G.R. No.

174975 January 20, 2009

LUISA KHO MONTAÑER, ALEJANDRO MONTAÑER, JR., LILLIBETH MONTAÑER-BARRIOS,

AND RHODORA ELEANOR MONTAÑER-DALUPAN, Petitioners,
vs.
SHARI'A DISTRICT COURT, FOURTH SHARI'A JUDICIAL DISTRICT, MARAWI CITY, LILING
DISANGCOPAN, AND ALMAHLEEN LILING S. MONTAÑER, Respondents.

DECISION

PUNO, C.J.:

This Petition for Certiorari and Prohibition seeks to set aside the Orders of the Shari’a District Court,
Fourth Shari’a Judicial District, Marawi City, dated August 22, 20061 and September 21, 2006.2

On August 17, 1956, petitioner Luisa Kho Montañer, a Roman Catholic, married Alejandro Montañer,
Sr. at the Immaculate Conception Parish in Cubao, Quezon City.3 Petitioners Alejandro Montañer,
Jr., Lillibeth Montañer-Barrios, and Rhodora Eleanor Montañer-Dalupan are their children.4 On May
26, 1995, Alejandro Montañer, Sr. died.5

On August 19, 2005, private respondents Liling Disangcopan and her daughter, Almahleen Liling S.
Montañer, both Muslims, filed a "Complaint" for the judicial partition of properties before the Shari’a
District Court.6 The said complaint was entitled "Almahleen Liling S. Montañer and Liling M.
Disangcopan v. the Estates and Properties of Late Alejandro Montañer, Sr., Luisa Kho Montañer,
Lillibeth K. Montañer, Alejandro Kho Montañer, Jr., and Rhodora Eleanor K. Montañer," and
docketed as "Special Civil Action No. 7-05."7 In the said complaint, private respondents made the
following allegations: (1) in May 1995, Alejandro Montañer, Sr. died; (2) the late Alejandro Montañer,
Sr. is a Muslim; (3) petitioners are the first family of the decedent; (4) Liling Disangcopan is the
widow of the decedent; (5) Almahleen Liling S. Montañer is the daughter of the decedent; and (6) the
estimated value of and a list of the properties comprising the estate of the decedent.8 Private
respondents prayed for the Shari’a District Court to order, among others, the following: (1) the
partition of the estate of the decedent; and (2) the appointment of an administrator for the estate of
the decedent.9

Petitioners filed an Answer with a Motion to Dismiss mainly on the following grounds: (1) the Shari’a
District Court has no jurisdiction over the estate of the late Alejandro Montañer, Sr., because he was
a Roman Catholic; (2) private respondents failed to pay the correct amount of docket fees; and (3)
private respondents’ complaint is barred by prescription, as it seeks to establish filiation between
Almahleen Liling S. Montañer and the decedent, pursuant to Article 175 of the Family Code.10

On November 22, 2005, the Shari’a District Court dismissed the private respondents’ complaint. The
district court held that Alejandro Montañer, Sr. was not a Muslim, and its jurisdiction extends only to
the settlement and distribution of the estate of deceased Muslims.11

On December 12, 2005, private respondents filed a Motion for Reconsideration.12 On December 28,
2005, petitioners filed an Opposition to the Motion for Reconsideration, alleging that the motion for
reconsideration lacked a notice of hearing.13 On January 17, 2006, the Shari’a District Court denied
petitioners’ opposition.14 Despite finding that the said motion for reconsideration "lacked notice of
hearing," the district court held that such defect was cured as petitioners "were notified of the
existence of the pleading," and it took cognizance of the said motion.15 The Shari’a District Court also
reset the hearing for the motion for reconsideration.16
In its first assailed order dated August 22, 2006, the Shari’a District Court reconsidered its order of
dismissal dated November 22, 2005.17 The district court allowed private respondents to adduce
further evidence.18 In its second assailed order dated September 21, 2006, the Shari’a District Court
ordered the continuation of trial, trial on the merits, adducement of further evidence, and pre-trial
conference.19

Seeking recourse before this Court, petitioners raise the following issues:

I.

RESPONDENT SHARI’A DISTRICT COURT – MARAWI CITY LACKS JURISDICTION OVER

PETITIONERS WHO ARE ROMAN CATHOLICS AND NON-MUSLIMS.

II.

RESPONDENT SHARI’A DISTRICT COURT – MARAWI CITY DID NOT ACQUIRE JURISDICTION
OVER "THE ESTATES AND PROPERTIES OF THE LATE ALEJANDRO MONTAÑER, SR."
WHICH IS NOT A NATURAL OR JURIDICAL PERSON WITH CAPACITY TO BE SUED.

III.

RESPONDENT SHARI’A DISTRICT COURT DID NOT ACQUIRE JURISDICTION OVER THE
COMPLAINT OF PRIVATE RESPONDENTS AGAINST PETITIONERS DUE TO NON-PAYMENT
OF THE FILING AND DOCKETING FEES.

IV.

RESPONDENT SHARI’A DISTRICT COURT—MARAWI CITY COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT DENIED THE OPPOSITION
OF PETITIONERS AND THEN GRANTED THE MOTION FOR RECONSIDERATION OF
RESPONDENTS LILING DISANGCOPAN, ET AL. WHICH WAS FATALLY DEFECTIVE FOR LACK
OF A "NOTICE OF HEARING."

V.

RESPONDENT SHARI’A DISTRICT COURT—MARAWI CITY COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT SET SPL. CIVIL ACTION 7-05
FOR TRIAL EVEN IF THE COMPLAINT PLAINLY REVEALS THAT RESPONDENT ALMAHLEEN
LILING S. MONTAÑER SEEKS RECOGNITION FROM ALEJANDRO MONTAÑER, SR. WHICH
CAUSE OF ACTION PRESCRIBED UPON THE DEATH OF ALEJANDRO MONTAÑER, SR. ON
MAY 26, 1995.

In their Comment to the Petition for Certiorari, private respondents stress that the Shari’a District
Court must be given the opportunity to hear and decide the question of whether the decedent is a
Muslim in order to determine whether it has jurisdiction.20

Jurisdiction: Settlement of the Estate of Deceased Muslims

Petitioners’ first argument, regarding the Shari’a District Court’s jurisdiction, is dependent on a
question of fact, whether the late Alejandro Montañer, Sr. is a Muslim. Inherent in this argument is
the premise that there has already been a determination resolving such a question of fact. It bears
emphasis, however, that the assailed orders did not determine whether the decedent is a Muslim.
The assailed orders did, however, set a hearing for the purpose of resolving this issue.

Article 143(b) of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal
Laws of the Philippines, provides that the Shari’a District Courts have exclusive original jurisdiction
over the settlement of the estate of deceased Muslims:

ARTICLE 143. Original jurisdiction. — (1) The Shari'a District Court shall have exclusive original
jurisdiction over:

xxxx

(b) All cases involving disposition, distribution and settlement of the estate of deceased Muslims,
probate of wills, issuance of letters of administration or appointment of administrators or executors
regardless of the nature or the aggregate value of the property.

The determination of the nature of an action or proceeding is controlled by the averments and
character of the relief sought in the complaint or petition.21 The designation given by parties to their
own pleadings does not necessarily bind the courts to treat it according to the said designation.
Rather than rely on "a falsa descriptio or defective caption," courts are "guided by the substantive
averments of the pleadings."22

Although private respondents designated the pleading filed before the Shari’a District Court as a
"Complaint" for judicial partition of properties, it is a petition for the issuance of letters of
administration, settlement, and distribution of the estate of the decedent. It contains sufficient
jurisdictional facts required for the settlement of the estate of a deceased Muslim,23 such as the fact
of Alejandro Montañer, Sr.’s death as well as the allegation that he is a Muslim. The said petition
also contains an enumeration of the names of his legal heirs, so far as known to the private
respondents, and a probable list of the properties left by the decedent, which are the very properties
sought to be settled before a probate court. Furthermore, the reliefs prayed for reveal that it is the
intention of the private respondents to seek judicial settlement of the estate of the decedent.24 These
include the following: (1) the prayer for the partition of the estate of the decedent; and (2) the prayer
for the appointment of an administrator of the said estate.

We cannot agree with the contention of the petitioners that the district court does not have
jurisdiction over the case because of an allegation in their answer with a motion to dismiss that
Montañer, Sr. is not a Muslim. Jurisdiction of a court over the nature of the action and its subject
matter does not depend upon the defenses set forth in an answer25 or a motion to
dismiss.26 Otherwise, jurisdiction would depend almost entirely on the defendant27 or result in having
"a case either thrown out of court or its proceedings unduly delayed by simple stratagem.28 Indeed,
the "defense of lack of jurisdiction which is dependent on a question of fact does not render the court
to lose or be deprived of its jurisdiction."29

The same rationale applies to an answer with a motion to dismiss.30 In the case at bar, the Shari’a
District Court is not deprived of jurisdiction simply because petitioners raised as a defense the
allegation that the deceased is not a Muslim. The Shari’a District Court has the authority to hear and
receive evidence to determine whether it has jurisdiction, which requires an a priori determination
that the deceased is a Muslim. If after hearing, the Shari’a District Court determines that the
deceased was not in fact a Muslim, the district court should dismiss the case for lack of jurisdiction.

Special Proceedings
The underlying assumption in petitioners’ second argument, that the proceeding before the Shari’a
District Court is an ordinary civil action against a deceased person, rests on an erroneous
understanding of the proceeding before the court a quo. Part of the confusion may be attributed to
the proceeding before the Shari’a District Court, where the parties were designated either as
plaintiffs or defendants and the case was denominated as a special civil action. We reiterate that the
proceedings before the court a quo are for the issuance of letters of administration, settlement, and
distribution of the estate of the deceased, which is a special proceeding. Section 3(c) of the Rules of
Court (Rules) defines a special proceeding as "a remedy by which a party seeks to establish a
status, a right, or a particular fact." This Court has applied the Rules, particularly the rules on special
proceedings, for the settlement of the estate of a deceased Muslim.31 In a petition for the issuance of
letters of administration, settlement, and distribution of estate, the applicants seek to establish the
fact of death of the decedent and later to be duly recognized as among the decedent’s heirs, which
would allow them to exercise their right to participate in the settlement and liquidation of the estate of
the decedent.32 Here, the respondents seek to establish the fact of Alejandro Montañer, Sr.’s death
and, subsequently, for private respondent Almahleen Liling S. Montañer to be recognized as among
his heirs, if such is the case in fact.

Petitioners’ argument, that the prohibition against a decedent or his estate from being a party
defendant in a civil action33 applies to a special proceeding such as the settlement of the estate of
the deceased, is misplaced. Unlike a civil action which has definite adverse parties, a special
proceeding has no definite adverse party. The definitions of a civil action and a special proceeding,
respectively, in the Rules illustrate this difference. A civil action, in which "a party sues another for
the enforcement or protection of a right, or the prevention or redress of a wrong"34necessarily has
definite adverse parties, who are either the plaintiff or defendant.35 On the other hand, a special
proceeding, "by which a party seeks to establish a status, right, or a particular fact,"36 has one
definite party, who petitions or applies for a declaration of a status, right, or particular fact, but no
definite adverse party. In the case at bar, it bears emphasis that the estate of the decedent is not
being sued for any cause of action. As a special proceeding, the purpose of the settlement of the
estate of the decedent is to determine all the assets of the estate,37pay its liabilities,38 and to
distribute the residual to those entitled to the same.39

Docket Fees

Petitioners’ third argument, that jurisdiction was not validly acquired for non-payment of docket fees,
is untenable. Petitioners point to private respondents’ petition in the proceeding before the court a
quo, which contains an allegation estimating the decedent’s estate as the basis for the conclusion
that what private respondents paid as docket fees was insufficient. Petitioners’ argument essentially
involves two aspects: (1) whether the clerk of court correctly assessed the docket fees; and (2)
whether private respondents paid the correct assessment of the docket fees.

Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a trial
court with jurisdiction over the subject matter.40 If the party filing the case paid less than the correct
amount for the docket fees because that was the amount assessed by the clerk of court, the
responsibility of making a deficiency assessment lies with the same clerk of court.41 In such a case,
the lower court concerned will not automatically lose jurisdiction, because of a party’s reliance on the
clerk of court’s insufficient assessment of the docket fees.42 As "every citizen has the right to assume
and trust that a public officer charged by law with certain duties knows his duties and performs them
in accordance with law," the party filing the case cannot be penalized with the clerk of court’s
insufficient assessment.43 However, the party concerned will be required to pay the deficiency.44
In the case at bar, petitioners did not present the clerk of court’s assessment of the docket fees.
Moreover, the records do not include this assessment. There can be no determination of whether
private respondents correctly paid the docket fees without the clerk of court’s assessment.

Exception to Notice of Hearing

Petitioners’ fourth argument, that private respondents’ motion for reconsideration before the Shari’a
District Court is defective for lack of a notice of hearing, must fail as the unique circumstances in the
present case constitute an exception to this requirement. The Rules require every written motion to
be set for hearing by the applicant and to address the notice of hearing to all parties
concerned.45 The Rules also provide that "no written motion set for hearing shall be acted upon by
the court without proof of service thereof."46 However, the Rules allow a liberal construction of its
provisions "in order to promote [the] objective of securing a just, speedy, and inexpensive disposition
of every action and proceeding."47 Moreover, this Court has upheld a liberal construction specifically
of the rules of notice of hearing in cases where "a rigid application will result in a manifest failure or
miscarriage of justice especially if a party successfully shows that the alleged defect in the
questioned final and executory judgment is not apparent on its face or from the recitals contained
therein."48 In these exceptional cases, the Court considers that "no party can even claim a vested
right in technicalities," and for this reason, cases should, as much as possible, be decided on the
merits rather than on technicalities.49

The case at bar falls under this exception. To deny the Shari’a District Court of an opportunity to
determine whether it has jurisdiction over a petition for the settlement of the estate of a decedent
alleged to be a Muslim would also deny its inherent power as a court to control its process to ensure
conformity with the law and justice. To sanction such a situation simply because of a lapse in
fulfilling the notice requirement will result in a miscarriage of justice.

In addition, the present case calls for a liberal construction of the rules on notice of hearing, because
the rights of the petitioners were not affected. This Court has held that an exception to the rules on
notice of hearing is where it appears that the rights of the adverse party were not affected.50 The
purpose for the notice of hearing coincides with procedural due process,51 for the court to determine
whether the adverse party agrees or objects to the motion, as the Rules do not fix any period within
which to file a reply or opposition.52 In probate proceedings, "what the law prohibits is not the
absence of previous notice, but the absolute absence thereof and lack of opportunity to be
heard."53 In the case at bar, as evident from the Shari’a District Court’s order dated January 17,
2006, petitioners’ counsel received a copy of the motion for reconsideration in question. Petitioners
were certainly not denied an opportunity to study the arguments in the said motion as they filed an
opposition to the same. Since the Shari’a District Court reset the hearing for the motion for
reconsideration in the same order, petitioners were not denied the opportunity to object to the said
motion in a hearing. Taken together, these circumstances show that the purpose for the rules of
notice of hearing, procedural process, was duly observed.

Prescription and Filiation

Petitioners’ fifth argument is premature. Again, the Shari’a District Court has not yet determined
whether it has jurisdiction to settle the estate of the decedent. In the event that a special proceeding
for the settlement of the estate of a decedent is pending, questions regarding heirship, including
prescription in relation to recognition and filiation, should be raised and settled in the said
proceeding.54 The court, in its capacity as a probate court, has jurisdiction to declare who are the
heirs of the decedent.55 In the case at bar, the determination of the heirs of the decedent depends on
an affirmative answer to the question of whether the Shari’a District Court has jurisdiction over the
estate of the decedent.
IN VIEW WHEREOF, the petition is DENIED. The Orders of the Shari’a District Court, dated August
22, 2006 and September 21, 2006 respectively, are AFFIRMED. Cost against petitioners.

SO ORDERED.

G.R. No. L-25721 May 26, 1969

MISAEL VERA, as Commissioner of Internal Revenue; EDUARDO ROMUALDEZ, as Secretary

of Finance; and RAFAEL SALAS, as Executive Secretary, petitioners,
vs.
HON. JUDGE FRANCISCO ARCA, ANTONIO J. VILLEGAS, as Mayor of Manila; GREGORIO
EJERCITO, as Assistant Secretary to said Mayor; and ANGEL C. CRUZ and ROMEO L.
KAHAYON, respondents.

Office of the Solicitor General Antonio P. Barredo and Solicitor Ricardo L. Pronove, Jr. for
petitioners.
Antonio J. Villegas and Gregorio Ejercito in their own behalf as respondents.

FERNANDO, J.:

With the judiciary called upon to apply the law on the facts as found by it and with the supremacy of
the Constitution as a cardinal postulate, the exercise of the power of the judicial review by a court of
justice, an inferior tribunal not accepted, is unavoidable. 1 There are times, and not infrequently
either, when both a constitutional provision and a statute may govern the matter before it. In the
event, therefore, that there is a contrariety or repugnancy between them, such delicate and
awesome power comes into play. Even prior to adjudication, at the inception of a lawsuit, a party
who seeks to annul such legislative act may pray for a writ of preliminary injunction so that its
operation would be arrested.

So it was in this case, respondent Judge Francisco Arca, now retired, indulging the other
respondents 2 in their plea for a preliminary injunction against the enforcement of the Tax Census
Act. 3 Petitioners 4 through this special civil action of certiorari and prohibition would have the validity
of such preliminary injunction tested. That is the initial issue before us. In the event that there was
such an improvident exercise of the power to issue a writ of preliminary injunction, does a petition for
certiorari and prohibition lie? That question, we must likewise resolve.

The other respondents, on February 4, 1966, started a special civil action for prohibition and
injunction in the sala of respondent Judge, seeking to declare the Tax Census Act 5 as
unconstitutional, illegal and invalid. The respondents in that suit were the Commissioner of Internal
Revenue, the Secretary of Finance and the Executive Secretary, now the petitioners before us. 6

Reference was made to its first section, which would require of every resident of the Philippines over
18 years of age within the month of February, 1962 and thereafter within the same month every four
years to file with the City or Municipal Treasurer in a form prescribed by the Commissioner of
Internal Revenue, with the approval of the Secretary of Finance, a statement under oath containing
such data as the name; age; sex; nationality (if alien, the number of the Alien Registration
Certificate, and aliases used, or authorized to be used, if any), address; occupation; place of
business; wife's or husband's name, age, sex, occupation and place of business; and the members
of his family, age and sex 7 as well as real property owned, stating the nature thereof, location and
assessed value thereof, and the annual gross income therefrom during the preceding year; property
held under lease stating also the nature, location and assessed value thereof and the annual income
during the preceding year; business subject to tax giving the nature and location thereof and the
annual gross receipts or earnings during the preceding year; stocks in corporations or shares in
partnerships or associations; inventories of assets particularly machineries and buildings,
merchandise on hand, unfinished goods and raw materials on hand, short and long term
receivables, and investments in stocks and bonds; professions or occupations, stating the kind and
location thereof and the annual salaries or gross receipts or earnings during the preceding year; and
personal properties except those worth less than five hundred pesos. 8 Two other sections were
likewise cited in the petition. 9 It was then alleged that the Tax Census Act has been enforced and
implemented since 1962 and that the parties who filed the suit, now respondents before us, "are
required to make and file Sworn Statements of Assets, Income and Liabilities" in accordance with
the Act. 10 It was likewise asserted that the then Senator Camilo Osias filed a bill to repeal such
legislation and that the Secretary of Finance had admitted that it had not been able to produce the
result expected from it, the information yielded not justifying the trouble caused not only to the public
but also to the government. 11

The main portion of the petition before respondent Judge dealt with the alleged infirmity of the Tax
Census Act as being violative of the constitutional right to liberty, to the guarantee against self-
incrimination and the protection against unreasonable searches and seizures with a citation from
both Philippine and American cases in support of such a plea. 12 A writ of preliminary injunction was
therein likewise sought, the argument being advanced that the other respondents before us in the
petition before respondent Judge "would suffer great and irreparable damage arising from the non-
filing of their Sworn Statement of Assets, Income and Liabilities, as they are subject to criminal
prosecution under Section 5 of the Tax Census Law which is in clear violation of herein petitioners'
aforesaid constitutional and legal rights and which would render the judgment in favor of herein
petitioners ineffectual" 13

The present petitioners, as respondents in such special civil action, in their answer filed on February
18, 1966, after denying specifically the allegations contained in the petition intended to establish the
unconstitutionality of the Tax Census Act, emphasized in the special and affirmative defenses
interposed that such an enactment was intended to implement the governmental function "for a just,
equal and efficient system of collecting taxes." The purpose of Republic Act No. 2070, in the
language of its authors, Senators Puyat and Roy, is to provide" "for a national tax census and the
keeping of national registers in every city and municipality of the Philippines. ... to provide the
Department of Finance and the Bureau of Internal Revenue with vital tax statistics upon which they
can formulate sound policies and recommend reforms in the tax system and in revenue to achieve
efficiency and honesty in the collection of taxes. ... It is believed that the establishment of a national
tax census will enhance revenue collection, minimize evasion of taxes, promote honesty and
efficiency in revenue administration and, above all, give fair assurance that every citizen pays his
just proportion of the public burden, and thus develop in this country tax consciousness which is vital
to tax collection.; ..." 14 Stress was likewise laid on the undeniable power of Congress to enact such a
measure. Then came an extended discussion to demonstrate that the right against self-incrimination
as well as the right against unreasonable searches and seizures did not suffer any infringement as a
result of the challenged legislation. 15 There was a vehement opposition to the plea for preliminary
injunction. 16 The prayer was for a denial of the preliminary injunction and the dismissal of the
petition.

Then came the order of respondent Judge of February 21, 1966, which is the basis of the present
petition for certiorari and prohibition, noting that a hearing on the plea for the issuance of the writ for
preliminary injunction took place on February 19, 1966 and ordering the issuance thereof upon the
posting of a bond of P1,000.00, thus restraining petitioners before us from requiring the other
respondents and other similarly situated to file their sworn statements of assets, income and
liabilities under Republic Act No. 2070. Hence this petition for certiorari and prohibition, dated
February 23, 1966.
Petitioners in this special civil action seek the setting aside of the writ of preliminary injunction issued
by respondent Judge and would restrain him perpetually from further hearing the suit for prohibition
and injunction pending before him. Petitioners predicate their plea on the allegation that respondent
Judge gravely abused his discretion in issuing the writ of preliminary injunction as the Tax Census
Act is valid and constitutional, there being neither any self-incrimination feature nor unreasonable
search and seizure taint, there being moreover a presumption of its conformity with the fundamental
law and no grave and irreparable injury being suffered by the other respondents, petitioners before
respondent Judge. 17 Petitioners likewise justify their contention that there was a grave abuse of
discretion on the part of respondent Judge in the issuance of such writ of preliminary injunction due
to his failure to consider the serious injury it would cause the paramount public interest, to realize
that the enforcement of penal laws cannot thus be restrained and to take note that the other
respondents as petitioners before him are guilty of laches. 18

This Court, in a resolution dated February 25, 1966, gave due course to the foregoing petition
for certiorari and prohibition and required respondents to file an answer within 10 days from notice.

Such an answer was filed on March 8, 1966, wherein after admitting the jurisdictional facts alleged
as well as the statement of the case as set forth in the petition, respondents specially denied the
allegations in the petition to the effect that Republic Act No. 2070 is valid and constitutional,
reference being made to the alleged violation of the constitutional right against self-incrimination and
against unreasonable searches and seizures. 19 Then came the specific denial of that portion of the
petition which pointed to the alleged grave abuse of discretion of respondent Judge in issuing the
writ of preliminary injunction. 20 In their special and affirmative defenses respondents would reiterate
their argument against the validity of the Act for the asserted transgression on the constitutional
protection against self-incrimination and against unreasonable searches and seizures. They did
likewise question its validity as being in excess of the State's taxing power, ignoring the fact that the
Act is more properly a police power legislation.

At the hearing of the case scheduled for May 16, 1966, nobody appeared for any of the parties,
petitioners however filing a motion, seeking a period of 30 days within which to submit a
memorandum. With its filing on September 5, 1966, the arguments set forth in the petition to uphold
the validity of the Tax Census Act being reiterated therein and the respondents' reply memorandum
on December 27, 1966, the case was deemed submitted for decision.

1. The primary question before us then is whether respondent Judge ought to have issued the writ of
preliminary injunction to restrain the enforcement of the Tax Census Act. The answer must be in the
negative.

As far back as March 23, 1909, more than 60 years ago, this Court, in the leading case of Devesa v.
Arbes, 21 made the categorical pronouncement that the issuance of an injunction is addressed to the
sound discretion of the Court, the exercise of which is controlled not so much by the then applicable
sections of the Code of Civil Procedure, now the Rules of Court, but by the accepted doctrines, one
of which is that it should not be granted while the rights between the parties are undetermined
except in extraordinary cases where material and irreparable injury will be done. For it is an action in
equity appropriate only when there can be no compensation in damages for the injury thus sustained
and where no adequate remedy in law exists. Such a holding reflected the prevailing American
doctrine that there is no power "the exercise of which is more delicate, which requires greater
caution, deliberation and sound discretion or more dangerous in a doubtful case," being "the strong
arm of equity, that never ought to be extended," except where the injury is great and irreparable. 22

We have remained committed to such an approach since then. Only last year, in Palanan Lumber &
Plywood Co. v. Arranz, 23 we emphasized: "It is not amiss to recall here that time and again this
Court has had occasion to deplore the readiness of some judges to grant and issue injunctions ex
parte against acts of public functionaries, ignoring the presumption of regularity and validity of official
actuations, in disregard of the deference and courtesy due to a coordinate branch of the
government, and with no other guide than the far from impartial assertions in pleadings of interested
parties, which a summary hearing would have shown to be either dubious or unfounded. The result
has been that all too often, the public interest has been prejudiced through unnecessary delays. It
bears repeating here that preliminary injunctions remain extraordinary remedies that should be
dispensed with circumspection, and that both sides should be first heard whenever possible."

It is true that the evil of ex parte injunction was stressed in the above excerpt. It is equally true that a
reminder was made of the extraordinary character of this remedy "to be dispensed with
circumspection" to avoid its invocation by interested parties whose claims could be shown "to be
either dubious or unfounded." What cannot be sufficiently pointed out is that a party seeking
injunction must show that his right to it must be clear and unmistakable. 24 The propriety of its
issuance, therefore, requires unmistakable proof "that the plaintiff is entitled to the relief demanded
and only when his complaint shows fact entitling him to such relief." 25

Whatever may be said of the original petition for prohibition and injunction filed by the other
respondents before the respondent Judge, it cannot be plausibly asserted the facts have been
alleged which would make manifest the violation of any of their constitutional rights. Instead of
relying on facts, they contended themselves with the general allegation that for them the Tax Census
Act was null. It was assailed for presumably violating the right to liberty, the protection against
unreasonable searches and seizures and the prohibition against self-incrimination. What was thus
being sought in effect was a declaration of invalidity based on the belief that its constitutional
infirmity is apparent on its face.

Independently then of whether or not there has been an unwarranted departure from the governing
principle that the power to issue a preliminary injunction is not to be availed of indiscriminately, the
more specific and pivotal question is whether it could be exercised to restrain the enforcement of the
Tax Census Act under the circumstances disclosed. The answer, to repeat, must be in the negative.

In the order granting the petition for the issuance of the writ of preliminary injunction, 26 it was stated
that a hearing on the matter took place on February 19, 1966. Then came a summary of the legal
arguments advanced both by the other respondents as petitioners and the then Solicitor General,
now Justice Antonio P. Barredo, on behalf of the petitioners before us, who were the parties
proceeded against before the lower court..

It is apparent on the face of such order that respondent Judge took into consideration purely legal
arguments, no evidence being introduced, both for and against the validity of the challenged statute.
Moreover, his attention was invited to the presumption of validity that every legislative act has in its
favor as well as the doctrine that the task of suspending the operation of the law "is a matter of
extreme delicacy because that is an interference with the official acts not only with the duly elected
representatives of the people in Congress but also of the highest magistrate of the
land." 27 Respondent Judge was deaf to the force of such cogent and persuasive constitutional law
doctrines. He issued the preliminary injunction nonetheless.

It is manifest that respondent Judge did overstep the bounds of discretion that set limits to the
authority he is entitled to exercise in the issuance of the preliminary injunction to restrain the
enforcement of a statute. There can be no dissent from the proposition that where the action
required of a lower court would be tantamount, even if only for a temporary period, to disregarding
the clearly expressed will of the two branches of the government, the need for caution is greatest.
Here, respondent Judge was apparently oblivious of such a need.
It might be said, of course, that the issuance of a preliminary injunction does not have the impress of
finality. After hearing on the merits, the legislative act could regain its full vigor and could then be
enforced. There is much to be said though in favor of Cooley's approach in the exercise of what he
referred to as the "high prerogative of declaring a legislative enactment void," a lower court,
"conscious of the fallibility of human judgment" being admonished to manifest the utmost
reluctance. 28 That attitude should be displayed even at the stage of considering whether a
preliminary injunction should issue. Had respondent Judge been of such a frame of mind, he would
have arrived at a more acceptable conclusion. He would have refrained from indulging the other
respondents in their plea for a preliminary injunction.

To borrow from the language of Justice Laurel, he was hardly conscious of the truism "that a
becoming modesty of inferior courts demands conscious realization of the position they occupy in
the interrelation and operation of the integrated judicial system of the nation." 29 For if note be taken
of the rigorous requirement of a two-thirds vote for this Court to annul a statute, 30 the confidence
displayed by respondent Judge in thus restraining the enforcement of the act does indeed appear to
be quite excessive, under all the circumstances disclosed by the record. Correspondingly, it could be
interpreted as the failure to observe what Cooley referred to as "due caution and circumspection" as
well as "the respect due to the action and judgement of the lawmakers." 31

It might have been different if at the hearing the attention of respondent Judge was invited to facts
which would overcome the presumption of validity. Even with reference to municipal ordinances,
Justice Malcolm so clearly emphasized that "the presumption is all in favor of validity." 32 In the
recent decision of Ermita-Malate Hotel & Motel Operators Asso. v. City Mayor of Manila, 33 we
announced the view that as underlying questions of fact may condition the constitutionality of
legislation, "the presumption of constitutionality must prevail in the absence of some factual
foundation of record for overthrowing the statute." It would appear clear, therefore, that the force of
such a presumption would preclude the issuance of a preliminary injunction, unless there be facts
disclosed which would serve to weaken if not to defeat the presumption of validity. No such facts
have even been alleged.

It could be argued, of course, that what was sought before the lower court was to declare the Tax
Census Act void on its face which would do away with the requirement of a factual foundation to
establish nullity. Considering that its operation would serve to curtail individual liberty as every
resident of the Philippines above 18 years of age would be required to furnish certain information
even against his will, such a plea could indeed have been raised. 34 It could then be plausibly
maintained that the need for a factual foundation for invalidity vanishes. Support for such a view may
be furnished by the cardinal principle that on the whole the Bill of Rights does raise barriers to
unwarranted intrusion and that in such a realm the primacy of liberty demands that the individual be
left alone. 35

That is so but it is equally undeniable that the liberty in its general sense enshrined by the
Constitution does not rule out in appropriate cases legislative deprivation as long as due process is
observed. 36 While courts should not relax its vigilance in assuring that no undue curtailment of liberty
exists, still it is to be admitted that except in cases where the specific freedoms of belief whether
religious or secular, of expression, of assembly and of association are concerned, 37 a domain where
Congress is forbidden to trespass except under the clear and present danger doctrine, 38 the need for
introducing evidence to counteract the assumption that a statute is valid may be unavoidable. So it
was in this case. The absence thereof sufficed to cast on the issuance of the preliminary injunction,
now challenged, the mark of a grave abuse of discretion.

Such a temporary injunction, in the language of Justice Black, "is in reality a suspension of an act,
delaying the date selected by Congress to put its chosen policies into effect. [Judicial] power to stay
an act of Congress, like judicial power to hold an act unconstitutional, is an awesome responsibility
calling for the utmost circumspection in its exercise." 39 Respondent Judge was of a different
persuasion.

2. Petitioners thus are clearly entitled to the writ of certiorari prayed for. Respondent Judge did
possess discretion to issue or not to issue a preliminary injunction. That discretion, however,
according to the circumstances disclosed, was abused, and abused gravely. Even on a matter of
less significance, this Court has not hesitated to exercise its supervisory authority by correcting such
failure to abide by controlling legal principles with a petition for certiorari as the appropriate remedy.
We have made that, clear in past pronouncements. Thus, in a 1919 decision: 40 "We are also of the
opinion that the action of a Court of First Instance in exercising this power may, under certain
conditions, amount to an abuse of discretion and constitute an irregularity so far in excess of the
proper power of the court as to give rise to a right in the injured part to have relief by the writ of
certiorari." So also in Silen v. Vera: 41 "Therefore, the respondent Judge acted in excess of his
jurisdiction and abused his discretion in issuing the writ of preliminary injunction the nullity of which is
sought, and the writ of certiorari applied for should be issued.

There is much greater reason for a writ of preliminary injunction being set aside in this case by the
grant of the certiorari prayed for. It may serve to deter other inferior tribunals similarly minded. It may
serve to induce the conviction on the part of a lower court judge that it is a matter of the utmost
seriousness to stop the enforcement of an act after it has been enacted by a bicameral legislative
body composed of the House and the Senate and approved by the President, two of the coordinate
branches of the government. The greatest care should thus be taken before its operation is enjoined.
Thereby, it would be manifesting not judicial timidity but judicial wisdom. lawphi1.ñet

This is not to say that in no case should a writ of preliminary injunction issue. There are times the
exercise of such an authority is appropriate. Thus when there is an invasion of the preferred
freedoms of belief, of expression as well as the cognate rights to freedom of assembly and
association, an affirmative response to a plea for preliminary injunction would indeed be called for.
The primacy of the freedom of the mind is entitled to the highest respect. This is not such a case,
however, and the writ of certiorari must be granted.

3. Petitioners likewise seek from us a writ of prohibition to restrain respondent Judge "from further
hearing the petition before him filed by the other respondents to annul and declare invalid the Tax
Census Act." Considering that as of now what had transpired was merely the hearing on the
preliminary injunction, this particular prayer obviously poses a more difficult question than the plea
for a writ of certiorari. There may be cases where at this particular stage reached, prohibition may be
granted. 42

After due reflection, we feel that it is not one of them. To call a halt to any further proceeding before
respondent Judge in connection with this particular suit before him to invalidate such legislative act
might be to run the risk of acting prematurely. Since the lower court is possessed of the power to act
in the premises, respect must be accorded such authority in the absence of any compelling reason
justifying direct action on our part. It is our conclusion that under the circumstances disclosed,
prohibition does not lie.

WHEREFORE, the writ of certiorari prayed for declaring null and void and setting aside the writ of
preliminary injunction issued by respondent Judge on February 21, 1966 is granted. The writ of
prohibition sought is denied. Without pronouncement as to costs.

G.R. No. 187256 February 23, 2011

CONSTANCIO F. MENDOZA and SANGGUNIANG BARANGAY OF BALATASAN, BULALACAO,
ORIENTAL MINDORO, Petitioners,
vs.
MAYOR ENRILO VILLAS and BRGY. KAGAWAD LIWANAG HERATO and MARLON DE
CASTRO, Manager, Pinamalayan Branch, Land Bank of the Philippines, Respondents.

RESOLUTION

VELASCO, JR., J.:

Before this Court is a Petition dated April 7, 20091 filed by Constancio F. Mendoza and Sangguniang
Barangay of Balatasan, Bulalacao, Oriental Mindoro. In the Petition, it is prayed that the Court: (1)
set aside the Order dated February 2, 20092 of the Regional Trial Court (RTC), Branch 43 in Roxas,
Oriental Mindoro and its Order dated March 17, 20093 denying petitioners’ motion for reconsideration
of the Order dated February 2, 2009; and (2) direct the RTC to continue with the proceedings in
Special Civil Action No. 08-10 entitled Constancio Mendoza v. Mayor Enrilo Villas.

The factual antecedents of the case are as follows:

In the 2007 barangay elections, Mendoza obtained the highest votes for the position of Punong
Barangay of Barangay Balatasan, Bulalacao, Oriental Mindoro, while respondent Liwanag Herato
obtained the highest number of votes for the position of Barangay Kagawad. Notably, Mayor Enrilo
Villas was the incumbent Mayor of Bulalacao, Oriental Mindoro at the time of the barangay
elections.4

After the elections, the Commission on Elections (COMELEC) proclaimed Mendoza as the duly-
elected Punong Barangay of Balatasan. Thus, the losing candidate, Thomas Pajanel, filed a petition
for quo warranto with the Municipal Trial Court (MTC) of Mansalay-Bulalacao which was docketed as
Election Case No. 407-B. The MTC issued a Decision dated February 23, 2008, disqualifying
Mendoza and declaring that Herato was entitled to succeed him as Punong Barangay with Herato
garnering the highest number of votes as a Barangay Kagawad. Mendoza appealed the MTC
Decision to the COMELEC.

On February 28, 2008, Villas administered the Oath of Office to Herato.5 Then, Villas issued
Memorandum No. 2008-03-010 dated March 3, 2008,6 directing all department heads of the
Municipal Government to act only on documents signed or authorized by Herato.

Meanwhile, Mendoza sought the advice of the Department of the Interior and Local Government
(DILG) as to who should exercise the powers of Punong Barangay of Balatasan given the prevailing
controversy.

In a letter dated April 11, 2008,7 DILG Undersecretary Austere A. Panadero responded to Mendoza’s
inquiry informing Villas that Mendoza should occupy the post of Punong Barangay as there was no
Writ of Execution Pending Appeal of the MTC Decision dated February 23, 2008.

Nevertheless, the Bulalacao Municipal Administrator, Edezer Aceron, by the authority of Villas,
issued a letter dated April 23, 20088 to respondent Marlon de Castro, Manager, Pinamalayan
Branch, Land Bank of the Philippines (LBP), requesting that transactions entered into by Mendoza in
behalf of Barangay Bulalacao should not be honored. In the same letter, Aceron dismissed the DILG
letter dated April 11, 2008, saying that it is merely advisory and not binding on the municipal
government of Bulalacao and the LBP.
In response, de Castro issued Villas and Mendoza a letter dated April 24, 2008,9 advising both
parties that the LBP shall not honor any transaction with regard the accounts of Barangay Balatasan.

Thereafter, petitioners filed a Petition dated May 5, 2008 for Mandamus with Damages and Prayer
for the Writ of Preliminary Mandatory Injunction, docketed as Special Civil Action No. 08-10 pending
with the Regional Trial Court, Branch 43 in Roxas, Oriental Mindoro. Petitioners prayed that the LBP
be directed to release the funds of Barangay Balatasan to them in order to render necessary, basic
public services to the inhabitants of the barangay.

Thus, Villas and Herato filed an Answer dated May 16, 2008 interposing the following affirmative
defenses: (1) that the petition for mandamus was defective, being directed against two or more
different entities and requiring to perform different acts; and (2) that Mendoza does not have any
clear and legal right for the writ of mandamus.

On the other hand, the LBP also filed its Answer dated June 5, 2008, stating that its decision of
withholding the barangay funds was a mere act of prudence given the controversy surrounding the
true Punong Barangay of Balatasan while manifesting that it will release the funds to whom the
Court directs it to.

Thereafter, Villas and Herato filed a Motion to Dismiss dated November 7, 2008. In the Motion, a
copy of the COMELEC Resolution dated September 8, 2008 in COMELEC Case No. SPA-07-243-
BRGY was attached. This case originated from a disqualification case against Mendoza filed with
the COMELEC by Senen Familara before the conduct of the 2007 barangay elections. In the
Resolution, the COMELEC disqualified Mendoza as a candidate for Punong Barangay of Barangay
Balatasan in the 2007 barangay elections for having already served three (3) consecutive terms for
the same position. In response, Mendoza presented a Certification dated February 27, 200910from
the COMELEC which stated that COMELEC Case No. SPA-07-243-BRGY is still pending with the
Commission.

In an attempt to clarify the issues on the matter, Mendoza again sought the opinion of the DILG
regarding the controversy. Thus, the DILG issued another letter, denominated as DILG Opinion No.
5, Series of 2009 dated January 2009,11 reiterating its stance that the MTC Decision dated February
23, 2008 has not yet become final and executory.

Nevertheless, the RTC issued the assailed order dated February 2, 2009 dismissing the petition on
the strength of the COMELEC Resolution dated September 8, 2008 disqualifying Mendoza from
running in the 2007 elections. As stated, petitioners’ motion for reconsideration of the Order dated
February 2, 2009 was denied in an Order dated March 17, 2009.

From such orders the petitioners went directly to this Court.

The instant petition is a direct recourse to this Court from the assailed orders of the RTC. Notably,
petitioners did not cite the rule under the Rules of Court by which the petition was filed. If the petition
is to be treated as a petition filed under Rule 65 of the Rules of Court, the petition must be dismissed
outright for having been filed prematurely.

In Chamber of Real Estate and Builders Associations, Inc. (CREBA) v. Secretary of Agrarian
Reform,12 a petition for certiorari filed under Rule 65 was dismissed for having been filed directly with
the Court, violating the principle of hierarchy of courts, to wit:

Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have concurrent
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and
injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court
forum. In Heirs of Bertuldo Hinog v. Melicor, citing People v. Cuaresma, this Court made the
following pronouncements:

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

Similarly, there are no special and important reasons that petitioners cite to justify their direct
recourse to this Court under Rule 65.

On the other hand, direct recourse to this Court has been allowed for petitions filed under Rule 45
when only questions of law are raised, as in this case. Thus, the Court ruled in Barcenas v. Tomas:13

Section 1 of Rule 45 clearly states that the following may be appealed to the Supreme Court through
a petition for review by certiorari: 1) judgments; 2) final orders; or 3) resolutions of the Court of
Appeals, the Sandiganbayan, the Regional Trial Court or similar courts, whenever authorized by law.
The appeal must involve only questions of law, not of fact.

This Court has, time and time again, pointed out that it is not a trier of facts; and that, save for a few
exceptional instances, its function is not to analyze or weigh all over again the factual findings of the
lower courts. There is a question of law when doubts or differences arise as to what law pertains to a
certain state of facts, and a question of fact when the doubt pertains to the truth or falsity of alleged
facts.

Under the principle of the hierarchy of courts, decisions, final orders or resolutions of an MTC should
be appealed to the RTC exercising territorial jurisdiction over the former. On the other hand, RTC
judgments, final orders or resolutions are appealable to the CA through either of the following: an
ordinary appeal if the case was originally decided by the RTC; or a petition for review under Rule 42,
if the case was decided under the RTC's appellate jurisdiction.

Nonetheless, a direct recourse to this Court can be taken for a review of the decisions, final orders
or resolutions of the RTC, but only on questions of law. Under Section 5 of Article VIII of the
Constitution, the Supreme Court has the power to

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court
may provide, final judgments and orders of lower courts in:

xxxx

(e) All cases in which only an error or question of law is involved.

This kind of direct appeal to this Court of RTC judgments, final orders or resolutions is provided for in
Section 2(c) of Rule 41, which reads:

SEC. 2. Modes of appeal.¾

xxxx

(c) Appeal by certiorari.¾In all cases where only questions of law are raised or involved, the appeal
shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45.

Procedurally then, petitioners could have appealed the RTC Decision affirming the MTC (1) to this
Court on questions of law only; or (2) if there are factual questions involved, to the CA -- as they in
fact did. Unfortunately for petitioners, the CA properly dismissed their petition for review because of
serious procedural defects. This action foreclosed their only available avenue for the review of the
factual findings of the RTC. (Emphasis supplied.)

Thus, the Court shall exercise liberality and consider the instant petition as one filed under Rule 45.
In Artistica Ceramica, Inc. v. Ciudad Del Carmen Homeowner’s Association, Inc.,14 citing Republic v.
Court of Appeals,15 the Court noted that it has the discretion to determine whether a petition was filed
under Rule 45 or 65 of the Rules of Court:

Admittedly, this Court, in accordance with the liberal spirit pervading the Rules of Court and in the
interest of justice, has the discretion to treat a petition for certiorari as having been filed under Rule
45, especially if filed within the reglementary period for filing a petition for review.
lawphi1

Nevertheless, even providing that the petition was not filed prematurely, it must still be dismissed for
having become moot and academic.

In Gunsi, Sr. v. Commissioners, The Commission on Elections,16 the Court defined a moot and
academic case as follows:

A moot and academic case is one that ceases to present a justiciable controversy by virtue of
supervening events, so that a declaration thereon would be of no practical value. As a rule, courts
decline jurisdiction over such case, or dismiss it on ground of mootness.

With the conduct of the 2010 barangay elections, a supervening event has transpired that has
rendered this case moot and academic and subject to dismissal. This is because, as stated in
Fernandez v. Commission on Elections,17 "whatever judgment is reached, the same can no longer
have any practical legal effect or, in the nature of things, can no longer be enforced." Mendoza’s
term of office has expired with the conduct of last year’s local elections. As such, Special Civil Action
No. 08-10, where the assailed Orders were issued, can no longer prosper. Mendoza no longer has
any legal standing to further pursue the case, rendering the instant petition moot and academic.

WHEREFORE, the Petition is DENIED.

SO ORDERED.

G.R. No. 183409 June 18, 2010

CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC. (CREBA), petitioner,
vs.
THE SECRETARY OF AGRARIAN REFORM, Respondent.

DECISION

PEREZ, J.:

This case is a Petition for Certiorari and Prohibition (with application for temporary restraining order
and/or writ of preliminary injunction) under Rule 65 of the 1997 Revised Rules of Civil Procedure,
filed by herein petitioner Chamber of Real Estate and Builders Associations, Inc. (CREBA) seeking
to nullify and prohibit the enforcement of Department of Agrarian Reform (DAR) Administrative Order
(AO) No. 01-02, as amended by DAR AO No. 05-07,1and DAR Memorandum No. 88,2 for having
been issued by the Secretary of Agrarian Reform with grave abuse of discretion amounting to lack or
excess of jurisdiction as some provisions of the aforesaid administrative issuances are illegal and
unconstitutional.

Petitioner CREBA, a private non-stock, non-profit corporation duly organized and existing under the
laws of the Republic of the Philippines, is the umbrella organization of some 3,500 private
corporations, partnerships, single proprietorships and individuals directly or indirectly involved in land
and housing development, building and infrastructure construction, materials production and supply,
and services in the various related fields of engineering, architecture, community planning and
development financing. The Secretary of Agrarian Reform is named respondent as he is the duly
appointive head of the DAR whose administrative issuances are the subject of this petition.

The Antecedent Facts

The Secretary of Agrarian Reform issued, on 29 October 1997, DAR AO No. 07-97,3 entitled
"Omnibus Rules and Procedures Governing Conversion of Agricultural Lands to Non-Agricultural
Uses," which consolidated all existing implementing guidelines related to land use conversion. The
aforesaid rules embraced all private agricultural lands regardless of tenurial arrangement and
commodity produced, and all untitled agricultural lands and agricultural lands reclassified by Local
Government Units (LGUs) into non-agricultural uses after 15 June 1988.

Subsequently, on 30 March 1999, the Secretary of Agrarian Reform issued DAR AO No. 01-
99,4 entitled "Revised Rules and Regulations on the Conversion of Agricultural Lands to Non-
agricultural Uses," amending and updating the previous rules on land use conversion. Its coverage
includes the following agricultural lands, to wit: (1) those to be converted to residential, commercial,
industrial, institutional and other non-agricultural purposes; (2) those to be devoted to another type of
agricultural activity such as livestock, poultry, and fishpond ─ the effect of which is to exempt the
land from the Comprehensive Agrarian Reform Program (CARP) coverage; (3) those to be
converted to non-agricultural use other than that previously authorized; and (4) those reclassified to
residential, commercial, industrial, or other non-agricultural uses on or after the effectivity of
Republic Act No. 66575 on 15 June 1988 pursuant to Section 206 of Republic Act No. 71607 and
other pertinent laws and regulations, and are to be converted to such uses.

On 28 February 2002, the Secretary of Agrarian Reform issued another Administrative Order, i.e.,
DAR AO No. 01-02, entitled "2002 Comprehensive Rules on Land Use Conversion," which further
amended DAR AO No. 07-97 and DAR AO No. 01-99, and repealed all issuances inconsistent
therewith. The aforesaid DAR AO No. 01-02 covers all applications for conversion from agricultural
to non-agricultural uses or to another agricultural use.
Thereafter, on 2 August 2007, the Secretary of Agrarian Reform amended certain provisions8 of DAR
AO No. 01-02 by formulating DAR AO No. 05-07, particularly addressing land conversion in time of
exigencies and calamities.

To address the unabated conversion of prime agricultural lands for real estate development, the
Secretary of Agrarian Reform further issued Memorandum No. 88 on 15 April 2008, which
temporarily suspended the processing and approval of all land use conversion applications.

By reason thereof, petitioner claims that there is an actual slow down of housing projects, which, in
turn, aggravated the housing shortage, unemployment and illegal squatting problems to the
substantial prejudice not only of the petitioner and its members but more so of the whole nation.

Hence, this petition.

The Issues

In its Memorandum, petitioner posits the following issues:

I.

WHETHER THE DAR SECRETARY HAS JURISDICTION OVER LANDS THAT HAVE BEEN
RECLASSIFIED AS RESIDENTIAL, COMMERCIAL, INDUSTRIAL, OR FOR OTHER NON-
AGRICULTURAL USES.

II.

WHETHER THE DAR SECRETARY ACTED IN EXCESS OF HIS JURISDICTION AND GRAVELY
ABUSED HIS DISCRETION BY ISSUING AND ENFORCING [DAR AO NO. 01-02, AS AMENDED]
WHICH SEEK TO REGULATE RECLASSIFIED LANDS.

III.

WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE LOCAL AUTONOMY OF

LOCAL GOVERNMENT UNITS.

IV.

WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE DUE PROCESS AND EQUAL
PROTECTION CLAUSE[S] OF THE CONSTITUTION.

V.

WHETHER MEMORANDUM NO. 88 IS A VALID EXERCISE OF POLICE POWER.9

The subject of the submission that the DAR Secretary gravely abused his discretion is AO No. 01-
02, as amended, which states:

Section 3. Applicability of Rules. – These guidelines shall apply to all applications for conversion,
from agricultural to non-agricultural uses or to another agricultural use, such as:
xxxx

3.4 Conversion of agricultural lands or areas that have been reclassified by the LGU or by way of a
Presidential Proclamation, to residential, commercial, industrial, or other non-agricultural uses on or
after the effectivity of RA 6657 on 15 June 1988, x x x. [Emphasis supplied].

Petitioner holds that under Republic Act No. 6657 and Republic Act No. 8435,10 the term agricultural
lands refers to "lands devoted to or suitable for the cultivation of the soil, planting of crops, growing
of fruit trees, raising of livestock, poultry or fish, including the harvesting of such farm products, and
other farm activities and practices performed by a farmer in conjunction with such farming operations
done by a person whether natural or juridical, and not classified by the law as mineral, forest,
residential, commercial or industrial land." When the Secretary of Agrarian Reform, however, issued
DAR AO No. 01-02, as amended, he included in the definition of agricultural lands "lands not
reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June
1988." In effect, lands reclassified from agricultural to residential, commercial, industrial, or other
non-agricultural uses after 15 June 1988 are considered to be agricultural lands for purposes of
conversion, redistribution, or otherwise. In so doing, petitioner avows that the Secretary of Agrarian
Reform acted without jurisdiction as he has no authority to expand or enlarge the legal signification
of the term agricultural lands through DAR AO No. 01-02. Being a mere administrative issuance, it
must conform to the statute it seeks to implement, i.e., Republic Act No. 6657, or to the Constitution,
otherwise, its validity or constitutionality may be questioned.

In the same breath, petitioner contends that DAR AO No. 01-02, as amended, was made in violation
of Section 6511of Republic Act No. 6657 because it covers all applications for conversion from
agricultural to non-agricultural uses or to other agricultural uses, such as the conversion of
agricultural lands or areas that have been reclassified by the LGUs or by way of Presidential
Proclamations, to residential, commercial, industrial or other non-agricultural uses on or after 15
June 1988. According to petitioner, there is nothing in Section 65 of Republic Act No. 6657 or in any
other provision of law that confers to the DAR the jurisdiction or authority to require that non-
awarded lands or reclassified lands be submitted to its conversion authority. Thus, in issuing and
enforcing DAR AO No. 01-02, as amended, the Secretary of Agrarian Reform acted with grave
abuse of discretion amounting to lack or excess of jurisdiction.

Petitioner further asseverates that Section 2.19,12 Article I of DAR AO No. 01-02, as amended,
making reclassification of agricultural lands subject to the requirements and procedure for land use
conversion, violates Section 20 of Republic Act No. 7160, because it was not provided therein that
reclassification by LGUs shall be subject to conversion procedures or requirements, or that the
DAR’s approval or clearance must be secured to effect reclassification. The said Section 2.19 of
DAR AO No. 01-02, as amended, also contravenes the constitutional mandate on local autonomy
under Section 25,13 Article II and Section 2,14 Article X of the 1987 Philippine Constitution.

Petitioner similarly avers that the promulgation and enforcement of DAR AO No. 01-02, as amended,
constitute deprivation of liberty and property without due process of law. There is deprivation of
liberty and property without due process of law because under DAR AO No. 01-02, as amended,
lands that are not within DAR’s jurisdiction are unjustly, arbitrarily and oppressively prohibited or
restricted from legitimate use on pain of administrative and criminal penalties. More so, there is
discrimination and violation of the equal protection clause of the Constitution because the aforesaid
administrative order is patently biased in favor of the peasantry at the expense of all other sectors of
society.
As its final argument, petitioner avows that DAR Memorandum No. 88 is not a valid exercise of
police power for it is the prerogative of the legislature and that it is unconstitutional because it
suspended the land use conversion without any basis.

The Court’s Ruling

This petition must be dismissed.

Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have concurrent
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and
injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court
forum.15 In Heirs of Bertuldo Hinog v. Melicor,16citing People v. Cuaresma,17 this Court made the
following pronouncements:

This Court's original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court
with Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not,
however, to be taken as according to parties seeking any of the writs an absolute, unrestrained
freedom of choice of the court to which application therefor will be directed. There is after all a
hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a
general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming
regard for that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court,
and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court’s
original jurisdiction to issue these writs should be allowed only when there are special and important
reasons therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a
policy necessary to prevent inordinate demands upon the Court’s time and attention which are better
devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the
Court’s docket.18 (Emphasis supplied.)

The rationale for this rule is two-fold: (a) it would be an imposition upon the precious time of this
Court; and (b) it would cause an inevitable and resultant delay, intended or otherwise, in the
adjudication of cases, which in some instances had to be remanded or referred to the lower court as
the proper forum under the rules of procedure, or as better equipped to resolve the issues because
this Court is not a trier of facts.19

This Court thus reaffirms the judicial policy that it will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts, and exceptional and compelling
circumstances, such as cases of national interest and of serious implications, justify the availment of
the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction.20

Exceptional and compelling circumstances were held present in the following cases: (a) Chavez v.
Romulo,21 on citizens’ right to bear arms; (b) Government of [the] United States of America v. Hon.
Purganan,22 on bail in extradition proceedings; (c) Commission on Elections v. Judge Quijano-
Padilla,23 on government contract involving modernization and computerization of voters’ registration
list; (d) Buklod ng Kawaning EIIB v. Hon. Sec. Zamora,24on status and existence of a public office;
and (e) Hon. Fortich v. Hon. Corona,25 on the so-called "Win-Win Resolution" of the Office of the
President which modified the approval of the conversion to agro-industrial area.26

In the case at bench, petitioner failed to specifically and sufficiently set forth special and important
reasons to justify direct recourse to this Court and why this Court should give due course to this
petition in the first instance, hereby failing to fulfill the conditions set forth in Heirs of Bertuldo Hinog
v. Melicor.27 The present petition should have been initially filed in the Court of Appeals in strict
observance of the doctrine on the hierarchy of courts. Failure to do so is sufficient cause for the
dismissal of this petition.

Moreover, although the instant petition is styled as a Petition for Certiorari, in essence, it seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned DAR AO No. 01-02,
as amended, and Memorandum No. 88. It, thus, partakes of the nature of a Petition for Declaratory
Relief over which this Court has only appellate, not original, jurisdiction.28 Section 5, Article VIII of the
1987 Philippine Constitution provides:

Sec. 5. The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers
and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and
habeas corpus.

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules
of Court may provide, final judgments and orders of lower courts in:

(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question. (Emphasis supplied.)

With that, this Petition must necessarily fail because this Court does not have original jurisdiction
over a Petition for Declaratory Relief even if only questions of law are involved.

Even if the petitioner has properly observed the doctrine of judicial hierarchy, this Petition is still
dismissible.

The special civil action for certiorari is intended for the correction of errors of jurisdiction only or
grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal office is only to
keep the inferior court within the parameters of its jurisdiction or to prevent it from committing such a
grave abuse of discretion amounting to lack or excess of jurisdiction.29

The essential requisites for a Petition for Certiorari under Rule 65 are: (1) the writ is directed against
a tribunal, a board, or an officer exercising judicial or quasi-judicial functions; (2) such tribunal,
board, or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of law.30

Excess of jurisdiction as distinguished from absence of jurisdiction means that an act, though within
the general power of a tribunal, board or officer, is not authorized and invalid with respect to the
particular proceeding, because the conditions which alone authorize the exercise of the general
power in respect of it are wanting.31 Without jurisdiction means lack or want of legal power, right or
authority to hear and determine a cause or causes, considered either in general or with reference to
a particular matter. It means lack of power to exercise authority.32Grave abuse of discretion implies
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction or, in other
words, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or
personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty or
to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.33
In the case before this Court, the petitioner fails to meet the above-mentioned requisites for the
proper invocation of a Petition for Certiorari under Rule 65. The Secretary of Agrarian Reform in
issuing the assailed DAR AO No. 01-02, as amended, as well as Memorandum No. 88 did so in
accordance with his mandate to implement the land use conversion provisions of Republic Act No.
6657. In the process, he neither acted in any judicial or quasi-judicial capacity nor assumed unto
himself any performance of judicial or quasi-judicial prerogative. A Petition for Certiorari is a special
civil action that may be invoked only against a tribunal, board, or officer exercising judicial functions.
Section 1, Rule 65 of the 1997 Revised Rules of Civil Procedure is explicit on this matter, viz.:

SECTION 1. Petition for certiorari. – When any tribunal, board or officer exercising judicial or quasi-
judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy,
and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with certainty and praying that judgment must be
rendered annulling or modifying the proceedings of such tribunal, board or officer. 1avvphi1

A tribunal, board, or officer is said to be exercising judicial function where it has the power to
determine what the law is and what the legal rights of the parties are, and then undertakes to
determine these questions and adjudicate upon the rights of the parties. Quasi-judicial function, on
the other hand, is "a term which applies to the actions, discretion, etc., of public administrative
officers or bodies x x x required to investigate facts or ascertain the existence of facts, hold hearings,
and draw conclusions from them as a basis for their official action and to exercise discretion of a
judicial nature."34

Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that
there be a law that gives rise to some specific rights of persons or property under which adverse
claims to such rights are made, and the controversy ensuing therefrom is brought before a tribunal,
board, or officer clothed with power and authority to determine the law and adjudicate the respective
rights of the contending parties.35

The Secretary of Agrarian Reform does not fall within the ambit of a tribunal, board, or officer
exercising judicial or quasi-judicial functions. The issuance and enforcement by the Secretary of
Agrarian Reform of the questioned DAR AO No. 01-02, as amended, and Memorandum No. 88 were
done in the exercise of his quasi-legislative and administrative functions and not of judicial or quasi-
judicial functions. In issuing the aforesaid administrative issuances, the Secretary of Agrarian
Reform never made any adjudication of rights of the parties. As such, it can never be said that the
Secretary of Agrarian Reform had acted with grave abuse of discretion amounting to lack or excess
of jurisdiction in issuing and enforcing DAR AO No. 01-02, as amended, and Memorandum No. 88
for he never exercised any judicial or quasi-judicial functions but merely his quasi-legislative and
administrative functions.

Furthermore, as this Court has previously discussed, the instant petition in essence seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned DAR AO No. 01-02,
as amended, and Memorandum No. 88. Thus, the adequate and proper remedy for the petitioner
therefor is to file a Petition for Declaratory Relief, which this Court has only appellate and not original
jurisdiction. It is beyond the province of certiorari to declare the aforesaid administrative issuances
unconstitutional and illegal because certiorari is confined only to the determination of the existence
of grave abuse of discretion amounting to lack or excess of jurisdiction. Petitioner cannot simply
allege grave abuse of discretion amounting to lack or excess of jurisdiction and then invoke certiorari
to declare the aforesaid administrative issuances unconstitutional and illegal. Emphasis must be
given to the fact that the writ of certiorari dealt with in Rule 65 of the 1997 Revised Rules of Civil
Procedure is a prerogative writ, never demandable as a matter of right, "never issued except in the
exercise of judicial discretion."36

At any rate, even if the Court will set aside procedural infirmities, the instant petition should still be
dismissed.

Executive Order No. 129-A37 vested upon the DAR the responsibility of implementing the CARP.
Pursuant to the said mandate and to ensure the successful implementation of the CARP, Section
5(c) of the said executive order authorized the DAR to establish and promulgate operational policies,
rules and regulations and priorities for agrarian reform implementation. Section 4(k) thereof
authorized the DAR to approve or disapprove the conversion, restructuring or readjustment of
agricultural lands into non-agricultural uses. Similarly, Section 5(l) of the same executive order has
given the DAR the exclusive authority to approve or disapprove conversion of agricultural lands for
residential, commercial, industrial, and other land uses as may be provided for by law. Section 7 of
the aforesaid executive order clearly provides that "the authority and responsibility for the exercise of
the mandate of the [DAR] and the discharge of its powers and functions shall be vested in the
Secretary of Agrarian Reform x x x."

Under DAR AO No. 01-02, as amended, "lands not reclassified as residential, commercial, industrial
or other non-agricultural uses before 15 June 1988" have been included in the definition of
agricultural lands. In so doing, the Secretary of Agrarian Reform merely acted within the scope of his
authority stated in the aforesaid sections of Executive Order No. 129-A, which is to promulgate rules
and regulations for agrarian reform implementation and that includes the authority to define
agricultural lands for purposes of land use conversion. Further, the definition of agricultural lands
under DAR AO No. 01-02, as amended, merely refers to the category of agricultural lands that may
be the subject for conversion to non-agricultural uses and is not in any way confined to agricultural
lands in the context of land redistribution as provided for under Republic Act No. 6657.

More so, Department of Justice Opinion No. 44, Series of 1990, which Opinion has been recognized
in many cases decided by this Court, clarified that after the effectivity of Republic Act No. 6657 on 15
June 1988 the DAR has been given the authority to approve land conversion.38 Concomitant to such
authority, therefore, is the authority to include in the definition of agricultural lands "lands not
reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988"
for purposes of land use conversion.

In the same vein, the authority of the Secretary of Agrarian Reform to include "lands not reclassified
as residential, commercial, industrial or other non-agricultural uses before 15 June 1988" in the
definition of agricultural lands finds basis in jurisprudence. In Ros v. Department of Agrarian
Reform,39 this Court has enunciated that after the passage of Republic Act No. 6657, agricultural
lands, though reclassified, have to go through the process of conversion, jurisdiction over which is
vested in the DAR. However, agricultural lands, which are already reclassified before the effectivity
of Republic Act No. 6657 which is 15 June 1988, are exempted from conversion.40 It bears stressing
that the said date of effectivity of Republic Act No. 6657 served as the cut-off period for automatic
reclassifications or rezoning of agricultural lands that no longer require any DAR conversion
clearance or authority.41 It necessarily follows that any reclassification made thereafter can be the
subject of DAR’s conversion authority. Having recognized the DAR’s conversion authority over lands
reclassified after 15 June 1988, it can no longer be argued that the Secretary of Agrarian Reform
was wrongfully given the authority and power to include "lands not reclassified as residential,
commercial, industrial or other non-agricultural uses before 15 June 1988" in the definition of
agricultural lands. Such inclusion does not unduly expand or enlarge the definition of agricultural
lands; instead, it made clear what are the lands that can be the subject of DAR’s conversion
authority, thus, serving the very purpose of the land use conversion provisions of Republic Act No.
6657.

The argument of the petitioner that DAR AO No. 01-02, as amended, was made in violation of
Section 65 of Republic Act No. 6657, as it covers even those non-awarded lands and reclassified
lands by the LGUs or by way of Presidential Proclamations on or after 15 June 1988 is specious. As
explained in Department of Justice Opinion No. 44, series of 1990, it is true that the DAR’s express
power over land use conversion provided for under Section 65 of Republic Act No. 6657 is limited to
cases in which agricultural lands already awarded have, after five years, ceased to be economically
feasible and sound for agricultural purposes, or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or industrial purposes. To suggest,
however, that these are the only instances that the DAR can require conversion clearances would
open a loophole in Republic Act No. 6657 which every landowner may use to evade compliance with
the agrarian reform program. It should logically follow, therefore, from the said department’s express
duty and function to execute and enforce the said statute that any reclassification of a private land as
a residential, commercial or industrial property, on or after the effectivity of Republic Act No. 6657 on
15 June 1988 should first be cleared by the DAR.42

This Court held in Alarcon v. Court of Appeals43 that reclassification of lands does not suffice.
Conversion and reclassification differ from each other. Conversion is the act of changing the current
use of a piece of agricultural land into some other use as approved by the DAR while reclassification
is the act of specifying how agricultural lands shall be utilized for non-agricultural uses such as
residential, industrial, and commercial, as embodied in the land use plan, subject to the
requirements and procedures for land use conversion. In view thereof, a mere reclassification of an
agricultural land does not automatically allow a landowner to change its use. He has to undergo the
process of conversion before he is permitted to use the agricultural land for other purposes.44

It is clear from the aforesaid distinction between reclassification and conversion that agricultural
lands though reclassified to residential, commercial, industrial or other non-agricultural uses must
still undergo the process of conversion before they can be used for the purpose to which they are
intended.

Nevertheless, emphasis must be given to the fact that DAR’s conversion authority can only be
exercised after the effectivity of Republic Act No. 6657 on 15 June 1988.45 The said date served as
the cut-off period for automatic reclassification or rezoning of agricultural lands that no longer require
any DAR conversion clearance or authority.46Thereafter, reclassification of agricultural lands is
already subject to DAR’s conversion authority. Reclassification alone will not suffice to use the
agricultural lands for other purposes. Conversion is needed to change the current use of reclassified
agricultural lands.

It is of no moment whether the reclassification of agricultural lands to residential, commercial,

industrial or other non-agricultural uses was done by the LGUs or by way of Presidential
Proclamations because either way they must still undergo conversion process. It bears stressing that
the act of reclassifying agricultural lands to non-agricultural uses simply specifies how agricultural
lands shall be utilized for non-agricultural uses and does not automatically convert agricultural lands
to non-agricultural uses or for other purposes. As explained in DAR Memorandum Circular No. 7,
Series of 1994, cited in the 2009 case of Roxas & Company, Inc. v. DAMBA-NFSW and the
Department of Agrarian Reform,47 reclassification of lands denotes their allocation into some specific
use and providing for the manner of their utilization and disposition or the act of specifying how
agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, or
commercial, as embodied in the land use plan. For reclassified agricultural lands, therefore, to be
used for the purpose to which they are intended there is still a need to change the current use
thereof through the process of conversion. The authority to do so is vested in the DAR, which is
mandated to preserve and maintain agricultural lands with increased productivity. Thus,
notwithstanding the reclassification of agricultural lands to non-agricultural uses, they must still
undergo conversion before they can be used for other purposes.

Even reclassification of agricultural lands by way of Presidential Proclamations to non-agricultural

uses, such as school sites, needs conversion clearance from the DAR. We reiterate that
reclassification is different from conversion. Reclassification alone will not suffice and does not
automatically allow the landowner to change its use. It must still undergo conversion process before
the landowner can use such agricultural lands for such purpose.48Reclassification of agricultural
lands is one thing, conversion is another. Agricultural lands that are reclassified to non-agricultural
uses do not ipso facto allow the landowner thereof to use the same for such purpose. Stated
differently, despite having reclassified into school sites, the landowner of such reclassified
agricultural lands must apply for conversion before the DAR in order to use the same for the said
purpose.

Any reclassification, therefore, of agricultural lands to residential, commercial, industrial or other non-
agricultural uses either by the LGUs or by way of Presidential Proclamations enacted on or after 15
June 1988 must undergo the process of conversion, despite having undergone reclassification,
before agricultural lands may be used for other purposes.

It is different, however, when through Presidential Proclamations public agricultural lands have been
reserved in whole or in part for public use or purpose, i.e., public school, etc., because in such a
case, conversion is no longer necessary. As held in Republic v. Estonilo,49 only a positive act of the
President is needed to segregate or reserve a piece of land of the public domain for a public
purpose. As such, reservation of public agricultural lands for public use or purpose in effect
converted the same to such use without undergoing any conversion process and that they must be
actually, directly and exclusively used for such public purpose for which they have been reserved,
otherwise, they will be segregated from the reservations and transferred to the DAR for distribution
to qualified beneficiaries under the CARP.50 More so, public agricultural lands already reserved for
public use or purpose no longer form part of the alienable and disposable lands of the public domain
suitable for agriculture.51 Hence, they are outside the coverage of the CARP and it logically follows
that they are also beyond the conversion authority of the DAR.

Clearly from the foregoing, the Secretary of Agrarian Reform did not act without jurisdiction or in
excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in
(1) including lands not reclassified as residential, commercial, industrial or other non-agricultural
uses before 15 June 1988 in the definition of agricultural lands under DAR AO No. 01-02, as
amended, and; (2) issuing and enforcing DAR AO No. 01-02, as amended, subjecting to DAR’s
jurisdiction for conversion lands which had already been reclassified as residential, commercial,
industrial or for other non-agricultural uses on or after 15 June 1988.

Similarly, DAR AO No. 01-02, as amended, providing that the reclassification of agricultural lands by
LGUs shall be subject to the requirements of land use conversion procedure or that DAR’s approval
or clearance must be secured to effect reclassification, did not violate the autonomy of the LGUs.

Section 20 of Republic Act No. 7160 states that:

SECTION 20. Reclassification of Lands. – (a) A city or municipality may, through an ordinance
passed by the sanggunian after conducting public hearings for the purpose, authorize the
reclassification of agricultural lands and provide for the manner of their utilization or disposition in the
following cases: (1) when the land ceases to be economically feasible and sound for agricultural
purposes as determined by the Department of Agriculture or (2) where the land shall have
substantially greater economic value for residential, commercial, or industrial purposes, as
determined by the sanggunian concerned: Provided, That such reclassification shall be limited to the
following percentage of the total agricultural land area at the time of the passage of the ordinance:

xxxx

(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That agricultural
lands distributed to agrarian reform beneficiaries pursuant to Republic Act Numbered Sixty-six
hundred fifty-seven (R.A. No. 6657), otherwise known as "The Comprehensive Agrarian Reform
Law," shall not be affected by the said reclassification and the conversion of such lands into other
purposes shall be governed by Section 65 of said Act.

xxxx

(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any manner
the provisions of R.A. No. 6657.

The aforequoted provisions of law show that the power of the LGUs to reclassify agricultural lands is
not absolute. The authority of the DAR to approve conversion of agricultural lands covered by
Republic Act No. 6657 to non-agricultural uses has been validly recognized by said Section 20 of
Republic Act No. 7160 by explicitly providing therein that, "nothing in this section shall be construed
as repealing or modifying in any manner the provisions of Republic Act No. 6657."

DAR AO No. 01-02, as amended, does not also violate the due process clause, as well as the equal
protection clause of the Constitution. In providing administrative and criminal penalties in the said
administrative order, the Secretary of Agrarian Reform simply implements the provisions of Sections
73 and 74 of Republic Act No. 6657, thus:

Sec. 73. Prohibited Acts and Omissions. – The following are prohibited:

xxxx

(c) The conversion by any landowner of his agricultural land into any non-agricultural use with intent
to avoid the application of this Act to his landholdings and to disposes his tenant farmers of the land
tilled by them;

xxxx

(f) The sale, transfer or conveyance by a beneficiary of the right to use or any other usufructuary
right over the land he acquired by virtue of being a beneficiary, in order to circumvent the provisions
of this Act.

xxxx

Sec. 74. Penalties. ─ Any person who knowingly or willfully violates the provisions of this Act shall be
punished by imprisonment of not less than one (1) month to not more than three (3) years or a fine
of not less than one thousand pesos (₱1,000.00) and not more than fifteen thousand pesos
(₱15,000.00), or both, at the discretion of the court.
If the offender is a corporation or association, the officer responsible therefor shall be criminally
liable.

And Section 11 of Republic Act No. 8435, which specifically provides:

Sec. 11. Penalty for Agricultural Inactivity and Premature Conversion. – x x x.

Any person found guilty of premature or illegal conversion shall be penalized with imprisonment of
two (2) to six (6) years, or a fine equivalent to one hundred percent (100%) of the government's
investment cost, or both, at the discretion of the court, and an accessory penalty of forfeiture of the
land and any improvement thereon.

In addition, the DAR may impose the following penalties, after determining, in an administrative
proceedings, that violation of this law has been committed:

a. Consolation or withdrawal of the authorization for land use conversion; and

b. Blacklisting, or automatic disapproval of pending and subsequent conversion applications

that they may file with the DAR.

Contrary to petitioner’s assertions, the administrative and criminal penalties provided for under DAR
AO No. 01-02, as amended, are imposed upon the illegal or premature conversion of lands within
DAR’s jurisdiction, i.e., "lands not reclassified as residential, commercial, industrial or for other non-
agricultural uses before 15 June 1998."

The petitioner’s argument that DAR Memorandum No. 88 is unconstitutional, as it suspends the land
use conversion without any basis, stands on hollow ground.

It bears emphasis that said Memorandum No. 88 was issued upon the instruction of the President in
order to address the unabated conversion of prime agricultural lands for real estate development
because of the worsening rice shortage in the country at that time. Such measure was made in order
to ensure that there are enough agricultural lands in which rice cultivation and production may be
carried into. The issuance of said Memorandum No. 88 was made pursuant to the general welfare of
the public, thus, it cannot be argued that it was made without any basis.

WHEREFORE, premises considered, the instant Petition for Certiorari is DISMISSED. Costs against
petitioner.

SO ORDERED.

G.R. No. 156264 September 30, 2004

ALLIED DOMECQ PHIL., INC., petitioner,

vs.
HON. SESINANDO E. VILLON of the Regional Trial Court of Manila, Branch 23; CLARK
LIBERTY WAREHOUSE, INC., BUREAU OF CUSTOMS and/or DISTRICT COLLECTORS OF
CUSTOMS, PORT OF MANILA and CLARK SPECIAL ECONOMIC ZONE, and BUREAU OF
FOOD AND DRUGS (BFAD) and/or DIRECTOR OF BFAD, respondents.

DECISION
SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari assailing the Decision1 of the Court of Appeals dated
May 27, 2002 and Resolution2 dated November 29, 2002 in CA-G.R. SP No. 63802 which dismissed
the special civil action for certiorari filed by Allied Domecq, Philippines Inc. (ADPI), herein petitioner,
for want of jurisdiction.

The factual background of this case is as follows:

On May 8, 1996, petitioner ADPI entered into an exclusive distributorship agreement with
Pedro Domecq, S.A., a corporation organized and existing under the laws of Spain, engaged
in the manufacture of wine and brandy. Under the said agreement, Pedro Domecq, S.A.
granted petitioner the sole and exclusive right to import and distribute in the Philippines
various Pedro Domecq, S.A. products including "Fundador" brandy until May 17, 2000. Upon
its expiration, the agreement is deemed automatically extended for an indefinite period of
time.

Petitioner then applied for a Certificate of Registration with the Bureau of Food and Drugs (BFAD),
pursuant to Department of Health Administrative Order No. 17, series of 1979, requiring all imported
food products to be registered with the BFAD prior to their distribution in the local markets.

On June 2, 1998, BFAD wrote then Director Quintin L. Kintanar of the Bureau of Customs,
requesting that entry of imported shipments of "Fundador" brandy should not be allowed in the
Philippines, unless the importer presents a valid Certificate of Registration issued by the BFAD. The
Bureau of Customs granted petitioner’s request and on July 13, 1998, issued Customs
Memorandum Circular No. 228-098.

On April 12, 1999, Clark Liberty Warehouse, Inc. (Clark Liberty), herein private respondent, a duly
licensed duty-free shop operating in the Clark Special Economic Zone, imported 800 cases or a total
of 9,420 bottles of "Fundador" brandy.

Since the importation by respondent Clark Liberty was not covered by the BFAD Certificate of
Product Registration, the Bureau of Customs seized and impounded the shipment pursuant to
Customs Memorandum Circular No. 228-98, in relation to Sections 101 (K) and 2530 of the Tariff
and Customs Code. The imported brandy then became the subject of seizure proceedings before
the District Collector of Customs of the Port of Manila, docketed as S.I. No. 99-140.

Petitioner then filed a motion to intervene in S.I. No. 99-140 alleging, among others, that it sustained
damages caused by respondent Clark Liberty’s illegal importation. However, the Bureau of Customs
District Collector failed to resolve the motion.

On September 15, 1999, petitioner sent respondent Clark Liberty a letter demanding that the latter
cease and desist from importing, distributing, selling, or marketing "Fundador" brandy in the
Philippines. Petitioner also demanded that Clark Liberty refrain from claiming the seized shipment
and participating in the seizure proceedings. Clark Liberty, however, refused to heed petitioner’s
demands.

On October 8, 1999, petitioner filed with the Regional Trial Court (RTC) of Manila a complaint for
injunction and damages with prayer for the issuance of a temporary restraining order (TRO) and a
writ of preliminary injunction. The complaint was raffled to Branch 23 of the Manila RTC, docketed
therein as Civil Case No. 99-95337.
On August 15, 2000, after hearing petitioner’s application for TRO and injunctive relief, the RTC
issued an Order denying the same. The trial court held that petitioner failed to prove that respondent
Clark Liberty engaged in unfair competition as there is no showing that it "employed deceit or
otherwise committed acts constituting bad faith;"3 that the bottles of "Fundador" brandy imported by
respondent are the "ones imported by plaintiff"4 and that these bottles "are not genuine, defective, or
of poor quality."5

Petitioner filed a motion for reconsideration but was denied by the RTC in its Order dated December
28, 2000.

On March 16, 2001, petitioner filed with the Court of Appeals a special civil action for certiorari,
docketed as CA-G.R. SP No. 63802.

On May 27, 2002, the Court of Appeals issued its assailed Decision dismissing the petition for lack
of jurisdiction. Its ratiocination is quoted as follows:

"[I]t is an admitted fact respondent Clark Liberty is one of the duly licensed and authorized
duty free shops at the Clark Special Economic Zone since 1998 which sells imported grocery
items including liquors, appliances, household wares, etc. and is exclusively regulated by the
Clark Development Corporation, created by Republic Act No. 7227, known as the ‘Bases
Conversion and Development Act of 1992.’ It is therefore a juridical creation of Republic Act
No. 7227 in relation to Executive Order No. 62 and Presidential Proclamation No. 163,
creating the Clark Special Economic Zone, under the exclusive jurisdiction, authority and
regulation of the Clark Development Corporation. As such juridical creation, this Court has
no jurisdiction to determine whether or not petitioner is entitled to the issuance of an
injunctive relief since such authority and jurisdiction belong the Honorable Supreme Court in
accordance with Section 21 of Republic Act No. 7227."6

Hence, the instant petition for review anchored on the following grounds:

"I

THE FORMER THIRTEENTH DIVISION OF THE COURT OF APPEALS COMMITTED

SERIOUS AND REVERSIBLE ERRORS IN LAW IN DISMISSING THE PETITION FOR
CERTIORARI IN CA-G.R. SP NO. 63802 UNDER RULE 65 OF THE 1997 RULES ON CIVIL
PROCEDURE FOR LACK OF JURISDICTION.

II

THE FORMER THIRTEENTH DIVISION OF THE COURT OF APPEALS COMMITTED

GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION BY NOT LOOKING INTO THE MERITS OF THE CASE AND IN NOT
RESOLVING WHETHER OR NOT PETITION IS ENTITLED TO THE INJUNCTION RELIEF
PRAYED FOR IN ITS PETITION.

III

IN DISMISSING THE PETITION IN CA-G.R. SP NO. 63802, THE HONORABLE COURT OF

APPEALS HAS DECIDED A QUESTION OF SUBSTANCE NOT THEREFORE
DETERMINED BY THE SUPREME COURT OR HAS DECIDED IT IN A WAY PROBABLY
 NOT IN ACCORD WITH LAW OR WITH APPLICABLE DECISIONS OF THIS HONORABLE
SUPREME COURT."7

Petitioner submits that the Appellate Court gravely abused its discretion in holding that under
Section 21 of Republic Act No. 7227, only the Supreme Court can issue a writ of preliminary
injunction. Petitioner contends that its cause of action has nothing to do with the implementation
of the projects for the conversion of the military reservation into alternative productive uses
governed by the said law. Since jurisdiction is conferred by law, the Court of Appeals cannot
diminish its own jurisdiction under Batas Pambansa Blg. 129, as amended.

The Solicitor General and respondent Clark Liberty counter that the Court of Appeals was correct in
dismissing the petition before it for lack of jurisdiction. They point out that in the proceedings before
the trial court, petitioner admitted that Clark Liberty is a registered enterprise of the Clark Special
Economic Zone, thus subject to the operation of R.A. 7227. Under Section 21 of this law, only the
Supreme Court has jurisdiction to grant injunctive relief to enjoin the implementation of the projects
for the conversion into alternative productive uses of the military reservation.

The pivotal issue, therefore, is whether the Court of Appeals gravely abused its discretion in holding
that it has no jurisdiction over CA-G.R. SP No. 63802 pursuant to Section 21 of Republic Act 7227.

Jurisdiction is the authority to hear and determine a cause.8 Jurisdiction over the subject matter is
the power to hear and determine the general class to which the proceedings in question
belong.9 Jurisdiction over the subject matter is conferred by law and not by the consent or
acquiescence of any or all of the parties or by erroneous belief of the court that it exists.10 Basic is
the rule that jurisdiction over the subject matter is determined by the cause or causes of action as
alleged in the complaint.11 But where the actual issues are evident from the records of the case, then
jurisdiction over the subject matter need not depend upon the literal averments in the complaint, but
on the law as applied to established facts.12

Here, in order to determine whether the court a quo has jurisdiction over petitioner’s complaint for
injunction, we have to interpret the law as applied to the established facts. There is no question
that respondent Clark Liberty is a registered enterprise of the Clark Special Economic Zone
and is primarily regulated by R.A. No. 7227, otherwise known as the Bases Conversion and
Development Act of 1992.

The underlying purpose of the Legislature in enacting R.A. No. 7227 is provided by Section 2, thus:

"SEC. 2. Declaration of Policies. – It is hereby declared the policy of the Government to

accelerate the sound and balanced conversion into alternative productive uses of the Clark
and Subic military reservations and their extensions (John Hay Station, Wallace Air Station,
O’Donnell Transmitter Station, San Miguel Naval Communications Station and Capas Relay
station), to raise funds by the sale of portions of Metro Manila military camps and to apply
said funds for the development and conversion to productive civilian use of the lands
covered under the 1947 Military Bases Agreement between the Philippines and the United
States of America, as amended.

It is likewise the declared policy of the Government to enhance the benefits to be derived
from said properties in order to promote the economic and social development of Central
Luzon in particular and the country in general."

Republic Act No. 7227 goes on further to provide that:

 "SEC. 4. Purposes of the Conversion Authority. – The Conversion authority shall have the
following purposes:

xxx

(c) To encourage the active participation of the private sector in transforming the
Clark and Subic military reservations and their extensions into other productive
uses;"

The establishment, registration, and operation of respondent Clark Liberty and the other enterprises
within the Clark Special Economic Zone are projects (involving the private sector) which convert
Clark Air Base, a military reservation, "into productive uses." In this connection, Section 21 of R.A.
No. 7227 provides:

"SEC. 21. Injunction and Restraining Order. – The implementation of the projects for the
conversion into alternative productive uses of the military reservations are urgent and
necessary and shall not be restrained or enjoined except by an order issued by the Supreme
Court of the Philippines."

Verily, the Court of Appeals did not err when it dismissed CA-G.R. SP No. 63802 for want of
jurisdiction.

WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals dated May 27,
2002 and its Resolution dated November 29, 2002, in CA-G.R. SP No. 63802 are AFFIRMED. Costs
against 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:

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:

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; 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 action pleaded as appearing from
the allegations in the complaint. The averments therein and the character of the relief sought are the
ones to be consulted.16

Respondents’ Complaint17 narrates that they are the duly registered owners of Lot No. 625 of the
Limay Cadastre which was covered by TCT No. T-105602. Without their knowledge and consent,
the land was divided into several lots under their names through the fraudulent manipulations of
Maura. One of the lots was Lot 625-K, 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. 134785 was cancelled
and TCT No. 134932 was issued in the name 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 later cancelled
and TCT No. 137466 was issued in the name of petitioner. Despite demands from the respondents,
petitioner refused to surrender possession of the subject property. Respondents were thus
constrained to engage the services of a lawyer and incur expenses for litigation. Respondents
prayed for the 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 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. 1âwphi 1

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 they have not yet obtained a
copy from the Provincial Assessor’s Office.22 However, they did not present such copy.

To reiterate, where the ultimate objective of the plaintiffs is to obtain title to real property, it should be
filed in the proper court having jurisdiction over the assessed value of the property subject
thereof.23 Since the amount alleged in the Complaint by respondents for the disputed lot is only
₱4,000.00, the MTC and not the RTC has jurisdiction over the action. Therefore, all proceedings in
the RTC are null and void.24

Consequently, the remaining issues raised by petitioner need not be discussed further.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No.
86983, dated June 29, 2007, and its Resolution dated October 23, 2007, are REVERSED and SET
ASIDE. The Decision of the Regional Trial Court, dated July I, 2005, is declared NULL and VOID.
The complaint in Civil Case No. 438-ML is dismissed without prejudice.

SO ORDERED.

G.R. No. 165849 December 10, 2007

GILBERT G. GUY, Petitioner,

vs.
THE COURT OF APPEALS (8th DIVISION), NORTHERN ISLANDS CO., INCORPORATED,
SIMNY G. GUY, GERALDINE G. GUY, GLADYS G. YAO, and EMILIA
TABUGADIR, Respondents.

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

G.R. No. 170185

IGNACIO AND IGNACIO LAW OFFICES, Petitioner,

vs.
THE COURT OF APPEALS (7th DIVISION), NORTHERN ISLANDS CO., INCORPORATED,
SIMNY G. GUY, GERALDINE G. GUY, GLADYS G. YAO, and EMILIA A.
TABUGADIR, Respondents.

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

G.R. No. 170186

SMARTNET PHILIPPINES, Petitioner,

vs.
THE COURT OF APPEALS (7th DIVISION), NORTHERN ISLANDS CO., INCORPORATED,
SIMNY G. GUY, GERALDINE G. GUY, GLADYS G. YAO, and EMILIA A.
TABUGADIR, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 171066

LINCOLN CONTINENTAL DEVELOPMENT CO., INC., Petitioner,

vs.
NORTHERN ISLANDS CO., INCORPORATED, SIMNY G. GUY, GERALDINE G. GUY, GRACE G.
CHEU, GLADYS G. YAO, and EMILIA A. TABUGADIR, Respondents.

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

G.R. No. 176650

LINCOLN CONTINENTAL DEVELOPMENT COMPANY, INC., Petitioner,

vs.
NORTHERN ISLANDS CO., INCORPORATED, SIMNY G. GUY, GERALDINE G. GUY, GRACE G.
CHEU, GLADYS G. YAO, and EMILIA A. TABUGADIR, Respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

Before us are five (5) consolidated cases which stemmed from Civil Case No. 04-109444 filed with
the Regional Trial Court (RTC), Branch 24, Manila, subsequently re-raffled to Branch 461 and
eventually to Branch 25.2

The instant controversies arose from a family dispute. Gilbert Guy is the son of Francisco and Simny
Guy. Geraldine, Gladys and Grace are his sisters. The family feud involves the ownership and
control of 20,160 shares of stock of Northern Islands Co., Inc. (Northern Islands) engaged in the
manufacture, distribution, and sales of various home appliances bearing the "3-D" trademark.

Simny and her daughters Geraldine, Gladys and Grace, as well as Northern Islands and Emilia
Tabugadir, have been impleaded as respondents in the above-entitled cases. Northern Islands is a
family-owned corporation organized in 1957 by spouses Francisco and respondent Simny Guy. In
November 1986, they incorporated Lincoln Continental Development Corporation, Inc. (Lincoln
Continental) as a holding company of the 50% shares of stock of Northern Islands in trust for their
three (3) daughters, respondents Geraldine, Gladys and Grace. Sometime in December 1986, upon
instruction of spouses Guy, Atty. Andres Gatmaitan, president of Lincoln Continental, indorsed in
blank Stock Certificate No. 132 (covering 8,400 shares) and Stock Certificate No. 133 (covering
11,760 shares) and delivered them to Simny.

In 1984, spouses Guy found that their son Gilbert has been disposing of the assets of their
corporations without authority. In order to protect the assets of Northern Islands, Simny surrendered
Stock Certificate Nos. 132 and 133 to Emilia Tabugadir, an officer of Northern Islands. The 20,160
shares covered by the two Stock Certificates were then registered in the names of respondent
sisters, thus enabling them to assume an active role in the management of Northern Islands.

On January 27, 2004, during a special meeting of the stockholders of Northern Islands, Simny was
elected President; Grace as Vice-President for Finance; Geraldine as Corporate Treasurer; and
Gladys as Corporate Secretary. Gilbert retained his position as Executive Vice President. This
development started the warfare between Gilbert and his sisters.
On March 18, 2004, Lincoln Continental filed with the RTC, Branch 24, Manila a Complaint for
Annulment of the Transfer of Shares of Stock against respondents, docketed as Civil Case No. 04-
109444. The complaint basically alleges that Lincoln Continental owns 20,160 shares of stock of
Northern Islands; and that respondents, in order to oust Gilbert from the management of Northern
Islands, falsely transferred the said shares of stock in respondent sisters’ names. Lincoln Continental
then prayed for an award of damages and that the management of Northern Islands be restored to
Gilbert. Lincoln also prayed for the issuance of a temporary restraining order (TRO) and a writ of
preliminary mandatory injunction to prohibit respondents from exercising any right of ownership over
the shares.

On June 16, 2004, Lincoln Continental filed a Motion to Inhibit the Presiding Judge of Branch 24,
RTC, Manila on the ground of partiality. In an Order dated June 22, 2004, the presiding judge
granted the motion and inhibited himself from further hearing Civil Case No. 04-109444. It was then
re-raffled to Branch 46 of the same court.

On July 12, 2004, Branch 46 set the continuation of the hearing on Lincoln Continental’s application
for a TRO.

On July 13, 2004, respondents filed with the Court of Appeals a Petition
for Certiorari and Mandamus, docketed as CA-G.R. SP No. 85069, raffled off to the Tenth Division.
Respondents alleged that the presiding judge of Branch 24, in issuing the Order dated June 22,
2004 inhibiting himself from further hearing Civil Case No. 04-109444, and the presiding judge of
Branch 46, in issuing the Order dated July 12, 2004 setting the continuation of hearing on Lincoln
Continental’s application for a TRO, acted with grave abuse of discretion tantamount to lack or
excess of jurisdiction.

Meanwhile, on July 15, 2004, the trial court issued the TRO prayed for by Lincoln Continental
directing respondents to restore to Gilbert the shares of stock under controversy. In the same Order,
the trial court set the hearing of Lincoln Continental’s application for a writ of preliminary injunction
on July 19, 20, and 22, 2004.

On July 16, 2004, the Court of Appeals (Tenth Division) issued a TRO enjoining Branch 46, RTC,
Manila from enforcing, maintaining, or giving effect to its Order of July 12, 2004 setting the hearing of
Lincoln Continental’s application for a TRO.

Despite the TRO, the trial court proceeded to hear Lincoln Continental’s application for a writ of
preliminary injunction. This prompted respondents to file in the same CA-G.R. SP No. 85069 a
Supplemental Petition for Certiorari, Prohibition, and Mandamus seeking to set aside the Orders of
the trial court setting the hearing and actually hearing Lincoln Continental’s application for a writ of
preliminary injunction. They prayed for a TRO and a writ of preliminary injunction to enjoin the trial
court (Branch 46) from further hearing Civil Case No. 04-109444.

On September 17, 2004, the TRO issued by the Court of Appeals (Tenth Division) in CA-G.R. SP
No. 85069 expired.

On September 20, 2004, Gilbert filed a Motion for Leave to Intervene and Motion to Admit
Complaint-in-Intervention in Civil Case No. 04-109444. In its Order dated October 4, 2004, the trial
court granted the motions.

Meantime, on October 13, 2004, the trial court issued the writ of preliminary mandatory injunction
prayed for by Lincoln Continental in Civil Case No. 04-109444.
On October 20, 2004, the Court of Appeals (Tenth Division) denied respondents’ application for
injunctive relief since the trial court had already issued a writ of preliminary injunction in favor of
Lincoln Continental. Consequently, on October 22, 2004, respondents filed with the Tenth Division a
Motion to Withdraw Petition and Supplemental Petition in CA-G.R. SP No. 85069.

On October 26, 2004, respondents filed a new Petition for Certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 87104, raffled off to the Eighth Division. They prayed that the TRO and
writ of preliminary injunction issued by the RTC, Branch 46, Manila be nullified and that an injunctive
relief be issued restoring to them the management of Northern Islands. They alleged that Gilbert has
been dissipating the assets of the corporation for his personal gain.

On October 28, 2004, the Court of Appeals Eighth Division issued a TRO enjoining the
implementation of the writ of preliminary injunction dated October 13, 2004 issued by the trial court
in Civil Case No. 04-109444; and directing Lincoln Continental to turn over the assets and records of
Northern Islands to respondents.

On November 2, 2004, respondents filed with the appellate court (Eighth Division) an
Urgent Omnibus Motion praying for the issuance of a break-open Order to implement its TRO.

On November 4, 2004, the Eighth Division issued a Resolution granting respondents’ motion.
Pursuant to this Resolution, respondents entered the Northern Islands premises at No. 3 Mercury
Avenue, Libis, Quezon City.

On November 18, 2004, Gilbert filed with this Court a petition for certiorari, docketed as G.R. No.
165849, alleging that the Court of Appeals (Eighth Division), in granting an injunctive relief in favor of
respondents, committed grave abuse of discretion tantamount to lack or in excess of jurisdiction.
The petition also alleges that respondents resorted to forum shopping.

Meanwhile, on December 16, 2004, Smartnet Philippines, Inc. (Smartnet) filed with the Metropolitan
Trial Court (MeTC), Branch 35, Quezon City a complaint for forcible entry against respondents,
docketed as Civil Case No. 35-33937. The complaint alleges that in entering the Northern Islands
premises, respondents took possession of the area being occupied by Smartnet and barred its
officers and employees from occupying the same.

Likewise on December 16, 2004, Ignacio and Ignacio Law Offices also filed with Branch 37, same
court, a complaint for forcible entry against respondents, docketed as Civil Case No. 34106. It
alleges that respondents forcibly occupied its office space when they took over the premises of
Northern Islands.

On December 22, 2004, the Eighth Division issued the writ of preliminary injunction prayed for by
respondents in CA-G.R. SP No. 87104.

Subsequently, the presiding judge of the RTC, Branch 46, Manila retired. Civil Case No. 04-109444
was then re-raffled to Branch 25.

On January 20, 2005, respondents filed with the Eighth Division of the appellate court a
Supplemental Petition for Certiorari with Urgent Motion for a Writ of Preliminary Injunction to Include
Supervening Events. Named as additional respondents were 3-D Industries, Judge Celso D. Laviña,
Presiding Judge, RTC, Branch 71, Pasig City and Sheriff Cresencio Rabello, Jr. This supplemental
petition alleges that Gilbert, in an attempt to circumvent the injunctive writ issued by the Eighth
Division of the appellate court, filed with the RTC, Branch 71, Pasig City a complaint for replevin on
behalf of 3-D Industries, to enable it to take possession of the assets and records of Northern
Islands. The complaint was docketed as Civil Case No. 70220. On January 18, 2005, the RTC
issued the writ of replevin in favor of 3-D Industries.

On April 15, 2005, respondents filed with the Eighth Division a Second Supplemental Petition
for Certiorari and Prohibition with Urgent Motion for the Issuance of an Expanded Writ of Preliminary
Injunction. Impleaded therein as additional respondents were Ignacio and Ignacio Law Offices,
Smartnet, Judge Maria Theresa De Guzman, Presiding Judge, MeTC, Branch 35, Quezon City,
Judge Augustus C. Diaz, Presiding Judge, MeTC, Branch 37, Quezon City, Sun Fire Trading
Incorporated, Zolt Corporation, Cellprime Distribution Corporation, Goodgold Realty and
Development Corporation, John Does and John Doe Corporations. Respondents alleged in the main
that the new corporations impleaded are alter egos of Gilbert; and that the filing of the forcible entry
cases with the MeTC was intended to thwart the execution of the writ of preliminary injunction dated
December 22, 2004 issued by the Court of Appeals (Eighth Division) in CA-G.R. SP No. 87104. 1awphil

On April 26, 2005, the Eighth Division issued a Resolution admitting respondents’ new pleading. On
August 19, 2005, the Eighth Division (now Seventh Division) rendered its Decision in CA-G.R. SP
No. 87104, the dispositive portion of which reads:

WHEREFORE, premises considered, the petition is hereby GRANTED and the October 13, 2004
Order and the October 13, 2004 Writ of Preliminary Mandatory Injunction issued by Branch 46 of the
Regional Trial Court of Manila are hereby REVERSED and SET ASIDE. The December 17, 2004
Order and Writ of Preliminary Injunction issued by this Court of Appeals are hereby MADE
PERMANENT against all respondents herein.

SO ORDERED.

Meanwhile, in a Decision3 dated September 19, 2005, the RTC, Branch 25, Manila dismissed the
complaint filed by Lincoln Continental and the complaint-in-intervention of Gilbert in Civil Case No.
04-109444, thus:

WHEREFORE, in view of the foregoing, the Complaint and the Complaint-in-Intervention are hereby
DISMISSED. Plaintiff and plaintiff-intervenor are hereby ordered to jointly and severally pay
defendants the following:

(a) Moral damages in the amount of Php2,000,000.00 each for defendants Simny Guy,
Geraldine Guy, Grace Guy-Cheu and Gladys Yao;

(b) Moral damages in the amount of Php200,000.00 for defendant Emilia Tabugadir;

(c) Exemplary damages in the amount of Php2,000,000.00 each for defendants Simny Guy,
Geraldine Guy, Grace Guy-Cheu, and Gladys Yao;

(d) Exemplary damages in the amount of Php200,000.00 for defendant Emilia Tabugadir;

(e) Attorney’s fees in the amount of Php2,000.000.00; and

(f) Costs of suit.

SO ORDERED.
The trial court held that Civil Case No. 04-109444 is a baseless and an unwarranted suit among
family members; that based on the evidence, Gilbert was only entrusted to hold the disputed shares
of stock in his name for the benefit of the other family members; and that it was only when Gilbert
started to dispose of the assets of the family’s corporations without their knowledge that respondent
sisters caused the registration of the shares in their respective names.

Both Lincoln Continental and Gilbert timely appealed the RTC Decision to the Court of Appeals,
docketed therein as CA-G.R. CV No. 85937.

On September 15, 2005, 3-D Industries, Inc. filed a petition for certiorari, prohibition,
and mandamus with this Court assailing the Decision of the Court of Appeals in CA-G.R. SP No.
87104 setting aside the writ of preliminary injunction issued by the RTC, Branch 46. The petition was
docketed as G.R. No. 169462 and raffled off to the Third Division of this Court.

On October 3, 2005, the Third Division of this Court issued a Resolution4 dismissing the petition of 3-
D Industries in G.R. No. 169462. 3-D Industries timely filed its motion for reconsideration but this
was denied by this Court in its Resolution5 dated December 14, 2005.

Meanwhile, on October 10, 2005, Gilbert, petitioner in G.R. No. 165849 for certiorari, filed with this
Court a Supplemental Petition for Certiorari, Prohibition, and Mandamus with Urgent Application for
a Writ of Preliminary Mandatory Injunction challenging the Decision of the Court of Appeals (Seventh
Division), dated August 19, 2005, in CA-G.R. SP No. 87104. This Decision set aside the Order dated
October 13, 2004 of the RTC, Branch 46 granting the writ of preliminary injunction in favor of Lincoln
Continental.

On November 8, 2005, Ignacio and Ignacio Law Offices and Smartnet filed with this Court their
petitions for certiorari, docketed as G.R. Nos. 170185 and 170186, respectively.

On February 27, 2006, Lincoln Continental filed with this Court a petition for review
on certiorari challenging the Decision of the Court of Appeals (Seventh Division) in CA-G.R. CV No.
85937, docketed as G.R. No. 171066.

On March 20, 2006, we ordered the consolidation of G.R. No. 171066 with G.R. Nos. 165849,
170185, and 170186.

In the meantime, in a Decision dated November 27, 2006 in CA-G.R. CV No. 85937, the Court of
Appeals (Special Second Division) affirmed the Decision in Civil Case No. 04-109444 of the RTC
(Branch 25) dismissing Lincoln Continental’s complaint and Gilbert’s complaint-in-intervention, thus:

WHEREFORE, the appeals are dismissed and the assailed decision AFFIRMED with modifications
that plaintiff and plaintiff-intervenor are ordered to pay each of the defendants-appellees Simny Guy,
Geraldine Guy, Grace Guy-Cheu and Gladys Yao moral damages of ₱500,000.00, exemplary
damages of ₱100,000.00 and attorney’s fees of ₱500,000.00.

SO ORDERED.

Lincoln Continental and Gilbert filed their respective motions for reconsideration, but they were
denied in a Resolution promulgated on February 12, 2007.
Lincoln Continental then filed with this Court a petition for review on certiorari assailing the Decision
of the Court of Appeals (Former Special Second Division) in CA-G.R. CV No. 85937. This petition
was docketed as G.R. No. 176650 and raffled off to the Third Division of this Court.

In our Resolution dated June 6, 2007, we ordered G.R. No. 176650 consolidated with G.R. Nos.
165849, 170185, 170186, and 171066.

THE ISSUES

In G.R. Nos. 165849 and 171066, petitioners Gilbert and Lincoln Continental raise the following
issues: (1) whether respondents are guilty of forum shopping; and (2) whether they are entitled to
the injunctive relief granted in CA-G.R. SP No. 87104.

In G.R. Nos. 170185 and 170186, the pivotal issue is whether the Court of Appeals committed grave
abuse of discretion amounting to lack or excess of jurisdiction in ruling that petitioners Ignacio and
Ignacio Law Offices and Smartnet are also covered by its Resolution granting the writ of preliminary
injunction in favor of respondents.

In G.R. No. 176650, the core issue is whether the Court of Appeals (Special Second Division) erred
in affirming the Decision of the RTC, Branch 25, Manila dated September 19, 2005 dismissing the
complaint of Lincoln Continental and the complaint-in-intervention of Gilbert in Civil Case No. 04-
109444.

THE COURT’S RULING

A. G.R. Nos. 165849 and 171066

On the question of forum shopping, petitioners Gilbert and Lincoln Continental contend that the acts
of respondents in filing a petition for certiorari and mandamus in CA-G.R. SP No. 85069 and
withdrawing the same and their subsequent filing of a petition for certiorari in CA-G.R. SP No. 87104
constitute forum shopping; that respondents withdrew their petition in CA-G.R. SP No. 85069 after
the Tenth Division issued a Resolution dated October 20, 2004 denying their application for a writ of
preliminary injunction; that they then filed an identical petition in CA-G.R. SP No. 87104 seeking the
same relief alleged in their petition in CA-G.R. SP No. 85069; and that by taking cognizance of the
petition in CA-G.R. SP No. 87104, instead of dismissing it outright on the ground of forum shopping,
the Court of Appeals committed grave abuse of discretion tantamount to lack or excess of
jurisdiction.

A party is guilty of forum shopping when he repetitively avails of several judicial remedies in different
courts, simultaneously or successively, all substantially founded on the same transactions and the
same essential facts and circumstances, and all raising substantially the same issues either pending
in, or already resolved adversely by some other court.6 It is prohibited by Section 5, Rule 7 of the
1997 Rules of Civil Procedure, as amended, which provides:

SECTION 5. Certification against forum shopping. – The plaintiff or principal party shall certify under
oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification
annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any
action or filed any other claim involving the same issues in any court, tribunal, or quasi-judicial
agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if
there is such other pending action or claim, a complete statement of the present status thereof; and
(c) if he should thereafter learn that the same or similar action has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory
pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall constitute indirect contempt
of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the
party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause
for administrative sanctions.

Forum shopping is condemned because it unnecessarily burdens our courts with heavy caseloads,
unduly taxes the manpower and financial resources of the judiciary and trifles with and mocks
judicial processes, thereby affecting the efficient administration of justice.7 The primary evil sought to
be proscribed by the prohibition against forum shopping is, however, the possibility of conflicting
decisions being rendered by the different courts and/or administrative agencies upon the same
issues.8

Forum shopping may only exist where the elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in the other.9 Litis pendentia as a ground for
dismissing a civil action is that situation wherein another action is pending between the same parties
for the same cause of action, such that the second action is unnecessary and vexatious. The
elements of litis pendentia are as follows: (a) identity of parties, or at least such as representing the
same interest in both actions; (b) identity of rights asserted and the relief prayed for, the relief being
founded on the same facts; and (c) the identity of the two cases such that judgment in one,
regardless of which party is successful, would amount to res judicata in the other.10 From the
foregoing, it is clear that sans litis pendentia or res judicata, there can be no forum shopping.

While the first element of litis pendentia – identity of parties – is present in both CA-G.R. SP No.
85069 and CA-G.R. SP No. 87104, however, the second element, does not exist. The petitioners in
CA-G.R. SP No. 85069 prayed that the following Orders be set aside:

(1) the Order of inhibition dated June 22, 2004 issued by the presiding judge of the RTC of
Manila, Branch 24; and

(2) the Order dated July 12, 2004 issued by Branch 46 setting Gilbert’s application for
preliminary injunction for hearing.

In their petition in CA-G.R. SP No. 87104, respondents prayed for the annulment of the writ of
preliminary injunction issued by the RTC, Branch 46 after the expiration of the TRO issued by the
Tenth Division of the Court of Appeals. Evidently, this relief is not identical with the relief sought by
respondents in CA-G.R. SP No. 85069. Clearly, the second element of litis pendentia – the identity
of reliefs sought - is lacking in the two petitions filed by respondents with the appellate court. Thus,
we rule that no grave abuse of discretion amounting to lack or excess of jurisdiction may be
attributed to the Court of Appeals (Eighth Division) for giving due course to respondents’ petition in
CA-G.R. SP No. 87104.

On the second issue, Section 3, Rule 58 of the 1997 Rules of Civil Procedure, as amended provides:

SECTION 3. Grounds for issuance of preliminary injunction. – A preliminary injunction may be

granted when it is established:
 (a) That the applicant is entitled to the relief demanded, and the whole or part of such relief
consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance, or non-performance of the act or acts complained of
during the litigation would probably work injustice to the applicant; or

(c) That a party, court, agency, or a person is doing, threatening, or is attempting to do, or is
procuring or suffering to be done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and tending to render the
judgment ineffectual.

For a party to be entitled to an injunctive writ, he must show that there exists a right to be protected
and that the acts against which the injunction is directed are violative of this right.11 In granting the
respondents’ application for injunctive relief and making the injunction permanent, the Court of
Appeals (Seventh Division) found that they have shown their clear and established right to the
disputed 20,160 shares of stock because: (1) they have physical possession of the two stock
certificates equivalent to the said number of shares; (2) Lincoln Continental is a mere trustee of the
Guy family; and (3) respondents constitute a majority of the board of directors of Northern Islands,
and accordingly have management and control of the company at the inception of Civil Case No. 94-
109444. The appellate court then ruled that the trial court committed grave abuse of discretion in
issuing a writ of preliminary mandatory injunction in favor of Guy. The writ actually reduced the
membership of Northern Islands board to just one member - Gilbert Guy. Moreover, he failed to
establish by clear and convincing evidence his ownership of the shares of stock in question. The
Court of Appeals then held there was an urgent necessity to issue an injunctive writ in order to
prevent serious damage to the rights of respondents and Northern Islands.

We thus find no reason to depart from the findings of the Court of Appeals. Indeed, we cannot
discern any taint of grave abuse of discretion on its part in issuing the assailed writ of preliminary
injunction and making the injunction permanent.

B. G.R. Nos. 170185 & 170186

Ignacio and Ignacio Law Offices and Smartnet, petitioners, claim that the Court of Appeals never
acquired jurisdiction over their respective persons as they were not served with summons, either by
the MeTC or by the appellate court in CA-G.R. SP No. 87104. Thus, they submit that the Court of
Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction when it
included them in the coverage of its injunctive writ.

Jurisdiction is the power or capacity given by the law to a court or tribunal to entertain, hear, and
determine certain controversies.12 Jurisdiction over the subject matter of a case is conferred by law.

Section 9 (1) of Batas Pambansa Blg. 129,13 as amended, provides:

SEC. 9. Jurisdiction. – The Court of Appeals shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo
warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction.

Rule 46 of the 1997 Rules of Civil Procedure, as amended, governs all cases originally filed
with the Court of Appeals. The following provisions of the Rule state:
SEC. 2. To what actions applicable. – This Rule shall apply to original actions
for certiorari, prohibition, mandamusand quo warranto.

Except as otherwise provided, the actions for annulment of judgment shall be governed by Rule 47,
for certiorari, prohibition, and mandamus by Rule 65, and for quo warranto by Rule 66.

xxx

SEC. 4. Jurisdiction over person of respondent, how acquired. – The court shall acquire jurisdiction
over the person of the respondent by the service on him of its order or resolution indicating its initial
action on the petition or by his voluntary submission to such jurisdiction.

SEC. 5. Action by the court. – The court may dismiss the petition outright with specific reasons for
such dismissal or require the respondent to file a comment on the same within ten (10) days from
notice. Only pleadings required by the court shall be allowed. All other pleadings and papers may be
filed only with leave of court.

It is thus clear that in cases covered by Rule 46, the Court of Appeals acquires jurisdiction over the
persons of the respondents by the service upon them of its order or resolution indicating its initial
action on the petitions or by their voluntary submission to such jurisdiction.14 The reason for this is
that, aside from the fact that no summons or other coercive process is served on respondents, their
response to the petitions will depend on the initial action of the court thereon. Under Section 5, the
court may dismiss the petitions outright, hence, no reaction is expected from respondents and under
the policy adopted by Rule 46, they are not deemed to have been brought within the court’s
jurisdiction until after service on them of the dismissal order or resolution.15

Records show that on April 27, 2005, petitioners in these two forcible entry cases, were served
copies of the Resolution of the Court of Appeals (Seventh Division) dated April 26, 2005 in CA-G.R.
SP No. 87104.16 The Resolution states:

Private respondents SMARTNET PHILIPPINES, INC., IGNACIO & IGNACIO LAW OFFICE,
SUNFIRE TRADING, INC., ZOLT CORPORATION, CELLPRIME DISTRIBUTION CORPO.,
GOODGOLD REALTY & DEVELOPMENT CORP., are hereby DIRECTED to file CONSOLIDATED
COMMENT on the original Petition for Certiorari, the First Supplemental Petition for Certiorari, and
the Second Supplemental Petition for Certiorari (not a Motion to Dismiss) within ten (10) days from
receipt of a copy of the original, first and second Petitions for Certiorari.17

Pursuant to Rule 46, the Court of Appeals validly acquired jurisdiction over the persons of Ignacio
and Ignacio Law Offices and Smartnet upon being served with the above Resolution.

But neither of the parties bothered to file the required comment. Their allegation that they have been
deprived of due process is definitely without merit. We have consistently held that when a party was
afforded an opportunity to participate in the proceedings but failed to do so, he cannot complain of
deprivation of due process for by such failure, he is deemed to have waived or forfeited his right to
be heard without violating the constitutional guarantee.18

On the question of whether the Court of Appeals could amend its Resolution directing the issuance
of a writ of preliminary injunction so as to include petitioners, suffice to state that having acquired
jurisdiction over their persons, the appellate court could do so pursuant to Section 5 (g), Rule 135 of
the Revised Rules of Court, thus:
SEC. 5. Inherent powers of courts. – Every court shall have power:

xxx

(g) To amend and control its process and orders so as to make them conformable to law and justice.

In Villanueva v. CFI of Oriental Mindoro19 and Eternal Gardens Memorial Parks Corp. v. Intermediate
Appellate Court,20 we held that under this Rule, a court has inherent power to amend its judgment so
as to make it conformable to the law applicable, provided that said judgment has not yet acquired
finality, as in these cases.

C. G.R. No. 176650

The fundamental issue is who owns the disputed shares of stock in Northern Islands.

We remind petitioner Lincoln Continental that what it filed with this Court is a petition for review
on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended. It is a rule in this
jurisdiction that in petitions for review under Rule 45, only questions or errors of law may be
raised.21 There is a question of law when the doubt or controversy concerns the correct application of
law or jurisprudence to a certain set of facts, or when the issue does not call for an examination of
the probative value of the evidence presented. There is a question of fact when the doubt arises as
to the truth or falsehood of facts or when there is a need to calibrate the whole evidence considering
mainly the credibility of the witnesses, the existence and relevancy of specific surrounding
circumstances, as well as their relation to each other and to the whole, and the probability of the
situation.22 Obviously, the issue raised by the instant petition for review on certiorari, involves a
factual matter, hence, is outside the domain of this Court. However, in the interest of justice and in
order to settle this controversy once and for all, a ruling from this Court is imperative.

One thing is clear. It was established before the trial court, affirmed by the Court of Appeals,
that Lincoln Continental held the disputed shares of stock of Northern Islands merely in trust
for the Guy sisters. In fact, the evidence proffered by Lincoln Continental itself supports this
conclusion. It bears emphasis that this factual finding by the trial court was affirmed by the Court of
Appeals, being supported by evidence, and is, therefore, final and conclusive upon this Court.

Article 1440 of the Civil Code provides that:

ART. 1440. A person who establishes a trust is called the trustor; one in whom confidence is
reposed as regards property for the benefit of another person is known as the trustee; and the
person for whose benefit the trust has been created is referred to as the beneficiary.

In the early case of Gayondato v. Treasurer of the Philippine Islands,23 this Court defines trust, in its
technical sense, as "a right of property, real or personal, held by one party for the benefit of another."
Differently stated, a trust is "a fiduciary relationship with respect to property, subjecting the person
holding the same to the obligation of dealing with the property for the benefit of another person."24

Both Lincoln Continental and Gilbert claim that the latter holds legal title to the shares in question.
But record shows that there is no evidence to support their claim. Rather, the evidence on
record clearly indicates that the stock certificates representing the contested shares are in
respondents’ possession. Significantly, there is no proof to support his allegation that the transfer of
the shares of stock to respondent sisters is fraudulent. As aptly held by the Court of Appeals, fraud is
never presumed but must be established by clear and convincing evidence.25 Gilbert failed to
discharge this burden. We, agree with the Court of Appeals that respondent sisters own the shares
of stocks, Gilbert being their mere trustee. Verily, we find no reversible error in the challenged
Decision of the Court of Appeals (Special Second Division) in CA-G.R. CV No. 85937.

WHEREFORE, we DISMISS the petitions in G.R. Nos. 165849, 170185, 170186 and 176650;
and DENY the petitions in G.R. Nos. 171066 and 176650. The Resolutions of the Court of Appeals
(Eighth Division), dated October 28, 2004 and November 4, 2004, as well as the Decision dated
October 10, 2005 of the Court of Appeals (Seventh Division) in CA-G.R. SP No. 87104
are AFFIRMED. We likewise AFFIRM IN TOTO the Decision of the Court of Appeals (Special
Second Division), dated November 27, 2006 in CA-G.R. CV No. 85937. Costs against petitioners.

SO ORDERED.

G.R. No. 168008 August 17, 2011

PETRONILO J. BARAYUGA, Petitioner,

vs.
ADVENTIST UNIVERSITY OF THE PHILIPPINES, THROUGH ITS BOARD OF TRUSTEES,
REPRESENTED BY ITS CHAIRMAN, NESTOR D. DAYSON, Respondents.

DECISION

BERSAMIN, J.:

The injunctive relief protects only a right in esse. Where the plaintiff does not demonstrate that he
has an existing right to be protected by injunction, his suit for injunction must be dismissed for lack of
a cause of action.

The dispute centers on whether the removal of the petitioner as President of respondent Adventist
University of the Philippines (AUP) was valid, and whether his term in that office was five years, as
he insists, or only two years, as AUP insists.

We hereby review the decision promulgated on August 5, 2004,1 by which the Court of Appeals (CA)
nullified and set aside the writ of preliminary injunction issued by the Regional Trial Court (RTC),
Branch 21, in Imus, Cavite to prevent AUP from removing the petitioner.

Antecedents

AUP, a non-stock and non-profit domestic educational institution incorporated under Philippine laws
on March 3, 1932, was directly under the North Philippine Union Mission (NPUM) of the Southern
Asia Pacific Division of the Seventh Day Adventists. During the 3rd Quinquennial Session of the
General Conference of Seventh Day Adventists held from November 27, 2000 to December 1, 2000,
the NPUM Executive Committee elected the members of the Board of Trustees of AUP, including
the Chairman and the Secretary. Respondent Nestor D. Dayson was elected Chairman while the
petitioner was chosen Secretary.

On January 23, 2001, almost two months following the conclusion of the 3rd Quinquennial Session,
the Board of Trustees appointed the petitioner President of AUP.2 During his tenure, or from
November 11 to November 13, 2002, a group from the NPUM conducted an external performance
audit. The audit revealed the petitioner’s autocratic management style, like making major decisions
without the approval or recommendation of the proper committees, including the Finance
Committee; and that he had himself done the canvassing and purchasing of materials and made
withdrawals and reimbursements for expenses without valid supporting receipts and without the
approval of the Finance Committee. The audit concluded that he had

committed serious violations of fundamental rules and procedure in the disbursement and use of
funds.

The NPUM Executive Committee and the Board of Trustees decided to immediately request the
services of the General Conference Auditing Service (GCAS) to determine the veracity of the audit
findings. Accordingly, GCAS auditors worked in the campus from December 4 to December 20,
2002 to review the petitioner’s transactions during the period from April 2002 to October 2002. On
December 20, 2002, CGAS auditors reported the results of their review, and submitted their
observations and recommendations to the Board of Trustees.

Upon receipt of the CGAS report that confirmed the initial findings of the auditors on January 8,
2003, the NPUM informed the petitioner of the findings and required him to explain.

On January 15, 2003, Chairman Dayson and the NPUM Treasurer likewise informed the petitioner
inside the NPUM office on the findings of the auditors in the presence of the AUP Vice-President for
Financial Affairs, and reminded him of the possible consequences should he fail to satisfactorily
explain the irregularities cited in the report. He replied that he had already prepared his written
explanation.

The Board of Trustees set a special meeting at 2 p.m. on January 22, 2003. Being the Secretary, the
petitioner himself prepared the agenda and included an item on his case. In that meeting, he
provided copies of the auditors’ report and his answers to the members of the Board of Trustees.
After hearing his explanations and oral answers to the questions raised on issues arising from the
report, the members of the Board of Trustees requested him to leave to allow them to analyze and
evaluate the report and his answers. Despite a long and careful deliberation, however, the members
of the Board of Trustees decided to adjourn that night and to set another meeting in the following
week considering that the meeting had not been specifically called for the purpose of deciding his
case. The adjournment would also allow the Board of Trustees more time to ponder on the
commensurate disciplinary measure to be meted on him.

On January 23, 2003, Chairman Dayson notified the petitioner in writing that the Board of Trustees
would hold in abeyance its deliberation on his answer to the auditors’ report and would meet again at
10:00 a.m. on January 27, 2003. Chairman Dayson indicated that some sectors in the campus had
not been properly represented in the January 22, 2003 special meeting, and requested the petitioner
as Secretary to ensure that all sectors are duly represented in the next meeting of the Board of
Trustees.3

In the January 27, 2003 special meeting, the petitioner sent a letter to the Board of Trustees. The
members, by secret ballot, voted to remove him as President because of his serious violations of
fundamental rules and procedures in the disbursement and use of funds as revealed by the special
audit; to appoint an interim committee consisting of three members to assume the powers and
functions of the President; and to recommend him to the NPUM for consideration as Associate
Director for Secondary Education.4

On January 28, 2003, the petitioner was handed inside the NPUM office a letter, together with a
copy of the minutes of the special meeting held the previous day. In turn, he handed to Chairman
Dayson a letter requesting two weeks within which to seek a reconsideration, stating that he needed
time to obtain supporting documents because he was then attending to his dying mother.5
In the evening of January 28, 2003, the Board of Trustees, most of whose members had not yet left
Cavite, reconvened to consider and decide the petitioner’s request for reconsideration. During the
meeting, he made an emotional appeal to allow him to continue as President, promising to
immediately vacate his office should he again commit any of the irregularities cited in the auditors’
report. He added that should the Board of Trustees not favor his appeal, he would settle for a
retirement package for him and his wife and would leave the church.

The Board of Trustees denied the petitioner’s request for reconsideration because his reasons were
not meritorious. Board Member Elizabeth Role served the notice of the denial on him the next day,
but he refused to receive the notice, simply saying Alam ko na yan.6

The petitioner later obtained a copy of the inter-school memorandum dated January 31, 2003
informing AUP students, staff, and faculty members about his relief as President and the
appointment of an interim committee to assume the powers and duties of the President.

On February 4, 2003, the petitioner brought his suit for injunction and damages in the RTC, with
prayer for the issuance of a temporary restraining order (TRO), impleading AUP and its Board of
Trustees, represented by Chairman Dayson, and the interim committee. His complaint alleged that
the Board of Trustees had relieved him as President without valid grounds despite his five-year term;
that the Board of Trustees had thereby acted in bad faith; and that his being denied ample and
reasonable time to present his evidence deprived him of his right to due process.7

The suit being intra-corporate and summary in nature, the application for TRO was heard by means
of affidavits. In the hearing of February 7, 2003, the parties agreed not to harass each other. The
RTC used the mutual agreement as its basis to issue a status quo order on February 11, 2003.8

In their answer with counterclaim, the respondents denied the allegations of the petitioner, and
averred that he had been validly removed for cause; and that he had been granted ample
opportunity to be heard in his defense.9

Order of the RTC

On March 21, 2003, after summary hearing, the RTC issued the TRO enjoining the respondents and
persons acting for and in their behalf from implementing the resolution removing him as President
issued by the Board of Trustees during the January 27, 2003 special meeting, and enjoining the
interim committee from performing the functions of President of AUP. The RTC did not require a
bond.10

After further hearing, the RTC issued on April 25, 2003 its controversial order,11 granting the
petitioner’s application for a writ of preliminary injunction. It thereby resolved three issues, namely:
(a) whether the special board meetings were valid; (b) whether the conflict-of-interest provision in the
By-Laws and Working Policy was violated; and (c) whether the petitioner was denied due process. It
found for the petitioner upon all the issues. On the first issue, it held that there was neither a written
request made by any two members of the Board of Trustees nor proper notices sent

to the members as required by AUP’s By-Laws, which omissions, being patent defects, tainted the
special board meetings with nullity. Anent the second issue, it ruled that the purchase of coco lumber
from his balae (i.e., mother-in-law of his son) was not covered by the conflict-of-interest provision, for
AUP’s Model Statement of Acceptance form mentioned only the members of the immediate family
and did not extend to the relationship between him and his balae. On the third issue, it concluded
that he was deprived of due process when the Board of Trustees refused to grant his motion for
reconsideration and his request for additional time to produce his evidence, and instead immediately
implemented its decision by relieving him from his position without according him the treatment
befitting a university President.

Proceedings in the CA

With the Interim Rules for Intra-Corporate Controversies prohibiting a motion for reconsideration, the
respondents forthwith filed a petition for certiorari in the CA,12 contending that the petitioner’s
complaint did not meet the requirement that an injunctive writ should be anchored on a legal right;
and that he had been merely appointed, not elected, as President for a term of office of only two
years, not five years, based on AUP’s amended By-Laws.

In the meanwhile, on September 17, 2003, the petitioner filed a supplemental petition in the
CA,13 alleging that after the commencement of his action, he filed in the RTC an urgent motion for
the issuance of a second TRO to enjoin the holding of an AUP membership meeting and the election
of a new Board of Trustees, capitalizing on the admission in the respondents’ answer that he had
been elected in 2001 to a five-year term of office. He argued that the admission estopped the
respondents from insisting to the contrary.

The respondents filed in the CA a verified urgent motion for a TRO and to set a hearing on the
application for preliminary injunction to enjoin the RTC from implementing the assailed order
granting a writ of preliminary injunction and from further proceeding in the case. The petitioner
opposed the motion for TRO, but did not object to the scheduling of preliminary injunctive hearings.

On February 24, 2004, the CA issued a TRO to enjoin the RTC from proceeding for a period of 60
days, and declared that the prayer for injunctive relief would be resolved along with the merits of the
main case.

The petitioner sought a clarification of the TRO issued by the CA, considering that his cause of
action in his petitions to cite the respondents in indirect contempt dated March 5, 2004 and March
16, 2004 filed in the RTC involved the election of a certain Robin Saban as the new President of
AUP in blatant and malicious violation of the writ of preliminary injunction issued by the RTC. In
clarifying the TRO, the CA explained that it did not go beyond the reliefs prayed for in the
respondents’ motion for TRO and preliminary injunctive hearings.

On August 5, 2004, the CA rendered its decision nullifying the RTC’s writ of preliminary injunction. It
rejected the petitioner’s argument that Article IV, Section 3 of AUP’s Constitution and By-Laws and
Working Policy of the Conference provided a five-year term for him, because the provision was
inexistent. It ruled that the petitioner’s term of office had expired on January 22, 2003, or two years
from his appointment, based on AUP’s amended By-Laws; that, consequently, he had been a mere
de facto officer appointed by the members of the Board of Trustees; and that he held no legal right
warranting the issuance of the writ of preliminary injunction.

The CA declared that the rule on judicial admissions admitted of exceptions, as held in National
Power Corporation v. Court of Appeals,14 where the Court held that admissions were not evidence
that prevailed over documentary proof; that the petitioner’s being able to answer the results of the
special audit point-by-point belied his allegation of denial of due process; that AUP was the party
that stood to be injured by the issuance of the injunctive writ in the form of a "demoralized
administration, studentry, faculty and staff, sullied reputation, and dishonest leadership;" and that the
assailed RTC order sowed confusion and chaos because the RTC thereby chose to subordinate the
interest of the entire AUP community to that of the petitioner who had been deemed not to have
satisfied the highest ideals required of his office.
 Issues

Undeterred, the petitioner has appealed, contending that:

I.

THE COURT OF APPPEALS HAS DECIDED CONTRARY TO LAW AND JURISPRUDENCE

WHEN IT RULED THAT THE EXTRAORDINARY WRIT OF CERTIORARI APPLIED IN THE CASE
AT BAR.

II.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN

ACCORD WITH THE ESTABLISHED LAW AND JURISPRUDENCE THAT "ADMISSIONS, VERBAL
OR WRITTEN, MADE BY A PARTY IN THE COURSE OF THE PROCEEDINGS IN THE SAME
CASE, DOES NOT REQUIRE PROOF," BY REQUIRING PETITIONER BARAYUGA TO PRESENT
EVIDENCE THAT HIS TERM AS PRESIDENT OF AUP IS FOR FIVE (5) YEARS.

III.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN

ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT RULED THAT PETITIONER
BARAYUGA HAS ONLY A TERM OF TWO (2) YEARS INSTEAD OF FIVE (5) YEARS AS
CLEARLY ADMITTED BY PRIVATE RESPONDENT AUP IN ITS ANSWER.

IV.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN

ACCORD WITH LAW AND JURISPRUDENCE BY SOLELY RELYING ON THE CASE OF
NATIONAL POWER CORPORATION v. COURT OF APPEALS, WHICH INVOLVE FACTS
DIFFERENT FROM THE PRESENT CASE.

V.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN

ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT UNJUSTIFIABLY ALLOWED THE
WAIVER OF NOTICE FOR THE SPECIAL MEETING OF THE BOARD OF TRUSTEES.

VI.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN

ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT ERRONEOUSLY CONCLUDED
THAT PETITIONER BARAYUGA WAS MERELY OCCUPYING THE POSITION OF AUP
PRESIDENT IN A HOLD-OVER CAPACITY.

The petitioner argues that the assailed RTC order, being supported by substantial evidence,
accorded with law and jurisprudence; that his tenure as President under the Constitution, By-Laws
and the Working Policy of the Conference was for five years, contrary to the CA’s findings that he
held the position in a hold-over capacity; that instead, the CA should have applied the rule on judicial
admission, because the holding in National Power Corporation v. Court of Appeals, cited by the CA,
did not apply, due to AUP not having presented competent evidence to prove that he had not been
elected by the Board of Trustees as President of AUP; and that his removal during the special board
meeting that was invalidly held for lack of notice denied him due process.

AUP counters that:

PETITIONER IS NOT AN ELECTED TRUSTEE OF THE AUP BOARD, NOR WAS (HE) ELECTED
AS PRESIDENT, AND AS SUCH, HE CAN CLAIM NO RIGHT TO THE AUP PRESIDENCY, BEING
TWICE DISQUALIFIED BY LAW, WHICH RENDERS MOOT AND ACAMEDIC ALL OF THE
ARGUMENTS IN THIS PETITION.

II

EVEN IF WE FALSELY ASSUME EX GRATIA THAT PETITIONER IS AN ELECTED TRUSTEE

AND ELECTED PRESIDENT, THE TWO (2) YEAR TERM PROVIDED IN AUP’S BY-LAWS –
REQUIRED BY THE CORPORATION CODE AND APPROVED BY THE SEC – IS WHAT
GOVERNS THE INTRA-CORPORATE CONTROVERSY, THE AUP’S ADMISSION IN ITS
ANSWER THAT HE HAS A FIVE (5) YEAR TERM BASED ON HIS INVOKED SAMPLE
CONSTITUTION, BY-LAWS AND POLICY OF THE SEVENTH DAY ADVENTIST
NOTWITHSTANDING.

III

PURSUANT TO THE RULES AND SETTLED JURISPRUDENCE, THE ADMISSION IN THE

ANSWER IS NOT EVEN PREJUDICIAL AT ALL.

IV

EVEN IF WE FALSELY ASSUME, JUST FOR THE SAKE OF ARGUMENT, THAT THE
PETITIONER HAD A FIVE (5) YEAR TERM AS UNIVERSITY PRESIDENT, HE WAS
NONETHELESS VALIDLY TERMINATED FOR LOSS OF CONFIDENCE, GIVEN THE NUMEROUS
ADMITTED ANOMALIES HE COMMITTED.

PETITIONER CANNOT COMPLAIN THAT NOTICES OF THE BOARD MEETING WERE NOT
SENT TO ALL "THE TWENTY FIVE (25) TRUSTEES OF THE AUP BOARD", SINCE: [1] AS THE
AUP SECRETARY, IT WAS HE WHO HAD THE DUTY TO SEND THE NOTICES; [2] WORSE, HE
ATTENDED AND EXHAUSTIVELY DEFENDED HIS WRITTEN ANSWER IN THE AUP BOARD OF
TRUSTEES MEETING, THUS, WAIVING ANY "NOTICE OBJECTION"; [3] WORST OF ALL, HIS
AFTERTHOUGHT OBJECTION IS DECEPTIVELY FALSE IN FACT.

The decisive question is whether the CA correctly ruled that the petitioner had no legal right to the
position of President of AUP that could be protected by the injunctive writ issued by the RTC.

Ruling

We deny the petition for review for lack of merit.

1.
 Petition is already moot

The injunctive writ issued by the RTC was meant to protect the petitioner’s right to stay in office as
President. Given that the lifetime of the writ of preliminary injunction was co-extensive with the
duration of the act sought to be prohibited,15 this injunctive relief already became moot in the face of
the admission by the petitioner himself, through his affidavit,16 that his term of office premised on his
alleged five-year tenure as President had lasted only until December 2005. In short, the injunctive
writ granted by the RTC had expired upon the end of the term of office (as posited by him).

The mootness of the petition warranted its denial. When the resolution of the issue submitted in a
case has become moot and academic, and the prayer of the complaint or petition, even if granted,
has become impossible of enforcement – for there is nothing more to enjoin – the case should be
dismissed.17 No useful purpose would then be served by passing on the merits of the petition,
because any ruling could hardly be of any practical or useful purpose in the premises. It is a settled
rule that a court will not determine a moot question or an abstract proposition, nor express an
opinion in a case in which no practical relief can be granted.18 Indeed, moot and academic cases
cease to present any justiciable controversies by virtue of supervening events,19 and the courts of
law will not determine moot questions,20 for the courts should not engage in academic declarations
and determine a moot question.21

2.

RTC acted in patently grave abuse of discretion

in issuing the TRO and writ of injunction

Nonetheless, the aspect of the case concerning the petitioner’s claim for damages has still to be
decided. It is for this reason that we have to resolve whether or not the petitioner had a right to the
TRO and the injunctive writ issued by the RTC.

A valid writ of preliminary injunction rests on the weight of evidence submitted by the plaintiff
establishing: (a) a present and unmistakable right to be protected; (b) the acts against which the
injunction is directed violate such right; and (c) a special and paramount necessity for the writ to
prevent serious damages.22 In the absence of a clear legal right, the issuance of the injunctive writ
constitutes grave abuse of discretion23 and will result to nullification thereof. Where the complainant’s
right is doubtful or disputed, injunction is not proper. The possibility of irreparable damage sans proof
of an actual existing right is not a ground for a preliminary injunction.24

It is clear to us, based on the foregoing principles guiding the issuance of the TRO and the writ of
injunction, that the issuance of the assailed order constituted patently grave abuse of discretion on
the part of the RTC, and that the CA rightly set aside the order of the RTC.

To begin with, the petitioner rested his claim for injunction mainly upon his representation that he
was entitled to serve for five years as President of AUP under the Constitution, By-Laws and
Working Policy of the General Conference of the Seventh Day Adventists (otherwise called the
Bluebook). All that he presented in that regard, however, were mere photocopies of pages 225-226
of the Bluebook, which read:

Article IV-Board of Directors

Sec. 1. This school operated by the _____________ Union Conference/Mission of Seventh-Day

Adventists shall be under the direct control of a board of directors, elected by the constituency in its
quinquennial sessions. The board of directors shall consist of 15 to 21 members, depending on the
size of the institution. Ex officio members shall be the union president as chairperson, the head of
the school as secretary, the union secretary, the union treasurer, the union director of education, the
presidents of the conferences/missions within the union. xxx.

Sec. 2. The term of office of members of the board of directors shall be five years to coincide with
the ______________ Union Conference/Mission quinquennial period.

Sec. 3. The duties of the board of directors shall be to elect quinquenially the president, xxx.

Yet, the document had no evidentiary value. It had not been officially adopted for submission to and
approval of the Securities and Exchange Commission. It was nothing but an unfilled model form. As
such, it was, at best, only a private document that could not be admitted as evidence in judicial
proceedings until it was first properly authenticated in court.

Section 20, Rule 132 of the Rules of Court requires authentication as a condition for the admissibility
of a private document, to wit:

Section 20. Proof of private document. – Before any private document offered as authentic is
received in evidence, its due execution and authenticity must be proved either:

(a) By anyone who saw the document executed or written; or

(b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed to be. (21 a)

For the RTC to base its issuance of the writ of preliminary injunction on the mere photocopies of the
document, especially that such document was designed to play a crucial part in the resolution of the
decisive issue on the length of the term of office of the petitioner, was gross error.

Secondly, even assuming that the petitioner had properly authenticated the photocopies of the
Bluebook, the provisions contained therein did not vest the right to an office in him. An unfilled model
form creates or establishes no rights in favor of anyone.

Thirdly, the petitioner’s assertion of a five-year duration for his term of office lacked legal basis.

Section 108 of the Corporation Code determines the membership and number of trustees in an
educational corporation, viz:

Section 108. Board of trustees. – Trustees of educational institutions organized as educational

corporations shall not be less than five (5) nor more than fifteen (15): Provided, however, That the
number of trustees shall be in multiples of five (5).

Unless otherwise provided in the articles of incorporation or the by-laws, the board of trustees of
incorporated schools, colleges, or other institutions of learning shall, as soon as organized, so
classify themselves that the term of office of one-fifth (1/5) of their number shall expire every year.
Trustees thereafter elected to fill vacancies, occurring before the expiration of a particular term, shall
hold office only for the unexpired period. Trustees elected thereafter to fill vacancies caused by
expiration of term shall hold office for five (5) years. A majority of the trustees shall constitute a
quorum for the transaction of business. The powers and authority of trustees shall be defined in the
by-laws.
For institutions organized as stock corporations, the number and term of directors shall be governed
by the provisions on stock corporations.

The second paragraph of the provision, although setting the term of the members of the Board of
Trustees at five years, contains a proviso expressly subjecting the duration to what is otherwise
provided in the articles of incorporation or by-laws of the educational corporation. That contrary
provision controls on the term of office.25

In AUP’s case, its amended By-Laws provided the term of the members of the Board of Trustees,
and the period within which to elect the officers, thusly:

Article I
Board of Trustees

Section 1. At the first meeting of the members of the corporation, and thereafter every two years, a
Board of Trustees shall be elected. It shall be composed of fifteen members in good and regular
standing in the Seventh-day Adventist denomination, each of whom shall hold his office for a term of
two years, or until his successor has been elected and qualified. If a trustee ceases at any time to be
a member in good and regular standing in the Seventh-day Adventist denomination, he shall thereby
cease to be a trustee.

xxxx

Article IV
Officers

Section 1. Election of officers. – At their organization meeting, the members of the Board of Trustees
shall elect from among themselves a Chairman, a Vice-Chairman, a President, a Secretary, a
Business Manager, and a Treasurer. The same persons may hold and perform the duties of more
than one office, provided they are not incompatible with each other.26

In light of foregoing, the members of the Board of Trustees were to serve a term of office of only two
years; and the officers, who included the President, were to be elected from among the members of
the Board of Trustees during their organizational meeting, which was held during the election of the
Board of Trustees every two years. Naturally, the officers, including the President, were to exercise
the powers vested by Section 2 of the amended By-Laws for a term of only two years, not five years.

Ineluctably, the petitioner, having assumed as President of AUP on January 23, 2001, could serve
for only two years, or until January 22, 2003. By the time of his removal for cause as President on
January 27, 2003, he was already occupying the office in a hold-over capacity, and could be
removed at any time, without cause, upon the election or appointment of his successor. His
insistence on holding on to the office was untenable, therefore, and with more reason when one
considers that his removal was due to the loss of confidence on the part of the Board of Trustees.

4.

Petitioner was not denied due process

The petitioner complains that he was denied due process because he was deprived of the right to be
heard and to seek reconsideration; and that the proceedings of the Board of Trustees were illegal
due to its members not being properly notified of the meeting.
Still, the petitioner fails to convince us.

The requirements of due process in an administrative context are satisfied when the parties are
afforded fair and reasonable opportunity to explain their respective sides of the controversy,27 for the
essence of due process is an opportunity to be heard.28 Here, the petitioner was accorded the full
opportunity to be heard, as borne by the fact that he was granted the opportunity to refute the
adverse findings contained in the GCAS audit report and that the Board of Trustees first heard his
side during the board meetings before his removal. After having voluntarily offered his refutations in
the proceedings before the Board of Trustees, he should not now be permitted to denounce the
proceedings and to plead the denial of due process after the decision of the Board of Trustees was
adverse to him. 1avvphi 1

Nor can his urging that the proceedings were illegal for lack of prior notification be plausible in light
of the fact that he willingly participated therein without raising the objection of lack of notification.
Thereby, he effectively waived his right to object to the validity of the proceedings based on lack of
due notice.29

5.

Conclusion

The removal of the petitioner as President of AUP, being made in accordance with the AUP
Amended By-Laws, was valid. With that, our going into the other issues becomes unnecessary. We
conclude that the order of the RTC granting his application for the writ of preliminary injunction was
tainted with manifestly grave abuse of discretion; that the CA correctly nullified and set aside the
order; and that his claim for damages, being bereft of factual and legal warrant, should be dismissed.

WHEREFORE, we DENY the petition for review on certiorari for lack of merit, and hereby DISMISS
SEC Case No. 028-03 entitled Dr. Petronilo Barayuga v. Nelson D. Dayson, et al.

The petitioner shall pay the cost of suit.

SO ORDERED.

G.R. No. 168973 August 24, 2011

CITY OF DUMAGUETE, herein Represented by City Mayor, Agustin R. Perdices, Petitioner,

vs.
PHILIPPINE PORTS AUTHORITY,Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a Petition for Review under Rule 45 of the Rules of Court assailing the Decision1 dated
March 4, 2005 and Resolution2 dated June 6, 2005 of the Court Appeals in CA-G.R. SP No. 64379,
which granted the Petition for Certiorari and Prohibition of respondent Philippine Ports Authority and
set aside the Orders dated December 7, 2000 and February 20, 2001 of the Regional Trial Court
(RTC), Branch 44 of the City of Dumaguete in LRC Case No. N-201.

The antecedent facts are as follows:

On October 14, 1998, petitioner City of Dumaguete, through Mayor Felipe Antonio B. Remollo
(Remollo), filed before the RTC an Application for Original Registration of Title over a parcel of land
with improvements, located at Barangay Looc, City of Dumaguete (subject property), under the
Property Registration Decree. The application was docketed as LRC Case No. N-201.

Petitioner alleged in support of its application:

1. That the applicant, City of Dumaguete through its Honorable Mayor Felipe Antonio B.
Remollo, is the owner of the land subject of this application with all improvements and
buildings comprising the Engineer’s Compound where it is now situated and has been in
continuous occupation and possession of the same for more than 30 years or from the year
1960 (Affidavit of Ownership executed by Felipe Antonio G. Remollo, the City Mayor, dated
August 21, 1998 herein attached as ANNEX A). The said land consist of 5,410 square
meters and is situated and bounded and described as shown on the plan (true and
photostatic copies of the original plan marked Psu-07-006805 approved by the Regional
Technical Director of the [Department of Environment and Natural Resources] DENR,
Regional Office, Cebu City herein attached as ANNEX B) and technical descriptions
attached hereto (technical description attached as ANNEX C) and made a part hereof;

2. That said land at the last assessment for taxation was assessed at ₱676,250, Philippine
currency, with market value of ₱1,352,500.00, Philippine currency. (Declaration of Real
Property with the assessed and market values attached as ANNEX D);

3. That to the best of my knowledge and belief, there is no mortgage or encumbrance of any
kind whatsoever affecting said land, nor another person having any estate or interest therein,
legal or equitable, in possession, remainder, reversion or expectancy;

4. That the land was acquired by possessory title in open, continuous, adverse occupation
and possession in the concept of owner for more than thirty years since 1960 (please refer to
ANNEX A);

5. That the land is adjoined by the following:

NorthWest

NorthEast

SouthEast

All along line 1-2-3-4-5-6-7-8-9-10 by Flores Avenue, City Road and the Dumaguete
Port Road

SouthWest – along line 10-1 by Plan Msi-V-20453

xxxx

8. That the land included is bounded on the West by Flores Avenue and on the North by the
City Road, all public highways and on the East by the Dumaguete Port Road, a private road
made part of the Port Zone.3

In an Order4 dated October 23, 1998, the RTC noted that:

A perusal of the records of the case shows that the annexes lack the following copies:

a) two blue print copies of the approved plan;

b) two copies of the technical description of the lot sought to be registered;

c) two copies of the Surveyor’s certificate;

d) a certificate in quadruplicate of the City Assessor of the assessed value of the land;

e) all original muniments of title in the possession of the applicant which prove ownership of
the land;

f) two copies of the petition/application.

Further, the application did not state the number of the lot sought to be registered, the number of
parcels applied for, the improvements found thereon, and indicate whether it claims a portion of the
road which serves as a boundary line.

All these must be alleged in the petition so that the Court will know the nature of the property.

The RTC explained that the extra copies submitted by petitioner shall be forwarded by the RTC
Clerk of Court to the Land Registration Commission (LRC) in Manila for comment. Only thereafter
would the RTC set the application for hearing.

Petitioner filed its Compliance5 with the above-mentioned Order, submitting additional copies of the
required documents and clarifying thus:

1. The approved plan does not state the number of lot sought to be registered because it is a
public land, thus, only PSU-07-006805 appears on the plan which is being applied for
registration;

2. Only one (1) parcel of land is applied for by petitioners which consist of five thousand four
hundred ten (5,410) square meters, more or less;

3. The City Engineer’s Building within the City Engineer’s compound are the only
improvement found thereon; and

4. Petitioners do not claim any portion of the road which serves as a boundary line.

The RTC accordingly set the initial hearing of LRC Case No. N-201 on April 12, 1999, and sent
notices to the parties.

The Republic of the Philippines, represented by the Director of Lands, and respondent, represented
by the Office of the Government Corporate Counsel, filed separate Oppositions 6 to the application
for registration of petitioner. Both the Republic and respondent averred that petitioner may not
register the subject property in its name since petitioner had never been in open, continuous,
exclusive, and notorious possession of the said property for at least 30 years immediately preceding
the filing of the application; and the subject property remains to be a portion of the public domain
which belongs to the Republic.
After several postponements of the scheduled hearings, petitioner presented the testimony of its first
witness, Engineer Rilthe P. Dorado (Engr. Dorado), on January 14, 2000. Engr. Dorado’s
examination on the witness stand was terminated on April 7, 2000. The presentation of the other
witnesses of petitioner was then scheduled to continue on June 2, 2000.7

However, before the next hearing, respondent filed a Motion to Dismiss,8 seeking the dismissal of
LRC Case No. N-201 on the ground that the RTC lacked jurisdiction to hear and decide the case.
Respondent argued that Section 14(1) of Presidential Decree No. 1529, otherwise known as the
Property Registration Decree, refers only to alienable and disposable lands of the public domain
under a bona fide claim of ownership. The subject property in LRC Case No. N-201 is not alienable
and disposable, since it is a foreshore land, as explicitly testified to by petitioner’s own witness, Engr.
Dorado. A foreshore land is not registerable. This was precisely the reason why, respondent points
out, that the subject property was included in Presidential Proclamation No. 1232 (delineating the
territorial boundaries of the Dumaguete Port Zone), so that the same would be administered and
managed by the State, through respondent, for the benefit of the people.

In its Terse Opposition to Oppositor’s Motion to Dismiss, petitioner claimed that the subject property
was a swamp reclaimed about 40 years ago, which it occupied openly, continuously, exclusively,
and notoriously under a bona fide claim of ownership. The technical description and approved plan
of the subject property showed that the said property was not bounded by any part of the sea.
Petitioner invoked Republic Act No. 1899,9 which authorizes chartered cities and municipalities to
undertake and carry out, at their own expense, the reclamation of foreshore lands bordering them;
and grants said chartered cities and municipalities ownership over the reclaimed lands. Presidential
Proclamation No. 1232 is immaterial to the present application for registration because it merely
authorizes respondent to administer and manage the Dumaguete Port Zone and does not confer
upon respondent ownership of the subject property.10

Respondent filed a Reply/Rejoinder (To Applicant’s Opposition to Oppositor’s Motion to

Dismiss), 11 asserting that there are no factual or legal basis for the claim of petitioner that the
subject property is reclaimed land. Petitioner sought the original registration of its title over the
subject property acquired through alleged continuous possession for 30 years under Section 14(1) of
the Property Registration Decree, and not through the reclamation of the said property at its own
expense under Republic Act No. 1899. The present claim of petitioner that the subject property is
reclaimed land should not be allowed for it would improperly change the earlier theory in support of
the application for registration. Respondent reiterated that the subject property is foreshore land
which cannot be registered; and that Presidential Proclamation No. 1232 is very material to LRC
Case No. N-201 because it confirms that areas within the Dumaguete Port Zone, including the
subject property, are not alienable and disposable lands of the public domain. 1avvphi1

On September 7, 2000, the RTC issued an Order12 granting the Motion to Dismiss of respondent
based on the following ratiocination:

The Court agrees with [herein respondent] Philippine Ports Authority that the basis of the [herein
petitioner’s] application for original registration of the subject lot is Section 14 of the Presidential
Decree No. 1529, otherwise known as the Property Registration Decree. A circumspect scrutiny of
said Section readily shows that it refers to alienable and disposable lands of the public domain as
proper subjects of registration, provided the applicant has met the other requirements such as open,
continuous, exclusive and notorious possession for at least thirty (30) years under a bona fide claim
of ownership.
It having been shown by [petitioner’s] own evidence that the lot subject of the application for original
registration is a foreshore land, and therefore not registerable (Dizon, et al. vs. Bayona, et al., 98
SCRA 942, 944), the application must be denied.

Again as correctly argued by [respondent], [petitioner’s] reliance on Republic Act 1899 which
authorizes all municipalities and chartered cities to undertake and carry out the reclamation by
dredging, filling or other means of any foreshore lands bordering them and which confers ownership
on them of the lands so reclaimed, is misplaced, as such has never been alleged in the application.
It is fundamental that a party cannot prove what it has not alleged in his complaint or application, as
in this case.

The admission by Engr. Dorado that there is no formal declaration from the executive branch of
government or law passed by Congress that the land in question is no longer needed for public use
or special industries x x x further militates against the application.

Moreover, the authority granted to municipalities and chartered cities to undertake and carry out at
their own expense the reclamation by dredging, filling, or other means, of any foreshore lands
bordering them is for the purpose of establishing, providing, constructing, maintaining, and repairing
proper and adequate docking and harbor facilities as such municipalities and chartered cities may
determine in consultation with the Secretary of Finance and the Secretary of Public Works and
Communications.

By its own evidence, [petitioner] has utilized the subject property allegedly reclaimed by it as Office
of the City Engineer and not as docking and harboring facilities. [Petitioner] has failed to show that
such reclamation was undertaken by it in consultation with the Secretary of Finance and the
Secretary of Public Works and Communications.13

The RTC decreed in the end that "the instant application for original registration is dismissed for lack
of merit."14

In its Motion for Reconsideration15 and Supplemental Motion for Reconsideration,16 petitioner
contended that the dismissal of its application was premature and tantamount to a denial of its right
to due process. It has yet to present evidence to prove factual matters in support of its application,
such as the subject property already being alienable and disposable at the time it was occupied and
possessed by petitioner.

Petitioner also pointed out that its witness, Engr. Dorado, "testified only as to the physical status of
the land in question at the time when the cadastral survey of Dumaguete was made sometime in
1916."17 In fact, Engr. Dorado expressly testified that the subject property was "part of the shore or
foreshore a long time ago[;]"18 and he did not testify at all that the subject property was a foreshore
lot at the time petitioner occupied and possessed the same. The physical state of the subject
property had already changed since 1916. It is now within the "alienable and disposable area as per
the Land Classification Map No. 674, Project No. 1-D, BL C-6, certified on July 3, 1927, of the
Bureau of Lands, now Land Management Sector of the Department of Environment and Natural
Resources[,]"19as verified and certified by the Chief of the Map Projection Section, Land
Management Sector, DENR Regional Office in Cebu City, who has yet to take the witness stand
before the RTC.

Petitioner insisted that the RTC should continue with the hearing of LRC Case No. N-201 and allow
petitioner to present evidence that the subject property is reclaimed land. Petitioner sufficiently
alleged in its application for registration that it has been in "open, continuous, exclusive, and
notorious possession of the [subject property] for more than thirty (30) years under a bona fide claim
of ownership."20 In support of such allegation, petitioner must necessarily prove that the subject
property was previously a swampy area, which had to be filled or reclaimed before the construction
of the City Engineer’s Office building thereon.

Respondent based its Opposition (To Applicant’s Motion for Reconsideration dated September 28,
2000)21 and Opposition (To Applicant’s Supplemental Motion for Reconsideration)22 on technical and
substantive grounds.

According to respondent, the Motion for Reconsideration of petitioner violated Sections 4 (Hearing of
motion), 5 (Notice of hearing), and 6 (Proof of service necessary), Rule 15 of the Rules of Court.
Petitioner did not set its Motion for Reconsideration for hearing even when the said Motion could not
be considered as non-litigable. The RTC could not hear the motion for reconsideration ex parte as
they are prejudicial to the rights of respondent. Petitioner also failed to comply with Section 11, Rule
13 of the Rules of Court when it did not attach to the Motion for Reconsideration a written
explanation why it did not resort to personal service of the said Motion. Thus, respondent averred
that the Motion for Reconsideration of petitioner should be treated as a mere scrap of paper with no
legal effect. It did not interrupt the reglementary period to appeal and the RTC Order dated
September 7, 2000, dismissing LRC Case No. N-201, had already attained finality. Respondent also
pointed out that the Supplemental Motion for Reconsideration of petitioner suffered from the same
fatal defects as the original Motion for Reconsideration.

Respondent again posited that the subject property was foreshore land belonging to the State and
not subject to private appropriation, unless the same had already been declared by the executive or
legislative department of the national government as no longer needed for coast guard service,
public use, or special industries, and classified as alienable and disposable. Full- blown trial in LRC
Case No. N-201 was no longer necessary as the evidence so far presented by petitioner had already
established that the RTC lacked jurisdiction over the subject matter of the case.

In its Order23 dated November 16, 2000, the RTC initially agreed with respondent that the Motion for
Reconsideration of petitioner violated Sections 4, 5, and 6, Rule 15 and Section 11, Rule 13 of the
Rules of Court. Resultantly, the Motion for Reconsideration of petitioner was considered as not filed
and did not toll the running of the period to file an appeal, rendering final and executory the order of
dismissal of LRC Case No. N-201.

However, after taking into consideration the Supplemental Motion for Reconsideration of petitioner,
the RTC issued another Order24 dated December 7, 2000, setting aside its Order dated September
7, 2000 in the interest of justice and resolving to have a full-blown proceeding to determine factual
issues in LRC Case No. N-201.

It was then the turn of respondent to file with the RTC a Motion for Reconsideration25 of the Order
dated December 7, 2000. In an Order26 dated February 20, 2001, the RTC denied the motion of
respondent and admitted the following:

A thorough review and perusal of the disputed order dated September 7, 2000 and December 7,
2000, whereby this Court dismissed [petitioner’s] petition for registration of Lot No. 1, Dumaguete
Cadastre, and later set aside the Order of September 7, 2000, shows that there was honest mistake
in declaring said lot 1, as a shoreline. Indeed, the adjoining lots are already titled and bounded by a
City Road. It is not bounded by a sea. The Court wants to correct this error in its findings on the
September 7, 2000 Order, that Lot No. 1 is situated on the shoreline of Dumaguete City. The Court
simply committed an oversight on the petitioner’s evidence that the lot in question is a foreshore land
x x x when in fact it is not. And it is for this reason that the court reconsidered and set aside said
September 7, 2000 Order, to correct the same while it is true that said September 7, 2000 Order had
attained its finality, yet this Court cannot in conscience allow injustice to perpetuate in this case and
that hearing on the merits must proceed to determine the legality and truthfulness of its application
for registration of title.

Respondent sought recourse from the Court of Appeals by filing a Petition for Certiorari and
Prohibition under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 64379. Respondent
challenged the RTC Orders dated December 7, 2000 and February 20, 2001 for having been issued
by the RTC in grave abuse of discretion amounting to lack or excess of jurisdiction. Respondent
reiterated that the RTC Order dated September 7, 2000, dismissing LRC Case No. N-201 had
already attained finality. The defects of the Motion for Reconsideration of petitioner rendered the
same as a mere scrap of paper, which did not toll the running of the prescriptive period to appeal the
RTC Order dated September 7, 2000.

The Court of Appeals, in its Decision dated March 4, 2005, found merit in the Petition of respondent
and set aside the RTC Orders dated December 7, 2000 and February 20, 2001. The appellate court,
in its Resolution dated June 6, 2005, denied the Motion for Reconsideration of petitioner.

Hence, petitioner comes before us via the instant Petition for Review with the following assignment
of error:

GROUND FOR THE APPEAL

Error of law: The March 4, 2005 decision of the Court of Appeals and its June 6, 2005 Resolution,
erred on question of law in setting aside the Orders of the Regional Trial Court, Branch 44, dated
December 7, 2000 and February 20, 2001. The said Orders of the trial court were made in order to
determine factual issues and to correct its error in its findings on the September 7, 2000 Order.
Thus, the Court of Appeals decision is contrary to law, justice, equity and existing jurisprudence.27

Respondent insists on the strict application of Sections 4, 5, and 6, Rule 15 and Section 11, Rule 13
of the Rules of Court. Violations of the said rules were fatal to the Motion for Reconsideration and
Supplemental Motion for Reconsideration of the petitioner, and as a result, the RTC Order dated
September 7, 2000, dismissing LRC Case No. N-201, had already become final and executory and,
thus, beyond the jurisdiction of the RTC to set aside. Respondent urges us to reject the plea of
petitioner for a liberal application of the rules in the absence of a compelling reason to do so.

We grant the Petition.

The grant of a petition for certiorari under Rule 65 of the Rules of Court requires grave abuse of
discretion amounting to lack or excess of jurisdiction. Grave abuse of discretion exists where an act
is performed with a capricious or whimsical exercise of judgment equivalent to lack of jurisdiction.
The abuse of discretion must be patent and gross as to amount to an evasion of positive duty or to a
virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the
power is exercised in an arbitrary and despotic manner by reason of passion or personal hostility.28

The Court of Appeals erred in granting the writ of certiorari in favor of respondent. The RTC did not
commit grave abuse of discretion when, in its Orders dated December 7, 2000 and February 20,
2001, it set aside the order of dismissal of LRC Case No. N-201 and resolved to have a full-blown
proceeding to determine factual issues in said case.

Procedural rules were conceived to aid the attainment of justice. If a stringent application of the rules
would hinder rather than serve the demands of substantial justice, the former must yield to the
latter.29 In Basco v. Court of Appeals,30 we allowed a liberal application of technical rules of
procedure, pertaining to the requisites of a proper notice of hearing, upon consideration of the
importance of the subject matter of the controversy, as illustrated in well-settled cases, to wit:

The liberal construction of the rules on notice of hearing is exemplified in Goldloop Properties, Inc. v.
CA:

Admittedly, the filing of respondent-spouses' motion for reconsideration did not stop the running of
the period of appeal because of the absence of a notice of hearing required in Secs. 3, 4 and 5, Rule
15, of the Rules of Court. As we have repeatedly held, a motion that does not contain a notice of
hearing is a mere scrap of paper; it presents no question which merits the attention of the court.
Being a mere scrap of paper, the trial court had no alternative but to disregard it. Such being the
case, it was as if no motion for reconsideration was filed and, therefore, the reglementary period
within which respondent-spouses should have filed an appeal expired on 23 November 1989.

But, where a rigid application of that rule will result in a manifest failure or miscarriage of justice, then
the rule may be relaxed, especially if a party successfully shows that the alleged defect in the
questioned final and executory judgment is not apparent on its face or from the recitals contained
therein. Technicalities may thus be disregarded in order to resolve the case. After all, no party can
even claim a vested right in technicalities. Litigations should, as much as possible, be decided on the
merits and not on technicalities.

Hence, this Court should not easily allow a party to lose title and ownership over a party worth
₱4,000,000.00 for a measly P650,000.00 without affording him ample opportunity to prove his claim
that the transaction entered into was not in fact an absolute sale but one of mortgage. Such grave
injustice must not be permitted to prevail on the anvil of technicalities.

Likewise, in Samoso v. CA, the Court ruled:

But time and again, the Court has stressed that the rules of procedure are not to be applied in a very
strict and technical sense. The rules of procedure are used only to help secure not override
substantial justice (National Waterworks & Sewerage System vs. Municipality of Libmanan, 97
SCRA 138 [1980]; Gregorio v. Court of Appeals, 72 SCRA 120 [1976]). The right to appeal should
not be lightly disregarded by a stringent application of rules of procedure especially where the
appeal is on its face meritorious and the interests of substantial justice would be served by
permitting the appeal (Siguenza v. Court of Appeals, 137 SCRA 570 [1985]; Pacific Asia Overseas
Shipping Corporation v. National Labor Relations Commission, et al., G.R. No. 76595, May 6, 1998).
...

In the instant case, it is petitioner's life and liberty that is at stake. The trial court has sentenced him
to suffer the penalty of reclusion perpetua and his conviction attained finality on the basis of mere
technicality. It is but just, therefore, that petitioner be given the opportunity to defend himself and
pursue his appeal. To do otherwise would be tantamount to grave injustice. A relaxation of the
procedural rules, considering the particular circumstances herein, is justified.31 (Emphasis ours.)

In the case at bar, the Motion for Reconsideration and Supplemental Motion for Reconsideration of
petitioner, which sought the reversal of RTC Order dated September 7, 2000 dismissing LRC Case
No. N-201, cite meritorious grounds that justify a liberal application of procedural rules.

The dismissal by the RTC of LRC Case No. N-201 for lack of jurisdiction is patently erroneous.

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.32

As a necessary consequence, the jurisdiction of the court cannot be made to depend upon the
defenses set up in the answer or upon the motion to dismiss; for otherwise, the question of
jurisdiction would almost entirely depend upon the defendant. What determines the jurisdiction of the
court is the nature of the action pleaded as appearing from the allegations in the complaint. The
averments therein and the character of the relief sought are the ones to be consulted.33

Under Act No. 496, otherwise known as the Land Registration Act, as amended by Act No. 2347,
jurisdiction over all applications for registration of title to land was conferred upon the Courts of First
Instance (CFI) of the respective provinces in which the land sought to be registered was situated.
Jurisdiction over land registration cases, as in ordinary actions, is acquired upon the filing in court of
the application for registration, and is retained up to the end of the litigation.34

The land registration laws were updated and codified by the Property Registration Decree, and
under Section 17 thereof, jurisdiction over an application for land registration was still vested on the
CFI of the province or city where the land was situated, viz:

SEC. 17. What and where to file. – The application for land registration shall be filed with the Court
of First Instance of the province or city where the land is situated. The applicant shall file together
with the application all original muniments of titles or copies thereof and a survey plan of the land
approved by the Bureau of Lands.

The Clerk of Court shall not accept any application unless it is shown that the applicant has
furnished the Director of Lands with a copy of the application and all annexes.

Batas Pambansa Blg. 129, otherwise known as The Judiciary Reorganization Act of 1980, created
the RTC35 in place of the CFI. Presently, jurisdiction over an application for land registration remains
with the RTC where the land is situated, except when such jurisdiction is delegated by the Supreme
Court to the Metropolitan Trial Court, Municipal Trial Courts, and Municipal Circuit Trial Courts under
certain circumstances.36

It is not disputed that the Application for Original Registration of Title filed by petitioner before the
RTC of the City of Dumaguete conformed to Section 15 of the Property Registration Decree, which
prescribes the form and contents of such applications. In its Application, petitioner prayed that its title
to the subject property, which it repeatedly alleged to have acquired through continuous and adverse
possession and occupation of the said property for more than 30 years or since 1960, be placed
under the land registration laws. The allegations and prayer in the Application of petitioner were
sufficient to vest jurisdiction on the RTC over the said Application upon the filing thereof.

Respondent sought the dismissal of LRC Case No. N-201 on the ground of lack of jurisdiction, not
because of the insufficiency of the allegations and prayer therein, but because the evidence
presented by petitioner itself during the trial supposedly showed that the subject property is a
foreshore land, which is not alienable and disposable. The RTC granted the Motion to Dismiss of
respondent in its Order dated September 7, 2000. The RTC went beyond the allegations and prayer
for relief in the Application for Original Registration of petitioner, and already scrutinized and
weighed the testimony of Engr. Dorado, the only witness petitioner was able to present.

As to whether or not the subject property is indeed foreshore land is a factual issue which the RTC
should resolve in the exercise of its jurisdiction, after giving both parties the opportunity to present
their respective evidence at a full-blown trial. As we have explained in the Estate of the Late Jesus
S. Yujuico v. Republic37 :

The plain import of Municipality of Antipolo is that a land registration court, the RTC at present, has
no jurisdiction over the subject matter of the application which respondent Republic claims is public
land. This ruling needs elucidation.

Firmly entrenched is the principle that jurisdiction over the subject matter is conferred by law.
Consequently, the proper CFI (now the RTC) under Section 14 of PD 1529 (Property Registration
Decree) has jurisdiction over applications for registration of title to land.

xxxx

Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the subject matter of the land
registration case filed by Fermina Castro, petitioners’ predecessor-in-interest, since jurisdiction over
the subject matter is determined by the allegations of the initiatory pleading – the application. Settled
is the rule that "the authority to decide a case and not the decision rendered therein is what makes
up jurisdiction. When there is jurisdiction, the decision of all questions arising in the case is but an
exercise of jurisdiction.

In our view, it was imprecise to state in Municipality of Antipolo that the "Land Registration Court
[has] no jurisdiction to entertain the application for registration of public property x x x" for such court
precisely has the jurisdiction to entertain land registration applications since that is conferred by PD
1529. The applicant in a land registration case usually claims the land subject matter of the
application as his/her private property, as in the case of the application of Castro. Thus, the
conclusion of the CA that the Pasig-Rizal CFI has no jurisdiction over the subject matter of the
application of Castro has no mooring. The land registration court initially has jurisdiction over the
land applied for at the time of the filing of the application. After trial, the court, in the exercise of its
jurisdiction, can determine whether the title to the land applied for is registerable and can be
confirmed. In the event that the subject matter of the application turns out to be inalienable public
land, then it has no jurisdiction to order the registration of the land and perforce must dismiss the
application. 38 (Emphasis ours.)

It is true that petitioner, as the applicant, has the burden of proving that the subject property is
alienable and disposable and its title to the same is capable of registration. However, we stress that
the RTC, when it issued its Order dated September 7, 2000, had so far heard only the testimony of
Engr. Dorado, the first witness for the petitioner. Petitioner was no longer afforded the opportunity to
present other witnesses and pieces of evidence in support of its Application. The RTC Order dated
September 7, 2000 – already declaring the subject property as inalienable public land, over which
the RTC has no jurisdiction to order registration – was evidently premature.

The RTC Order dated September 7, 2000 has not yet become final and executory as petitioner was
able to duly file a Motion for Reconsideration and Supplemental Motion for Reconsideration of the
same, which the RTC eventually granted in its Order dated December 7, 2000. Admittedly, said
motions filed by petitioner did not comply with certain rules of procedure. Ordinarily, such non-
compliance would have rendered said motions as mere scraps of paper, considered as not having
been filed at all, and unable to toll the reglementary period for an appeal. However, we find that the
exceptional circumstances extant in the present case warrant the liberal application of the rules.

Also, the Motion for Reconsideration and Supplemental Motion for Reconsideration of the Order
dated September 7, 2000 filed by petitioner did not comply with Section 11, Rule 13 of the Rules of
Court, for these did not include a written explanation why service or filing thereof was not done
personally. Nonetheless, in Maceda v. Encarnacion de Guzman Vda. de Magpantay,39 citing Solar
Team Entertainment, Inc. v. Ricafort,40 and Musa v. Amor,41 we explained the rationale behind said
rule and the mandatory nature of the same, vis-à-vis the exercise of discretion by the court in case of
non-compliance therewith:

In Solar Team Entertainment, Inc. v. Ricafort, this Court, passing upon Section 11 of Rule 13 of the
Rules of Court, held that a court has the discretion to consider a pleading or paper as not filed if said
rule is not complied with.

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

If only to underscore the mandatory nature of this innovation to our set of adjective rules requiring
personal service whenever practicable, Section 11 of Rule 13 then gives the court the discretion to
consider a pleading or paper as not filed if the other modes of service or filing were not resorted to
and no written explanation was made as to why personal service was not done in the first place. The
exercise of discretion must, necessarily consider the practicability of personal service, for Section 11
itself begins with the clause "whenever practicable."

We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules of Civil
Procedure, personal service and filing is the general rule, and resort to other modes of service and
filing, the exception. Henceforth, whenever personal service or filing is practicable, in the light of the
circumstances of time, place and person, personal service or filing is mandatory. Only when
personal service or filing is not practicable may resort to other modes be had, which must then be
accompanied by a written explanation as to why personal service or filing was not practicable to
begin with. In adjudging the plausibility of an explanation, a court shall likewise consider the
importance of the subject matter of the case or the issues involved therein, and the prima facie merit
of the pleading sought to be expunged for violation of Section 11.

In Musa v. Amor, this Court, on noting the impracticality of personal service, exercised its discretion
and liberally applied Section 11 of Rule 13:

As [Section 11, Rule 13 of the Rules of Court] requires, service and filing of pleadings must be done
personally whenever practicable. The court notes that in the present case, personal service would
not be practicable. Considering the distance between the Court of Appeals and Donsol, Sorsogon
where the petition was posted, clearly, service by registered mail [sic] would have entailed
considerable time, effort and expense. A written explanation why service was not done personally
might have been superfluous. In any case, as the rule is so worded with the use of "may," signifying
permissiveness, a violation thereof gives the court discretion whether or not to consider the paper as
not filed. While it is true that procedural rules are necessary to secure an orderly and speedy
administration of justice, rigid application of Section 11, Rule 13 may be relaxed in this case in the
interest of substantial justice.

In the case at bar, the address of respondent’s counsel is Lopez, Quezon, while petitioner Sonia’s
counsel’s is Lucena City. Lopez, Quezon is 83 kilometers away from Lucena City. Such distance
makes personal service impracticable. As in Musa v. Amor, a written explanation why service was
not done personally "might have been superfluous."42 (Emphases supplied and citations omitted.)

Our ruling in the above-cited cases is relevant to the instant case. Counsel for petitioner holds office
in Dumaguete City, Negros Oriental, in the Visayas; while counsel for respondent holds office in
Quezon City, Metro Manila, in Luzon. Given the considerable distance between the offices of these
two counsels, personal service of pleadings and motions by one upon the other was clearly not
practicable and a written explanation as to why personal service was not done would only be
superfluous.43 In addition, we refer once more to the merits of the Motion for Reconsideration and
Supplemental Motion for Reconsideration of the RTC Order dated September 7, 2000 filed by
petitioner, which justify the liberal interpretation of Section 11, Rule 13 of the Rules of Court in this
case.1avvphi 1

Jurisprudence confirms that the requirements laid down in Sections 4, 5, and 6, Rule 15 of the Rules
of Court that the notice of hearing shall be directed to the parties concerned, and shall state the time
and place for the hearing of the motion, are mandatory. If not religiously complied with, they render
the motion pro forma. As such, the motion is a useless piece of paper that will not toll the running of
the prescriptive period.44

Yet, again, there were previous cases with peculiar circumstances that had compelled us to liberally
apply the rules on notice of hearing and recognize substantial compliance with the same. Once such
case is Philippine National Bank v. Paneda,45 where we adjudged:

Thus, even if the Motion may be defective for failure to address the notice of hearing of said motion
to the parties concerned, the defect was cured by the court's taking cognizance thereof and the fact
that the adverse party was otherwise notified of the existence of said pleading. There is substantial
compliance with the foregoing rules if a copy of the said motion for reconsideration was furnished to
the counsel of herein private respondents.

In the present case, records reveal that the notices in the Motion were addressed to the respective
counsels of the private respondents and they were duly furnished with copies of the same as shown
by the receipts signed by their staff or agents.

Consequently, the Court finds that the petitioner substantially complied with the pertinent provisions
of the Rules of Court and existing jurisprudence on the requirements of motions and
pleadings.46 (Emphasis supplied.)

It was not refuted that petitioner furnished respondent and respondent actually received copies of
the Motion for Reconsideration, as well as the Supplemental Motion for Reconsideration of the RTC
Order dated September 7, 2000 filed by petitioner. As a result, respondent was able to file its
Oppositions to the said Motions. The RTC, in issuing its Order dated December 7, 2000, was able to
consider the arguments presented by both sides. Hence, there was substantial compliance by
petitioner with the rules on notice of hearing for its Motion for Reconsideration and Supplemental
Motion for Reconsideration of the RTC Order dated September 7, 2000. Respondent cannot claim
that it was deprived of the opportunity to be heard on its opposition to said Motions.
In view of the foregoing circumstances, the RTC judiciously, rather than abusively or arbitrarily,
exercised its discretion when it subsequently issued the Order dated December 7, 2000, setting
aside its Order dated September 7, 2000 and proceeding with the trial in LRC Case No. N-201.

WHEREFORE, the instant Petition for Review of petitioner City of Dumaguete is hereby GRANTED.
The Decision dated March 4, 2005 and Resolution dated June 6, 2005 of the Court Appeals in CA-
G.R. SP No. 64379 are SET ASIDE, and the Orders dated December 7, 2000 and February 20,
2001 of Branch 44 of the Regional Trial Court of the City of Dumaguete in LRC Case No. N-201 are
REINSTATED. The said trial court is DIRECTED to proceed with the hearing of LRC Case No. N-
201 with dispatch.

SO ORDERED.

G. R. No. 162322 March 14, 2012

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
BANTIGUE POINT DEVELOPMENT CORPORATION, Respondent.

DECISION

SERENO, J.:

This Rule 45 Petition requires this Court to address the issue of the proper scope of the delegated
jurisdiction of municipal trial courts in land registration cases. Petitioner Republic of the Philippines
(Republic) assails the Decision of the Court of Appeals (CA)1 in CA-G.R. CV No. 70349, which
affirmed the Decision of the Municipal Trial Court (MTC) of San Juan, Batangas2 in LRC Case No. N-
98-20, LRA Record No. 68329, granting respondent Bantigue Point Development Corporation’s
(Corporation) application for original registration of a parcel of land. Since only questions of law have
been raised, petitioner need not have filed a Motion for Reconsideration of the assailed CA Decision
before filing this Petition for Review.

The Facts

On 17 July 1997, respondent Bantigue Point Development Corporation filed with the Regional Trial
Court (RTC) of Rosario, Batangas an application for original registration of title over a parcel of land
with an assessed value of ₱4,330, ₱1,920 and ₱8,670, or a total assessed value of ₱14,920 for the
entire property, more particularly described as Lot 8060 of Cad 453-D, San Juan Cadastre, with an
area of more or less 10,732 square meters, located at Barangay Barualte, San Juan, Batangas. 3

On 18 July 1997, the RTC issued an Order setting the case for initial hearing on 22 October
1997.4 On 7 August 1997, it issued a second Order setting the initial hearing on 4 November 1997.5

Petitioner Republic filed its Opposition to the application for registration on 8 January 1998 while the
records were still with the RTC.6

On 31 March 1998, the RTC Clerk of Court transmitted motu proprio the records of the case to the
MTC of San Juan, because the assessed value of the property was allegedly less than ₱100,000.7

Thereafter, the MTC entered an Order of General Default8 and commenced with the reception of
evidence.9 Among the documents presented by respondent in support of its application are Tax
Declarations,10 a Deed of Absolute Sale in its favor,11 and a Certification from the Department of
Environment and Natural Resources (DENR) Community Environment and Natural Resources Office
(CENRO) of Batangas City that the lot in question is within the alienable and disposable
zone.12 Thereafter, it awarded the land to respondent Corporation.13

Acting on an appeal filed by the Republic,14 the CA ruled that since the former had actively
participated in the proceedings before the lower court, but failed to raise the jurisdictional challenge
therein, petitioner is thereby estopped from questioning the jurisdiction of the lower court on
appeal.15 The CA further found that respondent Corporation had sufficiently established the latter’s
registrable title over the subject property after having proven open, continuous, exclusive and
notorious possession and occupation of the subject land by itself and its predecessors-in-interest
even before the outbreak of World War II.16

Dissatisfied with the CA’s ruling, petitioner Republic filed this instant Rule 45 Petition and raised the
following arguments in support of its appeal:

I.

THE REPUBLIC CANNOT BE ESTOPPED FROM QUESTIONING THE JURISDICTION OF

THE MUNICIPAL TRIAL COURT OVER THE APPLICATION FOR ORIGINAL
REGISTRATION OF LAND TITLE EVEN FOR THE FIRST TIME ON APPEAL

II.

THE MUNICIPAL TRIAL COURT FAILED TO ACQUIRE JURISDICTION OVER THE

APPLICATION FOR ORIGINAL REGISTRATION OF LAND TITLE.17

The Court’s Ruling

We uphold the jurisdiction of the MTC, but remand the case to the court a quo for further
proceedings in order to determine if the property in question forms part of the alienable and
disposable land of the public domain.

The Republic is not estopped from raising the issue of jurisdiction in this case.

At the outset, we rule that petitioner Republic is not estopped from questioning the jurisdiction of the
lower court, even if the former raised the jurisdictional question only on appeal. The rule is settled
that lack of jurisdiction over the subject matter may be raised at any stage of the
proceedings.18 Jurisdiction over the subject matter is conferred only by the Constitution or the law.19 It
cannot be acquired through a waiver or enlarged by the omission of the parties or conferred by the
acquiescence of the court.20 Consequently, questions of jurisdiction may be cognizable even if raised
for the first time on appeal.21

The ruling of the Court of Appeals that "a party may be estopped from raising such [jurisdictional]
question if he has actively taken part in the very proceeding which he questions, belatedly objecting
to the court’s jurisdiction in the event that the judgment or order subsequently rendered is adverse to
him"22 is based on the doctrine of estoppel by laches. We are aware of that doctrine first enunciated
by this Court in Tijam v. Sibonghanoy.23 In Tijam, the party-litigant actively participated in the
proceedings before the lower court and filed pleadings therein. Only 15 years thereafter, and after
receiving an adverse Decision on the merits from the appellate court, did the party-litigant question
the lower court’s jurisdiction. Considering the unique facts in that case, we held that estoppel by
laches had already precluded the party-litigant from raising the question of lack of jurisdiction on
appeal. In Figueroa v. People,24 we cautioned that Tijam must be construed as an exception to the
general rule and applied only in the most exceptional cases whose factual milieu is similar to that in
the latter case.

The facts are starkly different in this case, making the exceptional rule in Tijam inapplicable. Here,
petitioner Republic filed its Opposition to the application for registration when the records were still
with the RTC.25 At that point, petitioner could not have questioned the delegated jurisdiction of the
MTC, simply because the case was not yet with that court. When the records were transferred to the
MTC, petitioner neither filed pleadings nor requested affirmative relief from that court. On appeal,
petitioner immediately raised the jurisdictional question in its Brief.26Clearly, the exceptional doctrine
of estoppel by laches is inapplicable to the instant appeal.

Laches has been defined as the "failure or neglect, for an unreasonable and unexplained length of
time, to do that which, by exercising due diligence, could or should have been done earlier; it is
negligence or omission to assert a right within a reasonable time, warranting the presumption that
the party entitled to assert it either has abandoned or declined to assert it."27 In this case, petitioner
Republic has not displayed such unreasonable failure or neglect that would lead us to conclude that
it has abandoned or declined to assert its right to question the lower court's jurisdiction.

II

The Municipal Trial Court properly acquired jurisdiction over the case.

In assailing the jurisdiction of the lower courts, petitioner Republic raised two points of contention: (a)
the period for setting the date and hour of the initial hearing; and (b) the value of the land to be
registered.

First, petitioner argued that the lower court failed to acquire jurisdiction over the application, because
the RTC set the date and hour of the initial hearing beyond the 90-day period provided under the
Property Registration Decree.28

We disagree.

The Property Registration Decree provides:

Sec. 23. Notice of initial hearing, publication, etc. - The court shall, within five days from filing of the
application, issue an order setting the date and hour of the initial hearing which shall not be earlier
than forty-five days nor later than ninety days from the date of the order. x x x.

In this case, the application for original registration was filed on 17 July 1997.29 On 18 July 1997, or a
day after the filing of the application, the RTC immediately issued an Order setting the case for initial
hearing on 22 October 1997, which was 96 days from the Order.30 While the date set by the RTC was
beyond the 90-day period provided for in Section 23, this fact did not affect the jurisdiction of the trial
court. In Republic v. Manna Properties, Inc.,31petitioner Republic therein contended that there was
failure to comply with the jurisdictional requirements for original registration, because there were 125
days between the Order setting the date of the initial hearing and the initial hearing itself. We ruled
that the lapse of time between the issuance of the Order setting the date of initial hearing and the
date of the initial hearing itself was not fatal to the application. Thus, we held:
x x x [A] party to an action has no control over the Administrator or the Clerk of Court acting as a
land court; he has no right to meddle unduly with the business of such official in the performance of
his duties. A party cannot intervene in matters within the exclusive power of the trial court. No fault is
attributable to such party if the trial court errs on matters within its sole power. It is unfair to punish
an applicant for an act or omission over which the applicant has neither responsibility nor control,
especially if the applicant has complied with all the requirements of the law.32

Indeed, it would be the height of injustice to penalize respondent Corporation by dismissing its
application for registration on account of events beyond its control.

Moreover, since the RTC issued a second Order on 7 August 1997 setting the initial hearing on 4
November 1997,33within the 90-day period provided by law, petitioner Republic argued that the
jurisdictional defect was still not cured, as the second Order was issued more than five days from the
filing of the application, again contrary to the prescribed period under the Property Registration
Decree.34

Petitioner is incorrect.

The RTC’s failure to issue the Order setting the date and hour of the initial hearing within five days
from the filing of the application for registration, as provided in the Property Registration Decree, did
not affect the court’s its jurisdiction. Observance of the five-day period was merely directory, and
failure to issue the Order within that period did not deprive the RTC of its jurisdiction over the case.
To rule that compliance with the five-day period is mandatory would make jurisdiction over the
subject matter dependent upon the trial court. Jurisdiction over the subject matter is conferred only
by the Constitution or the law.35 It cannot be contingent upon the action or inaction of the court.

This does not mean that courts may disregard the statutory periods with impunity. We cannot
assume that the law deliberately meant the provision "to become meaningless and to be treated as a
dead letter."36 However, the records of this case do not show such blatant disregard for the law. In
fact, the RTC immediately set the case for initial hearing a day after the filing of the application for
registration,37 except that it had to issue a second Order because the initial hearing had been set
beyond the 90-day period provided by law.

Second, petitioner contended38 that since the selling price of the property based on the Deed of Sale
annexed to respondent’s application for original registration was ₱160,000,39 the MTC did not have
jurisdiction over the case. Under Section 34 of the Judiciary Reorganization Act, as amended,40 the
MTC’s delegated jurisdiction to try cadastral and land registration cases is limited to lands, the value
of which should not exceed ₱100,000.

We are not persuaded.

The delegated jurisdiction of the MTC over cadastral and land registration cases is indeed set forth
in the Judiciary Reorganization Act, which provides:

Sec. 34. Delegated Jurisdiction in Cadastral and Land Registration Cases. - Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts may be assigned by the Supreme
Court to hear and determine cadastral or land registration cases covering lots where there is no
controversy or opposition, or contested lots where the value of which does not exceed One hundred
thousand pesos (₱100,000.00), such value to be ascertained by the affidavit of the claimant or by
agreement of the respective claimants if there are more than one, or from the corresponding tax
declaration of the real property. Their decision in these cases shall be appealable in the same
manner as decisions of the Regional Trial Courts. (As amended by R.A. No. 7691) (Emphasis
supplied.)

Thus, the MTC has delegated jurisdiction in cadastral and land registration cases in two
instances: first, where there is no controversy or opposition; or, second, over contested lots, the
value of which does not exceed ₱100,000.

The case at bar does not fall under the first instance, because petitioner opposed respondent
Corporation’s application for registration on 8 January 1998.41

However, the MTC had jurisdiction under the second instance, because the value of the lot in this
case does not exceed ₱100,000.

Contrary to petitioner’s contention, the value of the land should not be determined with reference to
its selling price. Rather, Section 34 of the Judiciary Reorganization Act provides that the value of the
property sought to be registered may be ascertained in three ways: first, by the affidavit of the
claimant; second, by agreement of the respective claimants, if there are more than one; or, third,
from the corresponding tax declaration of the real property.42

In this case, the value of the property cannot be determined using the first method, because the
records are bereft of any affidavit executed by respondent as to the value of the property. Likewise,
valuation cannot be done through the second method, because this method finds application only
where there are multiple claimants who agree on and make a joint submission as to the value of the
property. Here, only respondent Bantigue Point Development Corporation claims the property.

The value of the property must therefore be ascertained with reference to the corresponding Tax
Declarations submitted by respondent Corporation together with its application for registration. From
the records, we find that the assessed value of the property is ₱4,330, ₱1,920 and ₱8,670, or a total
assessed value of ₱14,920 for the entire property.43 Based on these Tax Declarations, it is evident
that the total value of the land in question does not exceed ₱100,000. Clearly, the MTC may
exercise its delegated jurisdiction under the Judiciary Reorganization Act, as amended.

III

A certification from the CENRO is not sufficient proof that the property in question is alienable and
disposable land of the public domain.

Even as we affirm the propriety of the MTC’s exercise of its delegated jurisdiction, we find that the
lower court erred in granting respondent Corporation’s application for original registration in the
absence of sufficient proof that the property in question was alienable and disposable land of the
public domain.

The Regalian doctrine dictates that all lands of the public domain belong to the State.44 The applicant
for land registration has the burden of overcoming the presumption of State ownership by
establishing through incontrovertible evidence that the land sought to be registered is alienable or
disposable based on a positive act of the government.45 We held in Republic v. T.A.N. Properties, Inc.
that a CENRO certification is insufficient to prove the alienable and disposable character of the land
sought to be registered.46 The applicant must also show sufficient proof that the DENR Secretary has
approved the land classification and released the land in question as alienable and disposable.47
Thus, the present rule is that an application for original registration must be accompanied by (1) a
CENRO or PENRO48 Certification; and (2) a copy of the original classification approved by the DENR
Secretary and certified as a true copy by the legal custodian of the official records.49

Here, respondent Corporation only presented a CENRO certification in support of its

application.50 Clearly, this falls short of the requirements for original registration.
1âwphi1

We therefore remand this case to the court a quo for reception of further evidence to prove that the
property in question forms part of the alienable and disposable land of the public domain. If
respondent Bantigue Point Development Corporation presents a certified true copy of the original
classification approved by the DENR Secretary, the application for original registration should be
granted. If it fails to present sufficient proof that the land in question is alienable and disposable
based on a positive act of the government, the application should be denied.

WHEREFORE, premises considered, the instant Petition for Review is DENIED. Let this case be
REMANDED to the Municipal Trial Court of San Juan, Batangas, for reception of evidence to prove
that the property sought to be registered is alienable and disposable land of the public domain.

SO ORDERED.

G.R. No. 153176 March 29, 2004

PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. ZEIDA AURORA B. GARFIN, In her capacity as Presiding Judge of RTC, Branch 19, of
the City of Naga and SERAFIN SABALLEGUE, respondents.

DECISION

PUNO, J:

For determination in this petition is a question in procedural law - - - whether an information filed by a
state prosecutor without the prior written authority or approval of the city or provincial prosecutor or
chief state prosecutor should be dismissed after the accused has entered his plea under the
information.

Petitioner comes before us with a petition for certiorari and mandamus under Rule 65 of the Revised
Rules of Court, seeking to declare as null and void the Orders issued by the Regional Trial Court of
Naga City, Branch 19 dated February 26, 20021 and April 3, 20022 which dismissed for lack of
jurisdiction the case of People vs. Serafin Saballegue, Criminal Case No. RTC 2001-0597, and
denied petitioner’s motion for reconsideration.

The antecedent facts are undisputed.

On June 22, 2001, private respondent was charged with violation of Section 22(a) in relation to
Sections 19(b) and 28(e) of Republic Act No. 8282, otherwise known as the "Social Security Act," in
an information which reads:

The undersigned State Prosecutor of the Office of the Regional State Prosecutor, Legazpi City,
accuses SERAFIN SABALLEGUE, as proprietor of Saballegue Printing Press with business address
at 16 San Mateo St., Peñafrancia Ave., Naga City for Violation of Section 22(a) in relation to
Sections 19(b) and 28(e) of R.A. 8282 otherwise known as the Social Security Act of 1997,
committed as follows:

That on or about February 1990 and up to the present, in the City of Naga, Philippines, within the
functional jurisdiction of SSS Naga Branch and the territorial jurisdiction of this Honorable Court, the
above named accused, while being the proprietor of Saballegue Printing Press, did then and there
willfully, unlawfully, and criminally refuse and fail and continuously refuse and fail to remit the
premiums due for his employee to the SSS in the amount of SIX THOUSAND FIVE HUNDRED
THIRTY-THREE PESOS (₱6,533.00), Philippine Currency, representing SSS and EC premiums for
the period from January 1990 to December 1999 (n.i.), and the 3% penalty per month for late
remittance in the amount of ELEVEN THOUSAND ONE HUNDRED FORTY-THREE PESOS and
28/100 (₱11,143.28) computed as of 15 March 2000, despite lawful demands by letter in violation of
the above-cited provisions of the law, to the damage and prejudice of the SSS and the public in
general.

CONTRARY TO LAW.

Legazpi City for Naga City. 22 June 2001.

(sgd.) ROMULO SJ. TOLENTINO

State Prosecutor
Special Prosecutor on SSS Cases in Region V3

The information contains a certification signed by State Prosecutor Romulo SJ. Tolentino which
states:

I hereby certify that the required investigation in this case has been conducted by the undersigned
Special Prosecutor in accordance with law and under oath as officer of the court, that there is
reasonable ground to believe that the offense has been committed, that the accused is probably
guilty thereof and that the filing of the information is with the prior authority and approval of the
Regional State Prosecutor.4

The case was raffled to Branch 19 of the Regional Trial Court of Naga City presided by respondent
judge Hon. Zeida Aurora B. Garfin. On September 24, 2001, accused Serafin Saballegue pleaded
not guilty to the charge and the case was set for pre-trial.5 Three days thereafter, the accused filed a
motion to dismiss6 on the ground that the information was filed without the prior written authority or
approval of the city prosecutor as required under Section 4, Rule 112 of the Revised Rules of Court.7

The People, through State Prosecutor Tolentino, filed an opposition,8 against which the accused filed
a rejoinder.9The People filed a reply to the rejoinder10 on December 21, 2001. A rejoinder to the
reply11 was filed by the accused on January 21, 2002.

After considering the arguments raised, the trial court granted the motion to dismiss in its first
questioned Order dated February 26, 2002, to wit:

After considering the respective arguments raised by the parties, the Court believes and so resolves
that the Information has not been filed in accordance with Section 4, par. 3 of Rule 112 of the 2000
Rules on Criminal Procedure, thus:

‘Rule 112, Section 4 x x x x x x

No complaint or information may be filed or dismissed by an investigating prosecutor without the
prior written authority or approval of the provincial or city prosecutor or chief state prosecutor or the
Ombudsman or his deputy.’

Expresio unius est exclusio alterius.

The Information will readily show that it has not complied with this rule as it has not been approved
by the City Prosecutor.

This Court holds that the defendant’s plea to the Information is not a waiver to file a motion to
dismiss or to quash on the ground of lack of jurisdiction. By express provision of the rules and by a
long line of decisions, questions of want of jurisdiction may be raised at any stage of the proceedings
(People vs. Eduarte, 182 SCRA 750).

The Supreme Court in Villa vs. Ibañez (88 Phil 402) dwelt on lack of authority of the officer who filed
the information and on jurisdiction at the same time, pertinent portions run as follows:

The defendant had pleaded to the information before he filed a motion to quash, and it is contended
that by his plea he waived all objections to the information. The contention is correct as far as formal
objections to the pleadings are concerned. But by clear implication, if not by express provision of
section 10 of Rule 113 of the Rules of Court, and by a long line of uniform decisions, questions of
want of jurisdiction may be raised at any stage of the proceedings. Now, the objection to the
respondent’s actuations goes to the very foundations of jurisdiction. It is a valid information signed
by a competent officer which, among other requisites, confers jurisdiction on the court over the
person of the accused and the subject matter of the accusation. In consonance with this view, an
infirmity of the nature noted in the information cannot be cured by silence, acquiescence, or even by
express consent.

Prosecutor Tolentino also contends that having been duly designated to assist the City Prosecutor in
the investigation and prosecution of all SSS cases by the Regional State prosecutor as alter ego of
the Secretary of Justice in Region V, then that authority may be given to other than the City
Prosecutor. The Court finds this contention to be devoid of merit. The Regional State Prosecutor is
not the alter ego of the Secretary of Justice but a mere subordinate official and if ever the former
files cases, it is by virtue of a delegated authority by the Secretary of Justice. Potestas delegada non
potesta delegare (sic) – what has been delegated cannot be redelegated.

In his opposition, the state prosecutor also attached a memorandum dated June 22, 2001 by
Regional State Prosecutor Santiago M. Turingan addressed to Provincial Prosecutor and City
Prosecutors of Region V directing them to inhibit and to append the following NOTATION after the
certification in the Information for filing.

NOTATION: The herein City/Provincial Prosecutor is inhibiting from this case and the Special
Prosecution Team on SSS Cases in Region V is authorized to dispose of the case without my
approval in view of the request for inhibition of the SSS Regional Manager as granted by the
Regional State Prosecutor.

A perusal of the Information, however, would readily show that nowhere in the Information has the
City Prosecutor of Naga City appended the above-quoted notation/inhibition. At most, the authority
of the special prosecutor is only for the conduct of preliminary investigations and the prosecution of
cases after they are filed. The Court, however, believes that the filing of this Information must be in
conformity with the Rules on Criminal Procedure, particularly Section 4 of Rule 112.
WHEREFORE, premises considered and for lack of jurisdiction, the Court hereby resolves to
DISMISS this case without pronouncement as to cost.

SO ORDERED.12

A motion for reconsideration was filed by the People contending that as a special prosecutor
designated by the regional state prosecutor to handle SSS cases within Region V, State Prosecutor
Tolentino is authorized to file the information involving violations of the SSS law without need of prior
approval from the city prosecutor. 13 Letters of commendation from Chief State Prosecutor Jovencito
Zuño14 and Secretary Hernando Perez15 were offered as proof to show that State Prosecutor
Tolentino’s authority to file the information was recognized. In response, the defense pointed out in
its opposition that the motion for reconsideration lacked a notice of hearing, hence it is pro forma or
a mere scrap of paper. 16

On April 3, 2002, respondent judge issued the second questioned Order which reads:

Acting upon the Motion for Reconsideration filed by State Prosecutor Romulo SJ. Tolentino, Special
Prosecutor on SSS cases in Region V, and it appearing that the same has failed to comply with the
requirement of notice prescribed in Sections 4 and 5, Rule 15 of the Rules of Court, the same is
hereby DENIED for being a mere scrap of paper.

SO ORDERED.17

Hence, this petition by the People through Regional State Prosecutor Santiago Turingan and State
Prosecutor Romulo SJ. Tolentino. Petitioner attributes grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of respondent judge, viz:18

1. RESPONDENT JUDGE DISMISSED THE INFORMATION WITHOUT THE REQUIRED

SUPPORTING FACTUAL AND LEGAL BASES;

2. RESPONDENT JUDGE DELIBERATELY AND CAPRICIOUSLY IGNORED THE

PRESUMPTION OF REGULARITY IN FAVOR OF THE PROSECUTION WITHOUT THE
REQUIRED SUFFICIENCY OF REBUTTAL EVIDENCE. THE WORD "MAY" IN SEC. 4,
RULE 112 OF THE RULES OF COURT IS NOT MANDATORY;

3. RESPONDENT JUDGE COMMITTED GRAVE ERROR IN DELIBERATELY IGNORING

THE JUDICIALLY KNOWN INHIBITION OF THE CITY PROSECUTOR AND THE SETTLED
JURISPRUDENCE ON THE MATTER;

4. RESPONDENT JUDGE GRAVELY ABUSED HER DISCRETION IN INTERFERING WITH

THE PURELY EXECUTIVE FUNCTION OF FILING AN INFORMATION BY RULING ON
THE AUTHORITY OF THE FILING OFFICER TO FILE THE INFORMATION.

The Office of the Solicitor General (OSG) filed its comment19 in compliance with this Court’s
Resolution dated September 23, 2002.20 It opines that the dismissal of the information is mandated
under Section 4, Rule 112 of the Rules of Criminal Procedure.

Private respondent contends that:21 1) the instant petition was filed out of time; 2) the special State
Prosecutor is only authorized to conduct preliminary investigation and prosecution of SSS cases and
not to sign the information; and 3) the City Prosecutor did not expressly inhibit himself from handling
SSS cases nor signing the information.
We shall first resolve the procedural issues. Respondent contends that the motion for
reconsideration filed on April 1, 2002 is late because it was filed eighteen days after March 14, 2002,
the date when petitioner received the first questioned order. Respondent has overlooked that the
15th day after March 14 is a Good Friday. Hence, petitioner’s last day to file the motion for
reconsideration was on the next working day after Good Friday, April 1.22

Next, respondent argues that having been considered as a mere scrap of paper, the motion for
reconsideration of the petitioner did not toll the running of the reglementary period. Respondent,
however, erroneously assumes that the present case is an appeal by certiorari under Rule 45. As
stated at the outset, this is an original petition for certiorari and mandamus under Rule 65.

Sec. 2, Rule 37 of the Rules of Court is clear. It provides that "(a) pro forma motion for new trial or
reconsideration shall not toll the reglementary period of appeal." (emphases supplied) Hence, the
same provision has no application in the case at bar.

The reckoning date is the receipt of the second questioned Order and not the receipt of the first.
Section 4, Rule 65, as amended by En Banc Resolution A.M. No. 00-2-03-SC, September 1, 2000,
provides, viz:

Sec. 4. When and where petition filed.-- The petition may be filed not later than sixty (60) days from
notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely
filed, whether such motion is required or not, the sixty (60)- day period shall be counted from notice
of the denial of said motion.

xxxxxxxxx

As shown by the records, petitioner received the first questioned order dated February 26, 2002 on
March 14, 2002.23 A motion for reconsideration was timely filed on April 1, 200224 which was
dismissed for lack of notice of hearing in an Order dated April 3, 2002.25 This second questioned
order was received by petitioner on April 11, 2002.26 A motion for extension of time to file a petition
for review on certiorari was filed on April 18, 2002.27 A motion for leave to file and admit the instant
petition for certiorari and mandamus was filed on May 29, 2002.28Having been filed within the
reglementary period, petitioner’s motion for leave to file the instant petition was granted in this
Court’s Resolution dated July 15, 2002.29

We now come to the other issue: whether the prior written authority and approval of the city or
provincial prosecutor or chief state prosecutor is necessary in filing the information at bar.

Petitioner takes the unbending view that the approval of the city or provincial prosecutor is no longer
required. It is contended that the Regional State Prosecutor has already directed the city or
provincial prosecutor to inhibit from handling SSS cases.30 Petitioner cites the letter of Regional
State Prosecutor Santiago M. Turingan to SSS Regional Director in Naga City dated June 6,
199731 and copies of Regional Orders No. 97-024-A32 and 2001-03333 dated July 14, 1997 and
September 28, 2001, respectively, showing the designation of State Prosecutor Tolentino as special
prosecutor for SSS cases in Region V. Petitioner relies on Galvez, et al. v. Court of Appeals, et
al.34 and Sanchez v. Demetriou, et al.35 to prop up its contention that given the designation of State
Prosecutor Tolentino, the city prosecutor need not participate in the filing and prosecution of the
information in the case at bar.

We disagree. Under Presidential Decree No. 1275, the powers of a Regional State Prosecutor are
as follows:
Sec. 8. The Regional State Prosecution Office: Functions of Regional State Prosecutor. - The
Regional State Prosecutor shall, under the control of the Secretary of Justice, have the following
functions:

a) Implement policies, plans, programs, memoranda, orders, circulars and rules and
regulations of the Department of Justice relative to the investigation and prosecution of
criminal cases in his region.

b) Exercise immediate administrative supervision over all provincial and city fiscals and other
prosecuting officers of provinces and cities comprised within his region.

c) Prosecute any case arising within the region.

d) With respect to his regional office and the offices of the provincial and city fiscals within his
region, he shall:

1) Appoint such member of subordinate officers and employees as may be

necessary; and approve transfers of subordinate personnel within the jurisdiction of
the regional office.

2) Investigate administrative complaints against fiscals and other prosecuting officers

within his region and submit his recommendation thereon to the Secretary of Justice
who shall, after review thereof, submit the appropriate recommendation to the Office
of the President: Provided, that where the Secretary of Justice finds insufficient
grounds for the filing of charges, he may render a decision of dismissal thereof.

3) Investigate administrative complaints against subordinate personnel of the region

and submit his recommendations thereon to the Secretary of Justice who shall have
the authority to render decision thereon. (emphases supplied)

The power of administrative supervision is limited to "the authority of the department or its equivalent
to generally oversee the operations of such agencies and to insure that they are managed
effectively, efficiently and economically but without interference with day-to-day activities; or require
the submission of reports and cause the conduct of management audit, performance evaluation and
inspection to determine compliance with policies, standards and guidelines of the department; to
take such action as may be necessary for the proper performance of official functions, including
rectification of violations, abuses and other forms of maladministration; and to review and pass upon
budget proposals of such agencies but may not increase or add to them."36 This is distinguished from
the power of "supervision and control" which includes the authority "to act directly whenever a
specific function is entrusted by law or regulation to a subordinate; direct the performance of duty;
restrain the commission of acts; review, approve, reverse or modify acts and decisions of
subordinate officials or units; determine priorities in the execution of plans and programs; and
prescribe standards, guidelines, plans and programs."37

The Regional State Prosecutor is clearly vested only with the power of administrative supervision. As
administrative supervisor, he has no power to direct the city and provincial prosecutors to inhibit from
handling certain cases. At most, he can request for their inhibition. Hence, the said directive of the
regional state prosecutor to the city and provincial prosecutors is questionable to say the least.

Petitioner cannot lean on the cases of Galvez and Sanchez. In those cases, the special prosecutors
were acting under the directive of the Secretary of Justice. They were appointed in accordance with
law. Nowhere in P.D. No. 1275 is the regional state prosecutor granted the power to appoint a
special prosecutor armed with the authority to file an information without the prior written authority or
approval of the city or provincial prosecutor or chief state prosecutor. P.D. No. 1275 provides the
manner by which special prosecutors are appointed, to wit:

Sec. 15. Special Counsels. - Whenever the exigencies of the service require the creation of positions
of additional counsel to assist provincial and city fiscals in the discharge of their duties, positions of
Special Counsels may be created by any province or city, subject to the approval of the Secretary of
Justice, and with salaries chargeable against provincial or city funds. The Secretary of Justice shall
appoint said Special Counsels, upon recommendation of the provincial or city fiscal and regional
state prosecutors concerned, either on permanent or temporary basis.

Special Counsel shall be appointed from members of the bar and shall be allowed not more than the
salary rate provided in this Decree for the lowest rank or grade of assistant fiscal in the province or
city where assigned. (emphases supplied)

Under Department Order No. 318,38 "Defining the authority, duties and responsibilities of regional
state prosecutors," then Acting Secretary of Justice Silvestre H. Bello III ordered the appointed
regional state prosecutors (which included Regional State Prosecutor Turingan for Region V) to,
among others, "(i)nvestigate and/or prosecute, upon the directive of the Secretary of Justice, specific
criminal cases filed within the region." (emphasis supplied)

In the case at bar, there is no pretense that a directive was issued by the Secretary of Justice to
Regional State Prosecutor Turingan to investigate and/or prosecute SSS cases filed within his
territorial jurisdiction. A bare reading of the alleged letter of commendation by then Secretary
Hernando Perez would show that it does not amount to a directive or even a recognition of this
authority. In fact, while the letter of Secretary Perez commends the efforts of Regional State
Prosecutor Turingan in successfully prosecuting SSS cases, it also negates his authority to
prosecute them. Secretary Perez called the Regional State Prosecutor’s attention to DOJ Circular
No. 27, series of 2001, which states that all important cases of the SSS should be referred to the
Office of the Government Corporate Counsel.39 Thus, Regional State Prosecutor Turingan cannot be
considered a special prosecutor within the meaning of the law.

Petitioner argues that the word "may" is permissive. Hence, there are cases when prior written
approval is not required, and this is one such instance. This is too simplistic an interpretation.
Whether the word "may" is mandatory or directory depends on the context of its use. We agree with
the OSG that the use of the permissive word "may" should be read together with the other provisions
in the same section of the Rule. The paragraph immediately preceding the quoted provision shows
that the word "may" is mandatory. It states:

Sec. 4, Rule 112. – x x x

Within five (5) days from his resolution, he (investigating prosecutor) shall forward the record of the
case to the provincial or city prosecutor or chief state prosecutor, or to the Ombudsman or his
deputy in cases of offenses cognizable by the Sandiganbayan in the exercise of its original
jurisdiction. They shall act on the resolution within ten (10) days from their receipt thereof and shall
immediately inform the parties of such action. (emphasis supplied)

Having settled that the prior authority and approval of the city, provincial or chief state prosecutor
should have been obtained, we shall now resolve the more important issue: whether the lack of prior
written approval of the city, provincial or chief state prosecutor in the filing of an information is a
defect in the information that is waived if not raised as an objection before arraignment.
We hold that it is not.

The provisions in the 2000 Revised Rules of Criminal Procedure that demand illumination are
Sections 3 and 9 of Rule 117 in relation to paragraph 3, Section 4 of Rule 112, to wit:

Rule 117, Section 3. Grounds.—The accused may move to quash the complaint or information on
any of the following grounds:

(a) That the facts charged do not constitute an offense;

(b) That the court trying the case has no jurisdiction over the offense charged;

(c) That the court trying the case has no jurisdiction over the person of the accused;

(d) That the officer who filed the information had no authority to do so;

(e) That it does not conform substantially to the prescribed form;

(f) That more than one offense is charged except when a single punishment for various
offenses is prescribed by law;

(g) That the criminal action or liability has been extinguished;

(h) That it contains averments which, if true, would constitute a legal excuse or justification;
and

(i) That the accused has been previously convicted or acquitted of the offense charged, or
the case against him was dismissed or otherwise terminated without his express consent.

xxx xxx xxx

Section 9. Failure to move to quash or to allege any ground therefor.—The failure of the accused to
assert any ground of a motion to quash before he pleads to the complaint or information, either
because he did not file a motion to quash or failed to allege the same in said motion, shall be
deemed a waiver of any objections except those based on the grounds provided for in paragraphs
(a), (b), (g), and (i) of section 3 of this Rule. (emphasis supplied)

Rule 112, Section 4, paragraph 3 provides, viz:

No complaint or information may be filed or dismissed by an investigating prosecutor without

the prior written authority or approval of the provincial or city prosecutor or chief state
prosecutor or the Ombudsman or his deputy. (emphasis supplied)

Private respondent and the OSG take the position that the lack of prior authority or approval by the
city or provincial prosecutor or chief state prosecutor is an infirmity in the information that prevented
the court from acquiring jurisdiction over the case. Since lack of jurisdiction is a defect that may be
raised as an objection anytime even after arraignment, the respondent judge did not err in granting
the motion to dismiss based on this ground. As basis, they cite the case of Villa v. Ibañez, et
al.40 where we held, viz:
The defendant had pleaded to an information before he filed a motion to quash, and it is contended
that by his plea he waived all objections to the informations. The contention is correct as far as
formal objections to the pleadings are concerned. But by clear implication, if not by express provision
of section 10 of Rule 113 of the Rules of Court (now Section 9 of Rule 117), and by a long line of
uniform decisions, questions of want of jurisdiction may be raised at any stage of the proceeding.
Now, the objection to the respondent’s actuations goes to the very foundation of the jurisdiction. It is
a valid information signed by a competent officer which, among other requisites, confers jurisdiction
on the court over the person of the accused and the subject matter of the accusation. In consonance
with this view, an infirmity in the information cannot be cured by silence, acquiescence, or even by
express consent.41 (emphasis supplied)

The case of Villa is authority for the principle that lack of authority on the part of the filing officer
prevents the court from acquiring jurisdiction over the case. Jurisdiction over the subject matter is
conferred by law while jurisdiction over the case is invested by the act of plaintiff and attaches upon
the filing of the complaint or information.42 Hence, while a court may have jurisdiction over the
subject matter, like a violation of the SSS Law, it does not acquire jurisdiction over the case itself
until its jurisdiction is invoked with the filing of the information.

In the United States, an information has been held as a jurisdictional requirement upon which a
defendant stands trial. Thus, it has been ruled that in the absence of probable cause, the court lacks
jurisdiction to try the criminal offense.43 In our jurisdiction, we have similarly held that:

While the choice of the court where to bring an action, where there are two or more courts having
concurrent jurisdiction thereon, is a matter of procedure and not jurisdiction, as suggested by
appellant, the moment such choice has been exercised, the matter becomes jurisdictional. Such
choice is deemed made when the proper complaint or information is filed with the court
having jurisdiction over the crime, and said court acquires jurisdiction over the person of the
defendant, from which time the right and power of the court to try the accused
attaches. (citations omitted) It is not for the defendant to exercise that choice, which is lodged
upon those who may validly file or subscribe to the complaint or information under sections
2 and 3 of Rule 106 of the Rules of Court. 44 (emphasis supplied)

A closer look at Villa would be useful in resolving the issue at hand. In that case, Atty. Abelardo
Subido, Chief of the Division of Investigation in the Office of the Mayor of Manila, was appointed by
the Secretary of Justice as special counsel to assist the City Fiscal of Manila in the cases involving
city government officials or employees. Pursuant to his appointment, Atty. Subido filed an
information against Pedro Villa for falsification of a payroll. Atty. Subido’s authority to file the
information was challenged on the ground that he was disqualified for appointment under Section
1686 of the Revised Administrative Code, as amended by Section 4 of Commonwealth Act No. 144,
to wit:

SEC. 1686. Additional counsel to assist fiscal. — The Secretary of Justice may appoint any lawyer,
being either a subordinate from his office or a competent person not in the public service,
temporarily to assist a fiscal or prosecuting attorney in the discharge of his duties, and with the same
authority therein as might be exercised by the Attorney General or Solicitor General.45

We held, viz:

Appointments by the Secretary of Justice in virtue of the foregoing provisions of the Revised
Administrative Code, as amended, were upheld in Lo Cham vs. Ocampo et al., 44 Official Gazette,
458, and Go Cam et al., vs. Gatmaitan et al., (47 Official Gazette, 5092). But in those cases, the
appointees were officials or employees in one or another of the bureaus or offices under the
Department of Justice, and were rightly considered subordinates in the office of the Secretary of
Justice within the meaning of section 1686, ante.

The case at bar does not come within the rationale of the above decisions. Attorney Subido is a
regular officer or employee in the Department of Interior, more particularly in the City Mayor’s office.
For this reason, he belongs to the class of persons disqualified for appointment to the post of special
counsel.

That to be eligible as special counsel to aid a fiscal the appointee must be either an employee or
officer in the Department of Justice is so manifest from a bare reading of section 1686 of the
Revised Administrative Code as to preclude construction. And the limitation of the range of choice in
the appointment or designation is not without reason.

The obvious reason is to have appointed only lawyers over whom the Secretary of Justice can
exercise exclusive and absolute power of supervision. An appointee from a branch of the
government outside the Department of Justice would owe obedience to, and be subject to orders by,
mutually independent superiors having, possibly, antagonistic interests. Referring particularly to the
case at hand for illustration, Attorney Subido could be recalled or his time and attention be required
elsewhere by the Secretary of Interior or the City Mayor while he was discharging his duties as
public prosecutor, and the Secretary of Justice would be helpless to stop such recall or interference.
An eventuality or state of affairs so undesirable, not to say detrimental to the public service and
specially the administration of justice, the Legislature wisely intended to avoid.

The application of the 1951 Villa ruling is not confined to instances where the person who filed the
information is disqualified from being a special prosecutor under Section 1686 of the Revised
Administrative Code, as amended, but has been extended to various cases where the information
was filed by an unauthorized officer as in the case at bar. In Cruz, Jr. v. Sandiganbayan, et al.,46 the
Court held that it is a fundamental principle that when on its face the information is null and void for
lack of authority to file the same, it cannot be cured nor resurrected by amendment. In that case, the
Presidential Commission on Good Government (PCGG) conducted an investigation and filed an
information with the Sandiganbayan against petitioner Roman Cruz, Jr. charging him with graft and
corruption. The petitioner sought to quash the information on the ground that the crime charged did
not constitute a "Marcos crony related crime" over which the PCGG had authority to investigate and
file an information. The Court found that the crime alleged in the information was not among those
which PCGG was authorized to investigate under Executive Orders No. 1 and 14 of then President
Corazon Aquino and ruled that the information was null and void. Of similar import is Romualdez v.
Sandiganbayan, et al.47 where we ruled that the information having been filed by an unauthorized
party (the PCGG), the information was fatally flawed. We noted that this defect is not a mere
remediable defect of form, but a defect that could not be cured. 1awphi 1.net

In Cudia v. Court of Appeals, et al.,48 we also reiterated the Villa ruling. The accused in that case
was apprehended in Mabalacat, Pampanga for illegal possession of firearms and was brought to
Angeles City where the headquarters of the arresting officers was located. The City Prosecutor of
Angeles City filed an information in the Regional Trial Court of Angeles City. We invalidated the
information filed by the City Prosecutor because he had no territorial jurisdiction, as the offense was
committed in Mabalacat, Pampanga and his territorial jurisdiction was only in Angeles City. We held
that an information, when required by law to be filed by a public prosecuting officer, cannot be filed
by another.49 Otherwise, the court does not acquire jurisdiction.50 It is a valid information signed by a
competent officer which, among other requisites, confers jurisdiction on the court over the person of
the accused and the subject matter thereof. The accused’s plea to an information may be a waiver of
all formal objections to the said information but not when there is want of jurisdiction. Questions
relating to lack of jurisdiction may be raised at any stage of the proceeding. An infirmity in the
information, such as lack of authority of the officer signing it, cannot be cured by silence,
acquiescence, or even by express consent.51

Despite modifications of the provisions on unauthorized filing of information contained in the 1940
Rules of Criminal Procedure under which Villa was decided, the 1951 Villa ruling continues to be the
prevailing case law on the matter.52

The 1940 Rules of Court provided in Rule 113, Section 10 that, if the defendant fails to move to
quash the complaint or information before he pleads thereto, he shall be taken to have waived all
objections which are grounds for a motion to quash except (1) "when the complaint or information
does not charge an offense" or (2) "the court is without jurisdiction of the same." (emphasis ours)
Among the enumerated grounds for a motion to quash under Section 2 of the same Rule was "(t)hat
the fiscal has no authority to file the information." With only the above two exceptions provided by
the 1940 Rules, the Court nevertheless made the Villa ruling that if the filing officer lacks authority to
file the information, jurisdiction is not conferred on the court and this infirmity cannot be cured by
silence or waiver, acquiescence, or even by express consent.

The 1940 Rules of Court was amended in 1964. With only minimal changes introduced, the 1964
Rules of Court contained provisions on unauthorized filing of information similar to the above
provisions of the 1940 Rules.53

Then came the 1985 Rules of Criminal Procedure. Lack of authority of the officer who filed the
information was also a ground for a motion to quash under these rules. The 1985 Rules also
provided for waiver of the grounds for a motion to quash under Rule 117, Section 8, but enumerated
the following exceptions to the waiver: (a) the facts charged do not constitute an offense; (b) the
court trying the case has no jurisdiction over the offense charged or the person of the accused; (c)
the criminal action or liability has been extinguished; and (d) the accused has been previously
convicted or in jeopardy of being convicted, or acquitted of the offense charged. Apparently, the
want of jurisdiction under the 1985 Rules refers to jurisdiction over the offense and the person, and
not over the case as in Villa where the court did not acquire jurisdiction over the case for lack of
authority of the officer who filed the information. Still, despite the enumeration, the Court continued
to apply the Villa ruling as shown in the afore-cited Cruz and Cudia cases.

The 1985 Rules was amended in 2000. The 2000 Revised Rules of Criminal Procedure also provide
for lack of authority of the filing officer as among the grounds for a motion to quash and the waiver of
these grounds. Similar to the 1985 Rules, the Revised Rules enumerate the exceptions from the
waiver, namely: (a) that the facts charged do not constitute an offense; (b) that the court trying the
case has no jurisdiction over the offense charged; (c) that the criminal action or liability has been
extinguished; and (d) that the accused has been previously convicted or acquitted of the offense
charged, or the case against him was dismissed or otherwise terminated without his express
consent. Under the regime of the 2000 Revised Rules, we reiterated the Villa ruling in the above-
cited Romualdez case. With the enumeration of the four exceptions, which was almost a replica of
the enumeration in the 1985 Rules, the 2000 Rules did not intend to abandon Villa. The Villa ruling
subsisted alongside the enumerated exceptions under the 1985 Rules, and it remains to do so under
the enumerated exceptions under the 2000 Rules. Neither the Rationale of the 2000 Revised Rules
of Criminal Procedure nor the Minutes of the Meeting of the Committee on the Revision of the Rules
of Court evinces any intent to abandon the doctrine enunciated in Villa.

In sum, we hold that, in the absence of a directive from the Secretary of Justice designating State
Prosecutor Tolentino as Special Prosecutor for SSS cases or a prior written approval of the
information by the provincial or city prosecutor, the information in Criminal Case No. RTC 2001-0597
was filed by an officer without authority to file the same. As this infirmity in the information constitutes
a jurisdictional defect that cannot be cured, the respondent judge did not err in dismissing the case
for lack of jurisdiction.

WHEREFORE, premises considered, the petition is DENIED. The respondent court’s orders dated
February 26, 2002 and April 3, 2002 are AFFIRMED. Criminal Case No. RTC 2001-0597 is
DISMISSED without prejudice to the filing of a new information by an authorized officer.

SO ORDERED.

G.R. No. L-27365 January 30, 1970

FELIX L. LAZO, MERCEDES CASTRO DE LAZO, and JOSE ROBLES, plaintiffs-appellees,

vs.
REPUBLIC SURETY & INSURANCE CO., INC. represented by ANTONIO M. KOH, General
Manager and as Attorney-in-Fact of plaintiffs, FELIX and MERCEDES LAZO defendants-
appellants.

Felix L. Lazo for himself and his co-plaintiffs-appellees.

Jose S. Sarte for other plaintiff-appellee.

Koh Law Offices for defendants-appellants.

MAKALINTAL, J.:

This case is before us on appeal by the defendants from the decision of the Court of First Instance of
Manila (Branch I, Judge Francisco Arca, presiding) rendered on December 7, 1966, in its Civil Case
No. 55734.

The original complaint was filed on December 12, 1963, and subsequently amended on November
9, 1964. The plaintiffs are the spouse Felix L. Lazo and Mercedes Castro de Lazo, and Jose Robles;
the defendants are Republic Surety & Insurance Co., Inc. its general manager Antonio M. Koh, the
sheriff of Manila and the Register of Deeds, also of Manila. The pertinent allegations which make up
the plaintiffs' cause of action are: that the spouses Lazo, acting as guarantors for Jose Robles in
connection with a loan of P12,000.00 obtained by the latter from the Philippine Bank of Commerce,
executed on August 18, 1953 a real estate mortgage in favor of the defendant Republic Surety &
Insurance Co., Inc. in consideration of its having consented to act as principal co-debtor for the loan
aforesaid; that the mortgage was foreclosed extra-judicially on July 1, 1958 and sold to the
mortgagee, as purchaser at such sale, for P18,627.00, the corresponding sheriff's certificate of sale
being formalized on August 2, 1958; that defendant Antonio M. Koh, pursuant to the power granted
to him in the instrument of mortgage, executed on March 20, 1963 (for purposes of registration) a
deed of absolute sale of the foreclosed property of the mortgagee — purchaser which sale was
registered on March 28, 1963; that by virtue of such registration the certificate of title in the name of
the spouses Lazo was cancelled and a new one issued in the name of the defendant company; that
the foreclosure of the mortgage was invalid because plaintiff Jose Robles had paid on the mortgage
loan the sum of P13,466.36 from August 20, 1953 to May 24, 1958; and that thereafter, from July 8,
1958 to August 23, 1963, he continued to make other payments, aggregating P17,250.00.
The principal prayer of the plaintiffs was for the defendant company to render an accounting of the
payments thus made, so that if it should appear that the original loan of P12,000.00, together with
the stipulated interest, had been paid in full then the real estate mortgage should be cancelled;
otherwise the plaintiffs should be allowed to pay, by way of legal redemption, whatever Balance still
remained. An additional prayer was for compensatory and moral damages as well as for attorney's
fees.

In a motion to dismiss filed by all the defendants with respect to the original complaint, they raised
two issues, namely: that the complaint did not state a cause of action and that the claim or demand
set forth therein had already prescribed. On this second point the defendants pointed out that under
the Rules of Court (Rule 39, Section 34) an accounting such as that prayed for by the plaintiffs could
be demanded only in cases where real property is sold on execution by virtue of a final judgment
and not where it is sold on extrajudicial foreclosure of mortgage; and if the rule is applicable at all in
the latter case, it is available only to a mortgage debtor who exercises his right of redemption within
the period provided therefor. In the present case, the defendants maintained, the redemption period
had already expired when the action was commenced.

The trial court did not resolve the motion to dismiss categorically, but in an order dated September
22, 1964, set the case for trial, with the advertence that "evidence on whether or not the action has
prescribed shall first be presented ... (and) then the court will consider the same ... as part of the
evidence on the merits."

After the plaintiffs filed their amended complaint on November 9, 1964 the defendants answered the
same, alleging inter alia that all the payments made by the plaintiffs after the foreclosure sale on July
1, 1958 were made in the concept of rents, for which the defendant company was under no
obligation to render an accounting.

The issue thus made out by the pleadings was whether or not the plaintiffs were entitled to the
accounting sought by them. A corollary issue — indeed the one on which the first depends — was
whether or not the right of redemption With respect to the force losed property was still available.
These issues were spelled out before the court a quo by the plaintiffs themselves in their answer to
the defendants' memorandum below, where it was stated:

... The complaint at bar for accounting and liquidation is fully sanctioned ... by section
34, of Rule 39, of the Rules of Court ... .

It is not disputed by the parties, that the mortgage was executed by the plaintiffs, the
spouses Felix L. Lazo and Mrs. Mercedes C Castro de Lazo, to secure a loan of
P12,000.00 which plaintiff Jose Robles obtained from the defendant Republic Surety
& Insurance Co., Inc. (sic) and neither is it disputed, that the mortgage was
extrajudicially foreclosed. Two vital issues or causes of action, therefore, are
presented before this Hon. Court by the case at bar, with:

a) — Can the plaintiffs demand an accounting and liquidation of accounts from the
defendant Republic Surety & Insurance Co., Inc. in the legal capacity of said plaintiffs
as redemptioners; and,

b) — Is the legal right of redemption of said plaintiffs still subsisting, in the light of
their indubitable causes of action in the case at bar.

The trial court, however, went entirely out of the issues submitted to it and chose to decide the case
on a point which was not at all litigated. It said: "The key, as it appears to this Court, lies in the
validity or invalidity of the extrajudicial foreclosure over the real estate mortgage, Exh.-A. If valid,
then in the ordinary course of things, all subsequent transactions by defendants dependent thereon
can be taken to be valid also. If not, then they of necessity must fall as a nullity."

In this connection it should be stated that the loan with the Philippine Bank of Commerce was on a
sixty-day note, which was renewed several times, until the said bank refused to grant any further
renewal. To accommodate the plaintiffs, on August 14, 1954 the loan was transferred to the
Republic Investment Co., The. as the new creditor, on a note payable on December 12, 1954; and
when after three renewals the plaintiffs, again defaulted the defendant Republic Surety & Insurance
Co., Inc. paid the account, and thereafter foreclosed the mortgage in its favor on July 1, 1958. The
trial court, after having stated what it believed to be the "key" to the problem, ruled that the transfer
of the loan to the Republic Investment Co., Inc. constituted a novation of the obligation, and that the
defendant company was released from its liability as co-debtor because it does not appear to have
signed the new promissory note executed by the plaintiffs. Consequently, the court concluded, the
real estate mortgage in favor of said defendant was extinguished, and the foreclosure thereof was a
nullity.

The actuation of the trial court was not legally permissible especially because the theory on which it
proceeded involved factual considerations neither touched upon the pleadings nor made the subject
of evidence at the trial. Rule 6, Section 1, is quite explicit in providing that "pleadings are the written
allegations of the parties of their respective claims and defenses submitted to the court for trial and
judgment." This rule has been consistently applied and adhered to by the courts.

The subject matter of any given case is determined ... by the nature and character of
the pleadings submitted by the parties to the court for trial and judgment. Belandres
vs. Lopez Sugar Central Mill Co., Inc., 97 Phil. 100, 103.

It is a fundamental principle that judgments must conform to both the pleadings and
the proof, and must be in accordance with the theory of the action upon which the
pleadings were framed and the case was tried; that a party can no more succeed
upon a case proved. but not alleged, than upon one alleged but not proved." (Ramon
v. Ortuzar, 89 Phil. 730, 742)

It is a well-known principle in procedure that courts of justice have no jurisdiction or

power to decide a question not in issue." (Lim Toco vs. Go Pay, 80 Phil. 166)

A judgment going outside the issues and purporting to adjudicate something upon
which the parties were not heard, is not merely irregular, but extrajudicial and
invalid." (Salvante v. Cruz, 88 Phil. 236, 244.)

The parties here went to court and presented their respective sides on the premise, admitted by
both, that the mortgage was valid and subsisting. Evidence, therefore, to establish such premise was
unnecessary and uncalled for. Indeed, it was for that reason and because in any event the record of
this case, particularly with respect to the actuations of the parties after the mortgage was foreclosed,
shows with overwhelming preponderance that the said mortgage had not been extinguished, that
this Court did not consider favorably the defendant company's petitions to submit a photostat of the
first promissory note, and signed duplicates of the three renewal notes, executed by the plaintiffs in
favor of Republic Investment Co., Inc. bearing not only their signatures as debtors but also the
signatures of the defendants company as solidary co-debtor — all these being evidence which the
said defendant could have submitted at the trial if the validity and existence of the mortgage had
been a contentious issue raised in the pleadings. That the copy of the note in the hands of the
plaintiffs does not bear the signature of the defendant company is not decisive of the latter's liability,
the primary evidence thereof being the original of the said note in the hands of the creditor, to whom,
after all, the right to recover exclusively belonged.

With particular reference to the first promissory note above mentioned, dated August 14, 1954, the
trial courts conclusion that defendant company never became obligated thereunder in favor of the
Republic Investment Co., Inc. is belied by the plaintiffs' own Exhibit N, which is the indemnity
agreement, also dated August 14, 1954, executed by the plaintiffs in favor of the defendant company
precisely to indemnify the latter for acting as solidary co-debtor said indemnity agreement being
identical in terms with the one previously executed when the loan was originally contracted with the
Philippine Bank of Commerce (Exh. G). And it was precisely because the plaintiffs defaulted on the
note of August 14, 1954 and on the renewals thereof that the defendant company had to pay the
Republic Investment Co., Inc. and to foreclosed, in turn, the mortgage on the plaintiffs' property. It
would have been absurd for the plaintiffs to execute the indemnity agreement, and to agree to pay
the premium thereunder as well as interest in the contingencies envisaged, if it were true that the
said company has assumed no liability at all in favor of the creditor.

We now come to the real issues as defined by the parties. The plaintiffs rely on Rule 39, Section
34.1 In this connection Section 9 of Act No. 3135, as amended, may also be cited. 2

Implicit in the application of these provisions is the premise that the period for redemption of the
property sold on execution (on extrajudicial foreclosure of mortgage in the present case) has not yet
expired. For if the right to redeem has been lost it stands to reason that there is no redemption price
to speak of, to which the rents received by the purchasers are to be applied or credited.3

The plaintiffs' position is that since the sheriff's certificate of sale was recorded in the office of the
Register of Deeds for Manila on March 28, 1963, the one-year period of legal redemption had not yet
expired when the action was commenced on December 12 of the same year.

There are, however, certain circumstances peculiar to this case which take it out of the operation of
the rule concerning registration in this regard. There is, to begin with, the categorical statement in
the certificate of sale that "the period of redemption of the said property sold will expire on the 2nd
day of July, 1959." Then there is the fact that no lien or encumbrance, right or claim of any person,
other than the mortgage in question, appeared on the transfer certificate of title of the plaintiff
spouses covering the mortgaged property, such that when the defendant company obtained a new
transfer certificate in its name on March 28, 1963, the same was entirely clean. In other words, no
third parties who might have an interest in the property, either as possible redemptioners or
otherwise, had to be protected by due notice of the sale through its registration.4 As far as the
plaintiffs themselves were concerned, not only were they duly notified of the sale but the same was
postponed twice, first upon their request and then upon written agreement of both parties. These
circumstances, in our opinion, have relevance in the consideration of the equities, as distinguished from
the purely legal technicalities, of this case.

But the more decisive developments ensued later: Beginning July 1958, immediately after the
foreclosure sale, the plaintiffs — in some instances in the joint names of Jose Robles and Felix Lazo
and in other instances in the name of Jose Robles alone — started paying rents on the property to
the defendant company, indicating that the former owners, while remaining in occupancy, did so in
the concept of tenants. The receipts for such payments, until May 1961, invariably referred to "rents"
on the "foreclosed property of Felix Lazo, et al." Thereafter the receipts merely stated "rents for the
Nadelco property." The receipt dated June 30, 1959 (presented by the plaintiffs as their Exhibit J-16)
is significantly worded as follows:
 At the insistent request of Messrs. Felix Lazo and Jose Robles, we acknowledge
receipt of the sum of FIVE HUNDRED (P500.00) PESOS, Philippine Currency, as
rental corresponding to the months of July and August, 1959 for premises No. 32A/B
Callejon Nadelco, Manila, with the condition that the redemption period provided by
law for the property of the spouses Felix L. Lazo and Mercedes Castro is thereby
extended to the last time up to August 31, 1959.

It is further provided that on or before August 31, 1959, the full redemption price of
P18,627, ... together with unpaid post insurance premium must be fully paid as
promised.

The foregoing was the first extension of the redemption period granted at the request of the plaintiffs.
It was an acknowledgment that the original period was expiring and a conventional stipulation on a
new period. This new period passed, but the defendant company did not consolidate its title. Instead
it sent a letter to the Lazo spouses on March 30, 1960, as follows (Exh. 1):

On July 1, 1959, this company purchased the property ... at an auction sale
conducted by the Sheriff of Manila for the amount of P18,627.00. The redemption
period of said sale has expired on the 2nd day of July 1959.

However ... we have deferred the consolidation of title to our name. This is last call
for you to act before it is too late. If you wish to redeem the property above
described, kindly call at this office on or before April 30, 1960 to arrange for a
settlement of your obligation.

The foregoing letter elicited a reply from plaintiff Felix L. Lazo on April 8, 1960, wherein he said (Exh.
2):

We wish to acknowledge receipt, with thanks, of your letter of March 30, 1960,
regarding our property involved in the transaction of Mr. Jose Robles. I feel really
grateful to you and your old man for having given us time to redeem it. It is really
unfortunate that Mr. Jose Robles, to whom we loaned the property as security for his
mortgage, has kept the matter dragging along for so many years. I have urged him to
settle the matter before April 30, 1960 and he promised earnestly to do so. He says
he is trying to raise the necessary funds, and will see you before the target date.

We are very much worried about this matter.

Thus was a second extension granted — up to April 30, 1960. Still no payment was tendered.

On May 30, 1960 it was plaintiff Jose Robles who wrote another letter to the defendant company,
making reference to the plaintiffs' "commitment to pay the redemption price of the foreclosed
property at the end of this month, May 1960," and pleading for a last extension of the redemption
period. The letter continued (Exh. 7):

In spite of our several failures to secure the expected fund for payment to your
goodselves, we assure you that we have not overlooked, nor forgotten, our said
obligation. However, this time, considering the fact that our said loan application only
requires the necessary inspection by our Bank before it is finally approved, we are
again constrained to request your kindselves to grant us another period of one month
(June) within which to remit to you the amount of redemption for the said foreclosed
property of Mr. Lazo, and this would he the last extension that we will beg of you to
 consider. Please be assured that should we be able to get our funds much earlier
than expected during the period of extension herein requested, we shall tender to
you our payment without further delay. At the moment, we are tendering you the
amount of P250.00 as rental corresponding to the month of June, 1960.

Trusting for your usual kind consideration on the above request, we are.

Felix L. Lazo himself confirmed the above request for extension by another letter dated May 31,
1960 (Exh. 8), thus:

I am lawfully embarrassed for the failure of Mr. Jose Robles to settle the amount ...

Out of equity, I am forced to consent to his extension for another 30 days by paying
the advanced rental. He expects the loan to be released in 15 days from now, and he
promised to settle our case.

May I ask again your kind indulgence on the matter.

The extension asked for was once more granted, this time up to June 30, 1960, with the same
negative result. Then again, on August 31, 1962 Felix L. Lazo wrote still another letter (Exh. 9) as
follows:

Here we come again about the house. I am really feeling ashamed to you. But Mr.
Robles said he failed to obtain the amount of about P6,000 he was going to pay as
down payment for the repurchase — even without a contract yet. He expected to get
the sum in a week time or until the 10th of September.

If you could still hold the property until that time, kindly give your consideration. May
be this is the last chance.

The plaintiffs having reneged on all their repeated promises, the defendant company finally
consolidated its title to the property as purchaser at the foreclosure sale on March 28, 1963, and
obtained the corresponding transfer certificate of title. That was almost five years after the said sale.

It is clear, in the light of the facts and circumstances above set forth, that the parties had abandoned
entirely the concept of legal redemption in this case and converted it into one of conventional
redemption, in which the only governing factor was the agreement between them. The registration of
the certificate of sale on March 28, 1963 was entirely unnecessary and irrelevant to the question of
when the period of redemption agreed upon expired. The record shows that the last request for
extension approved by the defendant is that contained in the letter of Jose Robles dated May 30,
1960 (Exh. 7), at the bottom of which appears the handwrittten notation: "Ok for last extension one
month. Please attach note of Mr. Lazo," this last evidently referring to the latter's confirmatory letter
of May 31, 1960 (Exh. 8). Consequently, the period to redeem expired on June 30, 1960.

There is no evidence that Felix L. Lazo next "last" request for extension, until September 10, 1962,
contained in his letter of August 31, 1962 (Exh. 9), was acted upon or approved by the defendant
company; but even if it was, then after September 10, 1962 the right to redeem had Become
irretrievably lost.

The plaintiffs' repeated requests for time within which to redeem, each with a definite date of
expiration, generated binding contracts when approved by the defendant company. A contract,
needles to say, has the force of law between the parties. In any event, the principle of estoppel
would step in to prevent the plaintiffs from going back upon their own acts and representations to the
prejudice of the other party who relied upon them. This is a principle of equity and natural justice,
expressly adopted in our Civil Code (Arts. 1431 et seq.) and articulated as one of the conclusive
presumptions in Rule 31, Sec. 3(a), of our Rules of Court as follows:

(a) Whenever a party has, by his own declaration, act, or omission, intentionally and
deliberately led another to believe a particular thing true, and to act upon such belief,
he cannot, in any litigation arising out of such declaration, act, or omission, be
permitted to falsify it.

In considering the equities of the case it may be pertinent to note that the property in question
consists of a small lot of 270 square meters and the house situated thereon, yielding a monthly rent,
of only P250.00, and that its fair value therefore, especially in 1958, could not be widely disparate
from the sale price of P8,627.00.

In the defendants' answer there is a counterclaim for attorney's fees in the amount of P6,000, aside
from moral damages. We do not find this second item sufficiently justified, but with respect to
attorney's fees there is a stipulation in the mortgage contract, Exh. A, for "15% of the total
indebtedness then unpaid." Under this stipulation the sum of P2,700.00 is recoverable.

IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the decision appealed from is reversed
and the complaint dismissed; and on the counterclaim the plaintiffs appellees are sentenced to pay,
jointly and severally, defendant company the sum of P2,700.00 by way of attorney's fees plus costs.

G.R. No. 136913 May 12, 2000

ANITA C. BUCE, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, SPS. BERNARDO C. TIONGCO and ARACELI
TIONGCO, SPS. DIONISIO TIONGCO and LUCILA TIONGCO, and JOSE M.
TIONGCO, respondents.

DAVIDE, JR., C.J.:

The basic issue in this petition is whether the parties intended an automatic renewal of the lease
contract1 when they agreed that the lease shall be for a period of fifteen years "subject to renewal for
another ten (10) years."

Petitioner leased a 56-square meter parcel of land located at 2068 Quirino Avenue, Pandacan,
Manila. The lease contract was for a period of fifteen years to commence on 1 June 1979 and to end
on 1 June 1994 "subject to renewal for another ten (10) years, under the same terms and
conditions." Petitioner then constructed a building and paid the required monthly rental of P200.
Private respondents, through their administrator Jose Tiongco, later demanded a gradual increase in
the rental until it reached P400 in 1985. For July and August 1991, petitioner paid private
respondents P1,000 as monthly rental.2
On 6 December 1991, private respondents' counsel wrote petitioner informing her of the increase in
the rent to P1,576.58 effective January 1992 pursuant to the provisions of the Rent Control
Law.3 Petitioner, however, tendered checks dated 5 October 1991,4 5 November 1991,5 5 December
1991, 6 5 January 1992,7 31 May 1992,8 and 2 January 1993 9 for only P400 each, payable to Jose
Tiongco as administrator. As might be expected, private respondents refused to accept the same.

On 9 August 1993, petitioner filed with the Regional Trial Court of Manila a complaint for specific
performance with prayer for consignation, which was docketed as Civil Case No. 93-67135. She
prayed that private respondents be ordered to accept the rentals in accordance with the lease
contract and to respect the lease of fifteen years, which was renewable for another ten years, at the
rate of P200 a month.

In their Answer, private respondents countered that petitioner had already paid the monthly rent of
P1,000 for July and August 1991. Under Republic Act No. 877, as amended, rental payments should
already be P1,576.58 10 per month; hence, they were justified in refusing the checks for P400 that
petitioner tendered. Moreover, the phrase in the lease contract authorizing renewal for another ten
years does not mean automatic renewal; rather, it contemplates a mutual agreement between the
parties.

During the pendency of the controversy, counsel for private respondents wrote petitioner reminding
her that the contract expired on 1 June 1994 and demanding that she pay the rentals in arrears,
which then amounted to P33,000.

On 29 August 1995, the RTC declared the lease contract automatically renewed for ten years and
considered as evidence thereof (a) the stipulations in the contract giving the lessee the right to
construct buildings and improvements and (b) the filing by petitioner of the complaint almost one
year before the expiration of the initial term of fifteen years. It then fixed the monthly rent at P400
from 1 June 1990 to 1 June 1994; P1,000 from 1 June 1994 until 1 June 1999; and P1,500 for the
rest of the period or from 1 June 2000 to 1 June 2004, reasoning that the continuous increase of rent
from P200 to P250 then P300, P400 and finally P1,000 caused "an inevitable novation of their
contract." 11

On appeal, the Court of Appeals reversed the decision of the RTC, and ordered petitioner to
immediately vacate the leased premises on the ground that the contract expired on 1 June 1994
without being renewed and to pay the rental arrearages at the rate of P1,000 monthly. 12

According to the Court of Appeals, the phrase in the contract "this lease shall be for a period of
fifteen (15) years effective June 1, 1979, subject to renewal for another ten (10) years, under the
same terms and conditions" is unclear as to who may exercise the option to renew. The stipulation
allowing the construction of a building and other improvements and the fact that the complaint was
filed a year before the expiration of the contract are not indicative of automatic renewal. It applied the
ruling in Fernandez v. Court of Appeals 1 that without a stipulation that the option to renew the lease
is solely for the benefit of one party any renewal of a lease contract must be upon the agreement of
the parties. Since private respondents were not agreeable to an extension, the original term of the
lease ended on 1 June 1994. Private respondents' refusal to accept petitioner's checks for P400 was
justified because although the original contract specified a monthly rental of P200, the tender and
acceptance of the increased rental of P1,000 novated the contract of lease; thus, petitioner was
estopped from claiming that the monthly rental is otherwise.

The Court of Appeals denied petitioner's motion for reconsideration. Hence this petition.
Petitioner contends that by ordering her to vacate the premises, the Appellate Court went beyond
the bounds of its authority because the case she filed before the RTC was for "Specific
Performance" not unlawful detainer. The power to order the lessee to vacate the leased premises is
lodged in another forum. Additionally, private respondents did not pray for the ejectment of
petitioners from the leased premises in their Answer with Counterclaim; well-settled is the rule that a
court cannot award relief not prayed for in the complaint or compulsory counterclaim.

Petitioner further maintains that the phrase "renewable for another ten years at the option of both
parties" in the Fernandez case clearly indicated the intention of the parties to renew the contract only
upon mutual agreement. Whereas in this case the contract states, "[T]his lease shall be for a period
of fifteen (15) years effective June 1, 1979, subject to renewal for another ten (10) years, under the
same terms and conditions," making this stipulation subject to interpretation with due regard to the
contemporaneous and subsequent acts of the parties. The stipulation in the contract allowing the
lessee to construct buildings and improvements; her filing of the complaint a year before the
expiration of the initial 15-year term; and private respondents' acceptance of the increased rental are
contemporaneous and subsequent acts that signify the intention of the parties to renew the contract.

On the other hand, private respondents aver that even if the original petition filed before the RTC
was not for unlawful detainer, the order of the Court of Appeals requiring petitioner to vacate the
premises is but a logical consequence of its finding that the lease contract had expired. To require
another litigation would constitute multiplicity of suits; besides, petitioner has no other reason to stay
in the premises. There is no basis why Fernandez should not be applied to the case at bar. Absent
contrary stipulation in reciprocal contracts, the period of lease is deemed to be for the benefit of both
parties.

Private respondents argue that the alleged contemporaneous and subsequent acts do not determine
the real intention of the parties as regards renewal of the lease contract. Had they intended an
automatic renewal of the lease contract they would have agreed on a 25-year period instead.
Correlatively, private respondents' letter reminding petitioner of the expiration of the contract on 1
June 1994 and demanding payment of the rentals in arrears signifies that they are no longer
interested in renewing the contract. Also petitioner's refusal to pay the increased rental of P1,000 as
early as 1991 and private respondents' refusal to accept the P400 tendered constituted a
disagreement on the rate of rental; hence, any renewal is out of the question.

The basic issue, as agreed upon by the parties, is the correct interpretation of the contract provision
"this lease shall be for a period of fifteen (15) years effective June 1, 1979, subject to renewal for
another ten (10) years, under the same terms and conditions."

The literal meaning of the stipulations shall control if the terms of the contract are clear and leave no
doubt upon the intention of the contracting parties. 14 However, if the terms of the agreement are
ambiguous resort is made to contract interpretation which is the determination of the meaning
attached to written or spoken words that make the contract. 15 Also, to ascertain the true intention of
the parties, their actions, subsequent or contemporaneous, must be principally considered. 16

The phrase "subject to renewal for another ten (10) years" is unclear on whether the parties
contemplated an automatic renewal or extension of the term, or just an option to renew the contract;
and if what exists is the latter, who may exercise the same or for whose benefit it was stipulated.

In this jurisdiction, a fine delineation exists between renewal of the contract and extension of its
period. Generally, the renewal of a contract connotes the death of the old contract and the birth or
emergence of a new one. A clause in a lease providing for an extension operates of its own force to
create an additional term, but a clause providing for a renewal merely creates an obligation to
execute a new lease contract for the additional term. As renewal of the contract contemplates the
cessation of the old contract, then it is necessary that a new one be executed between the parties. 17

There is nothing in the stipulations in the contract and the parties' actuation that shows that the
parties intended an automatic renewal or extension of the term of the contract. Even the RTC
conceded that the issue of automatic renewal is debatable. The fact that the lessee was allowed to
introduce improvements on the property is not indicative of the intention of the lessors to
automatically extend the contract. Considering the original 15-year duration of the contract,
structures would have necessarily been constructed, added, or built on the property, which in its
previous state was an idle 56-square meter lot in the heart of Manila. Petitioner leased the property
for the purpose of turning it into a commercial establishment and to which it has been transformed as
Anita's Grocery and Store. Neither the filing of the complaint a year before the expiration of the 15-
year term nor private respondents' acceptance of the increased rentals has any bearing on the
intention of the parties regarding renewal. It must be recalled that the filing of the complaint was
even spawned by private respondents' refusal to accept the payment of monthly rental in the amount
of only P400.

Now on the applicability of Fernandez v. Court of Appeals to the case at bar. Although the factual
scenario in that case with regard to the renewal option is slightly off-tangent to the case under
consideration because the intention of the parties therein for future mutual agreement was clearly
discernible in their contract, we cannot completely disregard the pronouncement of this Court in that
case; thus:

[I]n a reciprocal contract like a lease, the period must be deemed to have
been agreed upon for the benefit of both parties, absent language showing
that the term was deliberately set for the benefit of the lessee or lessor
alone. 18 We are not aware of any presumption in law that the term was
deliberately set for the benefit of the lessee alone. Koh and Cruz in effect
rested upon such a presumption. But that presumption cannot reasonably be
indulged in casually in an era of rapid economic change, marked by, among
other things, volatile costs of living and fluctuations in the value of domestic
currency. The longer the period the more clearly unreasonable such a
presumption would be. In an age like that we live in, very specific language is
necessary to show an intent to grant a unilateral faculty to extend or renew a
contract of lease to the lessee alone or to the lessor alone for that matter. 19

In the case at bar, it was not specifically indicated who may exercise the option to renew, neither
was it stated that the option was given for the benefit of herein petitioner. Thus, pursuant to the
Fernandez ruling and Article 1196 of the Civil Code, the period of the lease contract is deemed to
have been set for the benefit of both parties. Renewal of the contract may be had only upon their
mutual agreement or at the will of both of them. Since the private respondents were not amenable to
a renewal, they cannot be compelled to execute a new contract when the old contract terminated on
1 June 1994. It is the owner-lessor's prerogative to terminate the lease at its expiration. 20The
continuance, effectivity and fulfillment of a contract of lease cannot be made to depend exclusively
upon the free and uncontrolled choice of the lessee between continuing the payment of the rentals
or not, completely depriving the owner of any say in the matter. Mutuality does not obtain in such a
contract of lease and no equality exists between the lessor and the lessee since the life of the
contract would be dictated solely by the lessee. 21

After the lease terminated on 1 June 1994 without any agreement for renewal being reached,
petitioner became subject to ejectment from the premises. 22 It must be noted, however, that private
respondents did not include in their Answer with Counterclaim a prayer for the restoration of
possession of the leased premises. Neither did they file with the proper Metropolitan Trial Court an
unlawful detainer suit 2 against petitioner after the expiration of the lease contact. Moreover, the
issues agreed upon by the parties to be resolved during the pre-trial were the correct interpretation
of the contract and the validity of private respondents' refusal to accept petitioner's payment of P400
as monthly rental. 24 They later limited the issue to the first, i.e., the correct interpretation of the
contract. 25 The issue of possession of the leased premises was not among the issues agreed upon
by the parties or threshed out before the court a quo. Neither was it raised by private respondents on
appeal.

Accordingly, as correctly contended by the petitioner, the Court of Appeals went beyond the bounds
of its authority 26when after interpreting the questioned provision of the lease contract in favor of the
private respondents it proceeded to order petitioner to vacate the subject premises.

WHEREFORE, the instant petition is partly GRANTED. The assailed decision of the Court of
Appeals is REVERSED insofar as it ordered the petitioner to immediately vacate the leased
premises, without prejudice, however, to the filing by the private respondents of an action for the
recovery of possession of the subject property.

No costs.

SO ORDERED.

G.R. No. 130699 May 12, 2000

SPOUSES BERNARDO MERCADER and FLORINA M. MERCADER, and DR. JUAN Y.

MADERAZO, petitioners,
vs.
DEVELOPMENT BANK OF THE PHILIPPINES (CEBU BRANCH), GELACIO, FELIPE, OSMUNDO
all surnamed MANREAL, and RUFINA MANREAL VDA. DE ABALO, respondents.

DAVIDE, JR., C.J.:

In this petition for review, petitioners spouses Florina Maderazo-Mercader and Bernardo Mercader
(hereafter MERCADERs) and Juan Y. Mederazo impugn the Court of Appeals' 5 February 1997
decision in CA-GR-CV No. 21846 1 ordering them to deliver the possession of Lot No. 2985 to the
Development Bank of the Philippines, Cebu Branch (hereafter DBP) without right of reimbursements
for the improvements introduced thereon, and the 13 August 1997 resolution denying the motion for
reconsideration. Said decision and resolution reversed and set aside the 6 September 1988
decision 2 of the Regional Trial Court of Cebu, Branch 15, in Civil Case No. R-18521. 3

Civil Case No. R-18521 was for specific performance filed on 28 September 1979. In their
complaint, 4 the MERCADERs alleged that:

(1) In 1966, Juan Maderazo applied for a loan at the DBP secured by
interior Lots Nos. 2993 and 2994 (Talisay-Minglanilla estate);

(2) The DPB required Maderazo to construct a five (5) — meter wide
road right of way over the adjoining Lot No. 2985;
 (3) The DBP approved Maderazo's loan application upon his
submission of a copy of the lease contract for a right of way over the
adjoining Lot No. 2985;

(4) The lease contract for the right of way was for a twenty-year
period commencing on 20 October 1966 which Maderazo executed
with the spouses Gelacio and Vicenta Manreal, then the registered
owners of Lot No. 2985;

(5) Maderazo expended P10,000 for the construction of the five (5) —
meter right of way;

(6) This lease contract was however not registered for Gelacio
Manreal's failure, "for one reason or another," to deliver the
Certificate of Title (TCT) of Lot No. 2985 to Maderazo;

(7) About nine years later or on 6 January 1976, Maderazo's children,

the spouses Florina Maderazo-Mercader and Bernardo Mercader
executed a contract of lease with the Manreals for a period of twenty
years and four months over the remaining portion of Lot No. 2985;

(8) Despite repeated requests for the delivery of the TCT of Lot No.
2985 for the purpose of annotating the lease contract, the Manreals,
"for one reason or another," failed to do so; however, the Manreals
assured the Mercaders "not to worry since nothing will go wrong";

(9) Believing in the Manreals' assurances, Bernardo Mercader

intensively cultivated Lot No. 2985, "planted in good faith 600
calamansi fruit trees, fenced the lot with barbed wires, constructed
canals and drainages, spent wages for several farm workers and
introduced several improvements including a vegetable garden — all
in the sum of not less that P25,000";

(10) The MERCADERs subsequently discovered that the reason why

the Manreals failed to deliver the TCT of Lot No. 2985 [now
registered in the names of spouses Felipe and Florentina Manreal,
children of Gelacio and Vicenta Manreal] was because they offered
said lot including the improvements introduced by the former thereon
as "collateral" for a P150,000 deep-sea fishing loan with the DBP;

(11) That despite the lack of registration and/or annotation of the

respective interests of the MERCADERs on the TCT over Lot No.
2985, the DBP knew and should know of their existence considering
the several ocular inspection and investigation conducted over the
property; the DBP's actual knowledge of these unregistered interests
has the effect of registration. 5

Since the Manreals defaulted in the payment of their obligation to the DBP, and that the latter had
taken steps to foreclose Lot No. 2985 including all the improvements thereon, the MERCADERs
prayed among others, for the DBP to "respect their interests by excluding these from the foreclosure
proceedings, or if the foreclosure takes place, declare the same null and void or in the alternative,
order the DBP to reimburse them the cost of the improvements and loss of expected income
amounting to P210,000 for the duration of the unexpired term of their respective contracts." The
MERCADERs also prayed for the annotation of their interests in the TCT of Lot No. 2985.

In their answer, the Manreals only admitted the existence of the two unregistered contracts of lease
and the calamansi trees planted on Lot No. 2985. They then denied any knowledge or information
sufficient to form a belief on the other allegations of the MERCADERs. They then claimed that Felipe
Manreal informed Juan Maderazo of the intention to offer as security Lot No. 2985 for the deep sea-
fishing loan with the DBP. They also justified their inability to present to the MERCADERs the TCT
over Lot No. 2985 on the fact that at the time the latter were soliciting the title's delivery, it was still in
the hands of the lawyer who was preparing the Extrajudicial Settlement and Partition of the Estate
left by the deceased Vicenta Manreal. The Manreals then prayed for the dismissal of the complaint
for being utterly groundless. 6

In its answer, the DBP admitted:

(1) the loan of spouses Juan and Juana Maderazo; and

(2) the deep-sea fishing loan of spouses Felipe and Florentina

Manreal which was secured among others, by a first mortgage over
Lot No. 2985 evidenced by a TCT already registered in their names,
free from any lien or encumbrance.

It denied any knowledge or information of: (1) any flaw or infirmity in the TCT over Lot No. 2985; (2)
any interest in Lot No. 2985 other than and adverse to the spouses Felipe and Florentina Manreal as
registered owners and mortgagors; and (3) the existence of the lease contract for right of way over a
portion of Lot No. 2985 because it was not registered and that the spouses Gelacio and Vicenta
Manreal were not the ones who mortgaged said Lot No. 2985 to the DBP but their children, the
spouses Felipe and Florentina Manreal.

The DBP maintained that the alleged unregistered interests of the MERCADERs did not and could
not bind the DBP per Art. 1648 of the Civil Code 7 and Section 64 of Act 496. 8 It then prayed for the
dismissal of the complaint for being premature and for lack of cause of action as it never dealt with
Gelacio Manreal and there was as yet no foreclosure. Besides, the DBP was a mortgagee in good
faith. 9

In the meantime or on 26 November 1979, Lot No. 2985 was sold, among the other mortgaged lots,
on public auction to the DBP as the highest bidder. 10

During the pre-trial stage, the trial court acknowledged the possibility of a compromise agreement,
gave time to the parties to study their proposals and counterproposals and ordered the documents
pertinent thereto deemed parts of the record of the case. 11 Orders were further issued "giving the
parties more time to continue with their negotiations and re-setting the hearing of the
case." 12 Several communications were thereafter exchanged, to wit:

(1) a letter dated 24 June 1981 wherein the MERCADERs proposed

that Maderazo's contract of lease for right of way be registered, and
respect be accorded to the contract of lease the MERCADERs
executed with the Manreals, or as an alternative allow the
MERCADERs to purchase Lot No. 2985 on installment basis at the
price of P6.00 per square meter; 1
 (2) a letter dated 22 July 1982 wherein the DBP through its Manager
(Mr. Manuel Roa) offered the MERCADERs three options by which
they could amicably settle subject to the approval of the Board of
Governors of the Bank to wit: 14

a. First Option — Sale

P96,200.00 — Purchase price

19,200.00 — Down payment

77,000.00 — Balance payable in 10 years at 15%

interest per annum

1, 242.28 — Monthly amortization

b. Second Option — Lease-Purchase

P132,598.84 — Consideration

1,105.00 — Monthly lease-purchase for 10 years

c. Third Option — Lease

P14,430.00 — Equivalent to 15% annual interest of P96,200

1,202.50 — Monthly lease

(3) a letter dated 18 November 1982 whereby the MERCADERs

chose option 2 (lease-purchase); 15

(4) a letter dated 23 November 1982 whereby the MERCADERs

informed the DBP's Manager that they were "depositing P3,315.00
with the bank" pursuant to said Manager's proposal that a three-
month advance payment should be deposited while the
MERCADERs await the final decision of the bank on the proposed
settlement. 16

The DBP issued an official receipt for the payment of P3,315 as "earnest money, deposit to
purchase lot 2985." 17

With this development, on 9 December 1982, the trial court directed the parties to submit "their
compromise agreement which required the approval of the Board of Governors." 18

The DBP and the MERCADERs thereafter again exchanged a series of correspondences. In his 13
January 1983 letter to the DBP (through Mr. Ruben Carpio), Bernardo Mercader requested for a
grace period in the payment of the amortization for the lease-purchase option. 19 In response, the
DBP wrote a letter dated 19 January 1983 informing Bernardo Mercader that it had already
"prepared [its] recommendation to the head office, . . . rejected the request for a grace period but
informed [him] to respond soon or visit the bank for a possible conference." 20 Bernardo Mercader
replied through a letter dated 5 October 1983 reiterating his accord to the lease-purchase option but
suggesting this time that the amortization be paid on a quarterly basis. 21 In its 29 February 1984
letter, the DBP "noted" Mercader's suggestion as "counter-proposals or counter-offers which [it find
un]acceptable and made dimmer the realization of [their] mutual desire for an early amicable
settlement." The DBP reasoned that "the original conditions packaged in [its] proposal [were] no
longer applicable" considering that the market value of the property increased. 22

With this, the trial court ordered the termination of the pre-trial and set the case for hearing in its 18
September 1995 order, thus:

As manifested by the plaintiffs, they have alread[y] agreed with the defendant bank
that they will pay the property at P132, 598 payable in ten (10) years in quarterly
basis. However, the counsel of defendant manifested that it was only a proposal. The
plaintiff spouses requested for a longer period of fifteen (15) years which the bank
did not agree.

The only issue[s] to be resolved in this case are as follows:

1. Whether the plaintiff [are] entitled to specific performance of said

agreement;

2. Whether the defendant bank can be compelled to recognize the

lease contract entered into between the spouses plaintiff Bernardo
Mercader and Gelacio Manreal; and

3. Whether the foreclosure proceedings of the contract between the

defendant bank is null and void.

The pre-trial in this case is already closed and terminated. 2

On 7 November 1985, the MERCADERs filed a Supplemental Pleading insisting the consummation
of the lease-purchase option with the payment of the earnest money. 24 The DBP filed its Opposition
to the Supplemental Pleading. 25

Trial proceeded with the parties presenting evidence tending to establish their respective allegations.
On 29 May 1987, the trial court ordered the Manreals dropped from the case. The MERCADERs
offered no objection.

In its decision of 6 September 1988, the trial court reiterated the three issues ascertained in the pre-
trial order and resolved all of them in favor of the MERCADERs. On the first issue, the trial court
found that the "DBP had unnecessarily and unjustifiably made . . . [Bernardo] Mercader understand
that his second option [lease-purchase] would be more or less approved, except that the approval
will come from Manila." 26 Anent the second issue, the trial court also believed "quite firmly" that the
"DBP could not have escaped having a foreknowledge of the existence of the prior unrecorded
lease" as the "possession and cultivation of Bernardo Mercader . . . [was] a matter of open, notorious
and public knowledge in the area." In resolving the third issue, the court first acknowledged that it is
a "court of equity and not merely a court of law" and the "DBP is not authorized to keep real
propert[y] longer than ten years or so;" then the court "required [the] DBP to set aside the area
affected by the prior unregistered lease, known to [it], when [it] accepted the mortgage." 27 It then
decreed as follows:
 WHEREFORE, finding the preponderance of evidence to be in favor of plaintiffs,
judgment is hereby rendered as follows:

1) ordering the defendant DBP and its successors-in-

interest to respect and preserve the Contracts of
Lease between the Manreals and the Mercaders until
December 31, 1994;

2) ordering the DBP to exclude from the foreclosure

proceedings the rights of the plaintiffs as covered by
the Contract of Lease;

3) requiring the defendant DBP to cause the

annotation of the Contracts of Lease of plaintiffs on
TCT No. T-40396 of . . . Lot No. 2985 . . . and amend
Entry No. 4980-V-14-D-B, by excluding the
improvements of Mercader as guarantee or collateral
for defendant Felipe Manreal's deep-sea fishing loan;

4) ordering the DBP to execute the deed of sale

subject to the approval of the Manila Office of the
DBP as to the mode of payment, there being no
agreement thereon;

5) requiring the defendant DBP to pay attorney's fees

of P5,000, for making it necessary for the plaintiffs to
litigate, in order to protect their rights to the Lease
Contract with the Manreals and to compel DBP to act
on the proposals of Mercader as promised by DBP. 28

On appeal, the Court of Appeals found that the trial court erred in treating the lease-purchase option
as a controversial issue considering that it was "outside the parties' pleadings." But invoking the
Supreme Court's decision in Castro v. Court of Appeals 29 in that "the improvements introduced [into
the mortgaged property] are to be considered so incorporated [in the mortgage] only if so owned by
the mortgagor," the Court of Appeals declared that the improvements introduced on Lot No. 2985
had been improperly included in the foreclosure sale since they were not owned by the mortgagors.
But since the improvements were already included in the foreclosure sale and the MERCADERs
continued the possession and collection of income from the lot, the Court of Appeals, as already
earlier adverted to, reversed and set aside the appealed judgment. It entered a new one declaring
that the MERCADERs were not entitled to any compensation from the DBP. It also ordered the
MERCADERs to immediately turn over the possession of Lot No. 2985 to the DBP. 30

In this petition for review, the MERCADERs assert that in issuing the challenged decision, the Court
of Appeals contravened Section 4, Rule 20 and Section 5, Rule 10 of the Rules of Court by holding
that the trial court should not have taken cognizance of the lease-purchase option as a controversial
issue since it was not raised in the pleadings. They maintain that the trial court correctly took
cognizance of the lease-purchase option because it was part and parcel of the pre-trial stages, the
determination of which will prevent future litigation thereon. They also pray that in the event of a
favorable judgment, this Court should refer the case back to the Court of Appeals for a determination
of whether the trial court erred in finding that the lease-purchase option was already consummated.
For its part, the DBP contends that the MERCADERs raise questions of facts which are not
reviewable on appeal and that it had opposed and objected to in and at all stages of the trial, all
attempts by the MERCADERs to introduce evidence on the lease-purchase option.

This Court agrees with the MERCADERs and finds that the Court of Appeals erred in disregarding
as material the lease-purchase option on the ground that it was not raised in the pleadings. If the
Court of Appeals adverts to the lack of reference to the lease-purchase option in the initiatory
pleadings, this can be simply explained by the fact that the trial court only took cognizance thereof
when it became an integral component of the pre-trial proceedings. That is why the lease-purchase
option was included firstly, in the pre-trial order as one of the issues to be resolved at trial and
secondly, in the supplemental pleading subsequently filed by the MERCADERs on 7 November
1985. 31As a supplemental pleading, it served to aver supervening facts which were then not ripe for
judicial relief when the original pleading was filed. As such, it was meant to supply deficiencies in aid
of the original pleading, and not to dispense with the latter. 32 Hence, it was patently erroneous for the
Court of Appeals to pronounce that the lease-purchase option was not raised in the pleadings. The
DBP was even quite aware and knowledgeable of the supplemental pleading because it filed an
opposition thereto. 3

The records however reveal that the trial court did not promptly rule on the motion to admit the
supplemental pleading. And during trial, the trial court also failed to rule on the prompt objection
interposed by the DBP's counsel to the MERCADERs' introduction of evidence relative to said lease-
purchase option. But undisputed is the trial court's eventual admission in open court of the
MERCADERs' supplemental pleading, thus:

ATTY. GARLITOS

Probably, I did not make myself quite clear, Your honor. What I mean
is during the pre-trial stage the parties were encourage to negotiate
for a settlement. So they made an offer to DBP and DBP gave them
an option.

COURT

Those three options and chose the second one.

ATTY. GARLITOS

We interposed an objection on this option, Your Honor, because any

evidence which will be presented or which transpired during the pre-
trial is objectionable. So we interposed an objection to prevent the
witness from testifying on transactions which were referred to while
the parties were negotiating during the pre-trial stage.

ATTY. MERCADER

I wish to correct counsel. Records will show that there was no

objection on what transpired during the pre-trial. As a matter of fact
the pre-trial order is very material to the case. There is a pre-trial that
such an offer and three options made by DBP, and that plaintiff
selected the second option and that he deposited earnest money with
the bank.
 COURT

In other words there is no supplemental complaint.

ATTY. GARLITOS

It is good that they brought that out because we had an opposition

and this is what I am referring to.

COURT

What is your opposition, the price agreed upon?

ATTY. GARLITOS

We objected to the filing of the supplemental complaint and to all

evidence presented in regard to that supplemental complaint.

COURT

It's too late now for you to make an objection. This supplemental
pleading has been admitted by the court. That has become final.

ATTY. GARLITOS

There is no showing that it has been admitted by the court.

COURT

It has been admitted by the court. 34 (Emphasis supplied)

The records also show that not only did the DBP's counsel began to rigorously cross-examine
Bernardo Mercader on the lease-purchase option, he also subjected his witness Mr. Ruben Carpio,
then Chief of the Collection Department, DBP to an intensive direct examination covering said
subject matter. 35 He also offered as evidence the DBP's letter indicating the three options to the
MERCADERs as Exhibit "1" and the lease-purchase option contained therein as Exhibit "1-A." 36

The DBP is undoubtedly estopped from questioning the trial court's inclusion of the lease-purchase
option as a controversial issue. This action of the trial court finds anchor on Section 4, Rule 20 of the
Rules of Court which reads:

Sec. 4. Record of pre-trial results. — After the pre-trial the court shall make an order
which recites the action taken at the conference, the amendments allowed to the
pleadings, and the agreements made by the parties as to any of the matters
considered. Such order shall limit the issues for trial to those not disposed of by
admissions or agreements of counsel and when entered controls the subsequent
course of the action, unless modified before trial to prevent manifest injustice.

Indeed, the pre-trial is primarily intended to make certain that all issues necessary to the disposition
of a case are properly raised. The purpose is to obviate the element of surprise, hence, the parties
are expected to disclose at the pre-trial conference all issues of law and fact which they intend to
raise at the trial, except such as may involve privileged or impeaching matter. 37 In the case at bar,
the pre-trial order included as integral to the complete adjudication of the case the issue of whether
the MERCADERs can demand specific performance from the DBP relative to the lease-purchase
option. Thus, the element of surprise that the provision on pre-trial attempts to preclude was
satisfied. The surprise factor was further eliminated, as already earlier mentioned and merely to
reiterate here, with the DBP's (1) motion to oppose the supplemental pleading, (2) objection to the
introduction of evidence connected thereto, (3) later information from the trial court of its definitive
ruling admitting the supplemental pleading, (4) own introduction of evidence related thereto, and
finally, by its (5) intensive participation in the direct and cross-examination of witnesses whose
testimonies included said topic. In any case, the filing and consequent admission of the
supplemental pleading by the trial court validated the issues embraced in the pre-trial order.

Assuming arguendo that the MERCADERs failed to file the supplemental pleading, evidence relative
to the lease-purchase option may be legitimately admitted by the trial court in conformity with
Section 5, Rule 10 of the Rules of Court which states: —

Sec. 5. Amendment to conform to or authorize presentation of evidence. — When

issues not raised by the pleadings are tried by express or implied consent of the
parties, they shall be treated in all respects, as if they had been raised in the
pleadings. Such amendment of the pleadings as may be necessary to cause them to
conform to the evidence and to raise these issues may be made upon motion of any
party at any time, even after judgment; but failure so to amend does not affect the
result of the trial of these issues. If evidence is objected to at the trial on the ground
that it is not within the issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so freely when the presentation of the merits
of the action will be subserved thereby and the objecting party fails to satisfy the
court that the admission of such evidence would prejudice him in maintaining his
action or defense upon the merits. The court may grant a continuance to enable the
objecting party to meet such evidence. (emphasis supplied).

This provision envisions two scenarios — first, when evidence is introduced on an issue not alleged
in the pleadings and no objection was interjected and second, when evidence is offered again, on an
issue not alleged in the pleadings but this time an objection was interpolated. We are concerned with
the second scenario. In Co Tiamco v. Diaz, the Court held that "when evidence is offered on a
matter not alleged in the pleadings, the court may admit it even against the objection of the adverse
party, where the latter fails to satisfy the court that the admission of the evidence would prejudice
him in maintaining his defense upon the merits, and the court may grant him a continuance to enable
him to meet the new situation created by the evidence. Of course, the court, before allowing the
evidence, as a matter of formality, should allow an amendment of the pleading, . . . And,
furthermore, where the failure to order an amendment does not appear to have caused surprise or
prejudice to the objecting party, it may be allowed as a harmless error. Well-known is the rule that
departures from procedure may be forgiven where they do not appear to have impaired the
substantial rights of the parties." 38

More recently, in Bank of America v. American Realty Corporation 39 citing Talisay-Silay Milling Co.,
Inc. v. Asociacion de Agricultores de Talisay-Silay, Inc., 40 the Court reinforces the Co Tiamco ruling
on the application of Section 5, Rule 10 of the Rules of Court in this wise:

The failure of a party to amend a pleading to conform to the evidence adduced

during trial does not preclude adjudication by the court on the basis of such evidence
which may embody new issues not raised in the pleadings. . . . Although, the
 pleading may not have been amended to conform to the evidence submitted during
trial, judgment may nonetheless be rendered, not simply on the basis of the issues
alleged but also on the issues discussed and the assertions of fact proved in the
course of the trial. The court may treat the pleading as if it had been amended to
conform to the evidence, although it had not been actually amended. . . . Clearly, a
court may rule and render judgment on the basis of the evidence before it even
though the relevant pleading had not been previously amended, so long as no
surprise or prejudice is thereby caused to the adverse party. Put a little differently, so
long as the basic requirements of fair play had been met, as where the litigants were
given full opportunity to support their respective contentions and to object to or refute
each other's evidence, the court may validly treat the pleadings as if they had been
amended to conform to the evidence and proceed to adjudicate on the basis of all
the evidence before it.

As already enunciated, the DBP was not and would not be prejudiced by the incorporation of the
lease-purchase option as one of the controverted issues. Moreover, it had been afforded ample
opportunity to refute and object to the evidence germane thereto, thus, the rudiments of fair play had
been properly observed.

Since we agree with the MERCADERs' contention that the Court of Appeals contravened Section 4,
Rule 20 and Section 5, Rule 10 of the Rules of Court in promulgating the questioned decision, we
have to grant their prayer to refer the matter back to said court for a determination of the question of
whether the lease-purchase option was already consummated and for a complete ascertainment of
the rights and obligations of the parties.

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the instant petition is GRANTED DUE
COURSE and the 5 February 1997 judgment and 13 August 1995 resolution of the Court of Appeals
in CA-GR-CV No. 21846 are hereby SET ASIDE. The case is REFERRED BACK to the Court of
Appeals for a determination of whether the lease-purchase option was consummated with the end
view of ascertaining the rights and obligations of the parties.

SO ORDERED.

G.R. No. 136415 October 31, 2006

VIRGILIO P. CEZAR, petitioner,

vs.
HON. HELEN RICAFORT-BAUTISTA in her capacity as Presiding Judge of RTC, Branch 260,
City of Parañaque and SPECIFIED MATERIALS, CO., respondents.

DECISION

CHICO-NAZARIO, J.:
This Petition for Certiorari seeks the annulment of the Decision dated 9 September 19971 of
respondent Honorable Helen Ricafort-Bautista of the Regional Trial Court (RTC) of Parañaque City,
in Civil Case No. 96-0473 entitled, "Specified Materials Corporation v. Virgilio P. Cezar doing
business under the name and style `Virosell Construction and Supply.'" The dispositive portion of the
assailed decision provides:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff,

ordering defendant to pay plaintiff, as follows:

1. P2,005,000.00 representing the total amount that remain unpaid; plus,

2. A penalty of three (3%) percent per month on the value of each delivery receipt and sales
invoice computed from the time the obligation fell due until the same is fully paid;

3. P401,000.00 as attorney's fees.2

On 11 November 1996, private respondent Specified Materials Corporation filed a Complaint3 for
collection of sum of money against petitioner arising from the latter's failure to pay the construction
materials it purportedly purchased under a credit line extended by private respondent. At the time of
the institution of the action, petitioner's obligation stood at P1,860,000.00, and under the terms of the
credit arrangement, materials sold to petitioner was supposed to be paid within thirty days from date
of delivery, subject to an interest charge of 3% per month for delayed payments.

As petitioner failed to pay for the construction materials, private respondent sent two letters4 to
petitioner and his brother, Perfecto, reminding them of their obligation. In response, petitioner sent
three letters all dated 12 August 1996.5 In the first letter, petitioner manifested his willingness to
settle his account with private respondent as long as his obligation conforms with the submitted list
of materials he actually used. In the second letter, petitioner requested that any intended legal action
on the part of private respondent be suspended until such time that all deliveries and payments
made in his account are verified.6 Finally, in the third letter, petitioner requested that an inventory be
undertaken of the construction materials delivered by private respondent as well as those actually
withdrawn and used by petitioner.7

On 3 September 1996, private respondent's representatives met with petitioner in order to reconcile
their conflicting records. During said meeting, petitioner allegedly admitted that he failed to take into
account some deliveries made in 1995 amounting to around P648,750.00. Petitioner then requested
that they meet again after two days so that he could verify his documents but he failed to show up
for the subsequent meetings. Thereafter, private respondent sent a final demand letter to petitioner.8

After the filing of the complaint, summons9 was issued to petitioner and this was served by Sheriff
Juan C. Marquez with the pertinent portion of the return stating:

SHERIFF'S RETURN

I HEREBY CERTIFY that:

I HAVE SERVED a copy/ies of the summons, complaint and annexes issued in Civil Case
No. 96-0473, entitled Specified Materials Corp. versus Virgilio P. Cezar. x x x
 PERSONS DATE OF SERVICE HOW SERVED
SERVED

Virgilio P. Cezar January 9, 1997 served thru Mr. Arsenio Robles, an employee
of defendant who [is] authorized to transact
business, as per his signature appearing
below summons.

As petitioner failed to file his answer to the complaint, private respondent moved that he be declared
in default.10This motion was favorably acted upon by public respondent through the Order dated 14
March 1997,11 and private respondent was able to present its evidence.

On 15 May 1997, private respondent filed a Motion to Admit Amended Complaint alleging that it
erroneously computed petitioner's obligation to be P1,860,000.00, when it should have amounted
to P2,005,000.00. A copy of the motion and the Amended Complaint were personally received by
petitioner as evidenced by his signatures thereon.12 The Amended Complaint was ordered admitted
on 16 May 1997.13 On 9 September 1997, public respondent issued its now assailed decision.

On 3 November 1997, petitioner, by way of special appearance, filed a Motion to Set Aside Decision
arguing that the trial court did not acquire jurisdiction over his person.14 This motion was denied
through public respondent's order dated 7 November 1997.15

Following the denial of its Motion to Set Aside Decision, petitioner filed before the Court of Appeals a
Petition for Annulment of Judgment, Preliminary Injunction with Prayer for Temporary Restraining
Order.16 This petition was dismissed for "failure to attach an affidavit of merit alleging the facts
supporting the good and substantial defense, as well as the affidavits of witnesses or document
supporting the defense."17

Petitioner then filed a motion for reconsideration but this was denied by the Court of Appeals in its
Resolution dated 20 March 1998.18 According to the Court of Appeals –

Under Section 1, Rule 47 of the 1997 Rules of Civil Procedure, the annulment of a judgment
or final order or resolution in civil actions of the Regional Trial Courts may be availed of only
when the ordinary remedies of new trial, appeal, petition for relief or other appropriate
remedies are no longer available through no fault of the petitioner. The instant petition for
annulment was filed before this Court on November 24, 1997. Clearly, petitioner had other
remedies available when he filed the instant petition for annulment.

Following this set-back, petitioner filed before this Court a Petition for Review on Certiorari19 of the
resolutions of the Court of Appeals but we denied the same on 15 June 1998 for failure to comply
with procedural requirements.20 Our resolution became final and executory on 7 September 1998.21

On 10 November 1998, private respondent filed a Motion for Execution before the trial court.22 The
scheduled hearing of this motion on 13 November 1998 was ordered reset to 19 November 1998
after petitioner filed an Urgent Ex-Parte Motion to Re-Set Hearing.23 The records also disclose that
the 19 November 1998 hearing did not push through and in fact, it was rescheduled a couple of
more times per agreement of the parties.24 Finally, on 18 December 1998, public respondent granted
private respondent's Motion for Execution.25

Hence, the present petition raising the sole issue:

 1. WHETHER OR NOT THE COURT A QUO ACQUIRED JURISDICTION OVER THE
PERSON OF THE PETITIONER BY VIRTUE OF THE SUBSTITUTED SERVICE OF
SUMMONS EFFECTED BY SHERIFF JUAN C. MARQUEZ.26

The petition is unmeritorious.

Petitioner argues that since the trial court never acquired jurisdiction over his person, its Decision of
9 September 1997 is null and void. He claims that the person who allegedly received the summons
on his behalf, and who was identified in the sheriff's return as Arsenio Robles, was not his employee.
He adds that when he conducted an inquiry, he found out that Robles was a native of Batangas and
was merely peddling mango seedlings within the vicinity of his office when the summons was
served. He also maintains that had he been given the opportunity to present his defense, he would
have shown that his obligation to private respondent is less than the amount as established by the
trial court.

Private respondent retorts that petitioner's insistence that the court a quo did not acquire jurisdiction
over him is belied by the fact that petitioner had actual knowledge of all the proceedings since he
was furnished with all the copies of the pleadings and court orders. Private respondent points out
that the Motion to Admit Amended Complaint and the Amended Complaint were personally served
on petitioner himself as shown by his signatures appearing thereon. Moreover, private respondent is
of the view that the sheriff who served the summons upon petitioner enjoys the presumption of
regularity in the performance of duty – a presumption which petitioner was unable to overcome.

On 16 June 1999, this Court issued a temporary restraining order enjoining the enforcement of the
court a quo's decision dated 9 September 1997 and resolution dated 28 November 1997.27

It is fundamental that courts acquire jurisdiction over the plaintiff once the complaint is filed. On the
other hand, there are two ways through which jurisdiction over the defendant or respondent is
acquired – either through the service of summons upon them or through their voluntary appearance
in court. In the case of Avon Insurance PLC v. Court of Appeals,28 we discussed the function of
summons in court actions, to be –

Fundamentally, the service of summons is intended to give official notice to the defendant or
respondent that an action had been commenced against it. The defendant or respondent is
thus put [on] guard as to the demands of the plaintiff as stated in the complaint. The service
of summons upon the defendant becomes an important element in the operation of a court's
jurisdiction upon a party to a suit, as service of summons upon the defendant is the means
by which the court acquires jurisdiction over his person. Without service of summons, or
when summons are improperly made, both the trial and the judgment, being in violation of
due process, are null and void, unless the defendant waives the service of summons by
voluntarily appearing and answering the suit. 29

Elsewhere, we declared that jurisdiction of the court over the person of the defendant or respondent
cannot be acquired notwithstanding his knowledge of the pendency of a case against him unless he
was validly served with summons.30 Such is the important role a valid service of summons plays in
court actions.

The Rules of Court31 requires that, whenever practicable, summons must be served by handing a
copy thereof to the defendant in person. In case the defendant refuses to receive and sign for it, by
tendering the summons to him or her.
However, in the event that summons cannot be served within a reasonable time, the Rules permit
that substituted service may be resorted to, thus:

Sec. 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within
a reasonable time as provided in the preceding section, service may be effected (a) by
leaving copies of the summons at the defendant's residence with some person of suitable
age and discretion then residing therein, or (b) by leaving the copies at defendant's office or
regular place of business with some competent person in charge thereof.

In this case, the sheriff employed the substituted service of summons. The defect, however, in the
manner in which he implemented this mode of service of summons is readily apparent on the face of
the return. It must be emphasized that laws providing for modes other than the personal service of
summons must be strictly followed in order for the court to acquire jurisdiction over the person of
respondent or defendant. Compliance therewith should appear affirmatively on the return.32 The
essence of this requirement was enunciated in the case of Keister v. Navarro33 to be –

The summons must be served to the defendant in person. It is only when the defendant
cannot be served personally within a reasonable time that a substituted service may be
made. Impossibility of prompt service should be shown by stating the efforts made to
find the defendant personally and the fact that such efforts failed. This statement
should be made in the proof of service. This is necessary because substituted service is
in derogation of the usual method of service. It has been held that this method of service is
"in derogation of the common law; it is a method extraordinary in character, and hence may
be used only as prescribed and in the circumstances authorized by statute." Thus, under
the controlling decisions, the statutory requirements of substituted service must be
followed strictly, faithfully and fully, and any substituted service other than that
authorized by the statute is considered ineffective.34(Emphases supplied.)

As the sheriff's return in the present case does not contain any statement with regard to the
impossibility of personal service the same is patently defective and so the presumption of regularity
in the performance of official functions will not lie.35

Nevertheless, we still hold that jurisdiction was validly acquired by the trial court. Although the
substituted service upon him of summons was defective, said defect was cured by his voluntary
appearance.36

As the records of this case disclose, after private respondent moved for the execution of the trial
court's decision, petitioner filed a motion for a re-setting of the court's hearing thereon. In Flores v.
Zurbito,37 we held that an appearance in whatever form without expressly objecting to the
jurisdiction of the court over the person, is a submission to the jurisdiction of the court over the
person of the defendant or respondent, thus:

A voluntary appearance is a waiver of the necessity of a formal notice. An appearance in

whatever form, without expressly objecting to the jurisdiction of the court over the person, is
a submission to the jurisdiction of the court over the person. While the formal method of
entering an appearance in a cause pending in the courts is to deliver to the clerk a written
direction ordering him to enter the appearance of the person who subscribes it, an
appearance may be made by simply filing a formal motion, or plea or answer. This formal
method of appearance is not necessary. He may appear without such formal appearance
and thus submit himself to the jurisdiction of the court. He may appear by presenting a
motion, for example, and unless by such appearance he specifically objects to the
 jurisdiction of the court, he thereby gives his assent to the jurisdiction of the court
over his person.38

Hence, in this case, petitioner's filing of a Motion for Re-setting of the Hearing effectively cured the
defect of the substituted service of summons. Petitioner's insistence of lack of jurisdiction over his
person is utterly lacking in any legal basis.

WHEREFORE, premises considered, the present Petition is DISMISSED. The Decision dated 9
September 1997 rendered by the Regional Trial Court of Parañaque City in Civil Case No. 96-0473
is hereby AFFIRMED and the Temporary Restraining Order issued by this Court on 16 June 1999 is
hereby LIFTED. With costs.

SO ORDERED.

G.R. No. 143736 August 11, 2004

OFELIA HERRERA-FELIX, Represented by JOVITA HERRERA-SEÑA, petitioner,

vs.
COURT OF APPEALS, and ST. JOSEPH RESOURCES DEVELOPMENT, INC., respondents.

RESOLUTION

CALLEJO, SR., J.:

This is a petition for review on certiorari assailing the Decision1 of the Court of Appeals which
dismissed the petition to annul the Decision2 of the Regional Trial Court of Malabon, Metro Manila,
Branch 73, in Civil Case No. 1967, on the ground of lack of jurisdiction over the person of herein
petitioner Ofelia Herrera-Felix.

The Antecedents

On March 11, 1993, respondent St. Joseph Resource Development, Inc. filed a complaint for sum of
money against the Spouses Restituto and Ofelia Felix with a prayer for a writ of preliminary
attachment. It was alleged therein that, during the period from November 16, 1992 to December 14,
1992, the Felix Spouses purchased from the respondent tubs of assorted fish, as follows:

Date of Purchase Amount of Fish Purchased

November 16, 1992 P 183,360.00

November 17, 1992 114,380.00

November 19, 1992 56,014.00

 November 20, 1992 183,400.00

December 2, 1992 70,000.00

December 3, 1992 159,100.00

December 5, 1992 73,500.00

December 8, 1992 79,025.50

December 9, 1992 275,190.00

December 11, 1992 102,840.00

December 12, 1992 78,300.00

December 13, 1992 108,692.00

December 14, 1992 32,379.50

Total . . . . . P 1,516,181.00

It was also alleged that the Felix Spouses still had an outstanding obligation amounting
to P1,132,065.50, after deducting their total payment of P438,615.50 from their aggregate
purchases. The respondent prayed that, after due proceedings, judgment be rendered in its favor,
thus:

WHEREFORE, it is respectfully prayed that judgment be rendered in favor of plaintiff and

against defendants, ordering the latter to pay the former the following:

1. P1,132,065.50, representing their unpaid obligation, including unpaid tubs, plus legal
interest from the date of filing of the complaint;

2. Attorney's fees equivalent to 25% of the foregoing amount; and

3. Costs of suit.

Plaintiff likewise prays that a writ of preliminary attachment be issued ex parte against the
properties of defendants as security for the satisfaction of any judgment that may be
recovered.

Other just and equitable relief is also prayed for.3

The case was docketed as Civil Case No. 1967.

The trial court granted the respondent's prayer for a writ of preliminary attachment on a bond
of P1,132,065.50 which was posted on March 26, 1993. The Sheriff levied and took custody of some
of the personal properties of the Felix Spouses. On March 26, 1993, a copy of the writ of preliminary
attachment, summons and complaint were served on them at their residence, through the sister of
Ofelia Herrera-Felix, Ma. Luisa Herrera.4 According to the Sheriff's Return, Ofelia Herrera-Felix was
out of the country, as per the information relayed to him by Ma. Luisa Herrera. On April 5, 1993, the
Felix Spouses, through Atty. Celestino C. Juan, filed a motion praying for an extension of time to file
their answer to the complaint.5 On April 6, 1993, the trial court issued an Order granting the motion.
However, the Felix Spouses failed to file their answer to the complaint. The respondent then filed a
Motion dated April 23, 1993 to declare the said spouses in default,6 which motion was granted by the
court in its Resolution7dated May 13, 1993. A copy of the said resolution was sent to and received by
the counsel of the Felix Spouses through registered mail.

On August 11, 1993, the court a quo rendered a decision in favor of the respondent, the decretal
portion of which reads:

WHEREFORE, judgment is hereby rendered ordering:

1. The defendants to pay, jointly and severally, the plaintiffs the amount of ONE MILLION
SEVENTY-SEVEN THOUSAND FIVE HUNDRED SIXTY-FIVE PESOS AND FIFTY
CENTAVOS (P1,077,565.50) plus legal rate of interest from the date of the filing of the
complaint;

2. The defendants to pay, jointly and severally, the amount of TWENTY-FIVE THOUSAND
PESOS(P25,000.00) – as/for reasonable Attorney's fees;

3. The defendants to pay the costs of this suit.

SO ORDERED.8

Copies of the said decision were mailed to the Felix Spouses and their counsel, Atty. Celestino C.
Juan, by registered mail. The copy of the decision addressed to the spouses was returned to the
court after two notices for having been "Unclaimed." However, then counsel for the Felix Spouses
received his copy of the decision.

The decision of the trial court became final and executory after the Felix Spouses failed to appeal
the same. The respondent filed a motion for a writ of execution. A copy thereof was served on the
said spouses by registered mail, but they failed to oppose the motion. The court thereafter issued an
order granting the motion and directing the issuance of a writ of execution. The counsel for the Felix
Spouses received a copy of the said order. Thereafter, the following personal properties of the latter
were levied upon and sold by the sheriff at public auction for P83,200.00 to the respondent as the
winning bidder:

(1) unit Jeep-semi stainless

(1) unit Jeep-stainless

(1) Victor-Radio/TV/Cassette Recorder

(1) Sony "17" TV w/ remote control

(1) Kawai Electric Organ

(3) Hitachi Stand Fan

 (1) Standard Desk Fan

(1) 6 pieces Sala Set.9

On August 14, 1995, the Sheriff executed a Certificate of Sale of personal properties.10

On September 13, 1996, petitioner Ofelia Herrera-Felix, represented by another sister, Jovita
Herrera-Seña, filed a petition with the Court of Appeals under Rule 47 of the Rules of Court for the
nullification of the trial court's judgment by default, the writ of execution issued by the said court, and
the sale of her properties at public auction. The petitioner alleged, inter alia, that the complaint and
summons were handed over to her sister, Ma. Luisa Herrera, who was merely a visitor in her house
and, as such, was not a valid substituted service under Rule 14, Section 7 of the Rules of Court. She
also alleged that her husband Restituto Felix had died as early as April 23, 1988, as evidenced by
his Certificate of Death.11

In its comment on the petition, the respondent alleged that the substituted service of the complaint
and summons on the petitioner, who was then temporarily outside the Philippines, through her sister
Ma. Luisa Herrera, was valid and effective. The respondent, likewise, averred that even if such
substituted service on the petitioner was defective, the defect was cured when the latter, through her
counsel, Atty. Celestino C. Juan, appeared in court and moved for an extension of time to file her
responsive pleading. The respondent also maintained that the petitioner and her counsel were
served with copies of the decision of the court a quo, but that the petitioner failed to appeal the
decision.

In her reply to the comment of the respondent, the petitioner alleged that since she failed to file a
responsive pleading to the complaint, the appearance of Atty. Celestino C. Juan, as her counsel, did
not constitute as a voluntary submission to the jurisdiction of the court.

On June 7, 2000, the CA rendered a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, finding that the court a quo validly acquired jurisdiction
over the action and absent any ground warranting the annulment of its judgment, this petition
is hereby DISMISSED for lack of merit

SO ORDERED.12

The petitioner, through her sister, Jovita Herrera-Seña, now comes to this Court via a petition for
review on certioraripraying for the reversal of the decision of the Court of Appeals. She alleges that
the trial court did not acquire jurisdiction over her person through the service of the complaint and
summons on her sister, Ma. Luisa Herrera. She maintains that the latter was a mere visitor in her
house, not a resident therein; hence, the decision of the trial court is null and void. She further
alleges that even assuming the validity of the trial court's decision, such decision never became final
and executory since she was not served a copy of the same. As such, the writ of execution issued
by the trial court, the sale of her personal properties at public auction, as well as the issuance of the
Certificate of Sale, are null and void. She asserts that the actuations of both the trial court and the
Sheriff deprived her of her right to due process.

The contentions of the petitioner have no merit.

The court acquires jurisdiction over the person of the defendant by service of the complaint and
summons on him, either by personal service or by substituted service or by extra-territorial service
thereof or by his voluntary personal appearance before the court or through counsel. In this
case, the petitioner appeared before the court, through counsel, and filed a motion for extension of
time to file her answer to the complaint which the trial court granted. She even admitted in the said
motion that she was served with a copy of the complaint as well as the summons. The admissions
made in a motion are judicial admissions which are binding on the party who made them. Such party
is precluded from denying the same unless there is proof of palpable mistake or that no such
admission was made.13

By filing the said motion, through counsel, the petitioner thereby submitted herself to the jurisdiction
of the trial court. Indeed, in Busuego vs. Court of Appeals,14 we ruled that:

A voluntary appearance is a waiver of the necessity of a formal notice. An appearance in

whatever form, without explicitly objecting to the jurisdiction of the court over the person, is a
submission to the jurisdiction of the court over the person. While the formal method of
entering an appearance in a cause pending in the courts is to deliver to the clerk a written
direction ordering him to enter the appearance of the person who subscribes it, an
appearance may be made by simply filing a formal motion, or plea or answer. This formal
method of appearance is not necessary. He may appear without such formal appearance
and thus submit himself to the jurisdiction of the court. He may appear by presenting a
motion, for example, and unless by such appearance he specifically objects to the
jurisdiction of the court, he thereby gives his assent to the jurisdiction of the court over his
person. When the appearance is by motion objecting to the jurisdiction of the court over his
person, it must be for the sole and separate purpose of objecting to the jurisdiction of the
court. If his motion is for any other purpose than to object to the jurisdiction of the court over
his person, he thereby submits himself to the jurisdiction of the court.15

Equally barren of factual basis is the claim of the petitioner that she was not served with a copy of
the decision of the trial court. The records show that aside from the copy of the decision sent to her
by the Branch Clerk of Court by registered mail, another copy of the decision was served on her
through her counsel, Atty. Celestino C. Juan, who received the same. The service of the decision on
the petitioner, through counsel, is binding on her, conformably to Rule 13, Section 2 of the Rules of
Court.16

We reject the petitioner's plaint of having been deprived of her right to due process.

The essence of due process is a reasonable opportunity to be heard and submit evidence in support
of one's defense. What the law proscribes, therefore, is the lack of opportunity to be heard.17 A party
who opts not to avail of the opportunity to answer cannot complain of procedural due process. There
can be no denial of due process where a party had the opportunity to participate in the proceedings
but failed to do so through his own fault.

WHEREFORE, the petition is DENIED DUE COURSE. The assailed decision of the Court of
Appeals dated June 7, 2000 is hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

G.R. No. 190107 June 6, 2011

JAPRL DEVELOPMENT CORP., PETER RAFAEL C. LIMSON and JOSE UY

AROLLADO, Petitioners,
vs.
SECURITY BANK CORPORATION, Respondent.
 DECISION

CARPIO MORALES, J.,

JAPRL Development Corporation (JAPRL), a domestic corporation engaged in fabrication,

manufacture and distribution of steel products, applied for a credit facility (Letter of Credit/Trust
Receipt) in the amount of Fifty Million (₱50,000,000) Pesos with Security Bank Corporation (SBC).
The application was approved and the Credit Agreement took effect on July 15, 1996.1

On November 5, 2001, petitioners Peter Rafael C. Limson (Limson) and Jose Uy Arollado (Arollado),
JAPRL Chairman and President, respectively, executed a Continuing Suretyship Agreement
(CSA)2 in favor of SBC wherein they guaranteed the due and full payment and performance of
JAPRL’s guaranteed obligations under the credit facility.3

In 2002, on JAPRL’s proposal, SBC extended the period of settlement of his obligations.

In 2003, JAPRL’s financial adviser, MRM Management Incorporated (MRM), convened JAPRL’s
creditors, SBC included, for the purpose of restructuring JAPRL’s existing loan obligations. Copies of
JAPRL’s financial statements from 1998 to 2001 were given for the creditors to study.

SBC soon discovered material inconsistencies in the financial statements given by MRM vis-à-vis
those submitted by JAPRL when it applied for a credit facility, drawing SBC to conclude that JAPRL
committed misrepresentation.

As paragraph 10 (c) of the Credit Agreement4 provided, if "any representation or warranty, covenant
or undertaking embodied [therein] and [in] the Credit Instrument or in any certificate, statement or
document submitted to SBC turns out to be untrue or ceases to be true in any material respect, or is
violated or not complied with," such will constitute an event of default committed by JAPRL and its
sureties.

On the basis of Item 2 of the CSA,5 SBC sent a formal letter of demand6 dated August 20, 2003 to
petitioners JAPRL, Limson and Arollado for the immediate payment of Forty Three Million Nine
Hundred Twenty Six Thousand and Twenty One Pesos and 41/100 (₱43,926,021.41) representing
JAPRL’s outstanding obligations.

Petitioners failed to comply with SBC’s demand, hence, SBC filed on September 1, 2003 a complaint
for sum of money with application for issuance of writ of preliminary attachment7 before the Regional
Trial Court (RTC) of Makati City against JAPRL, Limson and Arollado.

During the hearing on the prayer for the issuance of writ of preliminary attachment on September 16,
2003, SBC’s counsel manifested that it received a copy of a Stay Order dated September 8, 2003
issued by the RTC of Quezon City, Branch 90 wherein JAPRL’s petition for rehabilitation was
lodged. The Makati RTC at once ordered in open court the archiving of SBC’s complaint for sum of
money until disposition by the Quezon City RTC of JAPRL’s petition for rehabilitation.8

When the Makati RTC reduced to writing its open court Order of September 16, 2003, however, it
instead declared the dismissal of SBC’s complaint without prejudice:

When this case was called for hearing, plaintiff’s counsel manifested that they received a Stay Order
from Regional Trial Court, Br. 190, Quezon City, relative to the approval of the Rehabilitation Plan
filed by defendant JAPRL Dev. Corp. and in view thereof he prayed that the present case be
archived instead. However, the Court is of the view to have the case dismissed without prejudice so
that a disposition be made on the case.

WHEREFORE, let the present case be ordered DISMISSED without prejudice to a refiling or having
a claim filed with the appropriate forum.

SO ORDERED.9 (underscoring supplied)

On SBC’s motion for reconsideration, however, the Makati RTC, by Order of January 9,
2004,10 reverted to its oral order of archiving SBC’s complaint.

SBC moved to clarify the Makati RTC January 9, 2004 Order, positing that the suspension of the
proceedings should only be with respect to JAPRL but not with respect to Limson and
Arollado.11 The Makati RTC, by Order of February 25, 2004, mantained its order archiving the
complaint against all petitioners herein, however.

SBC filed a motion for reconsideration12 of the February 25, 2004 Order, to which Limson and
Arollado separately filed an "Opposition (Ad Cautelam)"13 wherein they claimed that summons were
not served on them, hence, the Makati RTC failed to acquire jurisdiction over their person. At any
rate, they raised defenses against SBC’s claim that they acted as sureties of JAPRL.

Meanwhile, the proposed rehabilitation plan before the Quezon City RTC was disapproved by Order
of May 9, 2005.14 On SBC’s motion, the Makati RTC thus reinstated SBC’s complaint to its docket,
by Order of February 27, 2006.15

Petitioners later filed before the Makati RTC a Manifestation (Ad Cautelam)16 informing that a Stay
Order dated March 13, 200617 was issued, this time by the Calamba RTC, Branch 34, in a new
petition for rehabilitation filed by JAPRL and its subsidiary, RAPID Forming Corporation, and praying
for the archiving of SBC’s complaint.

By Order of June 30, 2006,18 the Makati RTC again archived SBC’s complaint against petitioners.
SBC, by Consolidated Motion, moved for the reconsideration of the June 30, 2006 Order, averring
that its complaint should not have been archived with respect to sureties Limson and Arollado; and
that since the two failed to file their respective Answers within the reglementary period, they should
be declared in default.

The Makati RTC denied, by Order of October 2, 2006,19 the Consolidated Motion of SBC, prompting
SBC to file a petition for certiorari before the Court of Appeals.

By Decision of September 25, 2008,20 the appellate court held that Limson and Arollado voluntarily
submitted themselves to the jurisdiction of the Makati RTC, despite the qualification that the filing of
their respective "Opposition[s] Ad Cautelam" and "Manifestation[s] Ad Cautelam," was "by way of
special appearance" they having sought affirmative relief by praying for the archiving of SBC’s
complaint.

The Manifestations and Oppositions filed by the individual private respondents to the court a quo
have the purpose of asking the court to archive the case until the final resolution of either the Petition
for Rehabilitation filed by private respondent corporation JAPRL in Quezon City or the subsisting
Petition for Rehabilitation filed in Calamba City, Laguna. Clearly, the purpose of those pleadings is to
seek for affirmative relief, (i.e. Suspending the proceedings in Civil Case No. 03-1036) from the said
court. By those pleadings asking for affirmative relief, the individual private respondents had
voluntarily appeared in court. As expressly stated in Rule 14, Section 20, of the Rules of Court, the
defendant’s voluntary appearance in the action shall be equivalent to service of summons. It is well
settled that any form of appearance in court, by the defendant, by his agent authorized to do so, or
by attorney, is equivalent to service except where such appearance is precisely to object to the
jurisdiction of the court over the person of the defendant. x x x 21 (italics in the original; underscoring
supplied)

To the appellate court, SBC’s claim against Limson and Arollado in their capacity as sureties could
proceed independently of JAPRL’s petition for rehabilitation:

x x x [T]he property of the surety cannot be taken into custody by the rehabilitation
receiver (SEC) and said surety can be sued separately to enforce his liability as surety for the debts
or obligations of the debtor. The debts or obligations for which a surety may be liable include future
debts, an amount which may not be known at the time the surety is given. 1âwphi 1

Aside from that, it is specifically stated under Rule 4, Section 6 (b) of the Interim Rules of Procedure
on Corporate Rehabilitation, that the issuance of a Stay order will have an effect of:

(b) staying enforcement of all claims whether for money or otherwise and whether such enforcement
is by court action otherwise, against the debtor, its guarantors and sureties not solidarily liable with
the debtor.22 (emphasis and italics in the original; underscoring supplied)

The appellate court denied petitioners’ motion for reconsideration by Resolution of October 29,
2009,23 hence, the present petition for review on certiorari.24

The petition fails.

A reading of the separate Oppositions Ad Cautelam by Limson and Arollado to SBC’s Motion for
Reconsideration25shows that they did not challenge the trial court’s jurisdiction. Albeit both pleadings
contained prefatory statements that the two did not receive summons, they pleaded defenses in their
favor, viz:

Limson’s Opposition Ad Cautelam

6. First of all, there is no gainsaying that herein defendant LIMSON as well as defendant
AROLLADO are being sued in their alleged capacities as SURETIES, with defendant JAPRL being
the DEBTOR. As SURETIES, they are covered by the Stay Order issued by the court hearing the
petition for corporate rehabilitation filed by Rapid Forming Corp. and defendant JAPRL. The Stay
Order directed, among others, the stay of enforcement of " ALL CLAIMS, WHETHER FOR MONEY
OR OTHERWISE, AND WHETHER SUCH ENFORCEMENT IS BY COURT ACTION OR
OTHERWISE, against the petitioner/s, and its/their guarantors and SURETIES not solidarily liable
with petitioner/s",26 x x x (all caps in the original)

Arollado’s Opposition (Ad Cautelam)

11. Certainly, the plaintiff cannot unjustly enrich itself and be allowed to recover from both the
DEBTOR JAPRL in accordance with the rehabilitation plan, and at the same time from the alleged
SURETIES LIMSON and AROLLADO through the present complaint.

12. Moreover, defendant AROLLADO, as surety, can set up against the plaintiff all the defenses
which pertain to the principal DEBTOR JAPRL and even those defenses that are inherent in the
debt. Likewise, defendant AROLLADO would, in any case, have a right of action for
reimbursement against JAPRL, the principal DEBTOR. Additionally, defendant AROLLADO is given
the right, under Article 1222 of the New Civil Code, to avail himself of all the defenses which are
derived from the nature of the obligation. Since the plaintiff, and even defendants LIMSON and
AROLLADO, are temporarily barred from enforcing a claim against JAPRL, there is, therefore, every
reason to suspend the proceedings against defendants LIMSON and AROLLADO while the
complaint is archived and cannot be prosecuted against the DEBTOR JAPRL.27 (capitalization and
emphasis in the original; underscoring supplied)

When a defendant’s appearance is made precisely to object to the jurisdiction of the court over his
person, it cannot be considered as appearance in court.28 Limson and Arollado glossed over the
alleged lack of service of summons, however, and proceeded to exhaustively discuss why SBC’s
complaint could not prosper against them as sureties. They thereby voluntarily submitted themselves
to the jurisdiction of the Makati RTC .

On a trial court’s suspension of proceedings against a surety of a corporation in the process of

rehabilitation, Banco de Oro-EPCI, Inc. v. JAPRL Development Corporation29 holds that a creditor
can demand payment from the surety solidarily liable with the corporation seeking rehabilitation, it
being not included in the list of stayed claims:

Indeed, Section 6(b) of the Interim Rules of Procedure of Corporate Rehabilitation which the
appellate court cited in the earlier-quoted portion of its decision, provides that a stay order does not
apply to sureties who are solidarily liable with the debtor. In Limson and Arollado’s case, their
solidary liability with JAPRL is documented.

3. Liability of the Surety – The liability of the Surety is solidary and not contingent upon the pursuit by
the Bank of whatever remedies it may have against the Debtor or the collaterals/liens it may
possess. If any of the Guaranteed Obligation is not paid or performed on due date (at stated maturity
or by acceleration), the Surety shall, without need for any notice, demand or any other act or deed,
immediately become liable therefor and the Surety shall pay and perform the same. 30 (emphasis
and underscoring supplied)

Limson and Arollado, as sureties, whose liability is solidary cannot, therefore, claim protection from
the rehabilitation court, they not being the financially-distressed corporation that may be restored,
not to mention that the rehabilitation court has no jurisdiction over them. Article 1216 of the Civil
Code clearly is not on their side:

ART. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them
simultaneously. The demand made against any one of them shall not be an obstacle to those which
may subsequently be directed against the others, so long as the debt has not been fully collected.
(underscoring supplied) 1âwphi 1

IN FINE, SBC can pursue its claim against Limson and Arollado despite the pendency of JAPRL’s
petition for rehabilitation. For, by the CSA in favor of SBC, it is the obligation of the sureties, who are
therein stated to be solidary with JAPRL, to see to it that JAPRL’s debt is fully paid.31

Finally, contrary to petitioners’ position, the appellate court’s decision only nullified the suspension of
proceedings against Limson and Arollado.32 The suspension with respect to JAPRL remains, in line
with Philippine Blooming Mills v. Court of Appeals.33

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. No. 184197 February 11, 2010

RAPID CITY REALTY AND DEVELOPMENT CORPORATION, Petitioner,

vs.
ORLANDO VILLA and LOURDES PAEZ-VILLA,1 Respondents.

DECISION

CARPIO MORALES, J.:

Sometime in 2004, Rapid City Realty and Development Corporation (petitioner) filed a complaint for
declaration of nullity of subdivision plans . . . mandamus and damages against several defendants
including Spouses Orlando and Lourdes Villa (respondents). The complaint, which was docketed at
the Regional Trial Court of Antipolo City as Civil Case No. 04-7350, was lodged at Branch 71
thereof.

After one failed attempt at personal service of summons, Gregorio Zapanta (Zapanta), court process
server, resorted to substituted service by serving summons upon respondents’ househelp who did
not acknowledge receipt thereof and refused to divulge their names. Thus Zapanta stated in the
Return of Summons:

THIS IS TO CERTIFY that on September 24, 2004, the undersigned caused the service of summons
together with a copy of the complaint with its annexes to defendant Spouses Lourdes Estudillo Paez-
Cline and Orlando Villa at their given address at 905 Padre Faura Street, Ermita Manila, as per
information given by two lady househelps who are also residing at the said address, the defendant
spouses are not around at that time. On the 27th of September, 2004, I returned to the same
place to serve the summons. I served the summons and the copy of the complaint with its annexes
to the two ladies (The same lady househelp I met on Sept. 24, 2004) but they refused to sign to
acknowledge receipt and they refused to tell their name as per instruction of the defendants. With
me who can attest to the said incident is Mr. Jun Llanes, who was with me at that time.2 x x x
(emphasis and underscoring supplied)

Despite substituted service, respondents failed to file their Answer, prompting petitioner to file a
"Motion to Declare Defendants[-herein respondents] in Default" which the trial court granted by
Order of May 3, 2005.

More than eight months thereafter or on January 30, 2006, respondents filed a Motion to Lift Order
of Default,3claiming that on January 27, 2006 they "officially received all pertinent papers such as
Complaint and Annexes. Motion to Dismiss of the Solicitor General and the ORDER dated May 3,
2005 granting the Motion to Declare [them] in Default." And they denied the existence of two women
helpers who allegedly refused to sign and acknowledge receipt of the summons. In any event, they
contended that assuming that the allegation were true, the helpers had no authority to receive the
documents.4

By Order of July 17, 2006, the trial court set aside the Order of Default and gave herein respondents
five days to file their Answer. Respondents just the same did not file an Answer, drawing petitioner to
again file a Motion to declare them in default, which the trial court again granted by Order of
February 21, 2007.
On April 18, 2007, respondents filed an Omnibus Motion for reconsideration of the second order
declaring them in default and to vacate proceedings, this time claiming that the trial court did not
acquire jurisdiction over their persons due to invalid service of summons.

The trial court denied respondents’ Omnibus Motion by Order of May 22, 2007 and proceeded to
receive ex-parteevidence for petitioner.

Respondents, via certiorari, challenged the trial court’s February 21, 2007 and April 18, 2007 Orders
before the Court of Appeals.

In the meantime, the trial court, by Decision of September 4, 2007, rendered judgment in favor of
petitioner.

By Decision of April 29, 2008,5 the appellate court annulled the trial court’s Orders declaring
respondents in default for the second time in this wise:

In assailing the orders of the trial court through their Motion to Lift… and later
their Omnibus Motion… the petitioners [herein-respondents] never raised any other defense in
avoidance of the respondents’ [herein petitioners] claim, and instead focused all their energies on
questioning the said court’s jurisdiction. The latter motion clearly stated prefatorily their counsel’s
reservation or "special appearance to question jurisdiction" over the persons of the petitioners. "A
party who makes a special appearance in court challenging the jurisdiction of said court based on
the ground of invalid service of summons is not deemed to have submitted himself to the jurisdiction
of the court."6(citation omitted; italics, emphasis and underscoring supplied)

Petitioner’s motion for reconsideration having been denied by the appellate court by Resolution of
August 12, 2008, it comes to the Court via petition for review on certiorari, arguing in the main that
respondents, in filing the first Motion to Lift the Order of Default, voluntarily submitted themselves to
the jurisdiction of the court.

The petition is impressed with merit.

It is settled that if there is no valid service of summons, the court can still acquire jurisdiction over the
person of the defendant by virtue of the latter’s voluntary appearance. Thus Section 20 of Rule 14 of
the Rules of Court provides:

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 shall not be deemed a voluntary appearance.

And Philippine Commercial International Bank v. Spouses Wilson Dy Hong Pi and Lolita Dy, et
al. enlightens:

Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive power
of legal processes exerted over his person, or his voluntary appearance in court. As a general
proposition, one who seeks an affirmative relief is deemed to have submitted to the jurisdiction of the
court. It is by reason of this rule that we have had occasion to declare that the filing of motions to
admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift
order of default with motion for reconsideration, is considered voluntary submission to the court’s
jurisdiction. This, however, is tempered by the concept of conditional appearance, such that a party
who makes a special appearance to challenge, among others, the court’s jurisdiction over his person
cannot be considered to have submitted to its authority.

Prescinding from the foregoing, it is thus clear that:

(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.7 (italics and underscoring supplied)

In their first Motion to Lift the Order of Default8 dated January 30, 2006, respondents alleged:

xxxx

4. In the case of respondents, there is no reason why they should not receive the Orders of
this Honorable Court since the subject of the case is their multi-million real estate property
and naturally they would not want to be declared in default or lose the same outright without
the benefit of a trial on the merits;

5. It would be the height of injustice if the respondents is [sic] denied the equal protection of
the laws[;]

6. Respondents must be afforded "Due process of Law" as enshrined in the New

Constitution, which is a basic right of every Filipino, since they were not furnished copies of
pleadings by the plaintiff and the Order dated May 3, 2005;

x x x x9

and accordingly prayed as follows:

WHEREFORE, . . . it is most respectfully prayed . . . that the Order dated May 5, 2005 declaring
[them] in default be LIFTED.10

Respondents did not, in said motion, allege that their filing thereof was a special appearance for the
purpose only to question the jurisdiction over their persons. Clearly, they had acquiesced to the
jurisdiction of the court.

WHEREFORE, the petition is GRANTED. The assailed Court of Appeals Decision of April 29, 2008
is REVERSED and SET ASIDE.

Let the original records of Civil Case No. 04-7350 be remanded to the court of origin, Regional Trial
Court of Antipolo City, Branch 71.

SO ORDERED.
G.R. No. 164703 May 4, 2010

ALLAN C. GO, doing business under the name and style "ACG Express Liner," Petitioner,
vs.
MORTIMER F. CORDERO, Respondent.

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

G.R. No. 164747

MORTIMER F. CORDERO, Petitioner,

vs.
ALLAN C. GO, doing business under the name and style "ACG Express Liner," FELIPE M.
LANDICHO and VINCENT D. TECSON, Respondents.

DECISION

VILLARAMA, JR., J.:

For review is the Decision1 dated March 16, 2004 as modified by the Resolution2 dated July 22, 2004
of the Court of Appeals (CA) in CA-G.R. CV No. 69113, which affirmed with modifications the
Decision3 dated May 31, 2000 of the Regional Trial Court (RTC) of Quezon City, Branch 85 in Civil
Case No. 98-35332.

The factual antecedents:

Sometime in 1996, Mortimer F. Cordero, Vice-President of Pamana Marketing Corporation

(Pamana), ventured into the business of marketing inter-island passenger vessels. After contacting
various overseas fast ferry manufacturers from all over the world, he came to meet Tony Robinson,
an Australian national based in Brisbane, Australia, who is the Managing Director of Aluminium Fast
Ferries Australia (AFFA).

Between June and August 1997, Robinson signed documents appointing Cordero as the exclusive
distributor of AFFA catamaran and other fast ferry vessels in the Philippines. As such exclusive
distributor, Cordero offered for sale to prospective buyers the 25-meter Aluminium Passenger
catamaran known as the SEACAT 25.4

After negotiations with Felipe Landicho and Vincent Tecson, lawyers of Allan C. Go who is the
owner/operator of ACG Express Liner of Cebu City, a single proprietorship, Cordero was able to
close a deal for the purchase of two (2) SEACAT 25 as evidenced by the Memorandum of
Agreement dated August 7, 1997.5 Accordingly, the parties executed Shipbuilding Contract No. 7825
for one (1) high-speed catamaran (SEACAT 25) for the price of US$1,465,512.00.6 Per agreement
between Robinson and Cordero, the latter shall receive commissions totalling US$328,742.00, or
22.43% of the purchase price, from the sale of each vessel.7

Cordero made two (2) trips to the AFFA Shipyard in Brisbane, Australia, and on one (1) occasion
even accompanied Go and his family and Landicho, to monitor the progress of the building of the
vessel. He shouldered all the expenses for airfare, food, hotel accommodations, transportation and
entertainment during these trips. He also spent for long distance telephone calls to communicate
regularly with Robinson, Go, Tecson and Landicho.
However, Cordero later discovered that Go was dealing directly with Robinson when he was
informed by Dennis Padua of Wartsila Philippines that Go was canvassing for a second catamaran
engine from their company which provided the ship engine for the first SEACAT 25. Padua told
Cordero that Go instructed him to fax the requested quotation of the second engine to the Park
Royal Hotel in Brisbane where Go was then staying. Cordero tried to contact Go and Landicho to
confirm the matter but they were nowhere to be found, while Robinson refused to answer his calls.
Cordero immediately flew to Brisbane to clarify matters with Robinson, only to find out that Go and
Landicho were already there in Brisbane negotiating for the sale of the second SEACAT 25. Despite
repeated follow-up calls, no explanation was given by Robinson, Go, Landicho and Tecson who
even made Cordero believe there would be no further sale between AFFA and ACG Express Liner.

In a handwritten letter dated June 24, 1998, Cordero informed Go that such act of dealing directly
with Robinson violated his exclusive distributorship and demanded that they respect the same,
without prejudice to legal action against him and Robinson should they fail to heed the
same.8 Cordero’s lawyer, Atty. Ernesto A. Tabujara, Jr. of ACCRA law firm, also wrote ACG Express
Liner assailing the fraudulent actuations and misrepresentations committed by Go in connivance
with his lawyers (Landicho and Tecson) in breach of Cordero’s exclusive distributorship
appointment.9

Having been apprised of Cordero’s demand letter, Thyne & Macartney, the lawyer of AFFA and
Robinson, faxed a letter to ACCRA law firm asserting that the appointment of Cordero as AFFA’s
distributor was for the purpose of one (1) transaction only, that is, the purchase of a high-speed
catamaran vessel by ACG Express Liner in August 1997. The letter further stated that Cordero was
offered the exclusive distributorship, the terms of which were contained in a draft agreement which
Cordero allegedly failed to return to AFFA within a reasonable time, and which offer is already being
revoked by AFFA.10

As to the response of Go, Landicho and Tecson to his demand letter, Cordero testified before the
trial court that on the same day, Landicho, acting on behalf of Go, talked to him over the telephone
and offered to amicably settle their dispute. Tecson and Landicho offered to convince Go to honor
his exclusive distributorship with AFFA and to purchase all vessels for ACG Express Liner through
him for the next three (3) years. In an effort to amicably settle the matter, Landicho, acting in behalf
of Go, set up a meeting with Cordero on June 29, 1998 between 9:30 p.m. to 10:30 p.m. at the
Mactan Island Resort Hotel lobby. On said date, however, only Landicho and Tecson came and no
reason was given for Go’s absence. Tecson and Landicho proposed that they will convince Go to
pay him US$1,500,000.00 on the condition that they will get a cut of 20%. And so it was agreed
between him, Landicho and Tecson that the latter would give him a weekly status report and that the
matter will be settled in three (3) to four (4) weeks and neither party will file an action against each
other until a final report on the proposed settlement. No such report was made by either Tecson or
Landicho who, it turned out, had no intention to do so and were just buying time as the catamaran
vessel was due to arrive from Australia. Cordero then filed a complaint with the Bureau of Customs
(BOC) to prohibit the entry of SEACAT 25 from Australia based on misdeclaration and
undervaluation. Consequently, an Alert Order was issued by Acting BOC Commissioner Nelson Tan
for the vessel which in fact arrived on July 17, 1998. Cordero claimed that Go and Robinson had
conspired to undervalue the vessel by around US$500,000.00.11

On August 21, 1998, Cordero instituted Civil Case No. 98-35332 seeking to hold Robinson, Go,
Tecson and Landicho liable jointly and solidarily for conniving and conspiring together in violating his
exclusive distributorship in bad faith and wanton disregard of his rights, thus depriving him of his due
commissions (balance of unpaid commission from the sale of the first vessel in the amount of
US$31,522.01 and unpaid commission for the sale of the second vessel in the amount of
US$328,742.00) and causing him actual, moral and exemplary damages, including ₱800,000.00
representing expenses for airplane travel to Australia, telecommunications bills and entertainment,
on account of AFFA’s untimely cancellation of the exclusive distributorship agreement. Cordero also
prayed for the award of moral and exemplary damages, as well as attorney’s fees and litigation
expenses.12

Robinson filed a motion to dismiss grounded on lack of jurisdiction over his person and failure to
state a cause of action, asserting that there was no act committed in violation of the distributorship
agreement. Said motion was denied by the trial court on December 20, 1999. Robinson was likewise
declared in default for failure to file his answer within the period granted by the trial court.13 As for Go
and Tecson, their motion to dismiss based on failure to state a cause of action was likewise denied
by the trial court on February 26, 1999.14 Subsequently, they filed their Answer denying that they
have anything to do with the termination by AFFA of Cordero’s authority as exclusive distributor in
the Philippines. On the contrary, they averred it was Cordero who stopped communicating with Go in
connection with the purchase of the first vessel from AFFA and was not doing his part in making
progress status reports and airing the client’s grievances to his principal, AFFA, such that Go
engaged the services of Landicho to fly to Australia and attend to the documents needed for
shipment of the vessel to the Philippines. As to the inquiry for the Philippine price for a Wartsila ship
engine for AFFA’s other on-going vessel construction, this was merely requested by Robinson but
which Cordero misinterpreted as indication that Go was buying a second vessel. Moreover,
Landicho and Tecson had no transaction whatsoever with Cordero who had no document to show
any such shipbuilding contract. As to the supposed meeting to settle their dispute, this was due to
the malicious demand of Cordero to be given US$3,000,000 as otherwise he will expose in the
media the alleged undervaluation of the vessel with the BOC. In any case, Cordero no longer had
cause of action for his commission for the sale of the second vessel under the memorandum of
agreement dated August 7, 1997 considering the termination of his authority by AFFA’s lawyers on
June 26, 1998.15

Pre-trial was reset twice to afford the parties opportunity to reach a settlement. However, on motion
filed by Cordero through counsel, the trial court reconsidered the resetting of the pre-trial to another
date for the third time as requested by Go, Tecson and Landicho, in view of the latter’s failure to
appear at the pre-trial conference on January 7, 2000 despite due notice. The trial court further
confirmed that said defendants misled the trial court in moving for continuance during the pre-trial
conference held on December 10, 1999, purportedly to go abroad for the holiday season when in
truth a Hold-Departure Order had been issued against them.16 Accordingly, plaintiff Cordero was
allowed to present his evidence ex parte.

Cordero’s testimony regarding his transaction with defendants Go, Landicho and Tecson, and the
latter’s offer of settlement, was corroborated by his counsel who also took the witness stand.
Further, documentary evidence including photographs taken of the June 29, 1998 meeting with
Landicho, Tecson and Atty. Tabujara at Shangri-la’s Mactan Island Resort, photographs taken in
Brisbane showing Cordero, Go with his family, Robinson and Landicho, and also various documents,
communications, vouchers and bank transmittals were presented to prove that: (1) Cordero was
properly authorized and actually transacted in behalf of AFFA as exclusive distributor in the
Philippines; (2) Cordero spent considerable sums of money in pursuance of the contract with Go and
ACG Express Liner; and (3) AFFA through Robinson paid Cordero his commissions from each
scheduled payment made by Go for the first SEACAT 25 purchased from AFFA pursuant to
Shipbuilding Contract No. 7825.17

On May 31, 2000, the trial court rendered its decision, the dispositive portion of which reads as
follows:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of Plaintiff and
against defendants Allan C. Go, Tony Robinson, Felipe Landicho, and Vincent Tecson. As prayed
for, defendants are hereby ordered to pay Plaintiff jointly and solidarily, the following:

1. On the First Cause of Action, the sum total of SIXTEEN MILLION TWO HUNDRED
NINETY ONE THOUSAND THREE HUNDRED FIFTY TWO AND FORTY THREE
CENTAVOS (P16,291,352.43) as actual damages with legal interest from 25 June 1998 until
fully paid;

2. On the Second Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as
moral damages;

3. On the Third Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as
exemplary damages; and

4. On the Fourth Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as
attorney’s fees;

Costs against the defendants.

SO ORDERED.18

Go, Robinson, Landicho and Tecson filed a motion for new trial, claiming that they have been unduly
prejudiced by the negligence of their counsel who was allegedly unaware that the pre-trial
conference on January 28, 2000 did not push through for the reason that Cordero was then allowed
to present his evidence ex-parte, as he had assumed that the said ex-parte hearing was being
conducted only against Robinson who was earlier declared in default.19 In its Order dated July 28,
2000, the trial court denied the motion for new trial.20 In the same order, Cordero’s motion for
execution pending appeal was granted. Defendants moved to reconsider the said order insofar as it
granted the motion for execution pending appeal.21 On August 8, 2000, they filed a notice of
appeal.22

On August 18, 2000, the trial court denied the motion for reconsideration and on August 21, 2000,
the writ of execution pending appeal was issued.23 Meanwhile, the notice of appeal was denied for
failure to pay the appellate court docket fee within the prescribed period.24 Defendants filed a motion
for reconsideration and to transmit the case records to the CA.25

On September 29, 2000, the CA issued a temporary restraining order at the instance of defendants
in the certiorari case they filed with said court docketed as CA-G.R. SP No. 60354 questioning the
execution orders issued by the trial court. Consequently, as requested by the defendants, the trial
court recalled and set aside its November 6, 2000 Order granting the ex-parte motion for release of
garnished funds, cancelled the scheduled public auction sale of levied real properties, and denied
the ex-parte Motion for Break-Open Order and Ex-Parte Motion for Encashment of Check filed by
Cordero.26 On November 29, 2000, the trial court reconsidered its Order dated August 21, 2000
denying due course to the notice of appeal and forthwith directed the transmittal of the records to the
CA.27

On January 29, 2001, the CA rendered judgment granting the petition for certiorari in CA-G.R. SP
No. 60354 and setting aside the trial court’s orders of execution pending appeal. Cordero appealed
the said judgment in a petition for review filed with this Court which was eventually denied under our
Decision dated September 17, 2002.28
On March 16, 2004, the CA in CA-G.R. CV No. 69113 affirmed the trial court (1) in allowing Cordero
to present his evidence ex-parte after the unjustified failure of appellants (Go, Tecson and Landicho)
to appear at the pre-trial conference despite due notice; (2) in finding that it was Cordero and not
Pamana who was appointed by AFFA as the exclusive distributor in the Philippines of its SEACAT
25 and other fast ferry vessels, which is not limited to the sale of one (1) such catamaran to Go on
August 7, 1997; and (3) in finding that Cordero is entitled to a commission per vessel sold for AFFA
through his efforts in the amount equivalent to 22.43% of the price of each vessel or US$328,742.00,
and with payments of US$297,219.91 having been made to Cordero, there remained a balance of
US$31,522.09 still due to him. The CA sustained the trial court in ruling that Cordero is entitled to
damages for the breach of his exclusive distributorship agreement with AFFA. However, it held that
Cordero is entitled only to commission for the sale of the first catamaran obtained through his efforts
with the remaining unpaid sum of US$31,522.09 or ₱1,355,449.90 (on the basis of US$1.00=₱43.00
rate) with interest at 6% per annum from the time of the filing of the complaint until the same is fully
paid. As to the ₱800,000.00 representing expenses incurred by Cordero for transportation, phone
bills, entertainment, food and lodging, the CA declared there was no basis for such award, the same
being the logical and necessary consequences of the exclusive distributorship agreement which are
normal in the field of sales and distribution, and the expenditures having redounded to the benefit of
the distributor (Cordero).

On the amounts awarded by the trial court as moral and exemplary damages, as well as attorney’s
fees, the CA reduced the same to ₱500,000.00, ₱300,000.00 and ₱50,000.00, respectively.
Appellants were held solidarily liable pursuant to the provisions of Article 1207 in relation to Articles
19, 20, 21 and 22 of the New Civil Code. The CA further ruled that no error was committed by the
trial court in denying their motion for new trial, which said court found to be pro forma and did not
raise any substantial matter as to warrant the conduct of another trial.

By Resolution dated July 22, 2004, the CA denied the motions for reconsideration respectively filed
by the appellants and appellee, and affirmed the Decision dated March 16, 2004 with the sole
modification that the legal interest of 6% per annum shall start to run from June 24, 1998 until the
finality of the decision, and the rate of 12% interest per annum shall apply once the decision
becomes final and executory until the judgment has been satisfied.

The case before us is a consolidation of the petitions for review under Rule 45 separately filed by Go
(G.R. No. 164703) and Cordero (G.R. No. 164747) in which petitioners raised the following
arguments:

G.R. No. 164703

(Petitioner Go)

I. THE HONORABLE COURT OF APPEALS DISREGARDED THE RULES OF COURT AND

PERTINENT JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF DISCRETION IN NOT
RULING THAT THE RESPONDENT IS NOT THE REAL PARTY-IN-INTEREST AND IN NOT
DISMISSING THE INSTANT CASE ON THE GROUND OF LACK OF CAUSE OF ACTION;

II. THE HONORABLE COURT OF APPEALS IGNORED THE LAW AND JURISPRUDENCE AND
ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING HEREIN PETITIONER
RESPONSIBLE FOR THE BREACH IN THE ALLEGED EXCLUSIVE DISTRIBUTORSHIP
AGREEMENT WITH ALUMINIUM FAST FERRIES AUSTRALIA;
III. THE HONORABLE APPELLATE COURT MISAPPLIED THE LAW AND ACTED WITH GRAVE
ABUSE OF DISCRETION IN FINDING PETITIONER LIABLE IN SOLIDUM WITH THE CO-
DEFENDANTS WITH RESPECT TO THE CLAIMS OF RESPONDENT;

IV. THE HONORABLE COURT OF APPEALS MISAPPLIED LAW AND JURISPRUDENCE AND
GRAVELY ABUSED ITS DISCRETION WHEN IT FOUND PETITIONER LIABLE FOR UNPAID
COMMISSIONS, DAMAGES, ATTORNEY’S FEES, AND LITIGATION EXPENSES; and

V. THE HONORABLE APPELLATE COURT ACTED CONTRARY TO LAW AND JURISPRUDENCE

AND GRAVELY ABUSED ITS DISCRETION WHEN IT EFFECTIVELY DEPRIVED HEREIN
PETITIONER OF HIS RIGHT TO DUE PROCESS BY AFFIRMING THE LOWER COURT’S DENIAL
OF PETITIONER’S MOTION FOR NEW TRIAL.29

G.R. No. 164747

(Petitioner Cordero)

I.

THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE JUDGMENT OF THE TRIAL
COURT AWARDING PETITIONER ACTUAL DAMAGES FOR HIS COMMISSION FOR THE SALE
OF THE SECOND VESSEL, SINCE THERE IS SUFFICIENT EVIDENCE ON RECORD WHICH
PROVES THAT THERE WAS A SECOND SALE OF A VESSEL.

A. THE MEMORANDUM OF AGREEMENT DATED 7 AUGUST 1997 PROVIDES THAT

RESPONDENT GO WAS CONTRACTUALLY BOUND TO BUY TWO (2) VESSELS FROM AFFA.

B. RESPONDENT GO’S POSITION PAPER AND COUNTER-AFFIDAVIT/POSITION PAPER THAT

WERE FILED BEFORE THE BUREAU OF CUSTOMS, ADMITS UNDER OATH THAT HE HAD
INDEED PURCHASED A SECOND VESSEL FROM AFFA.

C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL BRIEF THAT THEY HAD PURCHASED A

SECOND VESSEL.

II.

THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS NOT ENTITLED TO HIS
COMMISSIONS FOR THE PURCHASE OF A SECOND VESSEL, SINCE IT WAS PETITIONER’S
EFFORTS WHICH ACTUALLY FACILITATED AND SET-UP THE TRANSACTION FOR
RESPONDENTS.

III.

THE COURT OF APPEALS ERRED IN NOT IMPOSING THE PROPER LEGAL INTEREST RATE
ON RESPONDENTS’ UNPAID OBLIGATION WHICH SHOULD BE TWELVE PERCENT (12%)
FROM THE TIME OF THE BREACH OF THE OBLIGATION.

IV.

THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE ORIGINAL AMOUNT OF

CONSEQUENTIAL DAMAGES AWARDED TO PETITIONER BY THE TRIAL COURT
CONSIDERING THE BAD FAITH AND FRAUDULENT CONDUCT OF RESPONDENTS IN
MISAPPROPRIATING THE MONEY OF PETITIONER.30

The controversy boils down to two (2) main issues: (1) whether petitioner Cordero has the legal
personality to sue the respondents for breach of contract; and (2) whether the respondents may be
held liable for damages to Cordero for his unpaid commissions and termination of his exclusive
distributorship appointment by the principal, AFFA.

I. Real Party-in-Interest

First, on the issue of whether the case had been filed by the real party-in-interest as required by
Section 2, Rule 3 of the Rules of Court, which defines such party as the one (1) to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of the suit. The purposes of this
provision are: 1) to prevent the prosecution of actions by persons without any right, title or interest in
the case; 2) to require that the actual party entitled to legal relief be the one to prosecute the action;
3) to avoid a multiplicity of suits; and 4) to discourage litigation and keep it within certain bounds,
pursuant to sound public policy.31 A case is dismissible for lack of personality to sue upon proof that
the plaintiff is not the real party-in-interest, hence grounded on failure to state a cause of action.32

On this issue, we agree with the CA in ruling that it was Cordero and not Pamana who is the
exclusive distributor of AFFA in the Philippines as shown by the Certification dated June 1, 1997
issued by Tony Robinson.33 Petitioner Go mentions the following documents also signed by
respondent Robinson which state that "Pamana Marketing Corporation represented by Mr. Mortimer
F. Cordero" was actually the exclusive distributor: (1) letter dated 1 June 199734; (2) certification
dated 5 August 199735; and (3) letter dated 5 August 1997 addressed to petitioner Cordero
concerning "commissions to be paid to Pamana Marketing Corporation."36 Such apparent
inconsistency in naming AFFA’s exclusive distributor in the Philippines is of no moment. For all
intents and purposes, Robinson and AFFA dealt only with Cordero who alone made decisions in the
performance of the exclusive distributorship, as with other clients to whom he had similarly offered
AFFA’s fast ferry vessels. Moreover, the stipulated commissions from each progress payments
made by Go were directly paid by Robinson to Cordero.37 Respondents Landicho and Tecson were
only too aware of Cordero’s authority as the person who was appointed and acted as exclusive
distributor of AFFA, which can be gleaned from their act of immediately furnishing him with copies of
bank transmittals everytime Go remits payment to Robinson, who in turn transfers a portion of funds
received to the bank account of Cordero in the Philippines as his commission. Out of these partial
payments of his commission, Cordero would still give Landicho and Tecson their respective
"commission," or "cuts" from his own commission. Respondents Landicho and Tecson failed to
refute the evidence submitted by Cordero consisting of receipts signed by them. Said amounts were
apart from the earlier expenses shouldered by Cordero for Landicho’s airline tickets, transportation,
food and hotel accommodations for the trip to Australia.38

Moreover, petitioner Go, Landicho and Tecson never raised petitioner Cordero’s lack of personality
to sue on behalf of Pamana,39 and did so only before the CA when they contended that it is Pamana
and not Cordero, who was appointed and acted as exclusive distributor for AFFA.40 It was Robinson
who argued in support of his motion to dismiss that as far as said defendant is concerned, the real
party plaintiff appears to be Pamana, against the real party defendant which is AFFA.41 As already
mentioned, the trial court denied the motion to dismiss filed by Robinson.

We find no error committed by the trial court in overruling Robinson’s objection over the improper
resort to summons by publication upon a foreign national like him and in an action in personam,
notwithstanding that he raised it in a special appearance specifically raising the issue of lack of
jurisdiction over his person. Courts acquire jurisdiction over the plaintiffs upon the filing of the
complaint, while jurisdiction over the defendants in a civil case is acquired either through the service
of summons upon them in the manner required by law or through their voluntary appearance in court
and their submission to its authority.42 A party who makes a special appearance in court challenging
the jurisdiction of said court based on the ground of invalid service of summons is not deemed to
have submitted himself to the jurisdiction of the court.43

In this case, however, although the Motion to Dismiss filed by Robinson specifically stated as one (1)
of the grounds the lack of "personal jurisdiction," it must be noted that he had earlier filed a Motion
for Time to file an appropriate responsive pleading even beyond the time provided in the summons
by publication.44 Such motion did not state that it was a conditional appearance entered to question
the regularity of the service of summons, but an appearance submitting to the jurisdiction of the court
by acknowledging the summons by publication issued by the court and praying for additional time to
file a responsive pleading. Consequently, Robinson having acknowledged the summons by
publication and also having invoked the jurisdiction of the trial court to secure affirmative relief in his
motion for additional time, he effectively submitted voluntarily to the trial court’s jurisdiction. He is
now estopped from asserting otherwise, even before this Court.45

II. Breach of Exclusive Distributorship, Contractual Interference and Respondents’ Liability for
Damages

In Yu v. Court of Appeals,46 this Court ruled that the right to perform an exclusive distributorship
agreement and to reap the profits resulting from such performance are proprietary rights which a
party may protect. Thus, injunction is the appropriate remedy to prevent a wrongful interference with
contracts by strangers to such contracts where the legal remedy is insufficient and the resulting
injury is irreparable. In that case, the former dealer of the same goods purchased the merchandise
from the manufacturer in England through a trading firm in West Germany and sold these in the
Philippines. We held that the rights granted to the petitioner under the exclusive distributorship
agreement may not be diminished nor rendered illusory by the expedient act of utilizing or
interposing a person or firm to obtain goods for which the exclusive distributorship was
conceptualized, at the expense of the sole authorized distributor.47

In the case at bar, it was established that petitioner Cordero was not paid the balance of his
commission by respondent Robinson. From the time petitioner Go and respondent Landicho directly
dealt with respondent Robinson in Brisbane, and ceased communicating through petitioner Cordero
as the exclusive distributor of AFFA in the Philippines, Cordero was no longer informed of payments
remitted to AFFA in Brisbane. In other words, Cordero had clearly been cut off from the transaction
until the arrival of the first SEACAT 25 which was sold through his efforts. When Cordero
complained to Go, Robinson, Landicho and Tecson about their acts prejudicial to his rights and
demanded that they respect his exclusive distributorship, Go simply let his lawyers led by Landicho
and Tecson handle the matter and tried to settle it by promising to pay a certain amount and to
purchase high-speed catamarans through Cordero. However, Cordero was not paid anything and
worse, AFFA through its lawyer in Australia even terminated his exclusive dealership insisting that
his services were engaged for only one (1) transaction, that is, the purchase of the first SEACAT 25
in August 1997.

Petitioner Go argues that unlike in Yu v. Court of Appeals48 there is no conclusive proof adduced by
petitioner Cordero that they actually purchased a second SEACAT 25 directly from AFFA and hence
there was no violation of the exclusive distributorship agreement. Further, he contends that the CA
gravely abused its discretion in holding them solidarily liable to Cordero, relying on Articles 1207, 19
and 21 of the Civil Code despite absence of evidence, documentary or testimonial, showing that they
conspired to defeat the very purpose of the exclusive distributorship agreement.49
We find that contrary to the claims of petitioner Cordero, there was indeed no sufficient evidence that
respondents actually purchased a second SEACAT 25 directly from AFFA. But this circumstance will
not absolve respondents from liability for invading Cordero’s rights under the exclusive
distributorship. Respondents clearly acted in bad faith in bypassing Cordero as they completed the
remaining payments to AFFA without advising him and furnishing him with copies of the bank
transmittals as they previously did, and directly dealt with AFFA through Robinson regarding
arrangements for the arrival of the first SEACAT 25 in Manila and negotiations for the purchase of
the second vessel pursuant to the Memorandum of Agreement which Cordero signed in behalf of
AFFA. As a result of respondents’ actuations, Cordero incurred losses as he was not paid the
balance of his commission from the sale of the first vessel and his exclusive distributorship revoked
by AFFA.

Petitioner Go contends that the trial and appellate courts erred in holding them solidarily liable for
Cordero’s unpaid commission, which is the sole obligation of the principal AFFA. It was Robinson on
behalf of AFFA who, in the letter dated August 5, 1997 addressed to Cordero, undertook to pay
commission payments to Pamana on a staggered progress payment plan in the form of percentage
of the commission per payment. AFFA explicitly committed that it will, "upon receipt of progress
payments, pay to Pamana their full commission by telegraphic transfer to an account nominated by
Pamana within one to two days of [AFFA] receiving such payments."50 Petitioner Go further
maintains that he had not in any way violated or caused the termination of the exclusive
distributorship agreement between Cordero and AFFA; he had also paid in full the first and only
vessel he purchased from AFFA.51

While it is true that a third person cannot possibly be sued for breach of contract because only
parties can breach contractual provisions, a contracting party may sue a third person not for breach
but for inducing another to commit such breach.

Article 1314 of the Civil Code provides:

Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to
the other contracting party.

The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part of
the third person of the existence of a contract; and (3) interference of the third person is without legal
justification.52

The presence of the first and second elements is not disputed. Through the letters issued by
Robinson attesting that Cordero is the exclusive distributor of AFFA in the Philippines, respondents
were clearly aware of the contract between Cordero and AFFA represented by Robinson. In fact,
evidence on record showed that respondents initially dealt with and recognized Cordero as such
exclusive dealer of AFFA high-speed catamaran vessels in the Philippines. In that capacity as
exclusive distributor, petitioner Go entered into the Memorandum of Agreement and Shipbuilding
Contract No. 7825 with Cordero in behalf of AFFA.

As to the third element, our ruling in the case of So Ping Bun v. Court of Appeals53 is instructive, to
wit:

A duty which the law of torts is concerned with is respect for the property of others, and a cause of
action ex delicto may be predicated upon an unlawful interference by one person of the enjoyment
by the other of his private property. This may pertain to a situation where a third person induces a
party to renege on or violate his undertaking under a contract. In the case before us, petitioner’s
Trendsetter Marketing asked DCCSI to execute lease contracts in its favor, and as a result petitioner
deprived respondent corporation of the latter’s property right. Clearly, and as correctly viewed by the
appellate court, the three elements of tort interference above-mentioned are present in the instant
case.

Authorities debate on whether interference may be justified where the defendant acts for the sole
purpose of furthering his own financial or economic interest. One view is that, as a general rule,
justification for interfering with the business relations of another exists where the actor’s motive is to
benefit himself. Such justification does not exist where his sole motive is to cause harm to the other.
Added to this, some authorities believe that it is not necessary that the interferer’s interest outweigh
that of the party whose rights are invaded, and that an individual acts under an economic interest
that is substantial, not merely de minimis, such that wrongful and malicious motives are negatived,
for he acts in self-protection. Moreover, justification for protecting one’s financial position should not
be made to depend on a comparison of his economic interest in the subject matter with that of
others. It is sufficient if the impetus of his conduct lies in a proper business interest rather than in
wrongful motives.

As early as Gilchrist vs. Cuddy, we held that where there was no malice in the interference of a
contract, and the impulse behind one’s conduct lies in a proper business interest rather than in
wrongful motives, a party cannot be a malicious interferer. Where the alleged interferer is financially
interested, and such interest motivates his conduct, it cannot be said that he is an officious or
malicious intermeddler.

In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI to lease the
warehouse to his enterprise at the expense of respondent corporation. Though petitioner took
interest in the property of respondent corporation and benefited from it, nothing on record imputes
deliberate wrongful motives or malice in him.

xxx

While we do not encourage tort interferers seeking their economic interest to intrude into existing
contracts at the expense of others, however, we find that the conduct herein complained of did not
transcend the limits forbidding an obligatory award for damages in the absence of any malice. The
business desire is there to make some gain to the detriment of the contracting parties. Lack of
malice, however, precludes damages. But it does not relieve petitioner of the legal liability for
entering into contracts and causing breach of existing ones. The respondent appellate court correctly
confirmed the permanent injunction and nullification of the lease contracts between DCCSI and
Trendsetter Marketing, without awarding damages. The injunction saved the respondents from
further damage or injury caused by petitioner’s interference.54 [emphasis supplied.]

Malice connotes ill will or spite, and speaks not in response to duty. It implies an intention to do
ulterior and unjustifiable harm. Malice is bad faith or bad motive.55 In the case of Lagon v. Court of
Appeals,56 we held that to sustain a case for tortuous interference, the defendant must have acted
with malice or must have been driven by purely impure reasons to injure the plaintiff; in other words,
his act of interference cannot be justified. We further explained that the word "induce" refers to
situations where a person causes another to choose one course of conduct by persuasion or
intimidation. As to the allegation of private respondent in said case that petitioner induced the heirs
of the late Bai Tonina Sepi to sell the property to petitioner despite an alleged renewal of the original
lease contract with the deceased landowner, we ruled as follows:

Assuming ex gratia argumenti that petitioner knew of the contract, such knowledge alone was not
sufficient to make him liable for tortuous interference. x x x
Furthermore, the records do not support the allegation of private respondent that petitioner induced
the heirs of Bai Tonina Sepi to sell the property to him. The word "induce" refers to situations where
a person causes another to choose one course of conduct by persuasion or intimidation. The
records show that the decision of the heirs of the late Bai Tonina Sepi to sell the property was
completely of their own volition and that petitioner did absolutely nothing to influence their judgment.
Private respondent himself did not proffer any evidence to support his claim. In short, even assuming
that private respondent was able to prove the renewal of his lease contract with Bai Tonina Sepi, the
fact was that he was unable to prove malice or bad faith on the part of petitioner in purchasing the
property. Therefore, the claim of tortuous interference was never established.57

In their Answer, respondents denied having anything to do with the unpaid balance of the
commission due to Cordero and the eventual termination of his exclusive distributorship by AFFA.
They gave a different version of the events that transpired following the signing of Shipbuilding
Contract No. 7825. According to them, several builder-competitors still entered the picture after the
said contract for the purchase of one (1) SEACAT 25 was sent to Brisbane in July 1997 for
authentication, adding that the contract was to be effective on August 7, 1997, the time when their
funds was to become available. Go admitted he called the attention of AFFA if it can compete with
the prices of other builders, and upon mutual agreement, AFFA agreed to give them a discounted
price under the following terms and conditions: (1) that the contract price be lowered; (2) that Go will
obtain another vessel; (3) that to secure compliance of such conditions, Go must make an advance
payment for the building of the second vessel; and (4) that the payment scheme formerly agreed
upon as stipulated in the first contract shall still be the basis and used as the guiding factor in
remitting money for the building of the first vessel. This led to the signing of another contract
superseding the first one (1), still to be dated 07 August 1997. Attached to the answer were
photocopies of the second contract stating a lower purchase price (US$1,150,000.00) and facsimile
transmission of AFFA to Go confirming the transaction.58

As to the cessation of communication with Cordero, Go averred it was Cordero who was nowhere to
be contacted at the time the shipbuilding progress did not turn good as promised, and it was always
Landicho and Tecson who, after several attempts, were able to locate him only to obtain
unsatisfactory reports such that it was Go who would still call up Robinson regarding any progress
status report, lacking documents for MARINA, etc., and go to Australia for ocular inspection. Hence,
in May 1998 on the scheduled launching of the ship in Australia, Go engaged the services of
Landicho who went to Australia to see to it that all documents needed for the shipment of the vessel
to the Philippines would be in order. It was also during this time that Robinson’s request for inquiry
on the Philippine price of a Wartsila engine for AFFA’s then on-going vessel construction, was
misinterpreted by Cordero as indicating that Go was buying a second vessel.59

We find these allegations unconvincing and a mere afterthought as these were the very same
averments contained in the Position Paper for the Importer dated October 9, 1998, which was
submitted by Go on behalf of ACG Express Liner in connection with the complaint-affidavit filed by
Cordero before the BOC-SGS Appeals Committee relative to the shipment valuation of the first
SEACAT 25 purchased from AFFA.60 It appears that the purported second contract superseding the
original Shipbuilding Contract No. 7825 and stating a lower price of US$1,150,000.00 (not
US$1,465,512.00) was only presented before the BOC to show that the vessel imported into the
Philippines was not undervalued by almost US$500,000.00. Cordero vehemently denied there was
such modification of the contract and accused respondents of resorting to falsified documents,
including the facsimile transmission of AFFA supposedly confirming the said sale for only
US$1,150,000.00. Incidentally, another document filed in said BOC case, the Counter-
Affidavit/Position Paper for the Importer dated November 16, 1998,61 states in paragraph 8 under the
Antecedent facts thereof, that --
8. As elsewhere stated, the total remittances made by herein Importer to AFFA does not alone
represent the purchase price for Seacat 25. It includes advance payment for the acquisition of
another vessel as part of the deal due to the discounted price.62

which even gives credence to the claim of Cordero that respondents negotiated for the sale of the
second vessel and that the nonpayment of the remaining two (2) instalments of his commission for
the sale of the first SEACAT 25 was a result of Go and Landicho’s directly dealing with Robinson,
obviously to obtain a lower price for the second vessel at the expense of Cordero.

The act of Go, Landicho and Tecson in inducing Robinson and AFFA to enter into another contract
directly with ACG Express Liner to obtain a lower price for the second vessel resulted in AFFA’s
breach of its contractual obligation to pay in full the commission due to Cordero and unceremonious
termination of Cordero’s appointment as exclusive distributor. Following our pronouncement in
Gilchrist v. Cuddy (supra), such act may not be deemed malicious if impelled by a proper business
interest rather than in wrongful motives. The attendant circumstances, however, demonstrated that
respondents transgressed the bounds of permissible financial interest to benefit themselves at the
expense of Cordero. Respondents furtively went directly to Robinson after Cordero had worked hard
to close the deal for them to purchase from AFFA two (2) SEACAT 25, closely monitored the
progress of building the first vessel sold, attended to their concerns and spent no measly sum for the
trip to Australia with Go, Landicho and Go’s family members. But what is appalling is the fact that
even as Go, Landicho and Tecson secretly negotiated with Robinson for the purchase of a second
vessel, Landicho and Tecson continued to demand and receive from Cordero their "commission" or
"cut" from Cordero’s earned commission from the sale of the first SEACAT 25.

Cordero was practically excluded from the transaction when Go, Robinson, Tecson and Landicho
suddenly ceased communicating with him, without giving him any explanation. While there was
nothing objectionable in negotiating for a lower price in the second purchase of SEACAT 25, which
is not prohibited by the Memorandum of Agreement, Go, Robinson, Tecson and Landicho clearly
connived not only in ensuring that Cordero would have no participation in the contract for sale of the
second SEACAT 25, but also that Cordero would not be paid the balance of his commission from the
sale of the first SEACAT 25. This, despite their knowledge that it was commission already earned by
and due to Cordero. Thus, the trial and appellate courts correctly ruled that the actuations of Go,
Robinson, Tecson and Landicho were without legal justification and intended solely to prejudice
Cordero.

The existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the trial
court, when affirmed by the appellate court, are conclusive on this Court.63 We see no compelling
reason to reverse the findings of the RTC and the CA that respondents acted in bad faith and in utter
disregard of the rights of Cordero under the exclusive distributorship agreement.

The failure of Robinson, Go, Tecson and Landico to act with fairness, honesty and good faith in
securing better terms for the purchase of high-speed catamarans from AFFA, to the prejudice of
Cordero as the duly appointed exclusive distributor, is further proscribed by Article 19 of the Civil
Code:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.

As we have expounded in another case:

Elsewhere, we explained that 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 responsible." The object of this article, therefore, is to
set 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: act with justice, give everyone his
due and observe honesty and good faith. Its antithesis, necessarily, is any act evincing bad faith or
intent to injure. Its elements are the following: (1) There is a legal right or duty; (2) which is exercised
in bad faith; (3) for the sole intent of prejudicing or injuring another. When Article 19 is violated, an
action for damages is proper under Articles 20 or 21 of the Civil Code. Article 20 pertains to
damages arising from a violation of law x x x. Article 21, on the other hand, states:

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.

Article 21 refers to acts contra bonus mores and has the following elements: (1) There is an act
which is legal; (2) but which is contrary to morals, good custom, public order, or public policy; and (3)
it is done with intent to injure.

A common theme runs through Articles 19 and 21, and that is, the act complained of must be
intentional.64

Petitioner Go’s argument that he, Landicho and Tecson cannot be held liable solidarily with
Robinson for actual, moral and exemplary damages, as well as attorney’s fees awarded to Cordero
since no law or contract provided for solidary obligation in these cases, is equally bereft of merit.
Conformably with Article 2194 of the Civil Code, the responsibility of two or more persons who are
liable for the quasi-delict is solidary.65 In Lafarge Cement Philippines, Inc. v. Continental Cement
Corporation,66 we held:

[O]bligations arising from tort are, by their nature, always solidary. We have assiduously maintained
this legal principle as early as 1912 in Worcester v. Ocampo, in which we held:

x x x The difficulty in the contention of the appellants is that they fail to recognize that the basis of
the present action is tort. They fail to recognize the universal doctrine that each joint tort feasor is not
only individually liable for the tort in which he participates, but is also jointly liable with his tort
feasors. x x x

It may be stated as a general rule that joint tort feasors are all the persons who command, instigate,
promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who
approve of it after it is done, if done for their benefit. They are each liable as principals, to the same
extent and in the same manner as if they had performed the wrongful act themselves. x x x

Joint tort feasors are jointly and severally liable for the tort which they commit. The persons injured
1avv phi 1

may sue all of them or any number less than all. Each is liable for the whole damages caused by all,
and all together are jointly liable for the whole damage. It is no defense for one sued alone, that the
others who participated in the wrongful act are not joined with him as defendants; nor is it any
excuse for him that his participation in the tort was insignificant as compared to that of the others. x x
x

Joint tort feasors are not liable pro rata. The damages can not be apportioned among them, except
among themselves. They cannot insist upon an apportionment, for the purpose of each paying an
aliquot part. They are jointly and severally liable for the whole amount. x x x
A payment in full for the damage done, by one of the joint tort feasors, of course satisfies any claim
which might exist against the others. There can be but satisfaction. The release of one of the joint
tort feasors by agreement generally operates to discharge all. x x x

Of course, the court during trial may find that some of the alleged tort feasors are liable and that
others are not liable. The courts may release some for lack of evidence while condemning others of
the alleged tort feasors. And this is true even though they are charged jointly and
severally.67 [emphasis supplied.]

The rule is that the defendant found guilty of interference with contractual relations cannot be held
liable for more than the amount for which the party who was inducted to break the contract can be
held liable.68 Respondents Go, Landicho and Tecson were therefore correctly held liable for the
balance of petitioner Cordero’s commission from the sale of the first SEACAT 25, in the amount of
US$31,522.09 or its peso equivalent, which AFFA/Robinson did not pay in violation of the exclusive
distributorship agreement, with interest at the rate of 6% per annum from June 24, 1998 until the
same is fully paid.

Respondents having acted in bad faith, moral damages may be recovered under Article 2219 of
the Civil Code.69On the other hand, the requirements of an award of exemplary damages are: (1)
they may be imposed by way of example in addition to compensatory damages, and only after the
claimant’s right to them has been established; (2) that they cannot be recovered as a matter of right,
their determination depending upon the amount of compensatory damages that may be awarded to
the claimant; and (3) the act must be accompanied by bad faith or done in a wanton, fraudulent,
oppressive or malevolent manner.70 The award of exemplary damages is thus in order. However, we
find the sums awarded by the trial court as moral and exemplary damages as reduced by the CA,
still excessive under the circumstances.

Moral damages are meant to compensate and alleviate the physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injuries unjustly caused. Although incapable of pecuniary estimation, the amount must
somehow be proportional to and in approximation of the suffering inflicted. Moral damages are not
punitive in nature and were never intended to enrich the claimant at the expense of the defendant.
There is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral
damages, since each case must be governed by its own peculiar facts. Trial courts are given
discretion in determining the amount, with the limitation that it "should not be palpably and
scandalously excessive." Indeed, it must be commensurate to the loss or injury suffered.71

We believe that the amounts of ₱300,000.00 and ₱200,000.00 as moral and exemplary damages,
respectively, would be sufficient and reasonable. Because exemplary damages are awarded,
attorney’s fees may also be awarded in consonance with Article 2208 (1).72 We affirm the appellate
court’s award of attorney’s fees in the amount of ₱50,000.00.

WHEREFORE, the petitions are DENIED. The Decision dated March 16, 2004 as modified by the
Resolution dated July 22, 2004 of the Court of Appeals in CA-G.R. CV No. 69113 are hereby
AFFIRMED with MODIFICATION in that the awards of moral and exemplary damages are hereby
reduced to ₱300,000.00 and ₱200,000.00, respectively.

With costs against the petitioner in G.R. No. 164703.

SO ORDERED.

G.R. No. 171092 March 15, 2010

EDNA DIAGO LHUILLIER, Petitioner,
vs.
BRITISH AIRWAYS, Respondent.

DECISION

DEL CASTILLO, J.:

Jurisdictio est potestas de publico introducta cum necessitate juris dicendi. Jurisdiction is a power
introduced for the public good, on account of the necessity of dispensing justice.1

Factual Antecedents

On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint2 for damages against respondent
British Airways before the Regional Trial Court (RTC) of Makati City. She alleged that on February
28, 2005, she took respondent’s flight 548 from London, United Kingdom to Rome, Italy. Once on
board, she allegedly requested Julian Halliday (Halliday), one of the respondent’s flight attendants,
to assist her in placing her hand-carried luggage in the overhead bin. However, Halliday allegedly
refused to help and assist her, and even sarcastically remarked that "If I were to help all 300
passengers in this flight, I would have a broken back!"

Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight
attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in the
business class section to lecture on plane safety. Allegedly, Kerrigan made her appear to the other
passengers to be ignorant, uneducated, stupid, and in need of lecturing on the safety rules and
regulations of the plane. Affronted, petitioner assured Kerrigan that she knew the plane’s safety
regulations being a frequent traveler. Thereupon, Kerrigan allegedly thrust his face a mere few
centimeters away from that of the petitioner and menacingly told her that "We don’t like your
attitude."

Upon arrival in Rome, petitioner complained to respondent’s ground manager and demanded an
apology. However, the latter declared that the flight stewards were "only doing their job."

Thus, petitioner filed the complaint for damages, praying that respondent be ordered to pay ₱5
million as moral damages, ₱2 million as nominal damages, ₱1 million as exemplary damages,
₱300,000.00 as attorney’s fees, ₱200,000.00 as litigation expenses, and cost of the suit.

On May 16, 2005, summons, together with a copy of the complaint, was served on the respondent
through Violeta Echevarria, General Manager of Euro-Philippine Airline Services, Inc.3

On May 30, 2005, respondent, by way of special appearance through counsel, filed a Motion to
Dismiss4 on grounds of lack of jurisdiction over the case and over the person of the respondent.
Respondent alleged that only the courts of London, United Kingdom or Rome, Italy, have jurisdiction
over the complaint for damages pursuant to the Warsaw Convention,5 Article 28(1) of which
provides:

An action for damages must be brought at the option of the plaintiff, either before the court of
domicile of the carrier or his principal place of business, or where he has a place of business through
which the contract has been made, or before the court of the place of destination.
Thus, since a) respondent is domiciled in London; b) respondent’s principal place of business is in
London; c) petitioner bought her ticket in Italy (through Jeepney Travel S.A.S, in Rome);6 and d)
Rome, Italy is petitioner’s place of destination, then it follows that the complaint should only be filed
in the proper courts of London, United Kingdom or Rome, Italy.

Likewise, it was alleged that the case must be dismissed for lack of jurisdiction over the person of
the respondent because the summons was erroneously served on Euro-Philippine Airline Services,
Inc. which is not its resident agent in the Philippines.

On June 3, 2005, the trial court issued an Order requiring herein petitioner to file her
Comment/Opposition on the Motion to Dismiss within 10 days from notice thereof, and for
respondent to file a Reply thereon.7 Instead of filing a Comment/Opposition, petitioner filed on June
27, 2005, an Urgent Ex-Parte Motion to Admit Formal Amendment to the Complaint and Issuance of
Alias Summons.8 Petitioner alleged that upon verification with the Securities and Exchange
Commission, she found out that the resident agent of respondent in the Philippines is Alonzo Q.
Ancheta. Subsequently, on September 9, 2005, petitioner filed a Motion to Resolve Pending Incident
and Opposition to Motion to Dismiss.9

Ruling of the Regional Trial Court

On October 14, 2005, the RTC of Makati City, Branch 132, issued an Order10 granting respondent’s
Motion to Dismiss. It ruled that:

The Court sympathizes with the alleged ill-treatment suffered by the plaintiff. However, our Courts
have to apply the principles of international law, and are bound by treaty stipulations entered into by
the Philippines which form part of the law of the land. One of this is the Warsaw Convention. Being a
signatory thereto, the Philippines adheres to its stipulations and is bound by its provisions including
the place where actions involving damages to plaintiff is to be instituted, as provided for under Article
28(1) thereof. The Court finds no justifiable reason to deviate from the indicated limitations as it will
only run counter to the provisions of the Warsaw Convention. Said adherence is in consonance with
the comity of nations and deviation from it can only be effected through proper denunciation as
enunciated in the Santos case (ibid). Since the Philippines is not the place of domicile of the
defendant nor is it the principal place of business, our courts are thus divested of jurisdiction over
cases for damages. Neither was plaintiff’s ticket issued in this country nor was her destination Manila
but Rome in Italy. It bears stressing however, that referral to the court of proper jurisdiction does not
constitute constructive denial of plaintiff’s right to have access to our courts since the Warsaw
Convention itself provided for jurisdiction over cases arising from international transportation. Said
treaty stipulations must be complied with in good faith following the time honored principle of pacta
sunt servanda.

The resolution of the propriety of service of summons is rendered moot by the Court’s want of
jurisdiction over the instant case.

WHEREFORE, premises considered, the present Motion to Dismiss is hereby GRANTED and this
case is hereby ordered DISMISSED.

Petitioner filed a Motion for Reconsideration but the motion was denied in an Order11 dated January
4, 2006.

Petitioner now comes directly before us on a Petition for Review on Certiorari on pure questions of
law, raising the following issues:
 Issues

I. WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS CONDUCT

COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE PERSONNEL OF A
FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT OF ANY FOREIGN
COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW CONVENTION.

II. WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION TO

DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE
AND OVER ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN LAW SUBMITTED
ITSELF TO THE JURISDICTION OF THE LOWER COURT, ESPECIALLY SO, WHEN THE VERY
LAWYER ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT OF THE CARRIER.

Petitioner’s Arguments

Petitioner argues that her cause of action arose not from the contract of carriage, but from the
tortious conduct committed by airline personnel of respondent in violation of the provisions of the
Civil Code on Human Relations. Since her cause of action was not predicated on the contract of
carriage, petitioner asserts that she has the option to pursue this case in this jurisdiction pursuant to
Philippine laws.

Respondent’s Arguments

In contrast, respondent maintains that petitioner’s claim for damages fell within the ambit of Article
28(1) of the Warsaw Convention. As such, the same can only be filed before the courts of London,
United Kingdom or Rome, Italy.

Our Ruling

The petition is without merit.

The Warsaw Convention has the force and effect of law in this country.

It is settled that the Warsaw Convention has the force and effect of law in this country. In Santos III
v. Northwest Orient Airlines,12 we held that:

The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules
Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It took
effect on February 13, 1933. The Convention was concurred in by the Senate, through its Resolution
No. 19, on May 16, 1950. The Philippine instrument of accession was signed by President Elpidio
Quirino on October 13, 1950, and was deposited with the Polish government on November 9, 1950.
The Convention became applicable to the Philippines on February 9, 1951. On September 23, 1955,
President Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence thereto,
"to the end that the same and every article and clause thereof may be observed and fulfilled in good
faith by the Republic of the Philippines and the citizens thereof."

The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and,
as such, has the force and effect of law in this country.13

The Warsaw Convention applies because the air travel, where the alleged tortious conduct occurred,
was between the United Kingdom and Italy, which are both signatories to the Warsaw Convention.
Article 1 of the Warsaw Convention provides:

1. This Convention applies to all international carriage of persons, luggage or goods

performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft
performed by an air transport undertaking.

2. For the purposes of this Convention the expression "international carriage" means any
carriage in which, according to the contract made by the parties, the place of departure and
the place of destination, whether or not there be a break in the carriage or a
transhipment, are situated either within the territories of two High Contracting Parties, or
within the territory of a single High Contracting Party, if there is an agreed stopping place
within a territory subject to the sovereignty, suzerainty, mandate or authority of another
Power, even though that Power is not a party to this Convention. A carriage without such an
agreed stopping place between territories subject to the sovereignty, suzerainty, mandate or
authority of the same High Contracting Party is not deemed to be international for the
purposes of this Convention. (Emphasis supplied)

Thus, when the place of departure and the place of destination in a contract of carriage are situated
within the territories of two High Contracting Parties, said carriage is deemed an "international
carriage". The High Contracting Parties referred to herein were the signatories to the Warsaw
Convention and those which subsequently adhered to it.14

In the case at bench, petitioner’s place of departure was London, United Kingdom while her place of
destination was Rome, Italy.15 Both the United Kingdom16 and Italy17 signed and ratified the Warsaw
Convention. As such, the transport of the petitioner is deemed to be an "international carriage" within
the contemplation of the Warsaw Convention.

Since the Warsaw Convention applies in the instant case, then the jurisdiction over the subject
matter of the action is governed by the provisions of the Warsaw Convention.

Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for damages before
–

1. the court where the carrier is domiciled;

2. the court where the carrier has its principal place of business;

3. the court where the carrier has an establishment by which the contract has been made; or

4. the court of the place of destination.

In this case, it is not disputed that respondent is a British corporation domiciled in London, United
Kingdom with London as its principal place of business. Hence, under the first and second
jurisdictional rules, the petitioner may bring her case before the courts of London in the United
Kingdom. In the passenger ticket and baggage check presented by both the petitioner and
respondent, it appears that the ticket was issued in Rome, Italy. Consequently, under the third
jurisdictional rule, the petitioner has the option to bring her case before the courts of Rome in Italy.
Finally, both the petitioner and respondent aver that the place of destination is Rome, Italy, which is
properly designated given the routing presented in the said passenger ticket and baggage check.
Accordingly, petitioner may bring her action before the courts of Rome, Italy. We thus find that the
RTC of Makati correctly ruled that it does not have jurisdiction over the case filed by the petitioner.
Santos III v. Northwest Orient Airlines18 applies in this case.

Petitioner contends that Santos III v. Northwest Orient Airlines19 cited by the trial court is inapplicable
to the present controversy since the facts thereof are not similar with the instant case.

We are not persuaded.

In Santos III v. Northwest Orient Airlines,20 Augusto Santos III, a resident of the Philippines,
purchased a ticket from Northwest Orient Airlines in San Francisco, for transport between San
Francisco and Manila via Tokyo and back to San Francisco. He was wait-listed in the Tokyo to
Manila segment of his ticket, despite his prior reservation. Contending that Northwest Orient Airlines
acted in bad faith and discriminated against him when it canceled his confirmed reservation and
gave his seat to someone who had no better right to it, Augusto Santos III sued the carrier for
damages before the RTC. Northwest Orient Airlines moved to dismiss the complaint on ground of
lack of jurisdiction citing Article 28(1) of the Warsaw Convention. The trial court granted the motion
which ruling was affirmed by the Court of Appeals. When the case was brought before us, we denied
the petition holding that under Article 28(1) of the Warsaw Convention, Augusto Santos III must
prosecute his claim in the United States, that place being the (1) domicile of the Northwest Orient
Airlines; (2) principal office of the carrier; (3) place where contract had been made (San Francisco);
and (4) place of destination (San Francisco).21

We further held that Article 28(1) of the Warsaw Convention is jurisdictional in character. Thus:

A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not a
venue provision. First, the wording of Article 32, which indicates the places where the action for
damages "must" be brought, underscores the mandatory nature of Article 28(1). Second, this
characterization is consistent with one of the objectives of the Convention, which is to "regulate in a
uniform manner the conditions of international transportation by air." Third, the Convention does not
contain any provision prescribing rules of jurisdiction other than Article 28(1), which means that the
phrase "rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last
sentence of Article 32 specifically deals with the exclusive enumeration in Article 28(1) as
"jurisdictions," which, as such, cannot be left to the will of the parties regardless of the time when the
damage occurred.

xxxx

In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual
concept. Jurisdiction in the international sense must be established in accordance with Article 28(1)
of the Warsaw Convention, following which the jurisdiction of a particular court must be established
pursuant to the applicable domestic law. Only after the question of which court has jurisdiction is
determined will the issue of venue be taken up. This second question shall be governed by the law
of the court to which the case is submitted.22

Contrary to the contention of petitioner, Santos III v. Northwest Orient Airlines23 is analogous to the
instant case because (1) the domicile of respondent is London, United Kingdom;24 (2) the principal
office of respondent airline is likewise in London, United Kingdom;25 (3) the ticket was purchased in
Rome, Italy;26 and (4) the place of destination is Rome, Italy.27 In addition, petitioner based her
complaint on Article 217628 of the Civil Code on quasi-delict and Articles 1929 and 2130 of the Civil
Code on Human Relations. In Santos III v. Northwest Orient Airlines,31Augusto Santos III similarly
posited that Article 28 (1) of the Warsaw Convention did not apply if the action is based on tort.
Hence, contrary to the contention of the petitioner, the factual setting of Santos III v. Northwest
Orient Airlines32 and the instant case are parallel on the material points.
Tortious conduct as ground for the petitioner’s complaint is within the purview of the Warsaw
Convention.

Petitioner contends that in Santos III v. Northwest Orient Airlines,33 the cause of action was based on
a breach of contract while her cause of action arose from the tortious conduct of the airline
personnel and violation of the Civil Code provisions on Human Relations.34 In addition, she claims
that our pronouncement in Santos III v. Northwest Orient Airlines35 that "the allegation of willful
misconduct resulting in a tort is insufficient to exclude the case from the comprehension of the
Warsaw Convention," is more of an obiter dictum rather than the ratio decidendi.36 She maintains
that the fact that said acts occurred aboard a plane is merely incidental, if not irrelevant.37

We disagree with the position taken by the petitioner. Black defines obiter dictum as "an opinion
entirely unnecessary for the decision of the case" and thus "are not binding as precedent."38 In
Santos III v. Northwest Orient Airlines,39 Augusto Santos III categorically put in issue the applicability
of Article 28(1) of the Warsaw Convention if the action is based on tort.

In the said case, we held that the allegation of willful misconduct resulting in a tort is insufficient to
exclude the case from the realm of the Warsaw Convention. In fact, our ruling that a cause of action
based on tort did not bring the case outside the sphere of the Warsaw Convention was our ratio
decidendi in disposing of the specific issue presented by Augusto Santos III. Clearly, the contention
of the herein petitioner that the said ruling is an obiter dictum is without basis.

Relevant to this particular issue is the case of Carey v. United Airlines,40 where the passenger filed
an action against the airline arising from an incident involving the former and the airline’s flight
attendant during an international flight resulting to a heated exchange which included insults and
profanity. The United States Court of Appeals (9th Circuit) held that the "passenger's action against
the airline carrier arising from alleged confrontational incident between passenger and flight
attendant on international flight was governed exclusively by the Warsaw Convention, even though
the incident allegedly involved intentional misconduct by the flight attendant."41

In Bloom v. Alaska Airlines,42 the passenger brought nine causes of action against the airline in the
state court, arising from a confrontation with the flight attendant during an international flight to
Mexico. The United States Court of Appeals (9th Circuit) held that the "Warsaw Convention governs
actions arising from international air travel and provides the exclusive remedy for conduct which falls
within its provisions." It further held that the said Convention "created no exception for an injury
suffered as a result of intentional conduct" 43 which in that case involved a claim for intentional
infliction of emotional distress.

It is thus settled that allegations of tortious conduct committed against an airline passenger during
the course of the international carriage do not bring the case outside the ambit of the Warsaw
Convention.

Respondent, in seeking remedies from the trial court through special appearance of counsel, is not
deemed to have voluntarily submitted itself to the jurisdiction of the trial court.

Petitioner argues that respondent has effectively submitted itself to the jurisdiction of the trial court
when the latter stated in its Comment/Opposition to the Motion for Reconsideration that "Defendant
[is at a loss] x x x how the plaintiff arrived at her erroneous impression that it is/was Euro-Philippines
Airlines Services, Inc. that has been making a special appearance since x x x British Airways x x x
has been clearly specifying in all the pleadings that it has filed with this Honorable Court that it is the
one making a special appearance."44
In refuting the contention of petitioner, respondent cited La Naval Drug Corporation v. Court of
Appeals45 where we held that even if a party "challenges the jurisdiction of the court over his person,
as by reason of absence or defective service of summons, and he also invokes other grounds for the
dismissal of the action under Rule 16, he is not deemed to be in estoppel or to have waived his
objection to the jurisdiction over his person."46

This issue has been squarely passed upon in the recent case of Garcia v. Sandiganbayan,47 where
we reiterated our ruling in La Naval Drug Corporation v. Court of Appeals48 and elucidated thus:

Special Appearance to Question a Court’s Jurisdiction Is Not

Voluntary Appearance

The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly provides:

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.

Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his
person, together with other grounds raised therein, is not deemed to have appeared voluntarily
before the court. What the rule on voluntary appearance – the first sentence of the above-quoted
rule – means is that the voluntary appearance of the defendant in court is without qualification, in
which case he is deemed to have waived his defense of lack of jurisdiction over his person due to
improper service of summons.

The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she
voluntarily appeared without qualification. Petitioner filed the following pleadings in Forfeiture I: (a)
motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion for
reconsideration; (d) motion to consolidate forfeiture case with plunder case; and (e) motion to
dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to quash
Forfeiture II; and (b) motion for partial reconsideration.

The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for special
appearance with the purpose of challenging the jurisdiction of the SB over her person and that of her
three children. Petitioner asserts therein that SB did not acquire jurisdiction over her person and of
her three children for lack of valid service of summons through improvident substituted service of
summons in both Forfeiture I and Forfeiture II. This stance the petitioner never abandoned when she
filed her motions for reconsideration, even with a prayer to admit their attached Answer Ex
Abundante Ad Cautelam dated January 22, 2005 setting forth affirmative defenses with a claim for
damages. And the other subsequent pleadings, likewise, did not abandon her stance and defense of
lack of jurisdiction due to improper substituted services of summons in the forfeiture cases.
Evidently, from the foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on Civil Procedure,
petitioner and her sons did not voluntarily appear before the SB constitutive of or equivalent to
service of summons.

Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant case. Said
case elucidates the current view in our jurisdiction that a special appearance before the court––
challenging its jurisdiction over the person through a motion to dismiss even if the movant invokes
other grounds––is not tantamount to estoppel or a waiver by the movant of his objection to
jurisdiction over his person; and such is not constitutive of a voluntary submission to the jurisdiction
of the court.
1avvphi1
Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB to
cure the defective substituted services of summons. They are, therefore, not estopped from
questioning the jurisdiction of the SB over their persons nor are they deemed to have waived such
defense of lack of jurisdiction. Consequently, there being no valid substituted services of summons
made, the SB did not acquire jurisdiction over the persons of petitioner and her children. And
perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and her three children
are concerned, are null and void for lack of jurisdiction. (Emphasis supplied)

In this case, the special appearance of the counsel of respondent in filing the Motion to Dismiss and
other pleadings before the trial court cannot be deemed to be voluntary submission to the jurisdiction
of the said trial court. We hence disagree with the contention of the petitioner and rule that there was
no voluntary appearance before the trial court that could constitute estoppel or a waiver of
respondent’s objection to jurisdiction over its person.

WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the Regional Trial Court of
Makati City, Branch 132, dismissing the complaint for lack of jurisdiction, is AFFIRMED.

SO ORDERED.

G.R. No. L-38314 June 25, 1974

BELEN S. RODRIGUEZ and JOSE S. SANTOS, JR., petitioners,

vs.
HON. FEDERICO ALIKPALA (Presiding Judge, Branch XXII, Court of First Instance of Manila),
FEDERICO TOLENTINO and FELISA TOLENTINO, respondents.

Santos, Santos & Cunanan Law Office for petitioners.

Prospero A. Crescini & Associates for respondents.

CASTRO, J.:p

Failing to levy on the properties of the respondents Federico and Felisa Tolentino because of a prohibitory judgment rendered by the
respondent Court of First Instance of Manila in civil case 85998, the petitioners Belen S. Rodriguez and Jose S. Santos, Jr., have come to
this Court on appeal by certiorari.

On August 19, 1971 the petitioner Rodriguez, assisted by her counsel, the petitioner Santos, filed an
action, docketed as civil case 204601, with the city court of Manila against the spouses Manuel and
Fe Rebollado for recovery of the sum of P5,320 plus interest, attorney's fees and costs. A writ of
preliminary attachment was issued and served on the Rebollados at their store in Divisoria market.
Fe Rebollado immediately communicated with the petitioner Santos, and later with the latter's client,
the petitioner Rodriguez, to plead for time before the attachment was to be effectively enforced.
Rodriguez agreed to cause the suspension of the attachment writ on condition that Fe Rebollado's
parents, the now respondents Federico and Felisa Tolentino, would bind themselves, jointly and
severally with the Rebollado's, to pay the entire obligation subject of the suit. Felisa Tolentino who
was then present agreed to this proposal, and so the petitioner Santos, at the request of the
petitioner Rodriguez, drew up a motion for judgment on a compromise embodying the terms of the
agreement of the parties. On the basis of the said motion, the city court, on August 14, 1971,
rendered judgment, as follows:
Parties herein submitted the following compromise agreement and prayed that judgment be
rendered in accordance there with:

COMPROMISE AGREEMENT

xxx xxx xxx

1. That the defendants admit all the material allegations in the plaintiff's complaint
and acknowledged their indebtedness to the plaintiff in the total amount of
P5,980.00, which amount includes expenses of litigation;

2. That in consideration of defendants acknowledging their said indebtedness and

confessing judgment therefor, plaintiff has allowed defendants some consideration by
allowing them to pay their above-stated account in the following manner, to wit:

a) the sum of P200.00 shall be paid upon the signing of this

compromise agreement;

b) the remaining balance shall be paid in installment basis at the rate

of P100.00 a week, payable every Saturday beginning August 28,
1971 and every Saturday of the week thereafter until fully paid.

3. That in order to secure the prompt payment of the said obligations of the
defendants, Federico Tolentino and Felisa Tolentino hereby bind themselves to pay
jointly and severally with the defendants the said obligations, and in the event of
default on the part of the defendants to pay any of the said installments when the
same is already due, the judgment which may be rendered by virtue hereof as to full
amount remaining unpaid, may likewise be executed as against the properties of
Federico Tolentino and Felisa Tolentino;

4. That failure on the part of the defendants to pay any one of the installments as
above-scheduled shall render the remaining balance unpaid immediately due and
demandable and the plaintiff shall then be entitled to the execution of the judgment
which may be rendered by virtue hereof;

WHEREFORE, judgment by COMPROMISE is hereby rendered pursuant to the

foregoing agreement, enjoining strict compliance thereto by the parties.

The Rebollado's subsequently failed to comply with the terms of the compromise, thus prompting the
petitioner Rodriguez to ask the city court for a writ of execution not only against the Rebollados but
as well against the Tolentino's. When this was granted; and later affirmed over the opposition of the
Tolentino's, the latter brought an action for certiorari in the respondent Court of First Instance of
Manila, docketed as civil case 85998, to enjoin the city court from enforcing any writ of execution
against them. On December 20, 1973, after hearing duly had, the respondent court rendered
judgment excluding the Tolentinos from the effects of the writ of execution granted by the city court
in civil case 204601. It is this judgment that is the subject of the present appeal.

In excluding the Tolentino's from the effects of the judgment on a compromise rendered by the city
court, the respondent court invokes two reasons: first, the dispositive portion of the judgment quoted
above cannot be executed because it does not explicitly enjoin the Tolentino's to pay, jointly and
severally with the Rebollado's, the amount due to the plaintiff; and second, the city court never
acquired jurisdiction over the persons of the Tolentino's and, therefore, the latter cannot be bound by
the judgment rendered in civil cue 204601.

The respondent court is in error on both counts.

1. The dispositive portion of the judgment in civil case 204601 of the city court approving the
compromise and "enjoining strict compliance thereto by the parties" is adequate for purposes of
execution. It is not unusual for the body of a judgment on a compromise to merely quote the words
of the agreement that spell out the respective rights and obligations of the parties, since it is both
unnecessary and improper for the court to still make preliminary adjudication of the facts and the law
involved in the case.1 These rights and obligations, although not reproduced in the dispositive portion
of the judgment in obvious avoidance of repetition, are understood to constitute the terms under
which execution may issue. Decisions of similar tenor, import and form have in the past been given
effect by this Court.2

2. There is no question in the mind of the respondent court that the Rebollado's and the Tolentinos
freely and voluntarily entered into the compromise agreement which became the basis of the
judgment of the city court. Be it remembered that neither the Rebollado's nor the Tolentino's
question the existence of the indebtedness of the Rebollados or the amount thereof. The respondent
court heard the testimonies of the witnesses first hand and accorded no credence to the version of
the Rebollado's and the Tolentino's that Manuel and Fe Rebollado and Felisa Tolentino were made
to sign the motion for a judgment on a compromise without being permitted to read its contents and,
further, that Felisa Tolentino was induced to sign, too, the name of her husband without any
authority from the latter. The respondent court analyzed the evidence at length and found that the
involvement of the Tolentino's in the compromise agreement arose out of their natural filial concern
for their daughter Fe whose inventories at Divisoria market were under imminent threat of levy and
seizure. The respondent court, moreover, brooks no doubt, and we concur with it, that both the
Rebollado's and the Tolentino's understood the plain unequivocal terms of the compromise
agreement. And by assuming the roles of co-movants in the motion for a judgment on a
compromise, the Tolentino's actively instigated the city court into giving its judicial imprimatur to the
said agreement as well as their participation therein. Under the circumstances, the Tolentino's are
estopped from denying the very authority they have invoked.3

Moreover, because they signed and executed the compromise agreement willingly and voluntarily,
and, in a manner of speaking, with their eyes wide open, they should be bound by its terms. A
person cannot, to paraphrase Justice Alejo Labrador, repudiate the effects of his voluntary acts
simply because they do not suit him. In the very words of Justice Labrador, "in a regime of law and
order, repudiation of an agreement validly entered into can not be made without any ground or
reason in law or in fact for such repudiation."4

And even if we assume that estoppel does not apply in this case, we nonetheless cannot shunt
aside the principle of equity that jurisdiction over a person not formally or originally a party to a
litigation may nevertheless be acquired, under proper conditions, thru the voluntary appearance of
that person before the court. Thus, judgment may be directed against one who, although not a
formal party in the case, has assumed or participated in the defense.5 By coming forward with the
original litigants in moving for a judgment on a compromise and, furthermore, by assuming such
interest in the final adjudication of the case as would place them in unequivocal liability, together with
the Rebollado's, to the plaintiff therein, the Tolentino's effectively submitted themselves to the
jurisdiction of the city court. They were and are thus subject to its judgment.

ACCORDINGLY, the judgment a quo of December 20, 1973 is reversed, and the order of the city
court of November 26, 1971 in civil case 264601, directing the release of the writ of execution
against the Rebollado spouses and the Tolentino spouses, is hereby affirmed, with costs against the
respondents Federico and Felisa Tolentino.

G.R. No. L-34314 May 13, 1975

SOFIA PASTOR DE MIDGELY, petitioner,

vs.
THE HONORABLE PIO B. FERANDOS, Judge of the Court of First Instance of Cebu, Branch IX
and LEWELYN BARLITO QUEMADA, Special Administrator of the Testate and Intestate Estate
of ALVARO PASTOR Y TATO, respondents.

Abelardo P. Cecilio for petitioner.

Efipanio A. Anoos for private respondents.

AQUINO, J.: ñé+ .£ª wph!1

Sofia Pastor de Midgely, a British subject residing at Cura Planelles, 10 Cura Jardin, Alicante, Spain,
filed this special civil action of certiorari against Judge Pio B. Ferandos and Lewelyn Barlito
Quemada in order to set aside the Judge's order dated May 8, 1971 which denied her motion to
dismiss based on lack of jurisdiction and on article 222 of the Civil Code.

She prayed for a declaration that the Court of First Instance of Cebu, Toledo City, Branch IX has no
jurisdiction over her person and properties and for the dismissal of the complaint against her in Civil
Case No. 274-T of that court. The ultimate facts found in the prolix pleadings are as follows:

Alvaro Pastor, Sr., a Spanish citizen, was allegedly the owner of properties and rights in mining
claims located in Cebu and supposedly held in trust by his son, Alvaro Pastor, Jr., and his daughter-
in-law, Maria Elena Achaval-Pastor. Pastor, Sr. died on June 5, 1966. He was survived by his wife,
Sofia Pastor y Bossio (who died on October 21, 1966) and by his two legitimate children, Mrs.
Midgely and Alvaro Pastor, Jr. Respondent Quemada claims to be his illegitimate child.

Alvaro Pastor, Sr. in his supposed holographic will dated July 31, 1961 devised to Lewelyn Barlito
Quemada thirty percent of his forty-two percent share in certain mining claims and real properties. In
1970 the alleged will was presented for probate in Special Proceedings No. 3128-R assigned to
Branch I in Cebu City of the Court of First Instance of Cebu. Quemada was appointed special
administrator of the decedent's estate.

As such administrator and as heir of Alvaro Pastor, Sr., Quemada filed in the Court of First Instance
of Cebu at Toledo City a complaint dated December 7, 1970 against the spouses Alvaro Pastor, Jr.
and Maria Elena Achaval, Mrs. Midgely, Atlas Consolidated Mining and Development Corporation
and Caltex (Philippines), Inc. to settle the question of ownership over certain real properties and the
rights in some mining claims, to obtain an accounting and payment of the royalties and income
thereof and for the payment of damages amounting to P25,000. Quemada's theory is that those
properties and income belong to the estate of Alvaro Pastor, Sr.

Allegedly without complying with the requirements of Rule 14 of the Rules of Court, Quemada
caused extraterritorial service of summons to be made in that case through the Department of
Foreign Affairs and the Philippine Embassy in Madrid, Spain, which effected the service of the
summons by registered mail upon Mrs. Midgely and the Pastor, Jr. spouses at their respective
address in Alicante and Barcelona, Spain.

Alvaro Pastor, Jr. and Mrs. Midgely, in their respective letters to the Philippine Embassy dated
February 11 and 12, 1971, acknowledged the service of summons but reserved the right to contest
the courts jurisdiction over their persons. The Minister-Counselor of the Embassy forwarded those
letters to the Clerk of Court and apprised him of the manner the summons was served.

Through counsel, Mrs. Midgely and the Pastor, Jr. spouses entered a special appearance and filed a
motion to dismiss on the ground of lack of jurisdiction. They contended that as nonresidents they
could be summoned only with leave of court and that the requirements laid down in section 17 of
Rule 14 should have been observed. As additional, ground they alleged that the complaint does not
show that earnest efforts toward a compromise have been made, as required in article 222 of the
Civil Code in suits between members of the same family (See sec. 1[j], Rule 16, Rules of Court).
Quemada opposed the motion to dismiss.

As already stated, Judge Ferandos denied the motion. He ruled that Mrs. Midgely and the Pastor, Jr.
spouses had been properly summoned. He opined that article 222 was inapplicable to the case
because Quemada's civil status was involved and article 2035 of the Civil Code prohibits a
compromise on a person's civil status. He gave Mrs. Midgely and the Pastor, Jr. spouses seventy
days from February 12, 1971 within which to file their answer, deducting from that period the time
from March 10 to May 8, 1971 when their motion to dismiss was pending.

Mrs. Midgely's motion for reconsideration of the order denying her motion to dismiss was denied by
Judge Ferandos in his order of September 27, 1971 wherein he ruled that the action filed by
Quemada was for the recovery of real properties and real rights. He gave Mrs. Midgely and the
Pastor, Jr. spouses sixty days from notice within which to answer the complaint and directed that a
copy of his order be sent to them through the Philippine Embassy in Madrid. The petition
for certiorari herein was filed on November 3, 1971.

It was given due course. Respondent Quemada in his answer alleged that inasmuch as his action
against Mrs. Midgely concerns property located here in which she claims an interest, it is not
necessary that jurisdiction over her person be acquired. The service of summons upon her was not
for the purpose of acquiring jurisdiction over her person but merely as a matter of due process.

Quemada alleged that as administrator he has been in actual possession of two parcels of land
owned by Alvaro Pastor, Jr. located at Biga, Toledo City with areas of 55.3 hectares and 5,225
square meters, respectively. They were included in the inventory submitted by him to the probate
court in the testate proceeding for his putative father's estate. His answer contains annexes attesting
to his efforts to recover possession of the other properties of the decedent.

In the meantime the spouses Alvaro Pastor, Jr. and Maria Elena Achaval filed a verified answer to
the complaint in Civil Case No. 274-T dated December 5, 1971. Their answer was filed through the
same counsel who has been representing Mrs. Midgely. The said spouses-alleged that they were
not waiving their defense of lack of jurisdiction over their persons and over the subject matter of the
action. They claimed to be the owners of the properties described in the complaint.

It should be noted that in the testate proceeding Mrs. Midgely and Alvaro Pastor, Jr. had filed a
verified opposition dated January 26, 1971. They prayed for the dismissal of the proceeding. (The
holographic will was probated in the lower court's order of December 5, 1972 which was appealed to
the Court of Appeals by Mrs. Midgely and Alvaro Pastor, Jr., CA-G.R. No. 52961-R).
On May 10, 1972, this Court issued a writ of preliminary injunction suspending all proceedings in
Civil Case No. 274-T.

Contempt incident. — That writ of preliminary injunction spawned the contempt incident in this case.
Mrs. Midgely in a motion dated March 26, 1974 charged that Quemada committed "unlawful
interference of the case under injunction" and tried to circumvent the writ (1) by taking possession of
two parcels of land in Toledo City and (2) by asking the probate court to stop Altas Consolidated
Mining and Development Corporation from remitting to Mrs. Midgely and the Pastor, Jr. spouses the
landowner's share of the income from the Toledo City properties, with the result that the probate
court ordered the payment of said income to Quemada.

Quemada in his opposition to the motion countered that he had maintained the status quo in Civil
Case No. 274-T, as decreed in the writ of preliminary injunction; that the overseer delivered in 1971
the possession of the two parcels of land to him in his capacity as administrator or before the
issuance of the writ, and that the order of Judge Juan Y. Reyes in Special Proceedings No. 3128-R
did not constitute an interference with Civil Case No. 274-T which was assigned to Judge Ferandos.

Quemada through counsel filed a counter-charge for contempt against Abelardo Cecilio, the counsel
of Mrs. Midgely, for having made false and malicious statements in his motion to declare Quemada
in contempt of court. Quemada was referring to Atty. Cecilio's allegations that the writ of preliminary
injunction was intended to prevent Quemada from taking possession of the properties involved in
Civil Case No. 274-T and that, notwithstanding the writ, he took possession of the aforementioned
two parcels of land. Quemada in his memorandum further charged Cecilio with purporting to
represent Alvaro Pastor, Jr. in this case although the latter is not a party herein.

Quemada branded the acts of Cecilio as misbehavior of an officer of the court and as improper
conduct tending to degrade and obstruct the administration of justice. Quemada later manifested
that he had turned over to Atty. Cecilio the two checks for the land-owner's share of the income from
the Toledo City properties.

The contempt charges were investigated by the Legal Officer of this Court. After going over the
record, we find that both contempt charges are devoid of merit.

The writ issued by this Court enjoined Judge Ferandos and Quemada "from holding hearings, trial
and proceedings and/or from further proceeding with Civil Case No. 274-T". It froze the case. It was
a preventive injunction.

The undisputed fact is that in February, 1971 Quemada as administrator was already in possession
of the two parcels of land in Toledo City. The fact that he continued to remain in possession after the
injunction was issued on May 10, 1972 (Exh. 16) was not a violation of the injunction which was not
mandatory in character.

As to the attempt of Quemada in Special Proceeding No. 3128-R in his capacity as administrator to
get hold of the land-owner's share of the income derived from the properties involved in Civil Case
No. 274-T, it is apparent that he did so in good faith and on the advice of his lawyer who actually
filed the necessary motion.

The probate at first upheld his right to receive that income. Later he complied with the court's order
to turn over the checks to the counsel of Alvaro Pastor, Jr. Inasmuch as that incident transpired in
the testamentary proceeding and as Quemada committed the alleged contemptuous act through his
counsel, the same cannot be properly characterized as a willful interference with the injunction
issued by this Court in Civil Case No. 274-T.
On the other hand, Atty. Cecilio's free-wheeling allegations in his motion to declare Quemada in
contempt of court, which averments were tailored to support his notion that Quemada circumvented
the injunction, may be viewed simply as a manifestation of a lawyer's propensity to slant the
presentation of his client's case so that it would appear to be meritorious. Such a tactic is generally
tolerated by understanding judges. They are not deceived by the exaggerations and distortions in a
counsel's lopsided submission of his client's case especially where, as in this case, the alert
opposing counsel calls the court's attention to that fact.

"Contempt of court presupposes a contumacious attitude, a flouting or arrogant belligerence, a

defiance of the court" (Matutina vs. Judge Buslon and the Sheriff of Surigao, 109 Phil. 140, 142). It is
an offense against the authority and dignity of the court. That is not true in this case. The contempt
charges should be dismissed.

The certiorari case. — The petitioner injected into this case issues which involve the merits of
Quemada's action for reconveyance of certain properties and which are not germane to the
instant certiorari action. Those issues will be resolved by the lower court in the main case.

The only legal issue to be resolved is whether Judge Ferandos gravely abused his discretion in
denying Mrs. Midgely's motion to dismiss based on the grounds of (a) lack of jurisdiction over her
person and (b) lack of a showing that earnest efforts were exerted to effect a compromise.

The said order is interlocutory. It could eventually be reviewed in the appeal in the main case. While
this Court generally does not entertain a petition for certiorari questioning the propriety of an
interlocutory order, yet when a grave abuse of discretion has been patently committed, or the lower
court has acted capriciously and whimsically, then it devolves upon this Court to exercise its
supervisory authority and to correct the error committed (Manila Electric Co. and Sheriff of Quezon
City vs. Hon. Enriquez, etc. and Espinosa, 110 Phil. 499, 503; Abad Santos vs. Province of Tarlac,
67 Phil. 480).

We are of the opinion that the lower court has acquired jurisdiction over the person of Mrs. Midgely
by reason of her voluntary appearance. The reservation in her motion to dismiss that she was
making a special appearance to contest the court's jurisdiction over her person may be disregarded.

It may be disregarded because it was nullified by the fact that in her motion to dismiss she relied not
only on the ground of lack of jurisdiction over the person but also on the ground that there was no
showing that earnest efforts were exerted to compromise the case and because she prayed "for
such other relief as" may be deemed "appropriate and proper".

Thus, it was held that where the defendant corporation (which was not properly summoned because
the summons was served upon its lawyer) filed a motion to dismiss on the ground of lack of
jurisdiction over its person but in the same motion it prayed for the dismissal of the complaint on the
ground of prescription, it was held that, by invoking prescription, it necessarily admitted the court's
jurisdiction upon its, person and, therefore, it was deemed to have abandoned its special
appearance and voluntarily submitted itself to the court's jurisdiction (Republic vs. Ker & Co., Ltd., 64
O. G. 3761, 18 SCRA 207, 213-214 citing Flores vs. Zurbito, 37 Phil. 746 and Menghra vs.
Tarachand and Rewachand, 67 Phil. 286).

"When the appearance is by motion for the purpose of objecting to the jurisdiction of the court over
the person, it must be for the sole and separate purpose of objecting to the jurisdiction of the court. If
his motion is for any other purpose than to object to the jurisdiction of the court over his person, he
thereby submits himself to the jurisdiction of the court. A special appearance by motion made for the
purpose of objecting to the jurisdiction of the court over the person will be held to be a general
appearance, if the party in said motion should, for example, ask for a dismissal of the action upon
the further ground that the court had no jurisdiction over the subject matter." (Syllabus, Flores vs.
Zurbito, supra, at page 751. That rule was followed in Ocampo vs. Mina and Arejola, 41 Phil. 308).

Where the defendant contended that the court did not acquire jurisdiction over his person by means
of the publication of the corresponding summons in Hawaii, where he was residing, because the
action did not relate to personal or real properties situated in the Philippines in which the defendant
had or claimed a lien or interest, actual or contingent, it was held that the said defendant
nevertheless submitted to the court's jurisdiction when he filed a motion wherein he contested the
court's jurisdiction over his person and at the same time prayed that he be relieved from the effects
of the judgment by default, attaching to his motion an affidavit of merits. "He thereby impliedly
waived his special appearance assailing the jurisdiction of the court over his person, and voluntarily
submitted to the jurisdiction of said court." (Menghra vs. Tarachand and Rewachand, supra. See
Tenchavez vs. Escaño, L-19671, September 14, 1966, 17 SCRA 684 and Sharruf vs. Bubla, L-
17029, September 30, 1964, 12 SCRA 79 where it was held that a non-resident alien, by filing his
complaint in a Philippine court, submits thereby to its jurisdiction and the court acquires jurisdiction
over him even if as a matter of fact he had never been able to enter the Philippines).

Having shown that Mrs. Midgely had voluntarily submitted to the lower court's jurisdiction when she
filed her motion to dismiss (see sec. 23, Rule 14, Rules of Court), the inevitable conclusion is that it
did not commit any grave abuse of discretion in denying her motion to dismiss.

In petitioner's lengthy memorandum and reply she confined her arguments to the jurisdictional issue.
She even argued that the lower court does not have jurisdiction over the res, a contention that is
palpably baseless.

She did not discuss the second ground of her motion to dismiss, which is non-compliance with the
requirement of article 222 of the Civil Code on compromise of intra-family disputes. She was
presumably convinced by the lower court's argument that such a compromise would violate the
prohibition in article 2035 of the Civil Code against compromise on a person's civil status (See De
Raquiza vs. Castellvi, L-17630, October 31, 1963, 9 SCRA 395).

The case may be viewed from another angle. Supposing arguendo that the lower court did not
acquire jurisdiction over the person of Mrs. Midgely, still her motion to dismiss was properly denied
because Quemada's action against her may be regarded as a quasi in rem action where jurisdiction
over the person of the nonresident defendant is not necessary and where service of summons is
required only for the purpose of complying with the requirement of due process (Perkins vs. Dizon,
69 Phil. 186; Banco Español-Filipino vs. Palanca, 37 Phil. 921; Mabanag vs. Gallemore, 81 Phil.
254).

An action quasi in rem is an action between parties where the direct object is to reach and dispose
of property owned by them, or of some interest therein (1 Am Jur 2nd 574; State ex rel. South
Brevard Drainage Dist. vs. Smith, 170 So. 440, 126 Fla. 72). Quemada's action falls within that
category.

With respect to the extraterritorial service of summons to a nonresident defendant like Mrs. Midgely,
Rule 14 of the Rules of Court provides: têñ.£îhqw â£

SEC. 17. Extraterritorial service. — When the defendant does not reside and is not
found in the Philippines and the action affects the personal status of the plaintiff or
relates to, or the subject of which is, property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or in which the relief
 demanded consists, wholly or in part, in excluding the defendant from any interest
therein, or the property of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines by personal service
as under section 7; or by publication in a newspaper of general circulation in such
places and for such time as the court may order, in which case a copy of the
summons and order of the court shall be sent by registered mail to the last known
address of the defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the defendant must answer.

Under section 17, extraterritorial service of summons is proper (1) when the action affects the
personal status of the plaintiff; (2) when the action relates to, or the subject of which is, property
within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent; (3)
when the relief demanded in such an action consists, wholly or in part, in excluding the defendant
from any interest in property located in the Philippines, and (4) when defendant nonresident's
property has been attached within the Philippines (Sec. 17, Rule 14, Rules of Court).

In any of such four cases, the service of summons may, with leave of court, be effected out of the
Philippines in three ways: (1) by personal service; (2) by publication in a newspaper of general
circulation in such places and for such time as the court may order, in which case a copy of the
summons and order of the court should be sent by registered mail to the last known address of the
defendant, and (3) service of summons may be effected in any other manner which the court may
deem sufficient. That third mode of extraterritorial service of summons was substantially complied
with in this case.

In Civil Case No. 274-T the subject matter of the action for reconveyance consists of properties of
Alvaro Pastor, Sr. which are located in Cebu. Mrs. Midgely claims an actual interest in those
properties. She has been receiving a share of the income therefrom. Therefore, the extraterritorial
service of summons upon her was proper. As already noted, the action against her is quasi in rem.
(See Brown vs. Brown, 113 Phil. 442).

The record does not show whether Judge Ferandos was consulted by the Clerk of Court and by
Quemada's counsel when the service of summons was effected through the Philippine Embassy in
Madrid. But although there was no court order allowing service in that manner, that mode of service
was later sanctioned or ratified by Judge Ferandos in his order of May 8, 1971. In another order he
corrected the defect in the summons by giving Mrs. Midgely the sixty-day reglementary period for
answering the complaint.

In the Banco Español-Filipino case, supra, the failure of the clerk of court, in a case of foreclosure of
a mortgage executed by a non-resident defendant (which is an action quasi in rem) to mail to the
defendant's last place of residence copies of the summons and complaint, as required in section 399
of Act 190 (now section 17 of Rule 14) was held not to have affected the court's jurisdiction over
the res.

In the Perkins case, supra, Eugene Arthur Perkins sued in the Court of First Instance of Manila the
Benguet Consolidated Mining Company, a domestic firm, together with Idonah Slade Perkins and
George Engelhard, two nonresidents, who were summoned by publication. The service of summons
was based on section 398 of Act 190 (from which section 17 of Rule 14 was partly taken) which
provides that service of summons by publication may be made on a nonresident in "an action which
relates to, or the subject of which is, real or personal property within the Islands, in which such
person defendant or foreign corporation defendant, has or claims a lien or interest, actual or
contingent, or in which the relief demanded consists wholly or in part in excluding such person or
foreign corporation from any interest therein."

Eugene Arthur Perkins in his complaint prayed that Engelhard and Idonah Slade Perkins, "be
adjudged without interest" in certain shares of stock of the Benguet Consolidated Mining Company
and be excluded from any claim involving such shares.

Idonah Slade Perkins challenged the court's jurisdiction over her person. Judge Arsenio P. Dizon
overruled her objection. She filed in this Court a certiorari proceeding wherein she prayed that the
summons by publication issued against her be declared void and that Judge Dizon be permanently
prohibited from taking any action in the case.

This Court held that the action filed by Eugene Arthur Perkins against the two non-residents was
a quasi in rem action and not an action in personam. In that action plaintiff Perkins sought to exclude
Idonah Slade Perkins from any interest in property located in the Philippines consisting shares of
stock in a domestic sociedad anomina.

This Court clarified that in a quasi in rem action jurisdiction over the person of the nonresident
defendant is not essential. The service of summons by publication is required "merely to satisfy the
constitutional requirement of due process". The judgment of the court in the case would settle the
title to the shares of stock and to that extent it partakes of the nature of a judgment in rem.
Consequently, the lower court had jurisdiction to try the case even if it had not acquired jurisdiction
over the person of Idonah Slade Perkins. The judgment would be confined to the res. No personal
judgment could be rendered against the non-resident.

Other considerations may be adduced to indicate the frivolous character of Mrs. Midgely's petition
for certiorari. There is the circumstance that she actually received the summons and a copy of the
complaint. Thus, she cannot complain that she was unaware of the action against her. The
requirement of due process has been satisfied. She is cognizant not only of Quemada's complaint in
Civil Case No. 274-T in Branch IX of the Court of First Instance of Cebu at Toledo City but also of
the testamentary proceeding instituted earlier by Quemada for the settlement of the estate of Alvaro
Pastor, Sr. in the Cebu City Branch I of the Court of First Instance of Cebu. In that proceeding she
and her brother, Alvaro Pastor, Jr., through her counsel in this case, submitted to the court's
jurisdiction by filing an opposition to Quemada's petition.

It should be noted that Civil Case No. 274-T is related to the testamentary proceeding (which is a
proceeding in rem par excellance) because the former case was filed by Quemada for the purpose
of recovering the properties which, according to his understanding, belong to the estate of Alvaro
Pastor, Sr. and which are held by Mrs. Midgely and the spouses Alvaro Pastor, Jr. and Maria Elena
Achaval.

WHEREFORE, the contempt charges and the petition for certiorari are dismissed. Costs against the
petitioner.

SO ORDERED.

G.R. No. 46631 November 16, 1939

IDONAH SLADE PERKINS, petitioner,

vs.
ARSENIO P. DIZON, Judge of First Instance of Manila, EUGENE ARTHUR PERKINS, and
BENGUET CONSOLIDATED MINING COMPANY, respondents.
Alva J. Hill for petitioner.
Ross, Lawrence, Selph & Carrascoso for respondent Judge and Benguet Consolidated Mining
Company.
DeWitt, Perkins & Ponce Enrile for respondent Perkins.

MORAN, J.:

On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of First
Instance of Manila against the Benguet Consolidated Mining Company for dividends amounting to
P71,379.90 on 52,874 shares of stock registered in his name, payment of which was being withheld
by the company; and, for the recognition of his right to the control and disposal of said shares, to the
exclusion of all others. To the complaint, the company filed its answer alleging, by way of defense,
that the withholding of such dividends and the non-recognition of plaintiff's right to the disposal and
control of the shares were due to certain demands made with respect to said shares by the petitioner
herein, Idonah Slade Perkins, and by one George H. Engelhard. The answer prays that the adverse
claimants be made parties to the action and served with notice thereof by publication, and that
thereafter all such parties be required to interplead and settle the rights among themselves. On
September 5, 1938, the trial court ordered respondent Eugene Arthur Perkins to include in his
complaint as parties defendant petitioner, Idonah Slade Perkins, and George H. Engelhard. The
complaint was accordingly amended and in addition to the relief prayed for in the original complaint,
respondent Perkins prayed that petitioner Idonah Slade Perkins and George Engelhard be adjudged
without interest in the shares of stock in question and excluded from any claim they assert thereon.
Thereafter, summons by publication were served upon the non-resident defendants, Idonah Slade
Perkins and George H. Engelhard, pursuant to the order of the trial court. On December 9, 1938,
Engelhard filed his answer to the amended complaint, and on December 10, 1938, petitioner Idonah
Slade Perkins, through counsel, filed her pleading entitled "objection to venue, motion to quash, and
demurrer to jurisdiction" wherein she challenged the jurisdiction of the lower court over her person.
Petitioner's objection, motion and demurrer having been overruled as well as her motion for
reconsideration of the order of denial, she now brought the present petition for certiorari, praying that
the summons by publication issued against her be declared null and void, and that, with respect to
her, respondent Judge be permanently prohibited from taking any action on the case.

The controlling issue here involved is whether or not the Court of First Instance of Manila has
acquired jurisdiction over the person of the present petitioner as a non-resident defendant, or,
notwithstanding the want of such jurisdiction, whether or not said court may validly try the case. The
parties have filed lengthy memorandums relying on numerous authorities, but the principles
governing the question are well settled in this jurisdiction.

Section 398 of our Code of Civil Procedure provides that when a non-resident defendant is sued in
the Philippine courts and it appears, by the complaint or by affidavits, that the action relates to real or
personal property within the Philippines in which said defendant has or claims a lien or interest,
actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding such
person from any interest therein, service of summons maybe made by publication.

We have fully explained the meaning of this provision in El Banco Español Filipino vs. Palanca, 37
Phil., 921, wherein we laid down the following rules:

(1) In order that the court may validly try a case, it must have jurisdiction over the subject-
matter and over the persons of the parties. Jurisdiction over the subject-matter is acquired by
concession of the sovereign authority which organizes a court and determines the nature
and extent of its powers in general and thus fixes its jurisdiction with reference to actions
which it may entertain and the relief it may grant. Jurisdiction over the persons of the parties
is acquired by their voluntary appearance in court and their submission to its authority, or by
the coercive power of legal process exerted over their persons.

(2) When the defendant is a non-resident and refuses to appear voluntary, the court cannot
acquire jurisdiction over his person even if the summons be served by publication, for he is
beyond the reach of judicial process. No tribunal established by one State can extend its
process beyond its territory so as to subject to its decisions either persons or property
located in another State. "There are many expressions in the American reports from which it
might be inferred that the court acquires personal jurisdiction over the person of the
defendant by publication and notice; but such is not the case. In truth, the proposition that
jurisdiction over the person of a non-resident cannot be acquired by publication and notice
was never clearly understood even in the American courts until after the decision had been
rendered by the Supreme Court of the United States in the leading case of Pennoyer v.
Neff (95 U.S., 714; 24 Law. ed., 565). In the light of that decisions which have subsequently
been rendered in that and other courts, the proposition that jurisdiction over the person
cannot be thus acquired by publication and notice is no longer open to question; and it is
now fully established that a personal judgment upon constructive or substituted service
against a non-resident who does not appear is wholly invalid. This doctrine applies to all
kinds of constructive or substituted process, including service by publication and personal
service outside of the jurisdiction in which the judgment is rendered; and the only exception
seems to be found in the case where the non-resident defendant has expressly or impliedly
consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N. S.], 292; see
also L.R.A. 585; 35 L.R.A. [N.S.], 312.)

(3) The general rule, therefore, is that a suit against a non-resident cannot be entertained by
a Philippine court. Where, however, the action is in rem or quasi in rem in connection with
property located in the Philippines, the court acquires jurisdiction over the res, and its
jurisdiction over the person of the non-resident is non-essential. In order that the court may
exercise power over the res, it is not necessary that the court should take actual custody of
the property, potential custody thereof being sufficient. There is potential custody when, from
the nature of the action brought, the power of the court over the property is impliedly
recognized by law. "An illustration of what we term potential jurisdiction over the res, is found
in the proceeding to register the title of land under our system for the registration of land.
Here the court, without taking actual physical control over the property , assumes, at the
instance of some person claiming to be owner, to exercise a jurisdiction in rem over the
property and to adjudicate the title in favor of the petitioner against all the world."

(4) As before stated, in an action in rem or quasi in rem against a non-resident defendant,
jurisdiction over his person is non-essential, and if the law requires in such case that the
summons upon the defendant be served by publication, it is merely to satisfy the
constitutional requirement of due process. If any be said, in this connection, that "may
reported cases can be cited in which it is assumed that the question of the sufficiency of
publication or notice in the case of this kind is a question affecting the jurisdiction of the
court, and the court is sometimes said to acquire jurisdiction by virtue of the publication. This
phraseology was undoubtedly originally adopted by the court because of the analogy
between service by publication and personal service of process upon the defendant; and, as
has already been suggested, prior to the decision of Pennoyer v. Neff (supra), the difference
between the legal effects of the two forms of service was obscure. It is accordingly not
surprising that the modes of expression which had already been moulded into legal tradition
before that case was decided have been brought down to the present day. But it is clear that
 the legal principle here involved is not affected by the peculiar languages in which the courts
have expounded their ideas." lawphi1.net

The reason for the rule that Philippine courts cannot acquire jurisdiction over the person of a non-
resident, as laid down by the Supreme Court of the United States in Pennoyer v. Neff, supra, may be
found in a recognized principle of public law to the effect that "no State can exercise direct
jurisdiction and authority over persons or property without its territory. Story, Confl. L., ch. 2; Wheat,
Int. L., pt. 2, ch. 2. The several States are of equal dignity and authority, and the independence of
one implies the exclusion of power from all others. And so it is laid down by jurists, as an elementary
principle, that the laws of one State have no operation outside of its territory, except so far as is
allowed by comity; and that no tribunal established by it can extend its process beyond that territory
so as to subject either persons or property to its decisions. "Any exertion of authority of this sort
beyond this limit," says Story, "is a mere nullity, and incapable of binding such persons or property in
any other tribunals." Story, Confl. L., sec. 539." (Pennoyer v. Neff, 95 U.S., 714; 24 Law. ed., 565,
568-569.).

When, however, the action relates to property located in the Philippines, the Philippine courts may
validly try the case, upon the principle that a "State, through its tribunals, may subject property
situated within its limits owned by non-residents to the payment of the demand of its own citizens
against them; and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the
State where the owners are domiciled. Every State owes protection to its citizens; and, when non-
residents deal with them, it is a legitimate and just exercise of authority to hold and appropriate any
property owned by such non-residents to satisfy the claims of its citizens. It is in virtue of the State's
jurisdiction over the property of the non-resident situated within its limits that its tribunals can inquire
into the non-resident's obligations to its own citizens, and the inquiry can then be carried only to the
extent necessary to control the disposition of the property. If the non-resident has no property in the
State, there is nothing upon which the tribunals can adjudicate." (Pennoyer v. Neff, supra.)

In the instant case, there can be no question that the action brought by Eugene Arthur Perkins in his
amended complaint against the petitioner, Idonah Slade Perkins, seeks to exclude her from any
interest in a property located in the Philippines. That property consists in certain shares of stocks of
the Benguet Consolidated Mining Company, a sociedad anonima, organized in the Philippines under
the provisions of the Spanish Code of Commerce, with its principal office in the City of Manila and
which conducts its mining activities therein. The situs of the shares is in the jurisdiction where the
corporation is created, whether the certificated evidencing the ownership of those shares are within
or without that jurisdiction. (Fletcher Cyclopedia Corporations, Permanent ed. Vol. 11, p. 95). Under
these circumstances, we hold that the action thus brought is quasi in rem, for while the judgement
that may be rendered therein is not strictly a judgment in rem, "it fixes and settles the title to the
property in controversy and to that extent partakes of the nature of the judgment in rem." (50 C.J., p
503). As held by the Supreme Court of the United States in Pennoyer v. Neff (supra);

It is true that, in a strict sense, a proceeding in rem is one taken directly against property,
and has for its object the disposition of the property, without reference to the title of individual
claimants; but , in a large and more general sense, the terms are applied to actions between
parties, where the direct object is to reach and dispose of property owned by them, or of
some interest therein.

The action being in quasi in rem, The Court of First Instance of Manila has jurisdiction over the
person of the non-resident. In order to satisfy the constitutional requirement of due process,
summons has been served upon her by publication. There is no question as to the adequacy of
publication made nor as to the mailing of the order of publication to the petitioner's last known place
of residence in the United States. But, of course, the action being quasi in rem and notice having be
made by publication, the relief that may be granted by the Philippine court must be confined to
the res, it having no jurisdiction to render a personal judgment against the non-resident. In the
amended complaint filed by Eugene Arthur Perkins, no money judgment or other relief in
personam is prayed for against the petitioner. The only relief sought therein is that she be declared
to be without any interest in the shares in controversy and that she be excluded from any claim
thereto.

Petitioner contends that the proceeding instituted against her is one of interpleading and is therefore
an action in personam. Section 120 of our Code of Civil Procedure provides that whenever
conflicting claims are or may be made upon a person for or relating to personal property, or the
performance of an obligation or any portion thereof, so that he may be made subject to several
actions by different persons, such person may bring an action against the conflicting claimants,
disclaiming personal interest in the controversy, and the court may order them to interplead with one
another and litigate their several claims among themselves, there upon proceed to determine their
several claims. Here, The Benguet Consolidated Mining Company, in its answer to the complaint
filed by Eugene Arthur Perkins, averred that in connection with the shares of stock in question,
conflicting claims were being made upon it by said plaintiff, Eugene Arthur Perkins, his wife Idonah
Slade Perkins, and one named George H. Engelhard, and prayed that these last two be made
parties to the action and served with summons by publication, so that the three claimants may
litigate their conflicting claims and settle their rights among themselves. The court has not issued an
order compelling the conflicting claimants to interplead with one another and litigate their several
claims among themselves, but instead ordered the plaintiff to amend his complaint including the
other two claimants as parties defendant. The plaintiff did so, praying that the new defendants thus
joined be excluded fro any interest in the shares in question, and it is upon this amended complaint
that the court ordered the service of the summons by publication. It is therefore, clear that the
publication of the summons was ordered not in virtue of an interpleading, but upon the filing of the
amended complaint wherein an action quasi in rem is alleged.

Had not the complaint been amended, including the herein petitioner as an additional defendant, and
had the court, upon the filing of the answer of the Benguet Consolidated Mining Company, issued an
order under section 120 of the Code of Civil Procedure, calling the conflicting claimants into court
and compelling them to interplead with one another, such order could not perhaps have validly been
served by publication or otherwise, upon the non-resident Idonah Slade Perkins, for then the
proceeding would be purely one of interpleading. Such proceeding is a personal action, for it merely
seeks to call conflicting claimants into court so that they may interplead and litigate their several
claims among themselves, and no specific relief is prayed for against them, as the interpleader have
appeared in court, one of them pleads ownership of the personal property located in the Philippines
and seeks to exclude a non-resident claimant from any interest therein, is a question which we do
not decide not. Suffice it to say that here the service of the summons by publication was ordered by
the lower court by virtue of an action quasi in rem against the non-resident defendant.

Respondents contend that, as the petitioner in the lower court has pleaded over the subject-matter,
she has submitted herself to its jurisdiction. We have noticed, however, that these pleas have been
made not as independent grounds for relief, but merely as additional arguments in support of her
contention that the lower court had no jurisdiction over the person. In other words, she claimed that
the lower court had no jurisdiction over her person not only because she is a non-resident, but also
because the court had no jurisdiction over the subject-matter of the action and that the issues therein
involved have already been decided by the New York court and are being relitigated in the California
court. Although this argument is obviously erroneous, as neither jurisdiction over the subject-matter
nor res adjudicata nor lis pendens has anything to do with the question of jurisdiction over her
person, we believe and so hold that the petitioner has not, by such erroneous argument, submitted
herself to the jurisdiction of the court. Voluntary appearance cannot be implied from either a
mistaken or superflous reasoning but from the nature of the relief prayed for.
For all the foregoing, petition is hereby denied, with costs against petitioner.

G.R. No. 141423 November 15, 2000

MELINA P. MACAHILIG, petitioner,

vs.
The Heirs of GRACE M. MAGALIT, respondents.

DECISION

PANGANIBAN, J.:

An interlocutory order cannot give rise to res judicata. Only a final and unappealable judgment on
the merits rendered by a court of competent jurisdiction can effectively bar another action that has
identical parties, subject matter and cause of action as the prior one.

The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the Decision1 dated
October 15, 1999, and the Resolution dated December 28, 1999, issued by the Court of Appeals
(CA) in CA-GR SP No. 31809. The dispositive portion of the challenged Decision reads as follows:

"WHEREFORE, the petition for certiorari is hereby DENIED and is accordingly DISMISSED for lack
of merit.

"SO ORDERED."2

The assailed Resolution,3 on the other hand, denied petitioner’s Motion for Reconsideration.

The Facts

On February 5, 1965, Pepito Magalit, deceased husband of Dr. Grace M. Magalit (now substituted
by her heirs as respondents in view of her recent demise), filed with the then Philippine Fisheries
Commission -- now Bureau of Fisheries and Aquatic Resources (BFAR) -- Fishpond Application No.
24400. The application was for eleven (11) hectares of land situated in the Municipality of Batan,
Province of Aklan.4 On April 13, 1972, Bernardo Macahilig, deceased husband of petitioner, filed with
the BFAR Fishpond Application No. 29972 for five of the eleven hectares which Magalit had
previously applied for.5 On February 28, 1972, BFAR rejected Macahilig’s application for his failure to
submit all the requirements.

Undaunted, Macahilig protested Magalit’s application (in what will be referred to as the "Fishpond
Case") on November 8, 1976, contending that for a period of 20 years, he had been in actual
possession of the five-hectare area included in Magalit’s application.

On August 22, 1979, the director of BFAR ordered the Committee on Fishpond Claims and Conflict
to hear and determine the rights of Macahilig and Magalit over the disputed area. The Committee
concluded that the former was merely the latter’s laborer and caretaker. On June 6, 1980, BFAR
Director Felix R. Gonzales rendered an Order disposing as follows:

"WHEREFORE, premises considered, the letter protest dated November 8, 1976 filed by Bernardo
Macahilig against Pepito Magalit, should be as hereby it is DISMISSED for lack of merit. Fp. A. No.
29972 of Bernardo Macahilig shall remain REJECTED; and Fp. A. No. 24400 filed by Pepito Magalit
should be, as it is hereby GIVEN DUE COURSE, to contain 10.0 hectares only, as discussed earlier
on page 8 hereof, subject to the condition that the improvements existing on the area shall be
forfeited in favor of the Government with a provision that said Pepito Magalit has the option if he so
desire[s] to purchase from the government the aforesaid improvements after the re-appraisal thereof
by representatives of this Office, otherwise, said area shall be declared open and available

"The Regional Director of Iloilo City is hereby directed to advise Bernardo Macahilig or other
occupants to vacate the premises after the finality of this Order and take custody of the area in
question. (Annex "B", id.; pp. 30-31, id.)."6

Macahilig elevated this disposition to the Office of the President. However, then Presidential
Assistant for Legal Affairs Manuel M. Lazaro, by "authority of the President," denied reconsideration
in this language:

"WHEREFORE, the motion for reconsideration of Bernardo Macahilig is hereby DENIED. This
DENIAL IS FINAL."

Subsequently, Macahilig challenged this action via a "Petition for Review with Prayer for an Issuance
of a Writ of Injunction and/or Restraining Order." He had filed the Petition originally with the Supreme
Court, which then referred it to the Intermediate Appellate Court (IAC) where it was docketed as AC-
GR SP No. 03448. On March 26, 1985, the appellate court rendered a Decision declaring that
Magalit had occupied, cleared and improved the land; and that Macahilig was his mere caretaker
and laborer. It disposed as follows:

"WHEREFORE, this petition for review is hereby DENIED and is DISMISSED, for lack of legal and
factual basis.

"It is hereby ordered that the petitioner or anybody acting in his behalf is/are to vacate the subject
property in question, and to turn it over to the heirs of Pepito Magalit, considering that the challenged
decision as abovestated, has long become final and executory on May 2, 1984 yet."7

Later on, Magalit instituted Civil Case No. 3517 in the Regional Trial Court of Kalibo, Aklan, for the
issuance of a Writ of Execution.8 On November 29, 1985, Deputy Provincial Sheriff of Aklan Eriberto
Taytayon Jr. implemented the Writ issued by Judge Jaime D. Discaya on October 30, 1985. The
heirs of Pepito Magalit, represented by Dr. Magalit, filed on August 6, 1990, a "Motion for Correction
of the Implementation of the Decision of the Court of Appeals in CA-GR SP No. 03448 [p]romulgated
[o]n March 26, 1985 and of the Decision of the Court dated October 30, 1985." In that Motion, they
prayed that the trial court properly implement said IAC Decision by ordering Spouses Macahilig to
turn over to her the possession of Lot 4417, which had an area of 2.0805 hectares, more or less.9 Dr.
Magalit contended that the Writ of Execution was not satisfied, because the spouses had refused to
give up the fishpond in question.

On September 17, 1992, Judge Maria Carillo-Zaldivar issued the following Order:

"Finding from the Ma[n]ifestation of counsel on record for the movant that the two (2) hectares of
land she desires to be executed thru an alias writ is outside the ten (10) hectares awarded to her by
the Fisheries, this Court has no jurisdiction over her claim.

"WHEREFORE, the motion for reconsideration dated September 9, 1992 is hereby DENIED."10
On October 9, 1992, Dr. Magalit filed a "Petition for Contempt Against Melina Macahilig," alleging
that on November 29, 1985, Bernardo Macahilig had refused to turn over Lot 4417 to her.

The trial court appointed a commissioner to determine whether Lot 4417 was included in the parcels
of land awarded to the deceased Magalit.11 Sheriff Nelson R. dela Cruz, the appointed commissioner,
submitted his Commissioner’s Report dated May 13, 1993, pertinent portions of which read:

"That on April 29, 1993[,] a certain Cipriano Matutino, an employee of the Department of Agriculture
Regional Office in Iloilo City personally came to the [o]ffice of the undersigned commissioner and
delivered a letter dated April 26, 1993, addressed to the undersigned with attached [s]ketch. x x x.

"That on May 7, 1993, the undersigned constituted [sic] himself into the [f]ishpond in [q]uestion which
is situated at Lalab, Batan, Aklan, together with x x x Respondent Melina Macahilig, Barangay
Chairman Robinson de la Vega and the representative of Dr. Grace M. Magalit.

"That x x x Petitioner Dr. Grace M. Magalit is in the actual possession of Lot-A with an area of
99,114 [s]quare [m]eters or 9.9 [h]as. which is a fully developed [f]ishpond, and without any question
from the respondent. However, as per Order of the Bureau of Fisheries and Aquatic Resources
dated June 6, 1980, that portion labelled Parcel-A in the sketch with an area of 2.3 [h]as. has to be
excluded because it is needed for [f]orest purposes. So if we deduct 2.3 [h]as. from the 9.9 [h]as. the
remaining area for the [p]etitioner will only be 7.6 [h]as., that is [why] the Bureau of Fisheries has to
include Lot 4417 and Lot 5216, in order that the area of 10.0 hectares in said order will be
satisfied."12

In the Order of June 18, 1993, the trial court adopted the Commissioner’s Report and ruled in favor
of Dr. Magalit in this wise:

"Finding from the [C]ommissioner’s [R]eport and [the] sketch submitted that the questioned Lot 4417
with an area of 20,805 square meters is actually in the possession of [Petitioner] Melina Macahilig
but which was given to the [respondent’s] husband, let a writ of execution be issued in favor of the
[respondent] and against [Petitioner] Melina Macahilig for the delivery of Lot 4417.

"As regards Lot 5216, the report of the commissioner states that the same is covered by an Original
Certificate of Title No. P-19359 in the name of Julie Cawaling. The petitioner is hereby directed to
desist from occupying this lot until the original certificate of title in the name of Julie Cawaling shall
have been passed upon by a competent court.

"Failure on the part of the [petitioner] to deliver x x x said area covered by Lot 4417 to the
[respondent], this court will declare her in contempt."13

Petitioner moved for reconsideration, but her motion was denied in the Order of July 14,
1993,14 which held that she had no valid reason to possess the disputed lot, considering that her
husband’s application therefor had been rejected.15

Unfazed by the unfavorable turn of events, petitioner filed with the CA, on August 12, 1993, a
Petition for Certiorari16alleging that the trial court had acted with grave abuse of discretion in issuing
the Orders dated June 18 and July 14, 1993.

Ruling of the Court of Appeals

The CA ruled that the trial court did not commit grave abuse of discretion when it issued a Writ of
Execution ordering the delivery of Lot 4417 to Dr. Magalit. The records show that the fishpond
application of petitioner’s husband was rejected by the BFAR, and that petitioner did not present any
other evidence to prove her right of possession over the disputed property.

On the other hand, Dr. Magalit’s claim was based on the Decision in the Fishpond Case, which
upheld her right -- as the surviving spouse of the applicant -- to possess the ten hectares of land
awarded to him, including Lot 4417 which covered an area of more or less 2.0805 hectares. The
disputed lot was included in the area awarded to Dr. Magalit because of the report of the
commissioner appointed by the trial court to settle the issue. Petitioner had not objected either to the
said appointment or to the Report.

The Orders of June 18 and July 14, 1993 were based on the evidence presented before the trial
court. Consequently, they cannot be regarded as capricious and whimsical exercises of judicial
power.

Hence, this Petition.17

The Issues

Petitioner interposes the following issues for our resolution:18

"Whether x x x the Decision dated October 15, 1999 and the Resolution dated December 28, 1999
are contrary to law and established evidence and jurisprudence because the court a quo has no
jurisdiction to order the execution of the Orders dated June 18, 1993 and July 14, 1993 x x x
requiring the petitioner to turn over Lot no. 4417 to Dra. Magalit.

"Whether x x x [said] Orders x x x are void for lack of jurisdiction.

"Whether [said] Orders include Lot 4417.

"Whether x x x the lot in question can be turned over to the private respondents.

"Whether x x x there is a judgment in favor of Dra. Magalit including Lot 4417.

"Whether x x x the Order dated September 17, 1992 is conclusive or operates as a bar to the Orders
dated June 18, 1993 and July 14, 1993."

In simpler terms, the Petition raises the following crucial issues:

1. Was the issuance of the Writ of Execution in Civil Case No. 3517 proper?

2. Did the trial court acquire jurisdiction over Lot 4417?

3. Did the September 17, 1992 Order constitute res adjudicata barring the June 18 and July 14,
1993 Orders of the trial court?

The Court’s Ruling

The Petition has no merit.

First Issue:

Propriety of Writ of Execution

Petitioner insists that the Decision in AC-GR SP No. 03448 has already been complied with,
because the fishponds adjudicated to respondents had been surrendered to the latter. She cites as
evidence the receipt dated November 27, 1985 signed by Robinson de la Vega, the administrator of
Dr. Magalit; and the Decision in Civil Case No. 3436 for annulment of mortgage. The receipt19 stated
that De la Vega had received from Deputy Sheriff Taytayon a parcel of land located in Barangay
Lalab, Batan, Aklan, having an area of 99,114 square meters. On the other hand, the RTC of Kalibo,
Aklan, issued on November 4, 1988, in Civil Case No. 3436, a Decision for annulment of mortgage
(the "Annulment Case," for short), which states:

"Moreover, as above stated, the disputed fishpond had, in December 1985, already been turned
over officially to [Dr. Grace Magalit] by the Office of the Provincial Sheriff with the assistance of the
Office of the Provincial Fishery Officer and the Philippine Constabulary."20

We disagree. A judgment is a final ruling by a court of competent jurisdiction regarding the rights of
the parties or other matters submitted to it in an action or a proceeding.21 As clearly stated in the
assailed Decision, the heirs of Dr. Magalit possessed a right superior to that of petitioner’s husband,
whose application was rejected by BFAR, Presidential Assistant Lazaro and the IAC. Being the
prevailing party, respondents were entitled to the execution of the Decision in the Fishpond Case.

In her "Motion for Correction" filed in Civil Case No. 3517, Dr. Magalit averred that "per Officer’s
Return x x x the Writ of Execution dated November 29, 1985, x x x was not satisfied because the
defendant-spouses x x x opposed the official [turnover] of the fishpond land in question x x
x."22 Furthermore, in the "Petition for Contempt against Melina Macahilig" dated October 9, 1992, she
also stated that petitioner and her husband refused to turn over the possession of the disputed
fishpond with an area of 2.0905 hectares despite the service of the Writ of Execution. She added
that "on November 29, 1985, Deputy Sheriff x x x Taytayon Jr. [served] the Writ of Execution x x x
and that the defendant, Bernardo Macahilig, did not acknowledge receipt of the Writ of Execution,
[alleging] that he had nothing to turn over."23

This failure to satisfy the judgment in the Fishpond Case was confirmed by the Commissioner’s
Report dated May 13, 1993, which explained:

"That x x x Dr. Grace M. Magalit is in the actual possession of Lot-A with an area of 99,114 [s]quare
[m]eters or 9.9 [h]as. which is a fully developed [f]ishpond, and without any question from the
[petitioner]. However, as per Order of the Bureau of Fisheries and Aquatic Resources dated June 6,
1980, that portion labeled Parcel-A in the sketch with an area of 2.3 [h]as. has to be excluded
because it is needed for [f]orest purposes. So if we deduct 2.3 has. from the 9.9 [h]as. the remaining
area for the petitioner will only be 7.6 [h]as., that is [why] the Bureau of Fisheries has to include Lot
4417 and Lot 5216, in order that the area of 10.0 hectares in said order will be satisfied."24

The Decision in the Annulment Case, on the other hand, has no effect or bearing on the Fishpond
Case. On February 28, 1985, the Annulment Case (Civil Case No. 3436) was filed with the RTC of
Kalibo, Aklan, praying for the invalidation of the real estate mortgage which Spouses Macahilig had
constituted in favor of the Aklan Development Bank. The mortgage was a lien on the fishponds that
had been awarded to Dr. Magalit’s husband. These fishponds were described in the Complaint for
annulment of mortgage as follows:

"PARCEL ONE:
"A parcel of fishpond land with an area of Twenty Thousand Eight Hundred Five (20,805) [s]quare
meters, more or less. Bounded on the North by Lot 5212; South by a [c]reek; East by a [c]reek; West
by Lot No. A in the [s]ketch [p]lan prepared by the Bureau of Fisheries."

"PARCEL TWO:

"A parcel of fishpond land with an area of Ninety Nine Thousand One Hundred Fourteen (99,114)
[s]quare meters, more or less, located in Lalab, Batan, Aklan. Bounded on the North by Lot 4420
Azarraga and others; South by a [c]reek; East by Lot 4417; and West by Lot B; shown in the [s]ketch
[p]lan prepared by the Bureau of Fisheries."25

On November 4, 1988, Judge Romulo T. Arellano invalidated the mortgage and the sale of said
parcel of land with a declaration that the "disputed fishpond" had already been turned over to Dr.
Magalit. The Annulment Case, however, was entirely different from the Fishpond Case. Thus, the
RTC of Kalibo, Aklan, was not barred from ordering the surrender of Lot 4417 to satisfy the
execution of the judgment in the Fishpond Case. The Decision in the Annulment Case simply meant
that the lots mortgaged by the petitioner to the Aklan Development Bank, which formed part of the
10-hectare property awarded to Dr. Magalit’s husband in the Fishpond Case, were separate and
distinct from Lot 4417. Possession of said Lot 4417, which formed part of the property awarded to
Magalit, was not at issue in the Annulment Case. Contrary to petitioner’s claim, the Decision therein
did not state that this lot was actually turned over to respondents.

Second Issue: Jurisdiction

Petitioner further contends that the trial court gravely abused its discretion in ordering the turnover of
Lot 4417 to Dr. Magalit, because of its earlier ruling that it had no jurisdiction over said property.

We cannot place much weight on this Order. First, the September 9, 1992 Motion for
Reconsideration taken up in said Order has not been attached to or alleged in the herein Petition.
Hence, we cannot fully consider the nature of the claim that was denied by this Order or speculate
on why the trial court ruled that it had no jurisdiction over the movant’s claim. We cannot even guess
which Order the unidentified movant wanted to be reconsidered.

More important, it is too late in the day for petitioner to challenge the jurisdiction of the trial court.
She clearly submitted to its authority by her unqualified participation in Civil Case No. 3517. We
cannot allow her to attack its jurisdiction simply because it rendered a Decision prejudicial to her
position. Participation in all stages of a case before a trial court effectively estops a party from
challenging its jurisdiction.26 One cannot belatedly reject or repudiate its decision after voluntarily
submitting to its jurisdiction, just to secure affirmative relief against one’s opponent or after failing to
obtain such relief.27 If, by deed or conduct, a party has induced another to act in a particular manner,
estoppel effectively bars the former from adopting an inconsistent position, attitude or course of
conduct that thereby causes loss or injury to the latter.28

Petitioner insists that the trial court had no jurisdiction over the res of Lot 4417 when it issued its
September 17, 1992 Order.

Again, we disagree. Jurisdiction over the res is acquired either (a) by the seizure of the property
under legal process, whereby it is brought into actual custody of the law; or (b) as a result of the
institution of legal proceedings, in which the power of the court is recognized and made effective.29 In
the latter condition, the property, though at all times within the potential power of the court, may not
be in the actual custody of said court.
The trial court acquired jurisdiction over the disputed lot by virtue of the institution of the Petition for a
Writ of Execution filed by the respondents’ predecessors in interest. Without taking actual physical
control of the property, it had an impliedly recognized potential jurisdiction or potential custody over
the res. This was the jurisdiction which it exercised when it issued the Writ of Execution directing the
surrender of Lot 4417 to Dr. Magalit.

Third Issue: Res Judicata

Citing Section 49 of Rule 39, Rules of Court, petitioner insists that the September 17, 1997 Order of
the trial court in Civil Case No. 3517 bars it from rehearing questions on the ownership of Lot 4417.
She insists that said Order has become final and executory, because Dr. Magalit did not appeal it.

We disagree. Final, in the phrase judgments or final orders found in Section 49 of Rule 39, has two
accepted interpretations. In the first sense, it is an order that one can no longer appeal because the
period to do so has expired, or because the order has been affirmed by the highest possible tribunal
involved. The second sense connotes that it is an order that leaves nothing else to be done, as
distinguished from one that is interlocutory. The phrase refers to a final determination as opposed to
a judgment or an order that settles only some incidental, subsidiary or collateral matter arising in an
action; for example, an order postponing a trial, denying a motion to dismiss or allowing intervention.
Orders that give rise to res judicata and conclusiveness of judgment apply only to those falling under
the second category.

For res judicata to apply, the following elements must concur: (1) there is a final judgment or order;
(2) the court rendering it has jurisdiction over the subject matter and the parties; (3) the judgment is
one on the merits; and (4) there is, between the two cases, identity of parties, subject matter and
cause of action.30 For example, an order overruling a motion to dismiss does not give rise to res
adjudicata that will bar a subsequent action, because such order is merely interlocutory and is
subject to amendments until the rendition of the final judgment.31

A judgment or an order on the merits is one rendered after a determination of which party is upheld,
as distinguished from an order rendered upon some preliminary or formal or merely technical
point.32 Dismissal of a case for failure of plaintiff to comply with a "notice of case status" signed by an
officer-in-charge does not have the effect of an adjudication on the merits.33 Strictly speaking, res
judicata does not apply to decisions or orders adjudicating interlocutory motions.

The interlocutory nature of the Order of September 17, 1992 is evident from the fact that the trial
court proceeded to hear and determine the inclusion of Lot 4417 in the Fishpond Case. Without any
objection from petitioner, it commissioned Sheriff de la Cruz to hear and submit a report on the
issue. If it is true, as she claims, that the September 17, 1992 Order constituted a final judgment,
then she should have objected to any further proceedings.

Petitioner alleges that her failure to object on time to the Commissioner’s Report was a "plain error,"
which could be corrected by the CA. This is wrong. Her failure to object to the Report cannot be
dismissed as just a matter of assigning errors on appeal. Rather, it was a failure to assert her right
over the lot in dispute, an inaction that constituted estoppel. After having performed affirmative acts
upon which a person acted in good faith, the actor cannot thereafter repudiate those acts or renege
on their effects, to the prejudice of the former.34

The apparent conflict between the Orders of the trial court cannot be construed in favor of petitioner,
since her Petition does not present sufficient basis for us to reverse the CA. The rule of thumb in
these cases is to uphold the validity of all these orders.35 To be sure, petitioner’s lack of any right to
own or possess the disputed lot should be put to rest, as this issue has been resolved against her
several times. It is about time she faces the consequences of those decisions.

WHEREFORE, the Petition is DENIED, and the assailed Decision and

Resolution AFFIRMED. Petitioner is ordered to SURRENDER the possession of Lot 4417 to
respondents. Costs against petitioner.

SO ORDERED.

G.R. No. 162416 January 31, 2006

CHESTER DE JOYA, Petitioner,

vs.
JUDGE PLACIDO C. MARQUEZ, in his capacity as Presiding Judge of Branch 40, Manila-RTC,
PEOPLE OF THE PHILIPPINES and THE SECRETARY OF THE DEPARTMENT OF
JUSTICE, Respondents.

DECISION

AZCUNA, J.:

This is a petition for certiorari and prohibition that seeks the Court to nullify and set aside the warrant
of arrest issued by respondent judge against petitioner in Criminal Case No. 03-219952 for violation
of Article 315, par. 2(a) of the Revised Penal Code in relation to Presidential Decree (P.D.) No.
1689. Petitioner asserts that respondent judge erred in finding the existence of probable cause that
justifies the issuance of a warrant of arrest against him and his co-accused.

Section 6, Rule 112 of the Revised Rules of Criminal Procedure provides:

Sec. 6. When warrant of arrest may issue. – (a) By the Regional Trial Court. – Within ten (10)
days from the filing of the complaint or information, the judge shall personally evaluate the resolution
of the prosecutor and its supporting evidence. He may immediately dismiss the case if the evidence
on record clearly fails to establish probable cause. If he finds probable cause, he shall issue a
warrant of arrest, or a commitment order if the accused has already been arrested pursuant
to a warrant issued by the judge who conducted the preliminary investigation or when the
complaint or information was filed pursuant to section 7 of this Rule. In case of doubt on the
existence of probable cause, the judge may order the prosecutor to present additional evidence
within five (5) days from notice and the issuance must be resolved by the court within thirty (30) days
from the filing of the complaint or information.

x x x1

This Court finds from the records of Criminal Case No. 03-219952 the following documents to
support the motion of the prosecution for the issuance of a warrant of arrest:

1. The report of the National Bureau of Investigation to Chief State Prosecutor Jovencito R.
Zuño as regards their investigation on the complaint filed by private complainant Manuel Dy
Awiten against Mina Tan Hao @ Ma. Gracia Tan Hao and Victor Ngo y Tan for syndicated
estafa. The report shows that Hao induced Dy to invest more than a hundred million pesos in
State Resources Development Management Corporation, but when the latter’s investments
 fell due, the checks issued by Hao in favor of Dy as payment for his investments were
dishonored for being drawn against insufficient funds or that the account was closed.2

2. Affidavit-Complaint of private complainant Manuel Dy Awiten.3

3. Copies of the checks issued by private complainant in favor of State Resources

Corporation.4

4. Copies of the checks issued to private complainant representing the supposed return of
his investments in State Resources.5

5. Demand letter sent by private complainant to Ma. Gracia Tan Hao.6

6. Supplemental Affidavit of private complainant to include the incorporators and members of

the board of directors of State Resources Development Management Corporation as
participants in the conspiracy to commit the crime of syndicated estafa. Among those
included was petitioner Chester De Joya.7

7. Counter-Affidavits of Chester De Joya and the other accused, Ma. Gracia Hao and Danny
S. Hao.

Also included in the records are the resolution issued by State Prosecutor Benny Nicdao finding
probable cause to indict petitioner and his other co-accused for syndicated estafa,8 and a copy of the
Articles of Incorporation of State Resources Development Management Corporation naming
petitioner as incorporator and director of said corporation.

This Court finds that these documents sufficiently establish the existence of probable cause as
required under Section 6, Rule 112 of the Revised Rules of Criminal Procedure. Probable cause to
issue a warrant of arrest pertains to facts and circumstances which would lead a reasonably discreet
and prudent person to believe that an offense has been committed by the person sought to be
arrested. It bears remembering that "in determining probable cause, the average man weighs facts
and circumstances without resorting to the calibrations of our technical rules of evidence of which his
knowledge is nil. Rather, he relies on the calculus of common sense of which all reasonable men
have an abundance."9 Thus, the standard used for the issuance of a warrant of arrest is less
stringent than that used for establishing the guilt of the accused. As long as the evidence presented
shows a prima facie case against the accused, the trial court judge has sufficient ground to issue a
warrant of arrest against him.

The foregoing documents found in the records and examined by respondent judge tend to show that
therein private complainant was enticed to invest a large sum of money in State Resources
Development Management Corporation; that he issued several checks amounting
to P114,286,086.14 in favor of the corporation; that the corporation, in turn, issued several checks to
private complainant, purportedly representing the return of his investments; that said checks were
later dishonored for insufficient funds and closed account; that petitioner and his co-accused, being
incorporators and directors of the corporation, had knowledge of its activities and transactions.
These are all that need to be shown to establish probable cause for the purpose of issuing a warrant
of arrest. It need not be shown that the accused are indeed guilty of the crime charged. That matter
should be left to the trial. It should be emphasized that before issuing warrants of arrest, judges
merely determine personally the probability, not the certainty, of guilt of an accused. Hence, judges
do not conduct a de novo hearing to determine the existence of probable cause. They just personally
review the initial determination of the prosecutor finding a probable cause to see if it is supported by
substantial evidence.10 In case of doubt on the existence of probable cause, the Rules allow the
judge to order the prosecutor to present additional evidence. In the present case, it is notable that
the resolution issued by State Prosecutor Benny Nicdao thoroughly explains the bases for his
findings that there is probable cause to charge all the accused with violation of Article 315, par. 2(a)
of the Revised Penal Code in relation to P.D. No. 1689.

The general rule is that this Court does not review the factual findings of the trial court, which include
the determination of probable cause for the issuance of warrant of arrest. It is only in exceptional
cases where this Court sets aside the conclusions of the prosecutor and the trial judge on the
existence of probable cause, that is, when it is necessary to prevent the misuse of the strong arm of
the law or to protect the orderly administration of justice. The facts obtaining in this case do not
warrant the application of the exception. lavvph!l.ne+

In addition, it may not be amiss to note that petitioner is not entitled to seek relief from this Court nor
from the trial court as he continuously refuses to surrender and submit to the court’s jurisdiction.
Justice Florenz D. Regalado explains the requisites for the exercise of jurisdiction and how the court
acquires such jurisdiction, thus:

x x x Requisites for the exercise of jurisdiction and how the court acquires such jurisdiction:

a. Jurisdiction over the plaintiff or petitioner: This is acquired by the filing of the complaint,
petition or initiatory pleading before the court by the plaintiff or petitioner.

b. Jurisdiction over the defendant or respondent: This is acquired by the voluntary

appearance or submission by the defendant or respondent to the court or by coercive
process issued by the court to him, generally by the service of summons.

c. Jurisdiction over the subject matter: This is conferred by law and, unlike jurisdiction over
the parties, cannot be conferred on the court by the voluntary act or agreement of the
parties.

d. Jurisdiction over the issues of the case: This is determined and conferred by the pleadings
filed in the case by the parties, or by their agreement in a pre-trial order or stipulation, or, at
times by their implied consent as by the failure of a party to object to evidence on an issue
not covered by the pleadings, as provided in Sec. 5, Rule 10.

e. Jurisdiction over the res (or the property or thing which is the subject of the litigation). This
is acquired by the actual or constructive seizure by the court of the thing in question, thus
placing it in custodia legis, as in attachment or garnishment; or by provision of law which
recognizes in the court the power to deal with the property or subject matter within its
territorial jurisdiction, as in land registration proceedings or suits involving civil status or real
property in the Philippines of a non-resident defendant.

Justice Regalado continues to explain:

In two cases, the court acquires jurisdiction to try the case, even if it has not acquired jurisdiction
over the person of a nonresident defendant, as long as it has jurisdiction over the res, as when the
action involves the personal status of the plaintiff or property in the Philippines in which the
defendant claims an interest. In such cases, the service of summons by publication and notice to the
defendant is merely to comply with due process requirements. Under Sec. 133 of the Corporation
Code, while a foreign corporation doing business in the Philippines without a license cannot sue or
intervene in any action here, it may be sued or proceeded against before our courts or administrative
tribunals.11
Again, there is no exceptional reason in this case to allow petitioner to obtain relief from the courts
without submitting to its jurisdiction. On the contrary, his continued refusal to submit to the court’s
jurisdiction should give this Court more reason to uphold the action of the respondent judge. The
purpose of a warrant of arrest is to place the accused under the custody of the law to hold him for
trial of the charges against him. His evasive stance shows an intent to circumvent and frustrate the
object of this legal process. It should be remembered that he who invokes the court’s jurisdiction
must first submit to its jurisdiction.

WHEREFORE, the petition is DISMISSED.

No costs.