delica filed a
complaint before the RTC against Serrano, et al., praying that the
special power of attorney, the affidavit, the new titles issued in the
names of Serrano, et al., and the contracts of sale of the disputed
properties be cancelled; that Serrano, et al. be ordered to pay
Delica, jointly and severally, actual, moral and exemplary damages in
the amount of ₱200,000.00, as well as attorney’s fee of ₱200,000.00
and costs of litigation; that a TRO and a writ of preliminary
injunction be issued ordering Serrano, et al. to immediately restore
him to his possession of the parcels of land in question; and that
after trial, the writ of injunction be made permanent. The Court
dismissed Delica’s complaint for the following reasons:
A careful examination of respondent’s complaint is that it is a real
action. In Paderanga vs. Buissan, we held that "in a real action, the
plaintiff seeks the recovery of real property, or, as stated in Section
2(a), Rule 4 of the Revised Rules of Court, a real action is one
‘affecting title to real property or for the recovery of possession of,
or for partition or condemnation of, or foreclosure of a mortgage on
a real property.’"
Obviously, respondent’s complaint is a real action involving not only
the recovery of real properties, but likewise the cancellation of the
titles thereto.
Considering that respondent’s complaint is a real action, the Rule
requires that "the assessed value of the property, or if there is none,
the estimated value thereof shall be alleged by the claimant and
shall be the basis in computing the fees."
We note, however, that neither the "assessed value" nor the
"estimated value" of the questioned parcels of land were alleged by
respondent in both his original and amended complaint. What he
stated in his amended complaint is that the disputed realties have a
"BIR zonal valuation" of ₱1,200.00 per square meter. However, the
alleged "BIR zonal valuation" is not the kind of valuation required by
the Rule. It is the assessed value of the realty. Having utterly failed
to comply with the requirement of the Rule that he shall allege in his
complaint the assessed value of his real properties in controversy,
the correct docket fee cannot be computed. As such, his complaint
should not have been accepted by the trial court. We thus rule that
it has not acquired jurisdiction over the present case for failure of
herein respondent to pay the required docket fee. On this ground
alone, respondent’s complaint is vulnerable to dismissal.38
Brushing aside the significance of Serrano, petitioner argues that
said decision, rendered by the Third Division of the Court, and not by
the Court en banc, cannot modify or reverse the doctrine laid down
in Spouses De Leon v. Court of Appeals.39 Petitioner relies heavily on
the declaration of this Court in Spouses De Leon that an action for
annulment or rescission of a contract of sale of real property is
incapable of pecuniary estimation.
The Court, however, does not perceive a contradiction between
Serrano and the Spouses De Leon. The Court calls attention to the
following statement in Spouses De Leon: "A review of the
jurisprudence of this Court indicates that in determining whether an
action is one the subject matter of which is not capable of pecuniary
estimation, this Court has adopted the criterion of first ascertaining
the nature of the principal action or remedy sought." Necessarily,
the determination must be done on a case-to-case basis, depending
on the facts and circumstances of each. What petitioner
conveniently ignores is that in Spouses De Leon, the action therein
that private respondents instituted before the RTC was "solely for
annulment or rescission" of the contract of sale over a real
property.40 There appeared to be no transfer of title or possession to
the adverse party. Their complaint simply prayed for:
1. Ordering the nullification or rescission of the Contract of
Conditional Sale (Supplementary Agreement) for having
violated the rights of plaintiffs (private respondents)
guaranteed to them under Article 886 of the Civil Code
and/or violation of the terms and conditions of the said
contract.
2. Declaring void ab initio the Deed of Absolute Sale for
being absolutely simulated; and
3. Ordering defendants (petitioners) to pay plaintiffs
(private respondents) attorney's fees in the amount of
₱100,000.00.41
As this Court has previously discussed herein, the nature of Civil
Case No. 2006-0030 instituted by petitioner before the RTC is closer
to that of Serrano, rather than of Spouses De Leon, hence, calling for
the application of the ruling of the Court in the former, rather than
in the latter.
It is also important to note that, with the amendments introduced
by A.M. No. 04-2-04-SC, which became effective on 16 August 2004,
the paragraph in Section 7, Rule 141 of the Rules of Court, pertaining
specifically to the basis for computation of docket fees for real
actions was deleted. Instead, Section 7(1) of Rule 141, as amended,
provides that "in cases involving real property, the FAIR MARKET
value of the REAL property in litigation STATED IN THE CURRENT TAX
DECLARATION OR CURRENT ZONAL VALUATION OF THE BUREAU OF
INTERNAL REVENUE, WHICH IS HIGHER, OR IF THERE IS NONE, THE
STATED VALUE OF THE PROPERTY IN LITIGATION x x x" shall be the
basis for the computation of the docket fees. Would such an
amendment have an impact on Gochan, Siapno, and Serrano? The
Court rules in the negative.
A real action indisputably involves real property. The docket fees for
a real action would still be determined in accordance with the value
of the real property involved therein; the only difference is in what
constitutes the acceptable value. In computing the docket fees for
cases involving real properties, the courts, instead of relying on the
assessed or estimated value, would now be using the fair market
value of the real properties (as stated in the Tax Declaration or the
Zonal Valuation of the Bureau of Internal Revenue, whichever is
higher) or, in the absence thereof, the stated value of the same.
In sum, the Court finds that the true nature of the action instituted
by petitioner against respondents is the recovery of title to and
possession of real property. It is a real action necessarily involving
real property, the docket fees for which must be computed in
accordance with Section 7(1), Rule 141 of the Rules of Court, as
amended. The Court of Appeals, therefore, did not commit any error
in affirming the RTC Orders requiring petitioner to pay additional
docket fees for its Complaint in Civil Case No. 2006-0030.
The Court does not give much credence to the allegation of
petitioner that if the judgment of the Court of Appeals is allowed to
stand and not rectified, it would result in grave injustice and
irreparable injury to petitioner in view of the prohibitive amount
assessed against it. It is a sweeping assertion which lacks evidentiary
support. Undeniably, before the Court can conclude that the
amount of docket fees is indeed prohibitive for a party, it would
have to look into the financial capacity of said party. It baffles this
Court that herein petitioner, having the capacity to enter into multi-
million transactions, now stalls at paying ₱720,392.60 additional
docket fees so it could champion before the courts its rights over the
disputed real properties. Moreover, even though the Court exempts
individuals, as indigent or pauper litigants, from paying docket fees,
it has never extended such an exemption to a corporate entity.
WHEREFORE, premises considered, the instant Petition for Review is
hereby DENIED. The Decision, dated 22 November 2006, of the
Court of Appeals in CA-G.R. SP No. 94800, which affirmed the Orders
dated 24 March 2006 and 29 March 2006 of the RTC, Branch 22, of
Naga City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby
Shelter Builders and Realty Development Corporation to pay
additional docket/filing fees, computed based on Section 7(a), Rule
141 of the Rules of Court, as amended, is hereby AFFIRMED. Costs
against the petitioner.
SO ORDERED.
G.R. No. 180321 March 20, 2013
EDITHA PADLAN, Petitioner,
vs.
ELENITA DINGLASAN and FELICISIMO DINGLASAN, Respondents.
DECISION
PERALTA, J.:
This is a petition for review on certiorari assailing the
Decision1 dated June 29, 2007 of the Court of Appeals (CA) in CA-
G.R. CV No. 86983, and the Resolution2 dated October 23, 2007
denying petitioner's Motion for Reconsideration.3
The factual and procedural antecedents are as follows:
Elenita Dinglasan (Elenita) was the registered owner of a parcel of
land designated as Lot No. 625 of the Limay Cadastre which is
covered by Transfer Certificate of Title (TCT) No. T-105602, with an
aggregate area of 82,972 square meters. While on board a jeepney,
Elenita’s mother, Lilia Baluyot (Lilia), had a conversation with one
Maura Passion (Maura) regarding the sale of the said property.
Believing that Maura was a real estate agent, Lilia borrowed the
owner’s copy of the TCT from Elenita and gave it to Maura. Maura
then subdivided the property into several lots from Lot No. 625-A to
Lot No. 625-O, under the name of Elenita and her husband
Felicisimo Dinglasan (Felicisimo).
Through a falsified deed of sale bearing the forged signature of
Elenita and her husband Felicisimo, Maura was able to sell the lots
to different buyers. On April 26, 1990, Maura sold Lot No. 625-K to
one Lorna Ong (Lorna), who later caused the issuance of TCT No.
134932 for the subject property under her name. A few months
later, or sometime in August 1990, Lorna sold the lot to petitioner
Editha Padlan for ₱4,000.00. Thus, TCT No. 134932 was cancelled
and TCT No. 137466 was issued in the name of petitioner.
After learning what had happened, respondents demanded
petitioner to surrender possession of Lot No. 625-K, but the latter
refused. Respondents were then forced to file a case before the
Regional Trial Court (RTC) of Balanga, Bataan for the Cancellation of
Transfer Certificate of Title No. 137466, docketed as Civil Case No.
438-ML. Summons was, thereafter, served to petitioner through her
mother, Anita Padlan.
On December 13, 1999, respondents moved to declare petitioner in
default and prayed that they be allowed to present evidence ex
parte.4
On January 17, 2000, petitioner, through counsel, filed an
Opposition to Declare Defendant in Default with Motion to Dismiss
Case for Lack of Jurisdiction Over the Person of
Defendant.5 Petitioner claimed that the court did not acquire
jurisdiction over her, because the summons was not validly served
upon her person, but only by means of substituted service through
her mother. Petitioner maintained that she has long been residing in
Japan after she married a Japanese national and only comes to the
Philippines for a brief vacation once every two years.
On April 5, 2001, Charlie Padlan, the brother of petitioner, testified
that his sister is still in Japan and submitted a copy of petitioner’s
passport and an envelope of a letter that was allegedly sent by his
sister. Nevertheless, on April 5, 2001, the RTC issued an
Order6 denying petitioner’s motion to dismiss and declared her in
default. Thereafter, trial ensued.
On July 1, 2005, the RTC rendered a Decision7 finding petitioner to
be a buyer in good faith and, consequently, dismissed the complaint.
Not satisfied, respondents sought recourse before the CA, docketed
as CA-G.R. No. CV No. 86983.
On June 29, 2007, the CA rendered a Decision8 in favor of the
respondent. Consequently, the CA reversed and set aside the
Decision of the RTC and ordered the cancellation of the TCT issued in
the name of Lorna and the petitioner, and the revival of
respondents’ own title, to wit:
WHEREFORE, in view of the foregoing, the Decision dated July
1, 2005 of the Regional Trial Court, Third Judicial Region, Branch 4,
Mariveles, Bataan (Stationed in Balanga, Bataan) in Civil Case No.
438-ML is hereby REVERSED and SET ASIDE.
The Transfer Certificate of Title No. 134932 issued in the name of
Lorna Ong and Transfer Certificate of Title No. 137466 issued in the
name of defendant-appellee Editha Padlan are CANCELLED and
Transfer Certificate of Title No. 134785 in the name of the plaintiffs-
appellants is REVIVED.
SO ORDERED.9
The CA found that petitioner purchased the property in bad faith
from Lorna. The CA opined that although a purchaser is not
expected to go beyond the title, based on the circumstances
surrounding the sale, petitioner should have conducted further
inquiry before buying the disputed property. The fact that Lorna
bought a 5,000-square-meter property for only ₱4,000.00 and
selling it after four months for the same amount should have put
petitioner on guard. With the submission of the Judgment in
Criminal Case No. 4326 rendered by the RTC, Branch 2, Balanga,
Bataan, entitled People of the Philippines v. Maura Passion10 and the
testimonies of respondents, the CA concluded that respondents
sufficiently established that TCT No. 134932 issued in the name of
Lorna and TCT No. 137466 issued in the name of petitioner were
fraudulently issued and, therefore, null and void.
Aggrieved, petitioner filed a Motion for Reconsideration. Petitioner
argued that not only did the complaint lacks merit, the lower court
failed to acquire jurisdiction over the subject matter of the case and
the person of the petitioner.
On October 23, 2007, the CA issued a Resolution11 denying the
motion. The CA concluded that the rationale for the exception made
in the landmark case of Tijam v. Sibonghanoy12 was present in the
case. It reasoned that when the RTC denied petitioner’s motion to
dismiss the case for lack of jurisdiction, petitioner neither moved for
a reconsideration of the order nor did she avail of any remedy
provided by the Rules. Instead, she kept silent and only became
interested in the case again when the CA rendered a decision
adverse to her claim.
Hence, the petition assigning the following errors:
 I Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts shall
WHETHER OR NOT THE HONORABLE COURT HAS JURISDICTION
OVER THE PERSON OF THE PETITIONER.
II
WHETHER OR NOT THE HONORABLE COURT HAS JURISDICTION
OVER THE SUBJECT MATTER OF THE CASE.
III
WHETHER OR NOT PETITIONER IS A BUYER IN GOOD FAITH AND FOR
VALUE.13
Petitioner maintains that the case of Tijam v. Sibonghanoy finds no
application in the case at bar, since the said case is not on all fours
with the present case. Unlike in Tijam, wherein the petitioner
therein actively participated in the proceedings, petitioner herein
asserts that she did not participate in any proceedings before the
RTC because she was declared in default.
Petitioner insists that summons was not validly served upon her,
considering that at the time summons was served, she was residing
in Japan. Petitioner contends that pursuant to Section 15, Rule 14 of
the Rules of Civil Procedure, when the defendant does not reside in
the Philippines and the subject of the action is property within the
Philippines of the defendant, service may be effected out of the
Philippines by personal service or by publication in a newspaper of
general circulation. In this case, summons was served only by
substituted service to her mother. Hence, the court did not acquire
jurisdiction over her person.
Also, petitioner posits that the court lacks jurisdiction of the subject
matter, considering that from the complaint, it can be inferred that
the value of the property was only ₱4,000.00, which was the
amount alleged by respondents that the property was sold to
petitioner by Lorna.
Finally, petitioner stresses that she was a buyer in good faith. It was
Maura who defrauded the respondents by selling the property to
Lorna without their authority.
Respondents, on the other hand, argue that the CA was correct in
ruling in their favor.
The petition is meritorious.
Respondents filed the complaint in 1999, at the time Batas
Pambansa Blg. (BP) 129, the Judiciary Reorganization Act of 1980,
was already amended by Republic Act (RA) No. 7691, An Act
Expanding the Jurisdiction of the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts, amending
for the purpose BP Blg. 129.14
Section 1 of RA 7691, amending BP Blg. 129, provides that the RTC
shall exercise exclusive original jurisdiction on the following actions:
Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known
as the "Judiciary Reorganization Act of 1980," is hereby amended to
read as follows:
exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is
incapable of pecuniary estimation;
(2) In all civil actions which involve the title to, or
possession of, real property, or any interest therein, where
the assessed value of the property involved exceeds
Twenty Thousand Pesos (₱20,000.00) or for civil actions in
Metro Manila, where such value exceeds Fifty Thousand
Pesos (₱50,000.00), except actions for forcible entry into
and unlawful detainer of lands or buildings, original
jurisdiction over which is conferred upon the Metropolitan
Trial Courts, Municipal Trial Courts, and Municipal Circuit
Trial Courts; x x x
Section 3 of RA 7691 expanded the exclusive original jurisdiction of
the first level courts, thus:
Section 3. Section 33 of the same law BP Blg. 129 is hereby amended
to read as follows:
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in Civil Cases. –
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts shall exercise:
xxxx
(3) Exclusive original jurisdiction in all civil actions which involve title
to, or possession of, real property, or any interest therein where the
assessed value of the property or interest therein does not exceed
Twenty Thousand Pesos (₱20,000.00) or, in civil actions in Metro
Manila, where such assessed value does not exceed Fifty Thousand
Pesos (₱50,000.00) exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses and costs: Provided, That in cases
of land not declared for taxation purposes, the value of such
property shall be determined by the assessed value of the adjacent
lots.
Respondents filed their Complaint with the RTC; hence, before
proceeding any further with any other issues raised by the
petitioner, it is essential to ascertain whether the RTC has
jurisdiction over the subject matter of this case based on the above-
quoted provisions.
However, in order to determine which court has jurisdiction over the
action, an examination of the complaint is essential. Basic as a
hornbook principle is that jurisdiction over the subject matter of a
case is conferred by law and determined by the allegations in the
complaint which comprise a concise statement of the ultimate facts
constituting the plaintiff's cause of action. The nature of an action,
as well as which court or body has jurisdiction over it, is determined
based on the allegations contained in the complaint of the plaintiff,
irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein. The averments in
the complaint and the character of the relief sought are the ones to
be consulted. Once vested by the allegations in the complaint,
jurisdiction also remains vested irrespective of whether or not the
plaintiff is entitled to recover upon all or some of the claims asserted
therein.15
What determines the jurisdiction of the court is the nature of the they have not yet obtained a copy from the Provincial Assessor’s
action pleaded as appearing from the allegations in the complaint. Office.22 However, they did not present such copy.
The averments therein and the character of the relief sought are the
ones to be consulted.16 To reiterate, where the ultimate objective of the plaintiffs is to
obtain title to real property, it should be filed in the proper court
Respondents’ Complaint17 narrates that they are the duly registered having jurisdiction over the assessed value of the property subject
owners of Lot No. 625 of the Limay Cadastre which was covered by thereof.23 Since the amount alleged in the Complaint by respondents
TCT No. T-105602. Without their knowledge and consent, the land for the disputed lot is only ₱4,000.00, the MTC and not the RTC has
was divided into several lots under their names through the jurisdiction over the action. Therefore, all proceedings in the RTC are
fraudulent manipulations of Maura. One of the lots was Lot 625-K, null and void.24
which was covered by TCT No. 134785. On April 26, 1990, Maura
sold the subject lot to Lorna. By virtue of the fictitious sale, TCT No. Consequently, the remaining issues raised by petitioner need not be
134785 was cancelled and TCT No. 134932 was issued in the name discussed further.
of Lorna. Sometime in August 1990, Lorna sold the lot to petitioner
for a consideration in the amount of ₱4,000.00. TCT No. 134932 was
WHEREFORE, the petition is GRANTED. The Decision of the Court of
later cancelled and TCT No. 137466 was issued in the name of
Appeals in CA-G.R. CV No. 86983, dated June 29, 2007, and its
petitioner. Despite demands from the respondents, petitioner
Resolution dated October 23, 2007, are REVERSED and SET ASIDE.
refused to surrender possession of the subject property.
The Decision of the Regional Trial Court, dated July I, 2005, is
Respondents were thus constrained to engage the services of a
declared NULL and VOID. The complaint in Civil Case No. 438-ML is
lawyer and incur expenses for litigation. Respondents prayed for the
dismissed without prejudice.
RTC (a) to declare TCT No. 137466 null and to revive TCT No. T-
105602 which was originally issued and registered in the name of
the respondents; and (b) to order petitioner to pay attorney’s fees in SO ORDERED.
the sum of ₱50,000.00 and litigation expenses of ₱20,000.00, plus
cost of suit.18

An action "involving title to real property" means that the plaintiff's

cause of action is based on a claim that he owns such property or
that he has the legal rights to have exclusive control, possession,
enjoyment, or disposition of the same. Title is the "legal link
between (1) a person who owns property and (2) the property
itself." "Title" is different from a "certificate of title" which is the
document of ownership under the Torrens system of registration
issued by the government through the Register of Deeds. While title
is the claim, right or interest in real property, a certificate of title is
the evidence of such claim.19

In the present controversy, before the relief prayed for by the

respondents in their complaint can be granted, the issue of who
between the two contending parties has the valid title to the subject
lot must first be determined before a determination of who
between them is legally entitled to the certificate of title covering
the property in question.1âwphi1

From the Complaint, the case filed by respondent is not simply a

case for the cancellation of a particular certificate of title and the
revival of another. The determination of such issue merely follows
after a court of competent jurisdiction shall have first resolved the
matter of who between the conflicting parties is the lawful owner of
the subject property and ultimately entitled to its possession and
enjoyment. The action is, therefore, about ascertaining which of
these parties is the lawful owner of the subject lot, jurisdiction over
which is determined by the assessed value of such lot.20

In no uncertain terms, the Court has already held that a complaint

must allege the assessed value of the real property subject of the
complaint or the interest thereon to determine which court has
jurisdiction over the action.21In the case at bar, the only basis of
valuation of the subject property is the value alleged in the
complaint that the lot was sold by Lorna to petitioner in the amount
of ₱4,000.00. No tax declaration was even presented that would
show the valuation of the subject property. In fact, in one of the
hearings, respondents’ counsel informed the court that they will
present the tax declaration of the property in the next hearing since
G.R. No. 191641
EDMUNDO NAVAREZ, Petitioner,
vs.
ATTY. MANUEL ABROGAR III, Respondent.
DECISION
BRION, J.:
This is a petition for certiorari under Rule 651 of the Rules of Court,
filed from the October 16, 2009 Decision and the March 12, 2010
Resolution of the Court of Appeals (CA) in CA-G.R. SP No.
108675.2 The CA dismissed the petition for certiorari that the
present petitioner filed against the January 21, 2009 Order of the
Regional Trial Court (RTC).
ANTECEDENTS
On July 30, 2007, petitioner Edmundo Navarez engaged the services
of Abrogar Valerio Maderazo and Associates Law Offices (the Firm)
through the respondent, Atty. Manuel Abrogar III. The Firm was to
represent Navarez in Sp. Proc. No. Q-05-59112 entitled "Apolonia
Quesada, Jr. v. Edmundo Navarez" as collaborating counsel of Atty.
Perfecto Laguio. The case involved the settlement of the estate of
Avelina Quesada-Navarez that was then pending before the Regional
Trial Court (RTC), Branch 83, Quezon City. The pertinent portions of
the Retainer Agreement read:
Our services as collaborating counsel will cover investigation,
research and representation with local banks, concerns regarding
deposits (current and savings) and investment instruments
evidenced by certificate of deposits. Our office may also initiate
appropriate civil and/or criminal actions as well as administrative
remedies needed to adjudicate the Estate of Avelina Quesada-
Navarez expeditiously, peacefully and lawfully.
Effective Date: June 2007
Acceptance Fee: P100,000.00 in an installment basis
Success Fee: 2% of the total money value of your share as co-owner
and heir of the Estate (payable proportionately upon your receipt of
any amount) Appearance Fee: P2,500.00 per Court hearing or
administrative meetings and/or other meetings.
Filing of Motions and/or pleadings at our initiative shall be for your
account and you will be billed accordingly.
OUT-OF-POCKET EXPENSES: Ordinary out-of-pocket expenses such
as telex, facsimile, word processing, machine reproduction, and
transportation expenses, as well as per diems and accommodations
expenses incurred in undertaking work for you outside Metro
Manila area and other special out-of-pocket expenses as you may
authorized [sic] us to incur (which shall always be cleared with you in
advance) shall be for your account. Xxxx
On September 2, 2008, Navarez filed a Manifestation with the RTC
that he was terminating the services of Atty. Abrogar. On the same
day, Navarez also caused the delivery to Atty. Abrogar of a check in
the amount of P220,107.51 – allegedly equivalent to one half of
7.5% of petitioner’s P11,200,000.00 share in the estate of his
deceased wife less Atty. Abrogar’s cash advances.
On September 9, 2008, Atty. Abrogar manifested that with respect
to the petitioner’s one-half (½) share in the conjugal partnership, the
RTC had already resolved the matter favorably because it had issued
a release order for the petitioner to withdraw the amount. Atty.
Abrogar further declared that the Firm was withdrawing as counsel
effective upon the appointment of an Administrator of the estate
from the remaining proceedings for the settlement of the estate of
Avelina Quesada-Navarez.
On September 22, 2008, the petitioner wrote to Atty. Abrogar
offering to pay his attorney’s fees in accordance with their Retainer
Agreement minus the latter’s cash advances – an offer that Atty.
Abrogar had previously refused in August 2008.
On October 7, 2008, Atty. Abrogar filed a Motion to Enter into the
Records his attorney’s lien pursuant to Rule 138, Section 37 of the
Rules of Court.
On November 21, 2008, the motion was submitted for resolution
without oral arguments.
On January 21, 2009, the RTC issued an order granting the motion
and directed the petitioner to pay Atty. Abrogar’s attorney’s fees.
The Order reads:
WHEREFORE, premises considered, it is hereby ordered:
1. That the attorney’s lien of Manuel Abrogar III
conformably with the Retainer Agreement dated July 30,
2007, be entered into the records of this case in
consonance with Section 37, Rule 138 of the Rules of
Court;
2. That oppositor Edmundo Navarez pay the amount of
7.5% of P11,196,675.05 to Manuel Abrogar III;
3. That the oppositor pay the administrative
costs/expenses of P103,000.00 to the movant; and
4. That the prayers for P100,000.00 as exemplary
damages, P200,000.00 as moral damages and for writ of
preliminary attachment be denied.
SO ORDERED.
On February 18, 2009, the petitioner filed a Motion for
Reconsideration.
On March 17, 2009, the RTC denied the motion for reconsideration
and issued a Writ of Execution of its Order dated January 21, 2009.
The petitioner elevated the case to the CA via a petition for
certiorari. He argued that the RTC committed grave abuse of
discretion because: (1) the RTC granted Atty. Abrogar’s claim for
attorney’s fees despite non-payment of docket fees; (2) the RTC
denied him the opportunity of a full-blown trial to contradict Atty.
Abrogar’s claims and prove advance payments; and (3) the RTC
issued a writ of execution even before the lapse of the reglementary
period.
In its decision dated October 16, 2009, the CA dismissed the petition
and held that the RTC did not commit grave abuse of discretion.
The petitioner moved for reconsideration which the CA denied in a
Resolution dated March 12, 2010.
On April 6, 2010, and April 26, 2010, the petitioner filed his first and
second motions for extension of time to file his petition for review.
This Court granted both motions for extension totaling thirty (30)
days (or until May 5, 2010) in the Resolution dated July 26, 2010.
On May 5, 2010, the petitioner filed the present petition entitled
"Petition for Review." However, the contents of the petition show
that it is a petition for certiorari under Rule 65 of the Rules of Court.3
THE PETITION
The petitioner argues that the CA gravely erred in dismissing his
petition for certiorari that challenged the RTC ruling ordering the
payment of attorney’s fees. He maintains his argument that the RTC
committed grave abuse of discretion because: (1) it granted Atty.
Abrogar’s claim for attorney’s fees despite lack of jurisdiction due to
non-payment of docket fees; (2) it granted the claim for attorney’s
fees without requiring a fullblown trial and without considering his
advance payments; and (3) it issued the writ of execution before the
lapse of the reglementary period. The petitioner also points out that
the CA nullified the RTC’s release order in CA-G.R. SP No. 108734.
In his Comment dated September 8, 2010, Atty. Abrogar adopted
the CA’s position in its October 16, 2009 Decision.
OUR RULING
We observe that the petitioner used the wrong remedy to challenge
the CA’s decision and resolution. The petitioner filed a petition for
certiorari under Rule 65, not a petition for review on certiorari under
Rule 45. A special civil action for certiorari is a remedy of last resort,
available only to raise jurisdictional issues when there is no appeal
or any other plain, speedy, and adequate remedy under the law.
Nonetheless, in the spirit of liberality that pervades the Rules of
Court4 and in the interest of substantial justice,5 this Court has, on
appropriate occasions, treated a petition for certiorari as a petition
for review on certiorari, particularly when: (1) the petition for
certiorari was filed within the reglementary period to file a petition
for review on certiorari;6(2) the petition avers errors of
judgment;7 and (3) when there is sufficient reason to justify the
relaxation of the rules.8 Considering that the present petition was
filed within the extension period granted by this Court and avers
errors of law and judgment, this Court deems it proper to treat the
present petition for certiorari as a petition for review on certiorari in
order to serve the higher ends of justice.
With the procedural issue out of the way, the remaining issue is
whether or not the CA erred when it held that the RTC acted within
its jurisdiction and did not commit grave abuse of discretion when it
ordered the payment of attorney’s fees.
We find merit in the petition.
An attorney has a right to be paid a fair and reasonable
compensation for the services he has rendered to a client. As a
security for his fees, Rule 138, Section 37 of the Rules of Court
grants an attorney an equitable right to a charging lien over money
judgments he has secured in litigation for his client. For the lien to
be enforceable, the attorney must have caused: (1) a statement of
his claim to be entered in the record of the case while the court has
jurisdiction over the case and before the full satisfaction of the
judgment;9 and (2) a written notice of his claim to be delivered to his
client and to the adverse party.
However, the filing of the statement of the claim does not, by itself,
legally determine the amount of the claim when the client disputes
the amount or claims that the amount has been paid.10 In these
cases, both the attorney and the client have a right to be heard and
to present evidence in support of their claims.11 The proper
procedure for the court is to ascertain the proper amount of the lien
in a full dress trial before it orders the registration of the charging
lien.12 The necessity of a hearing is obvious and beyond dispute.13
In the present case, the RTC ordered the registration of Atty.
Abrogar’s lien without a hearing even though the client contested
the amount of the lien. The petitioner had the right to be heard and
to present evidence on the true amount of the charging lien. The
RTC acted with grave abuse of discretion because it denied the
petitioner his right to be heard, i.e., the right to due process.
The registration of the lien should also be distinguished from the
enforcement of the lien. Registration merely determines the birth of
the lien.14 The enforcement of the lien, on the other hand, can only
take place once a final money judgment has been secured in favor of
the client. The enforcement of the lien is a claim for attorney’s fees
that may be prosecuted in the very action where the attorney
rendered his services or in a separate action.
However, a motion for the enforcement of the lien is in the nature
of an action commenced by a lawyer against his clients for
attorney’s fees.15As in every action for a sum of money, the
attorney-movant must first pay the prescribed docket fees before
the trial court can acquire jurisdiction to order the payment of
attorney’s fees.
In this case, Atty. Abrogar only moved for the registration of his lien.
He did not pay any docket fees because he had not yet asked the
RTC to enforce his lien. However, the RTC enforced the lien and
ordered the petitioner to pay Atty. Abrogar’s attorney’s fees and
administrative expenses.
Under this situation, the RTC had not yet acquired jurisdiction to
enforce the charging lien because the docket fees had not been
paid. The payment of docket fees is mandatory in all actions,
whether separate or an offshoot of a pending proceeding. In Lacson
v. Reyes,16 this Court granted certiorari and annulled the decision of
the trial court granting a "motion for attorney’s fees" because the
attorney did not pay the docket fees. Docket fees must be paid
before a court can lawfully act on a case and grant relief. Therefore,
the RTC acted without or in excess of its jurisdiction when it ordered
the payment of the attorney’s fees.
Lastly, the enforcement of a charging lien can only take place after a
final money judgment has been rendered in favor of the client.17 The
lien only attaches to the money judgment due to the client and is
contingent on the final determination of the main case. Until the
money judgment has become final and executory, enforcement of
the lien is premature.

The RTC again abused its discretion in this respect because it

prematurely enforced the lien and issued a writ of execution even
before the main case became final; no money judgment was as yet
due to the client to which the lien could have attached itself.
Execution was improper because the enforceability of the lien is
contingent on a final and executory award of money to the client.
This Court notes that in CA-G.R. SP No. 108734, the CA nullified the
"award" to which the RTC attached the attorney’s lien as there was
nothing due to the petitioner. Thus, enforcement of the lien was
premature.

The RTC’s issuance of a writ of execution before the lapse of the

reglementary period to appeal from its order is likewise
premature.1âwphi1 The Order of the RTC dated January 21, 2009, is
an order that finally disposes of the issue on the amount of
attorney’s fees Atty. Abrogar is entitled to. The execution of a final
order issues as a matter of right upon the expiration of the
reglementary period if no appeal has been perfected.18 Under Rule
39, Section 2 of the Rules of Court, discretionary execution can only
be made before the expiration of the reglementary period upon a
motion of the prevailing party with notice to the adverse party.
Discretionary execution may only issue upon good reasons to be
stated in a special order after due hearing.19

The RTC ordered execution without satisfying the requisites that

would have justified discretionary execution. Atty. Abrogar had not
moved for execution and there were no good reasons to justify the
immediate execution of the RTC's order. Clearly, the RTC gravely
abused its discretion when it ordered the execution of its order
dated January 21, 2009, before the lapse of the reglementary
period.

For these reasons, this Court finds that the CA erred when it held
that the RTC did not commit grave abuse of discretion and acted
without jurisdiction.

As our last word, this decision should not be construed as imposing

unnecessary burden on the lawyer in collecting his just fees. But, as
in the exercise of any other right conferred by law, the lawyer - and
the courts - must avail of the proper legal remedies and observe the
procedural rules to prevent the possibility, or even just the
perception, of abuse or prejudice.20

WHEREFORE, premises considered, we hereby GRANT the petition.

The decision of the Court of Appeals in CA-G.R. SP No. 108675 dated
October 16, 2009, is hereby REVERSED, and the decision of the
Regional Trial Court, Branch 83, Quezon City in Sp. Proc. No. Q-05-
59112 is hereby ANNULLED and SET ASIDE.

SO ORDERED.
G.R. No. 176339 January 10, 2011
DO-ALL METALS INDUSTRIES, INC., SPS. DOMINGO LIM and LELY
KUNG LIM, Petitioners,
vs.
SECURITY BANK CORP., TITOLAIDO E. PAYONGAYONG, EVYLENE C.
SISON, PHIL. INDUSTRIAL SECURITY AGENCY CORP. and GIL
SILOS, Respondents.
DECISION
ABAD, J.:
This case is about the propriety of awarding damages based on
claims embodied in the plaintiff’s supplemental complaint filed
without prior payment of the corresponding filing fees.
The Facts and the Case
From 1996 to 1997, Dragon Lady Industries, Inc., owned by
petitioner spouses Domingo Lim and Lely Kung Lim (the Lims) took
out loans from respondent Security Bank Corporation (the Bank)
that totaled ₱92,454,776.45. Unable to pay the loans on time, the
Lims assigned some of their real properties to the Bank to secure the
same, including a building and the lot on which it stands (the
property), located at M. de Leon St., Santolan, Pasig City.1
In 1998 the Bank offered to lease the property to the Lims through
petitioner Do-All Metals Industries, Inc. (DMI) primarily for business
although the Lims were to use part of the property as their
residence. DMI and the Bank executed a two-year lease contract
from October 1, 1998 to September 30, 2000 but the Bank retained
the right to pre-terminate the lease. The contract also provided that,
should the Bank decide to sell the property, DMI shall have the right
of first refusal.
On December 3, 1999, before the lease was up, the Bank gave notice
to DMI that it was pre-terminating the lease on December 31, 1999.
Wanting to exercise its right of first refusal, DMI tried to negotiate
with the Bank the terms of its purchase. DMI offered to pay the Bank
₱8 million for the property but the latter rejected the offer,
suggesting ₱15 million instead. DMI made a second offer of ₱10
million but the Bank declined the same.
While the negotiations were on going, the Lims claimed that they
continued to use the property in their business. But the Bank posted
at the place private security guards from Philippine Industrial
Security Agency (PISA). The Lims also claimed that on several
occasions in 2000, the guards, on instructions of the Bank
representatives Titolaido Payongayong and Evylene Sison, padlocked
the entrances to the place and barred the Lims as well as DMI’s
employees from entering the property. One of the guards even
pointed his gun at one employee and shots were fired. Because of
this, DMI was unable to close several projects and contracts with
prospective clients. Further, the Lims alleged that they were unable
to retrieve assorted furniture, equipment, and personal items left at
the property.
The Lims eventually filed a complaint with the Regional Trial Court
(RTC) of Pasig City for damages with prayer for the issuance of a
temporary restraining order (TRO) or preliminary injunction against
the Bank and its co-defendants Payongayong, Sison, PISA, and Gil
Silos.2 Answering the complaint, the Bank pointed out that the lease
contract allowed it to sell the property at any time provided only
that it gave DMI the right of first refusal. DMI had seven days from
notice to exercise its option. On September 10, 1999 the Bank gave
notice to DMI that it intended to sell the property to a third party.
DMI asked for an extension of its option to buy and the Bank
granted it. But the parties could not agree on a purchase price. The
Bank required DMI to vacate and turnover the property but it failed
to do so. As a result, the Bank’s buyer backed-out of the sale.
Despite what happened, the Bank and DMI continued negotiations
for the purchase of the leased premises but they came to no
agreement.
The Bank denied, on the other hand, that its guards harassed DMI
and the Lims. To protect its property, the Bank began posting guards
at the building even before it leased the same to DMI. Indeed, this
arrangement benefited both parties. The Bank alleged that in
October of 2000, when the parties could not come to an agreement
regarding the purchase of the property, DMI vacated the same and
peacefully turned over possession to the Bank.
The Bank offered no objection to the issuance of a TRO since it
claimed that it never prevented DMI or its employees from entering
or leaving the building. For this reason, the RTC directed the Bank to
allow DMI and the Lims to enter the building and get the things they
left there. The latter claimed, however, that on entering the
building, they were unable to find the movable properties they left
there. In a supplemental complaint, DMI and the Lims alleged that
the Bank surreptitiously took such properties, resulting in additional
actual damages to them of over ₱27 million.
The RTC set the pre-trial in the case for December 4, 2001. On that
date, however, counsel for the Bank moved to reset the proceeding.
The court denied the motion and allowed DMI and the Lims to
present their evidence ex parte. The court eventually reconsidered
its order but only after the plaintiffs had already presented their
evidence and were about to rest their case. The RTC declined to
recall the plaintiffs’ witnesses for cross- examination but allowed the
Bank to present its evidence.3 This prompted the Bank to seek relief
from the Court of Appeals (CA) and eventually from this Court but to
no avail.4
During its turn at the trial, the Bank got to present only defendant
Payongayong, a bank officer. For repeatedly canceling the hearings
and incurring delays, the RTC declared the Bank to have forfeited its
right to present additional evidence and deemed the case submitted
for decision.
On September 30, 2004 the RTC rendered a decision in favor of DMI
and the Lims. It ordered the Bank to pay the plaintiffs
₱27,974,564.00 as actual damages, ₱500,000.00 as moral damages,
₱500,000 as exemplary damages, and ₱100,000.00 as attorney’s
fees. But the court absolved defendants Payongayong, Sison, Silos
and PISA of any liability.
The Bank moved for reconsideration of the decision, questioning
among other things the RTC’s authority to grant damages
considering plaintiffs’ failure to pay the filing fees on their
supplemental complaint. The RTC denied the motion. On appeal to
the CA, the latter found for the Bank, reversed the RTC decision, and
dismissed the complaint as well as the counterclaims.5 DMI and the
Lims filed a motion for reconsideration but the CA denied the same,
hence this petition.
 The Issues Presented
The issues presented in this case are:
1. Whether or not the RTC acquired jurisdiction to hear
and adjudicate plaintiff’s supplemental complaint against
the Bank considering their failure to pay the filing fees on
the amounts of damages they claim in it;
2. Whether or not the Bank is liable for the intimidation
and harassment committed against DMI and its
representatives; and
3. Whether or not the Bank is liable to DMI and the Lims
for the machineries, equipment, and other properties they
allegedly lost after they were barred from the property.
The Court’s Rulings
One. On the issue of jurisdiction, respondent Bank argues that
plaintiffs’ failure to pay the filing fees on their supplemental
complaint is fatal to their action.
But what the plaintiffs failed to pay was merely the filing fees for
their Supplemental Complaint. The RTC acquired jurisdiction over
plaintiffs’ action from the moment they filed their original complaint
accompanied by the payment of the filing fees due on the same. The
plaintiffs’ non-payment of the additional filing fees due on their
additional claims did not divest the RTC of the jurisdiction it already
had over the case.6
Two. As to the claim that Bank’s representatives and retained guards
harassed and intimidated DMI’s employees and the Lims, the RTC
found ample proof of such wrongdoings and accordingly awarded
damages to the plaintiffs. But the CA disagreed, discounting the
testimony of the police officers regarding their investigations of the
incidents since such officers were not present when they happened.
The CA may be correct in a way but the plaintiffs presented
eyewitnesses who testified out of personal knowledge. The police
officers testified merely to point out that there had been trouble at
the place and their investigations yielded their findings.
The Bank belittles the testimonies of the petitioners’ witnesses for
having been presented ex parte before the clerk of court. But the ex
parte hearing, having been properly authorized, cannot be assailed
as less credible. It was the Bank’s fault that it was unable to attend
the hearing. It cannot profit from its lack of diligence.
Domingo Lim and some employees of DMI testified regarding the
Bank guards’ unmitigated use of their superior strength and
firepower. Their testimonies were never refuted. Police Inspector
Priscillo dela Paz testified that he responded to several complaints
regarding shooting incidents at the leased premises and on one
occasion, he found Domingo Lim was locked in the building. When
he asked why Lim had been locked in, a Bank representative told
him that they had instructions to prevent anyone from taking any
property out of the premises. It was only after Dela Paz talked to the
Bank representative that they let Lim out.7
Payongayong, the Bank’s sole witness, denied charges of
harassment against the Bank’s representatives and the guards. But
his denial came merely from reports relayed to him. They were not
based on personal knowledge.1avvphil
While the lease may have already lapsed, the Bank had no business
harassing and intimidating the Lims and their employees. The RTC
was therefore correct in adjudging moral damages, exemplary
damages, and attorney’s fees against the Bank for the acts of their
representatives and building guards.
Three. As to the damages that plaintiffs claim under their
supplemental complaint, their stand is that the RTC committed no
error in admitting the complaint even if they had not paid the filing
fees due on it since such fees constituted a lien anyway on the
judgment award. But this after-judgment lien, which implies that
payment depends on a successful execution of the judgment, applies
to cases where the filing fees were incorrectly assessed or paid or
where the court has discretion to fix the amount of the
award.8 None of these circumstances obtain in this case.
Here, the supplemental complaint specified from the beginning the
actual damages that the plaintiffs sought against the Bank. Still
plaintiffs paid no filing fees on the same. And, while petitioners
claim that they were willing to pay the additional fees, they gave no
reason for their omission nor offered to pay the same. They merely
said that they did not yet pay the fees because the RTC had not
assessed them for it. But a supplemental complaint is like any
complaint and the rule is that the filing fees due on a complaint
need to be paid upon its filing.9 The rules do not require the court to
make special assessments in cases of supplemental complaints.
To aggravate plaintiffs’ omission, although the Bank brought up the
question of their failure to pay additional filing fees in its motion for
reconsideration, plaintiffs made no effort to make at least a late
payment before the case could be submitted for decision, assuming
of course that the prescription of their action had not then set it in.
Clearly, plaintiffs have no excuse for their continuous failure to pay
the fees they owed the court. Consequently, the trial court should
have treated their Supplemental Complaint as not filed.
Plaintiffs of course point out that the Bank itself raised the issue of
non-payment of additional filing fees only after the RTC had
rendered its decision in the case. The implication is that the Bank
should be deemed to have waived its objection to such omission.
But it is not for a party to the case or even for the trial court to
waive the payment of the additional filing fees due on the
supplemental complaint. Only the Supreme Court can grant
exemptions to the payment of the fees due the courts and these
exemptions are embodied in its rules.
Besides, as correctly pointed out by the CA, plaintiffs had the burden
of proving that the movable properties in question had remained in
the premises and that the bank was responsible for their loss. The
only evidence offered to prove the loss was Domingo Lim’s
testimony and some undated and unsigned inventories. These were
self-serving and uncorroborated.
WHEREFORE, the Court PARTIALLY GRANTS the petition and
REINSTATES with modification the decision of the Regional Trial
Court of Pasig City in Civil Case 68184. The Court DIRECTS
respondent Security Bank Corporation to pay petitioners DMI and
spouses Domingo and Lely Kung Lim damages in the following
amounts: ₱500,000.00 as moral damages, ₱500,000.00 as exemplary
damages, and ₱100,000.00 for attorney’s fees. The Court DELETES
the award of actual damages of ₱27,974,564.00.

SO ORDERED.
.R. No. 175733
WESTMONT BANK (now UNITED OVERSEAS BANK
PHILS.*), Petitioner,
vs.
FUNAI PHILIPPINES CORPORATION, SPOUSES ANTONIO and SYLVIA
YUTINGCO, PANAMAX CORPORATION, PEPITO ONG NGO, RICHARD
N. YU, AIMEE R. ALBA, ANNABELLE BAESA, NENITA RESANE, and
MARIA ORTIZ, Respondents.
x-----------------------x
G.R. No. 180162
CARMELO V. CACHERO, Petitioner,
Vs.
UNITED OVERSEAS BANK PHILS. and/or WESTMONT
BANK, Respondents.
DECISION
PERLAS-BERNABE, J.:
Before the Court are petitions for review on certiorari1assailing: (a)
the Decision2 dated November 8, 2006 of the Court of Appeals (CA)
in CA- G.R. CV No. 71933, which affirmed with modification the
Decision3 dated June 20, 2001 rendered by the Regional Trial Court
of Manila, Branch 49 (RTC) in Civil Case No. 98-86853l, and awarded
five percent (5%) of the principal amount as attorney’s fees; (b) the
Decision4 dated April 23, 2007 of the CA in CA-G.R. SP. Nos. 65785
and 66410, which nullified the Orders dated July 17, 20015 and July
23, 20016 of the RTC in the same civil case, and adjudged petitioner
Sheriff Carmelo V. Cachero (Sheriff Cachero) guilty of indirect
contempt with the penalty of a fine; and (c) the Resolution7 dated
October 24, 2007 of the CA in CA-G.R. SP. Nos. 65785 and 66410,
which denied Sheriff Cachero’s motion for reconsideration.
The Facts
Sometime in April and May 1997, respondents Funai Philippines
Corporation (Funai) and Spouses Antonio and Sylvia Yutingco (Sps.
Yutingco) obtained loans from Westmont Bank (Westmont), now
United Overseas Bank Phils., in the aggregate amount of
P10,000,000.00, secured by several promissory notes8 (PNs) with
different maturity dates.9 The PNs commonly provide that in case
the same are referred to an attorney at-law or a collection agency,
or a suit is instituted in court for collection, Sps. Yutingco will be
liable to pay twenty percent (20%) of the total amount due as
attorney’s fees, exclusive of costs of suit and other expenses.10
However, Funai and Sps. Yutingco (original defendants) defaulted in
the payment of the said loan obligations when they fell due, and
ignored Westmont’s demands for payment.11 Hence, the Westmont
filed a complaint12 for sum of money, with prayer for the issuance of
a writ of preliminary attachment before the RTC on January 16,
1998, docketed as Civil Case No. 98-86853.
The RTC Proceedings
After an ex-parte hearing, the RTC issued a Writ of Preliminary
Attachment13 dated February 19, 1998 ordering the attachment of
the personal and real properties of the original defendants.
Furthermore, the RTC issued another Order14 dated March 24, 1998,
directing the attachment of properties appearing under the names
of other persons, but which were under the control of the original
defendants. In view of the foregoing directives, Sheriff Gerry C.
Duncan (Sheriff Duncan) and Sheriff Cachero levied and seized the
properties situated at: (a) No. 9 Northpark Avenue, Bellevue, Grace
Village, Quezon City; and (b) 2nd Level, Phase III, Sta. Lucia East
Grand Mall, Cainta, Rizal (Sta. Lucia).15
Pepito Ong Ngo (Ngo), as Acting President of Panamax Corporation
(Panamax), filed an Affidavit of Third-Party Claim16 over the
properties seized in Sta. Lucia, claiming that Panamax is the true and
lawful owner thereof.17
On April 20, 1998, Westmont filed an Amended
Complaint18 impleading as additional defendants, Panamax, Ngo,
Aimee R. Alba, Richard N. Yu, Annabelle Baesa, and Nenita
Resane19 (additional defendants), and praying that they be declared
as mere alter egos, conduits, dummies, or nominees of Sps. Yutingco
to defraud their creditors, including Westmont.20 On August 6, 1998,
Westmont filed a Second Amended Complaint21 adding Maria Ortiz
to the roster of additional defendants.22
On August 14, 1998,23 the original defendants submitted their
Answer,24 explaining that their "non-payment was due to
circumstances beyond their control and occasioned by [Westmont’s]
sudden treacherous manipulation leaving no room for [original]
defendants to make arrangements for payment,"25 and interposing a
counterclaim for actual and moral damages and attorney’s fees for
the alleged irregular levy.26
On the other hand, the additional defendants moved to
dismiss27 the complaints and, thereafter, filed their
Answer,28alleging that: (a) the complaints stated no cause of action
against them, considering the lack of legal tie or vinculum juris with
Westmont; and (b) they were not parties-in-interest in the case
absent any proof linking them to the transaction between
Westmont and the original defendants.29 They thereby interposed a
counterclaim for actual, moral, and exemplary damages, as well as
attorney’s fees, and costs of suit.30
On December 11, 1998, Westmont moved for a judgment on the
pleadings.31 During its pendency, a public auction sale of the seized
properties was conducted on March 16, 2001 that realized net
proceeds in the amount of P1,030,000.00.32
In a Decision33 dated June 20, 2001 (June 20, 2001 RTC Decision), the
RTC adjudged the original defendants jointly and severally liable to
Westmont for the amount of P10,000,000.00 less the amount of
P1,030,000.00 realized from the public auction sale, plus nineteen
percent (19%) legal interest from the filing of the complaint until
fully paid.34 However, it dismissed the amended and second
amended complaints for failure to state a cause of action against the
additional defendants and ordered the return of the items
wrongfully seized, to the premises of Panamax in Sta. Lucia.35
The RTC ruled that the additional defendants had no participation or
any corresponding duty whatsoever relative to the subject PNs,
which were executed only by the original defendants in favor of
Westmont; hence, the latter cannot maintain an action against said
additional defendants. The RTC further held that Westmont’s
imputation that the additional defendants acted as dummies,
conduits, and alter egos of the original defendants are but mere
inferences of fact, and not a narration of specific acts or set of facts
or ultimate facts required in a complaint to entitle the plaintiff to a
remedy in law. Thus, it concluded that the complaint failed to state
a cause of action against the additional defendants.36
Westmont’s partial motion for reconsideration37 from the June 20,
2001 RTC Decision, dismissing the complaints against the additional
defendants, was denied in an Order38 dated July 19, 2001. Hence, it
filed a notice of partial appeal,39 docketed as CA-G.R. CV No.
71933.40
On the other hand, the additional defendants filed on July 6, 2001 a
Motion for Execution Pending Appeal,41 praying for the return of the
seized items which were in danger of becoming obsolescent and
useless, and whose value had considerably gone down in the
market.42 The said motion was granted in an Order43 dated July 17,
2001 (July 17, 2001 Execution Order). Accordingly, the RTC issued a
writ of execution44 of even date, directing Sheriff Duncan and Sheriff
Cachero to cause the immediate return of the wrongfully seized
items to the additional defendants.45However, Westmont refused to
release the seized items, hence, the RTC issued an Order46 dated July
23, 2001 (July 23, 2001 Execution Order), enjoining Westmont to
comply with the order of execution, otherwise, a break-open order
shall be issued.47
Aggrieved, Westmont filed a petition for certiorari 48 with very
urgent motion/prayer for a temporary restraining order (TRO)
and/or writ of preliminary injunction before the CA, docketed as CA-
G.R. SP. No. 65785, seeking to prevent the RTC and the additional
defendants from implementing the July 17 and 23, 2001 Execution
Orders (Execution Orders).49
Due to Westmont’s continued refusal to release the seized items,
the RTC issued a Break-Open Order50 dated July 25, 2001 to enforce
the writ. However, the following day, or on July 26, 2001, the CA
issued a TRO51 enjoining Sheriffs Duncan and Cachero from
enforcing the writ of execution.52 The CA process server, Alfredo
Obrence, Jr. (Obrence), duly served a copy of the TRO to the RTC
Clerk of Court at around 2:30 p.m.53 and informed Sheriff Cachero
thereof over the phone. Notwithstanding, the latter proceeded with
the implementation of the writ of execution.54
At around 3:00 p.m., Westmont’s representative who was able to
secure a facsimile copy of the TRO showed the same to Sheriff
Cachero who merely ignored it. Meanwhile, various audio, video,
and electrical appliances were taken out from the warehouse and
loaded into a truck.55 At around 4:15 p.m., Obrence arrived at the
site and served on Sheriff Cachero a duplicate original copy of the
TRO.56 Nonetheless, the items on the truck were not unloaded and
the truck was allowed to leave the premises.57 Consequently, a case
for indirect contempt was filed by Westmont against Sheriffs
Cachero and Duncan, and Ngo, docketed as CA-G.R. SP. No. 66410,
which was consolidated with the petition for certiorari in CA-G.R. SP.
No. 65785.58
The Ruling in CA-G.R. CV No. 71933
In a Decision59 dated November 8, 2006, the CA affirmed the June
20, 2001 RTC Decision, with the modification awarding five percent
(5%) of the principal amount as attorney’s fees.60
The CA ruled that Westmont has no cause of action against the
additional defendants as they had no participation whatsoever in
the execution of the subject PNs.61 It further struck down the writ of
attachment issued in the case, considering that the same was
implemented against the additional defendants prior to the
acquisition of jurisdiction over their persons.62 Finally, it declared
Westmont entitled to the award of attorney’s fees on the basis of
the express stipulation in the PNs, but in the reduced amount of five
percent (5%), which it found reasonable under the premises. 63
Dissatisfied, Westmont filed a petition for partial review
on certiorari64 before the Court, docketed as G.R. No. 175733.
The Ruling in CA-G.R. SP. Nos. 65785 and 66410
In a Decision65 dated April 23, 2007, the CA: (a) nullified the
Execution Orders, granting the additional defendants’ Motion for
Execution Pending Appeal, and enjoining Westmont to comply with
the Execution Orders; and (b) adjudged Sheriff Cachero guilty of
indirect contempt and ordered him to pay a fine of P30,000.00.66
The CA found no good reasons stated in a special order to justify the
RTC’s grant of discretionary execution pending appeal in favor of the
additional defendants.67 On the petition for indirect contempt, the
CA found that Sheriff Cachero had prior knowledge of the TRO, even
before he broke the padlock of the warehouse,68 warranting the
inference that he had the intention to defy the same.69 Moreover,
despite actual receipt of the TRO, he failed to rectify his acts.70 On
the other hand, the CA found no evidence to hold Sheriff Duncan
and Ngo liable, absent any showing that they knew of the TRO.71
Sheriff Cachero filed a motion for reconsideration,72 which was,
however, denied in a Resolution73 dated October 24, 2007, hence
the instant petition for review on certiorari74 before the Court,
docketed as G.R. No. 180162.
In a Resolution75 dated August 15, 2012, the Court, resolved to
consolidate G.R. Nos. 175733 and 180162.
In the meantime, records show that the accounts involved in the
instant cases were assigned by Westmont to the Philippine Deposit
Insurance Corporation.76
The Issues Before the Court
The essential issues for the Court’s resolution are as follows:
In G.R. No. 175733:
Westmont argues that the CA gravely erred in: (a) not applying the
alter ego doctrine;77 (b) not considering additional defendants as
necessary parties to the case;78 (c) not awarding exemplary damages
in its favor;79 and (d) disregarding the express stipulation of the PNs
regarding attorney’s fees.80
In G.R. No. 180162:
Sheriff Cachero asserts that the CA committed gross abuse of
discretion when it adjudged him guilty of indirect contempt in
implementing the writ of execution and the Break-Open Order
despite the want of proper, timely, and adequate notice of the
TRO.81
 The Court’s Ruling
The petitions lack merit.
Re: G.R. No. 175733
At the outset, it must be stressed that Civil Case No. 98-86853 was
submitted for judgment on the pleadings, on Westmont’s
motion.82 Hence, other than the hearing on the motion to discharge
the attached items,83 no full-blown trial was conducted on the case.
In the case at bar, both the RTC and the CA were one in dismissing
Westmont’s Amended and Second Amended Complaints as to the
additional defendants, but differed on the grounds therefor – i.e.,
the RTC held that said complaints failed to state a cause of action,
while the CA ruled that there was no cause of action, as to the
additional defendants.
"Failure to state a cause of action and lack of cause of action are
distinct grounds to dismiss a particular action. The former refers to
the insufficiency of the allegations in the pleading, while the latter to
the insufficiency of the factual basis for the action. Dismissal for
failure to state a cause of action may be raised at the earliest stages
of the proceedings through a motion to dismiss under Rule 16 of the
Rules of Court, while dismissal for lack of cause of action may be
raised any time after the questions of fact have been resolved on
the basis of stipulations, admissions or evidence presented by the
plaintiff."84
Considering that, in this case, no stipulations, admissions, or
evidence have yet been presented, it is perceptibly impossible to
assess the insufficiency of the factual basis on which Sheriff Cachero
asserts his cause of action. Hence, the ground of lack of cause of
action could not have been the basis for the dismissal of this action.
Nonetheless, the Amended and Second Amended Complaints are
still dismissible on the ground of failure to state a cause of action, as
correctly held by the RTC.1âwphi1
"A complaint states a cause of action if it sufficiently avers the
existence of the three (3) essential elements of a cause of action,
namely: (a) a right in favor of the plaintiff by whatever means and
under whatever law it arises or is created; (b) an obligation on the
part of the named defendant to respect or not to violate such right;
and (c) an act or omission on the part of the named defendant
violative of the right of the plaintiff or constituting a breach of the
obligation of defendant to the plaintiff for which the latter may
maintain an action for recovery of damages. If the allegations of the
complaint do not state the concurrence of these elements, the
complaint becomes vulnerable to a motion to dismiss on the ground
of failure to state a cause of action."85
Judicious examinations of Westmont’s Amended and Second
Amended Complaints readily show their failure to sufficiently state a
cause of action as the allegations therein do not proffer ultimate
facts which would warrant an action against the additional
defendants for the collection of the amount due on the subject PNs.
In imputing liability to the additional defendants, Westmont merely
alleged in its Second Amended Complaint:
"Panamax, Ngo, Alba, Yu, Baesa and Resane are impleaded herein
for being mere alter egos, conduits, dummies or nominees of
defendants spouses Antonio and Sylvia Yutingco to defraud
creditors, including herein plaintiff [Westmont].
xxxx
Maria Ortiz is impleaded herein for being mere alter ego, conduit,
dummy or nominee of defendants spouses Antonio and Sylvia
Yutingco to defraud creditors, including herein
plaintiff [Westmont]." (Underscoring supplied)86
The aforecited allegations partake of the nature of mere conclusions
of law, unsupported by a particular averment of circumstances that
will show why or how such inferences or conclusions were arrived at
as to bring the controversy within the trial court’s
jurisdiction.87 There is no explanation or narration of facts that
would disclose why the additional defendants are mere alter egos,
conduits, dummies or nominees of the original defendants to
defraud creditors, contrary to the requirement of Section 5,88 Rule 8
of the Rules of Court that the circumstances constituting fraud must
be stated with particularity, thus, rendering the allegation of fraud
simply an unfounded conclusion of law. It must be pointed out that,
in the absence of specific averments, the complaint presents no
basis upon which the court should act, or for the defendant to meet
it with an intelligent answer89 and must, perforce, be dismissed for
failure to state a cause of action,90 as what the RTC did.
It bears to stress that "while the facts alleged in the complaint are
hypothetically admitted by the defendant, who moves to dismiss the
complaint on the ground of failure to state a cause of action, it must,
nevertheless, be remembered that the hypothetical admission
extends only to the relevant and material facts well pleaded in the
complaint, as well as inferences fairly deductible
therefrom."91 Verily, the filing of the motion to dismiss assailing the
sufficiency of the complaint "does not admit the truth of mere
epithets of fraud; nor allegations of legal conclusions; nor an
erroneous statement of law; nor mere inferences or conclusions
from facts not stated; nor mere conclusions of law; nor allegations
of fact the falsity of which is subject to judicial notice; nor matters of
evidence; nor surplusage and irrelevant matter; nor scandalous
matter inserted merely to insult the opposing party; nor to legally
impossible facts; nor to facts which appear unfounded by a record
incorporated in the pleading, or by a document referred to; nor to
general averments contradicted by more specific averments."92
Anent the award of attorney’s fees, it is relevant to note that the
stipulations on attorney’s fees contained in the PNs constitute what
is known as a penal clause. The award of attorney’s fees by the CA,
therefore, is not in the nature of an indemnity but rather a penalty
in the form of liquidated damages in accordance with the contract
between Westmont and the original defendants. "Such a stipulation
has been upheld by [the] Court as binding between the parties so
long as it does not contravene the law, morals, public order or public
policy."93 Nevertheless, the courts possess the power to reduce the
amount of attorney’s fees whether intended as an indemnity or a
penalty, if the same is iniquitous or unconscionable.94 Thus, in Trade
& Investment Dev’t. Corp. of the Phils. v. Roblett Industrial
Construction Corp.,95 the Court equitably reduced the amount of
attorney’s fees to be paid since interests (and penalties) had
ballooned to thrice as much as the principal debt. In the present
case, interest alone runs to more than thrice the principal amount of
the loan obligation.96 In real terms, therefore, attorney’s fees at the
stipulated rate of 20% of the total amount due of over
P42,000,000.00,97 or about P8,400,000.00, is manifestly exorbitant.
Hence, the Court concurs with the CA that the amount of attorney’s
fees should be equitably reduced to five percent (5%) of the WHEREFORE, the petitions are DENIED. The Court
principal debt, which the Court finds reasonable under the premises. hereby AFFIRMS: (a) the Decision dated November 8, 2006 of the
Court of Appeals (CA) in CA-G.R. CV No. 71933, dismissing the
Finally, anent Westmont’s claim for exemplary damages, the Court Amended and Second Amended Complaints against the additional
does not find any factual and legal98 bases for the award. A perusal defendants, namely, Panamax Corporation, Pepito Ong Ngo, Aimee
of the original, amended and second amended complaints failed to R. Alba, Richard N. Yu, Annabelle Baesa, Nenita Resane and Maria
disclose specific averments that will show the wanton, fraudulent, Ortiz in Civil Case No. 98-86853 before the Regional Trial Court of
reckless, oppressive or malevolent acts99 committed by the original Manila, Branch 49 (RTC), and directing the original defendants,
defendants with respect to the loan obligation sought to be namely, Funai Phils. Corp. and Spouses Antonio and Sylvia Yutingco
enforced. to pay attorney's fees in the amount of five percent (5%) of the
principal amount; (b) the Decision dated April 23, 2007 and the
Resolution dated October 24, 2007 of the CA in CA-G.R. SP. Nos.
Re: G.R. No. 180162
65785 and 66410, which nullified the Execution Orders dated July
17, 2001 and July 23, 2001 of the RTC in Civil Case No. 98-86853, and
It is well-settled that a sheriff performs a sensitive role in the adjudged Sheriff Carmelo V. Cachero guilty of indirect contempt
dispensation of justice. He is duty-bound to know the basic rules in with the penalty of fine in the amount of P30,000.00.
the implementation of a writ of execution and be vigilant in the
exercise of that authority. While sheriffs have the ministerial duty to
SO ORDERED.
implement writs of execution promptly, they are bound to discharge
their duties with prudence, caution, and attention which careful
men usually exercise in the management of their affairs. Sheriffs, as
officers of the court upon whom the execution of a judgment
depends, must be circumspect and proper in their
behavior.100 Anything less is unacceptable because in serving the
court’s writs and processes and in implementing the orders of the
court, sheriffs cannot afford to err without affecting the efficiency of
the process of the administration of justice.101

In the present case, Sheriff Cachero failed to exercise circumspection

in the enforcement of the writ of execution, given the information
that a TRO had already been issued by the CA enjoining him from
implementing the same. This clearly evinces an intention to defy the
TRO. As aptly observed by the CA:

Sheriff Cachero, being an officer of the court, should have exercised

prudence by verifying whether there was really a TRO issued so as to
avoid committing an act that would result in the thwarting of this
Court’s order. Assuming that [his] testimony that the loading of the
items was completed at 4:00 p.m., and that the process server was
fifteen minutes late in serving the TRO, the phone call and the
presentation of the fax copy of the TRO sufficiently notified him of
the Court’s order which enjoined them (the Sheriffs) from carrying
out the writ of execution. The fact of [his] prior actual knowledge
was never refuted by him. It was also undisputed that he already
knew of the existence of the TRO even before he broke the padlock
of the warehouse.102

In this relation, the Court does not find credence in Sheriff Cachero’s
insistence that while he may have "gotten wind" of the TRO through
a cellular phone call, he was not bound thereby unless an official
copy of the TRO was duly served upon him.103

Settled is the rule that where a party has actual notice, no matter
how acquired, of an injunction clearly informing him from what he
must abstain, he is "legally bound from that time to desist from
what he is restrained and inhibited from doing, and will be
punished for a violation thereof, even though it may not have
served, or may have been served on him defectively."104

In view of the foregoing, the Court finds that Sheriff Cachero’s open
defiance of the TRO constitutes contumacious behavior falling under
Section 3 (b),105 Rule 71 of the Rules of Court, which is punishable by
a fine not exceeding P30,000.00 or imprisonment not exceeding six
(6) months or both.
G.R. No. 170746-47 March 07, 2016
CALTEX (PHILIPPINES), INC., Petitioner,
vs.
MA. FLOR A. SINGZON AGUIRRE, ERNEST SINGZON, CESAR
SINGZON AND ALL THE OTHER PLAINTIFFS- INTERVENORS IN CIVIL
CASES NOS. 91-59592,91-59658, AND 92-61026 PENDING BEFORE
THE REGIONAL TRIAL COURT OF MANILA, BRANCH 39, Respondent.
DECISION
REYES, J.:
Facts
Dubbed as the Asia's Titanic,1 the M/V Dona Paz was an inter-island
passenger vessel owned and operated by Sulpicio Lines, Inc.
(Sulpicio) traversing its Leyte to Manila route on the night of
December 20, 1987, when it collided with M/T Vector, a commercial
tanker owned and operated by Vector Shipping Corporation, Inc.,
(Vector Shipping). On that particular voyage, M/T Vector was
chartered by Caltex (Philippines) Inc., et al.2 (petitioners) to
transport petroleum products. The collision brought forth an inferno
at sea with an estimate of about 4,000 casualties, and was described
as the "world's worst peace time maritime disaster."3 It precipitated
the filing of numerous lawsuits, the instant case included.
In December 1988, the heirs of the victims of the tragedy
(respondents), instituted a class action with the Civil District Court
for the Parish of Orleans, State of Louisiana, United States of
America (Louisiana Court), docketed as Civil Case No. 88-24481
entitled "Sivirino Carreon, et al. v. Caltex (Philippines), Inc., et
al."4 On November 30, 2000, the Louisiana Court entered a
conditional judgment dismissing the said case on the ground of
forum non-conveniens.5 This led the respondents, composed of
1,689 claimants, to file on March 6, 2001 a civil action for damages
for breach of contract of carriage and quasi-delict with the Regional
Trial Court (RTC) of Catbalogan, Samar, Branch 28 (RTC of
Catbalogan), against the herein petitioners, Sulpicio, Vector
Shipping, and Steamship Mutual Underwriting Association, Bermuda
Limited (Steamship). This was docketed as Civil Case No. 7277
entitled "Ma. Flor Singzon-Aguirre, et al. v. Sulpicio Lines, Inc., et
al."6
In its Order7 dated March 28, 2001, the RTC of Catbalogan, motu
proprio dismissed the complaint pursuant to Section 1, Rule 9 of the
1997 Rules of Civil Procedure as the respondents' cause of action
had already prescribed. In an unusual turn of events however, the
petitioners as defendants therein, who were not served with
summons, filed a motion for reconsideration, alleging that they are
waiving their defense of prescription, among others. The RTC of
Catbalogan, however, merely noted the petitioners' motion.8
The dismissal of the complaint prompted the respondents to have
the case reinstated with the Louisiana Court. The petitioners, as
defendants, however argued against it and contended that the
Philippines offered a more convenient forum for the parties,
specifically the RTC of Manila, Branch 39 (RTC of Manila), where
three consolidated cases9 concerning the M/V Dona Paz collision
were pending.10
In its Judgment11 dated March 27, 2002, the Louisiana Court once
again conditionally dismissed the respondents' action, ordering the
latter to bring their claims to the RTC of Manila by intervening in the
consolidated cases filed before the latter court. It was also stated in
the judgment that the Louisiana Court will allow the reinstatement
of the case if the Philippine court "is unable to assume jurisdiction
over the parties or does not recognize such cause of action or any
cause of action arising out of the same transaction or occurrence." 12
Following the Louisiana Court's order, the respondents filed a
motion for intervention on May 6, 2002, and a complaint in
intervention on May 13, 2002 with the pending consolidated cases
before the RTC of Manila. Also, co-defendants in the consolidated
cases, Sulpicio and Steamship were furnished with a copy of the
respondents' motion to intervene.
In their Manifestation13 dated April 24, 2002, the petitioners
unconditionally waived the defense of prescription of the
respondents' cause of action. The petitioners also reiterated a
similar position in their Comment/Consent to Intervention14 dated
May 16, 2002. Likewise, Sulpicio and Steamship filed their
Manifestation of No Objection dated May 30, 2002 and
Manifestation dated June 20, 2002 with the RTC of Manila,
expressing concurrence with the petitioners.15
On July 2, 2002, the RTC of Manila issued its Order16 denying the
respondents' motion to intervene for lack of merit. The RTC of
Manila ruled that the RTC of Catbalogan had already dismissed the
case with finality; that a final and executory prior judgment is a bar
to the filing of the complaint in intervention of the respondents; and
that the waivers of the defense of prescription made by the
petitioners, Sulpicio and Steamship are of no moment.17 The motion
for reconsideration filed by the petitioners, Sulpicio and Steamship
was denied as well on August 30, 2002.18
On September 25, 2002, the petitioners instituted a petition for
certiorari before the Court of Appeals (CA) docketed as CA-G.R. SP
No. 72994. On November 12, 2002, Sulpicio and Steamship also filed
a separate petition docketed as CA-G.R. SP No. 73793. These
petitions were consolidated in an order of the CA dated March 31,
2004.19
On April 27, 2005, the CA dismissed20 the consolidated petitions in
this wise:
WHEREFORE, premises considered, the consolidated petitions under
consideration are hereby DISMISSED. Accordingly, the assailed
orders of the [RTC of Manila] dated July 2, 2002 and August 30, 2002
are AFFIRMED. No pronouncement as to costs.
SO ORDERED.21ChanRoblesVirtualawlibrary
The CA concurred with the RTC of Manila that the finality of the
Order dated March 28, 2001 issued by the RTC of Catbalogan has
the effect of res judicata, which barred the respondents' motion to
intervene and complaint-in-intervention with the RTC of
Manila.22 The CA also considered the filing of motion for
reconsideration by the petitioners before the RTC of Catbalogan as
tantamount to voluntary submission to the jurisdiction of the said
court over their person.23 The CA rationalized that "[i]t is basic that
as long as the party is given the opportunity to defend his interests
in due course, he would have no reason to complain, for it is this
opportunity to be heard that makes up the essence of due
process."24
The motions for reconsideration having been denied by the CA in its
Order25 dated December 8, 2005, only the petitioners elevated the
matter before this Court by way of petition for review
on certiorari26under Rule 45.
The Parties' Arguments
The petitioners contended that not all the elements of res
judicata are present in this case which would warrant its application
as the RTC of Catbalogan did not acquire jurisdiction over their
persons and that the judgment therein is not one on the merits. 27 It
was also adduced that only the respondents were heard in the RTC
of Catbalogan because when the petitioners filed their motion for
reconsideration, the order of dismissal was already final and
executory.28 The petitioners also bewailed that other complaints
were accepted by the RTC of Manila in the consolidated cases
despite prescription of the cause of action29 and that the real issue
of merit is whether the defense of prescription that has matured can
be waived.30 They explained that they were not able to file for the
annulment of judgment or order of the RTC of Catbalogan since the
respondents precluded them from seeking such remedy by filing a
motion for intervention in the consolidated cases before the RTC of
Manila.31
On the other side, the respondents maintained that the waiver on
prescription is not the issue but bar by prior judgment is, because
when they filed their motion for intervention, the dismissal meted
out by the RTC of Catbalogan was already final.32 According to the
respondents, if the petitioners intended to have the dismissal
reversed, the latter should have appealed from the order of the RTC
of Catbalogan or filed a petition for certiorari against the said order
or an action to nullify the same.33 The respondents also elucidated
that they could not have precluded the petitioners from assailing the
RTC of Catbalogan's orders because it was not until May 6, 2002
when the respondents filed a motion for intervention with the
consolidated cases before the RTC of Manila34 and only in deference
to the 2nd order of dismissal of the Louisiana Court.35 Finally, for the
respondents, the CA correctly held that the petitioners cannot
collaterally attack the final order of the RTC of Catbalogan, the
reason being that a situation wherein there could be two conflicting
rulings between two co-equal courts must be avoided.36
Essentially, the issues can be summed up as follows:
I. WHETHER THE CA ERRED IN RULING THAT THE ORDERS OF
THE RTC OF CATBALOGAN BARRED THE FILING OF THE
MOTION AND COMPLAINT FOR INTERVENTION BEFORE
THE RTC OF MANILA; and
II. WHETHER THE CA ERRED IN AFFIRMING THE RTC OF
MANILA'S DISREGARD OF THE PETITIONERS' WAIVER OF
PRESCRIPTION ON THE GROUND OF BAR BY PRIOR
JUDGMENT.37
Ruling of the Court
The petition lacks merit.
The petitioners cannot be permitted to assert their right to waive
the defense of prescription when they had foregone the same
through their own omission, as will be discussed below.
The Court shall first discuss the prescription of the respondents'
cause of action against the petitioners. Article 1106 of the Civil Code
provides that "[b]y prescription, one acquires ownership and other
real rights through the lapse of time in the manner and under the
conditions laid down by law. In the same way, rights and conditions
are lost by prescription." The first sentence refers to acquisitive
prescription, which is a mode of "acquisition of ownership and other
real rights through the lapse of time in the manner and under the
conditions provided by law." The second sentence pertains to
extinctive prescription "whereby rights and actions are lost by the
lapse of time."38 It is also called limitation of action.39
This case involves the latter type of prescription, the purpose of
which is to protect the diligent and vigilant, not the person who
sleeps on his rights, forgetting them and taking no trouble of
exercising them one way or another to show that he truly has such
rights.40 The rationale behind the prescription of actions is to
suppress fraudulent and stale claims from springing up at great
distances of time when all the proper vouchers and evidence are lost
or the facts have become obscure from the lapse of time or
defective memory or death or removal of witnesses.41
There is no dispute that the respondents' cause of action against the
petitioners has prescribed under the Civil Code.42 In fact, the same is
evident on the complaint itself. The respondents brought their claim
before a Philippine court only on March 6, 2001, more than 13 years
after the collision occurred.43 Article 1139 of the Civil Code states
that actions prescribe by the mere lapse of time fixed by law.
Accordingly, the RTC of Catbalogan cannot be faulted for the motu
proprio dismissal of the complaint filed before it. It is settled that
prescription may be considered by the courts motu proprio if the
facts supporting the ground are apparent from the pleadings or the
evidence on record.44
The peculiarity in this case is that the petitioners, who were the
defendants in the antecedent cases before the RTCs of Catbalogan
and Manila, are most adamant in invoking their waiver of the
defense of prescription while the respondents, to whom the cause
of action belong, have acceded to the dismissal of their complaint.
The petitioners posit that there is a conflict between a substantive
law and procedural law in as much as waiver of prescription is
allowed under Article 1112 of the Civil Code, a substantive law even
though the motu proprio dismissal of a claim that has prescribed is
mandated under Section 1, Rule 9 of the Rules of Court.45
The Court has previously held that the right to prescription may be
waived or renounced pursuant to Article 1112 of the Civil Code:46
Art. 1112. Persons with capacity to alienate property may renounce
prescription already obtained, but not the right to prescribe in the
future.
Prescription is deemed to have been tacitly renounced when the
renunciation results from acts which imply the abandonment of the
right acquired.
In the instant case, not only once did the petitioners expressly
renounce their defense of prescription. Nonetheless, the Court
cannot consider such waiver as basis in order to reverse the rulings
of the courts below as the dismissal of the complaint had become
final and binding on both the petitioners and the respondents.
It is not contested that the petitioners were not served with
summons by the RTC of Catbalogan prior to the motu
proprio dismissal of the respondents' complaint. It is basic that
courts acquire jurisdiction over the persons of defendants or
respondents, by a valid service of summons or through their
voluntary submission.47 Not having been served with summons, the
petitioners were not initially considered as under the jurisdiction of
the court. However, the petitioners voluntarily submitted
themselves under the jurisdiction of the RTC of Catbalogan by filing
their motion for reconsideration.
Section 20, Rule 14 of the 1997 Rules of Court states:
Sec. 20. Voluntary appearance. - The defendant's voluntary
appearance in the action shall be equivalent to service of summons.
The inclusion in a motion to dismiss of other grounds aside from lack
of jurisdiction over the person of the defendant shall not be deemed
a voluntary appearance.
In Philippine Commercial International Bank v. Spouses Dy Hong Pi,
et al.,48 the Court explained the following:
(1) Special appearance operates as an exception to the general rule
on voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the
person of the defendant must be explicitly made, i.e., set forth in an
unequivocal manner; and
(3) Failure to do so constitutes voluntary submission to the
jurisdiction of the court, especially in instances where a pleading or
motion seeking affirmative relief is filed and submitted to the court
for resolution.49
Previous to the petitioners' filing of their motion for reconsideration,
the RTC of Catbalogan issued an Entry of Final Judgment50 stating
that its Order dated March 28, 2001 became final and executory on
April 13, 2001. The petitioners claimed that for this reason, they
could not have submitted themselves to the jurisdiction of the RTC
of Catbalogan by filing such a belated motion.51
But the petitioners cannot capitalize on the supposed finality of the
Order dated March 28, 2001 to repudiate their submission to the
jurisdiction of the RTC of Catbalogan. It must be emphasized that
before the filing of their motion for reconsideration, the petitioners
were not under the RTC of Catbalogan's jurisdiction. Thus, although
the order was already final and executory with regard to the
respondents; it was not yet, on the part of the petitioners. As
opposed to the conclusion reached by the CA, the Order dated
March 28, 2001 cannot be considered as final and executory with
respect to the petitioners. It was only on July 2, 2001, when the
petitioners filed a motion for reconsideration seeking to overturn
the aforementioned order, that they voluntarily submitted
themselves to the jurisdiction of the court. On September 4, 2001,
the RTC of Catbalogan noted the petitioners' motion for
reconsideration on the flawed impression that the defense of
prescription cannot be waived.52
Consequently, it was only after the petitioners' failure to appeal or
seek any other legal remedy to challenge the subsequent Order
dated September 4, 2001, that the dismissal became final on their
part. It was from the date of the petitioners' receipt of this particular
order that the reglementary period under the Rules of Court to
assail it commenced to run for the petitioners. But neither the
petitioners nor the respondents resorted to any action to overturn
the orders of the RTC of Catbalogan, which ultimately led to their
finality. While the RTC of Catbalogan merely noted the motion for
reconsideration in its Order dated September 4, 2001, the effect is
the same as a denial thereof, for the intended purpose of the
motion, which is to have the complaint reinstated, was not realized.
This should have prompted the petitioners to explore and pursue
other legal measures to have the dismissal reversed. Instead,
nothing more was heard from the parties until a motion for
intervention was filed by the respondents before the RTC of Manila,
in conformity with the order of the Louisiana Court. As the CA
espoused in its decision:
We concur with the observation of the [RTC of Manila] that the
petitioners' predicament was of their own making. The petitioners
should have exhausted the other available legal remedies under the
law after the [RTC of Catbalogan] denied their motion for
reconsideration. Under Section 9, Rule 37 of the [Rules of Court], the
remedy against an order denying a motion for reconsideration is not
to appeal the said order of denial but to appeal from the judgment
or final order of the court. Moreover, the petitioners could have
availed of an action for annulment of judgment for the very purpose
of having the final and executory judgment be set aside so that
there will be a renewal of litigation. An action for annulment of
judgment is grounded only on two justifications: (1) extrinsic fraud;
and (2) lack of jurisdiction or denial of due process. All that herein
petitioners have to prove was that the trial court had no jurisdiction;
that they were prevented from having a trial or presenting their case
to the trial court by some act or conduct of the private respondents;
or that they have been denied due process of law. Seasonably, the
petitioners could have also interposed a petition for certiorari under
Rule 65 of the Rules [of Court] imputing grave abuse of discretion on
the part of the trial court judge in issuing the said order of dismissal.
For reasons undisclosed in the records, the petitioners did not
bother to mull over and consider the said legal avenues, which they
could have readily availed of during that time.53
The RTC of Manila denied the respondents' motion for intervention
on the ground of the finality of the order of the RTC of Catbalogan,
there being no appeal or any other legal remedy perfected in due
time by either the petitioners or the respondents. Since the
dismissal of the complaint was already final and executory, the RTC
of Manila can no longer entertain a similar action from the same
parties. The bone of contention is not regarding the petitioners'
execution of waivers of the defense of prescription, but the effect
of finality of an order or judgment on both parties.
"Settled is the rule that a party is barred from assailing the
correctness of a judgment not appealed from by him" because the
"presumption [is] that a party who did not interject an appeal is
satisfied with the adjudication made by the lower court."54 Whether
the dismissal was based on the merits or technicality is beside the
point. "[A] dismissal on a technicality is no different in effect and
consequences from a dismissal on the merits."55
The petitioners attempted to justify their failure to file an action to
have the orders of the RTC of Catbalogan annulled by ratiocinating
that the respondents precluded them from doing so when the latter
filed their complaint anew with the RTC of Manila. This is untenable,
as it is clear that the respondents filed the said complaint-in-
intervention with the RTC of Manila more than a year after the case
was ordered dismissed by the RTC of Catbalogan.56 Aside from this,
the petitioners offered no other acceptable excuse on why they did
not raise their oppositions against the orders of the RTC of
Catbalogan when they had the opportunity to do so. Thus, the only
logical conclusion is that the petitioners abandoned their right to
waive the defense of prescription.
Lastly, the Court takes judicial notice of its ruling in Vector Shipping
Corporation, et al. v. Macasa, et al.57 and Caltex (Philippines) Inc., v.
Sulpicio Lines, Inc.58 wherein the petitioners, as a mere voyage
charterer, were exonerated from third party liability in the M/V
Doña Paz collision. Should this Court allow the reinstatement of the
complaint against the petitioners, let the trial proceedings take its
course, and decide the same on the merits in favor of the
respondents, then it would have led to the promulgation of
conflicting decisions. On the other hand, if this Court were to decide
this matter on the merits in favor of the petitioners, then the same
result would be obtained as with a dismissal now.chanrobleslaw

WHEREFORE, the petition is denied for lack of merit.

SO ORDERED
A.M. No. 88-1-646-0 March 3, 1988
RE: REQUEST OF THE PLAINTIFFS, HEIRS OF THE PASSENGERS OF
THE DOÑA PAZ TO SET ASIDE THE ORDER DATED JANUARY 4, 1988
OF JUDGE B.D. CHINGCUANGCO.
The Court deliberated on the letter-request of Atty. Pablito M. Rojas
dated January 5, 1988, the comments thereon of Quezon City
Executive Judge B.D. Chingcuangco and of counsel for Sulpicio Lines
et al, and the reply to said comments.
It appears that on January 4, 1988 a complaint for damages
amounting to more than one and a half billion pesos was filed in the
name and behalf of the relatives or heirs of the victims of "the worst
sea disaster in history:" the sinking of the vessel Doña Paz caused by
its collision with another vessel. The complaint characterized the
action thereby instituted as a "lass suit",prosecuted by the twenty-
seven (27) named plaintiffs in their behalf and in presentation of the
approximately 4,000 persons . . . (who also) are all close relatives
and legal heirs of the passengers of the Doña Paz" (par. 5). The
action's character as a class suit results, it is claimed, from "the
subject matter . . . (thereof being) of general or common interest to
4,000 persons, more or less, all of whom are residing variously in
Samar, Leyte and Metro Manila;" and its institution is proper
because the Identified plaintiffs are sufficiently numerous and
representative to fully protect the interests of all" (par. 3). The
complaint prayed that —
... judgment be rendered in favor of the plaintiffs
and all other persons embraced in this class suit,
and against the defendants, ordering them to
pay to the former, jointly and severally, as
follows:
a) From P200,000.00 to P400,000.00 per victim
or passenger who perished in the sinking of the
vessel DOÑA PAZ, by way of actual or
compensatory, moral and exemplary damages,
or the total amount of from P800,000,000.00 to
Pl,200,000,000.00 (should be P1,600,000,000.00)
for all of the 4,000 passengers on board said
vessel;
b) an amount which this Honorable Court may
deem just and reasonable as and by way of
attorney's fees and, under the circumstances of
this case, P10,000,000.00 would be reasonable;
xxx xxx xxx
Together with the complaint, the plaintiffs filed a "MOTION FOR
LEAVE TO FILE CASE AS PAUPER LITIGANT." They alleged that "a big
majority ... (of them) are poor and have no sufficient means to
finance the filing of this case especially because, considering the
gargantuan amount of damages involved, the amount of filing fee
alone will run to several thousands of pesos," that in view thereof
and the fact that the case was one of "national concern as shown by
the public outcry and sustained publicity that it has evoked,' the
Court "may be justified in ... (allowing them) to file the instant suit as
pauper litigants or, in the alternative, (ruling) that the legal fees
incident to the filing of this case may constitute a lien on whatever
judgment may be recovered by the plaintiffs therein." On the same
day, their counsel submitted a certification of the City Assessor of
Quezon City of even date to the effect "that according to the
assessment records x x there is no property whether land or
improvements registered for taxation purposes in the . . names of'
seven (7) of the named plaintiffs.
By Order dated January 4, 1988, the motion was granted by Judge
Chingcuangco in his capacity as Executive Judge only in so far as said
seven (7) plaintiffs were concerned, but not as regards the case.
It is this order that the plaintiffs, in their counsel's aforementioned
letter of January 5, 1988, request this Court to set aside. They ask
that they all instead be allowed to prosecute the case as pauper
litigants and they be exempt from paying filing fees which they say
have "been assessed in the amount of P6,060,252.50 based on the
total maximum claim of P1,200,000,000.00 as per the complaint."
In the comment (dated January 22, 1988) submitted by him in
response to this Court's direction, Judge Chingcuangco declared that
he had opted to leave the matter of the propriety of the class suit
"to the sound judgment of the branch to which this case may be
raffled," although he personally "would have freely allowed all
plaintiffs to litigate as pauper litigants and close ... (his) eyes to the
fact that one of them is the present Clerk of this Court and another
regional trial court judge;"and that he had 'suggested to the
plaintiffs' counsel to seek the assistance of the highest tribunal of
the land with the fond hope that it may once again exercise its
highly-regarded judicial activism by allowing that which this
Executive Judge cannot do, that is, allow, in the highest interest of
public service, all plaintiffs to litigate as pauper litigants, and
consider the case as a class suit."
The defendants, Sulpicio Lines, Inc., et al., in their own comment,
point out that there were only 1,493 passengers on board the Doña
Paz at the time of the tragedy, not 4,000; they have not been remiss
in attending to the immediate needs and claims of the the legal basis
for the claim and the amount of damages recoverable;"' it is
doubtful whether 27 plaintiffs are sufficiently numerous and
representative to fully protect the interests of all the suit preempts
the other claimants' cause of action as to the amount of recovery
and as to the venue of the suit; there are in truth only seven
plaintiffs qualified to sue as pauper litigants; and the claimants not
authorized to sue as paupers may continue with the action.
In the first place, it is not the rule governing class suits under Section
12, Rule 3 of the Rules of Court that in truth is involved in the
proceedings at bar, but that concerning permissive joinder of
parties in Section 6 of the same Rule 3. 1 It is perhaps not
inappropriate for the Court to avail of the opportunity that the
proceeding at bar presents to point out the distinctions between the
two rules, as these appear to have been missed by the petitioners
and even by the Court a quo.
The first cited provision reads as follows:
SEC. 12. Class Suit. — When the subject matter
of his controversy is one of csurvivors and next
of kin of the victims; each claimant is a class unto
himself in terms of ommon or general interest to
many persons, and the parties are so numerous
that it is impracticable to bring them all before
the court, one or more may sue or defend for
the benefit of all. But in such case the court shall
make sure that the parties actually before it are
 sufficiently numerous and representative so that
all interests concerned are fully protected. Any
party in interest shall have a right to intervene in
protection of his individual interest.
What is contemplated, as will be noted, is that (a) the subject matter
in controversy is of common or general interest to many persons,
and (b) those persons are so numerous as to make it impracticable
to bring them all before the court. Illustrative of the rule is a so-
called derivative suit brought in behalf of numerous stockholders of
a corporation to perpetually enjoin or nullify what is claimed to be a
breach of trust or an ultra vires act of the company's board of
directors. 2 In such a suit, there is one, single right of action
pertaining to numerous stockholders, not multiple rights belonging
separately to several, distinct persons.
On the other hand, if there are many persons who have distinct,
separate rights against the same party or group of parties, but those
rights arise from the same transaction or series of transactions and
there are common questions of fact or law resulting therefrom, the
former may join as plaintiffs in one action against the same
defendant. This is authorized by the above mentioned joinder-of-
parties rule in Section 6 of Rule 3.
SEC. 6. Permissive joinder of parties. — All
persons in whom or against whom any right to
relief in respect to or arising out of the same
transaction or series of transaction is alleged to
exist, whether jointly, severally, or in the
alternative, may, except as otherwise provided
in these rules, join as plaintiffs or be joined as
defendants in one complaint, where any
question of law or fact common to all such
plaintiffs or to all such defendants may arise in
the action; but the court may make such orders
as may be just to prevent any plaintiff or
defendant from being embarrassed or put
texpense in connection with any proceedings in
which he may have no interests.
For instance, it has been held that employees dismissed by their
employer on the same occasion for substantially the same reasons,
allegedly without cause or justification, may join as plaintiff in a
single action to obtain relief from their employer. 3 In such a case,
the plaintiff each have a material interest only in the damages
properly due to him, not in those that may be payable to the others,
although their rights thereto arise from the same transaction. In
other words, there are as many rights of action as there are plaintiffs
joined in the action. Similarly, the owner of a tract of land whose
property has been illegally occupied by many persons claiming
different portions thereof, may bring a single action against all illegal
occupants thereof, in accordance with this rule of permissive joinder
of parties. 4 The right of action is not unal but plural, there being as
many rights asserted in the action as there are defendants, each
defendant having an interest only in the portion of the land
occupied by him.
It is true that in both juridical situations, similar essential factors
exist i.e., the same transaction or series of transactions is involved;
and common questions of fact or law are at issue. What makes the
situation a proper case for a class suit is the circumstance that there
is only one right or cause of action pertaining or belonging in
common to many persons, not separately or severally to distinct
individuals.
The "true" class action, which is the invention of
equity, is one which involves the enforcement of
a right which is joint, common, or secondary or
derivative. ... (It) is a suit wherein, but for the
class action device, the joinder of all interested
parties would be essential. 5
A "true class actions" — distinguished from the
so-called hybrid and the spurious class action in
U.S. Federal Practice-involves principles of
compulsory joinder, since . . (were it not) for the
numerosity of the class members all should ...
(be) before the court. Included within the true
class suit ... (are) the shareholders' derivative
suit and a class action by or against an
unincorporated association. ... A judgment in a
class suit, whether favorable or unfavorable to
the class, is binding under res judicata principles
upon all the members of the class, whether or
not they were before the court. It is the non-
divisible nature of the right sued on which
determines both the membership of the class
and the res judicata effect of the final
determination of the right. 6
The object of the suit is to obtain relief for or against numerous
persons as a group or as an integral entity, and not as separate,
distinct individuals whose rights or liabilities are separate from and
independent of those affecting the others. 7
An action instituted by several hundred members of a voluntary
association against their officers to compel them to wind up the
association's affairs and render an accounting of the money and
property in their possession has been held to be a class suit. 8 In that
case there was in truth only one single right of action sought to be
enforced by the numerous plaintiff, not separate, individual, distinct
rights pertaining independently to them. 9
On the other hand — unlike an action by numerous stockholders
(which is properly a class suit) to restrain an unauthorized act of a
corporation's board of directors, e.g., to extend or shorten the
corporate life or increase capital stock of incur bonded indebtedness
without the specified majority vote prescribed by the Corporation
Law, in which the right sought to be vindicated is single, common
and general, not multiple and separate and distinct from each
other's 10 — an action by shareholders of a banking corporation, for
example, to enforce their right to subscribe to stock left
unsubscribed by other stockholders who failed to exercise their own
right to do so on or before a stipulated date, was held not to be a
class suit since each one of them 'had determinable interest; each
one had a right, if any, only to his respective portion of the stocks (or
a definite number of shares) ... and (no one) of them had any right
to, or any interest in, the stock to which another was entitled."11So,
too, an action for libel flied in behalf of 8,500 sugarcane planters has
been held not to be a class suit since 'each of the plaintiffs has a
separate and distinct reputation in the community ... (and) do not
have a common or general interest in the subject matter of the
controversy. 12 But in all these instances, and prescinding from
pragmatic considerations, a permissive joinder of parties would have
been perfectly proper in accordance with the aforecited Section 6 of
Rule 3 .13
The other factor that serves to distinguish the rule on class suits
from that of permissive joinder of parties is, of course, the
numerousness of parties involved in the former. The rule is that for a
class suit to be allowed, it is needful inter alia that the parties be so hanroblesvirtuallawlibrary
numerous that it would be impracticable to bring them all before
the court.

The case at bar not being a proper one for a class suit, it follows that
the action may not be maintained by a representative few in behalf
of all the others. Be all this as it may, as regards the computation of
the amount involved in the action for purposes of determining the
original jurisdiction over it, and the correlative matter of the amount
of filing fees to be paid, it is immaterial whether the rule applied be
that on class suits or permissive joinder of parties. For in either case,
it is the totality of the amounts claimed by or against the parties that
determines jurisdiction, exclusive only of interest and costs. 14

The second question-whether or not the numerous claimants,

should they join as parties plaintiff, may be allowed to sue as pauper
litigants, not because they are shown to be without means to
maintain their suits, but on the ground of the alleged "national
importance" of the subject matter, or upon an unverified averment
that most of them are impecunious-yields another negative answer.

The rule on the matter is clear. A party may be

allowed to litigate in forma pauper is only. . upon
a proper showing that he has no means to that
effect by affidavits, certificate of the
corresponding provincial, city or municipal
treasurer, or otherwise. 15

Thus, every would be litigant who seeks exemption from the

payment of the fees prescribed for maintaining an action must
establish, not simply allege, his lack of means Where there is a
multiplicity of such parties, each must show such lack, in propria
persona as it were. And that the particular circumstances or possible
consequences of an actual or contemplated suit are such as to
transcend the narrow personal interests of the immediate parties
thereto and to so impinge upon the wider interests of the people at
large as to assume an aspect of "national importance," does not
under any existing law or rule justify excusing such parties from
paying the requisite judicial fees or costs.

It should moreover be quite obvious that the denial of the privilege

to prosecute as paupers litigant to those who do not qualify as such
cannot in any sense be deemed a denial of free access to the courts
by reason of poverty, 16 as counsel for the plaintiffs suggests.

Everyone — and the members of the Court are no exception —

deplores that tragedy that claimed so many unsuspecting victims in
what has been described, to repeat, as 'the worst single -disaster' in
maritime history. Everyone condoles and symphatizes with those
whom the victims, both known and unknown, left behind, many of
whom were denied even the small consolation of being able to bury
their dead. Everyone undoubtedly hopes and wishes that these
survivors may quickly obtain adequate recompense for the untimely
loss of their loved ones. But sympathy and commiseration however-
well-deserved, are not considerations that would justifiably argue
for bending or dispensing with the observance of the rules which
prescribe now such vindication may be obtained in the courts of law.

WHEREFORE, the order complained of being in accordance with law,

the solicitation to set aside the same, and to be exempted from
observance of the rule on paupers litigant, is DENIED. The authority
to litigate in the form of a class action is likewise DENIED.