THE CITY OF MANILA, represented by MAYOR JOSE L.
Petitioners filed a Motion for Reconsideration 4 but the RTC
ATIENZA, JR.,and MS. LIBERTY M. TOLEDO, in her capacity as
the City Treasurer of Manila,petitioners, vs.HON. CARIDAD
H. GRECIA-CUERDO, in her capacity as Presiding Judge of the
Regional Trial Court, Branch 112, Pasay City; SM MART,
INC.;SM PRIME HOLDINGS, INC.;STAR APPLIANCES CENTER;
SUPERVALUE, INC.;ACE HARDWARE PHILIPPINES,
INC.;WATSON PERSONAL CARE STORES,
PHILS.,INC.;JOLLIMART PHILS.,CORP.;SURPLUS MARKETING
CORPORATION and SIGNATURE LINES, respondents.
PERALTA, J
Before the Court is a special civil action for certiorari under
Rule 65 of the Rules of Court seeking to reverse and set aside
the Resolutions 1 dated April 6, 2006 and November 29,
2006 of the Court of Appeals (CA) in CA-G.R. SP No. 87948.
The antecedents of the case, as summarized by the CA, are as
follows: The record shows that petitioner City of Manila,
through its treasurer, petitioner Liberty Toledo, assessed taxes
for the taxable period from January to December 2002 against
private. respondents SM Mart, Inc.,SM Prime Holdings,
Inc.,Star Appliances Center, Supervalue, Inc.,Ace Hardware
Philippines, Inc.,Watsons Personal Care Stores
Phils.,Inc.,Jollimart Philippines Corp.,Surplus Marketing Corp.
and Signature Lines. In addition to the taxes purportedly due
from private respondents pursuant to Sections 14, 15, 16,
17 of the Revised Revenue Code of Manila (RRCM), said
assessment covered the local business taxes petitioners were
authorized to collect under Section 21 of the same Code.
Because payment of the taxes assessed was a precondition for
the issuance of their business permits, private respondents
were constrained to pay the P19,316,458.77 assessment under
protest.
On January 24, 2004, private respondents filed [with the
Regional Trial Court of Pasay City] the complaint denominated
as one for "Refund or Recovery ofIllegally and/or Erroneously-
Collected Local Business Tax, Prohibition with Prayer to Issue
TRO and Writ of Preliminary Injunction" which was docketed
as Civil Case No. 04-0019-CFM before public respondent's sala
[at Branch 112].In the amended complaint they filed on
February 16, 2004, private respondents alleged that, in
relation to Section 21 thereof, Sections 14, 15, 16, 17, 18, 19
and 20 of the RRCM were violative of the limitations and
guidelines under Section 143 (h) of Republic Act No. 7160
[Local Government Code] on double taxation. They further
averred that petitioner city's Ordinance No. 8011 which
amended pertinent portions of the RRCMhad already been
declared to be illegal and unconstitutional by the
Department of Justice. 2
In its Order 3 dated July 9, 2004, the RTC granted private
respondents' application for a writ of preliminary injunction.
1
denied it in its Order 5 dated October 15, 2004.
Petitioners then filed a special civil action for certiorari with
the CA assailing the July 9, 2004 and October 15, 2004
Orders of the RTC.
In its Resolution promulgated on April 6, 2006, the CA
dismissed petitioners' petition for certiorari holding that it has
no jurisdiction over the said petition. The CA ruled that since
appellate jurisdiction over private respondents' complaint for
tax refund, which was filed with the RTC, is vested in the
Court of Tax Appeals (CTA), pursuant to its expanded
jurisdiction under Republic Act No. 9282 (RA 9282), it follows
that a petition for certiorari seeking nullification of an
interlocutory order issued in the said case should, likewise, be
filed with the CTA.
Petitioners filed a Motion for Reconsideration, 7 but the CA
denied it in its Resolution dated November 29, 2006.
Hence, the present petition raising the following issues:
I-Whether or not the Honorable Court of Appeals gravely erred
in dismissing the case for lack of jurisdiction.
II-Whether or not the Honorable Regional Trial Court gravely
abuse[d] its discretion amounting to lack or
excess of jurisdiction in enjoining by issuing a
Writ of Injunction the petitioners[,] their agents and/or
authorized representatives from implementing Section
21 of the Revised Revenue Code of Manila, as amended,
against private respondents.
III-Whether or not the Honorable Regional Trial Court gravely
abuse[d] its discretion amounting to lack or
excess of jurisdiction in issuing the Writ of Injunction despite
failure of private respondents to make a written claim for tax
credit or refund with the City Treasurer of Manila.
IV-Whether or not the Honorable Regional Trial Court gravely
abuse[d] its discretion amounting to lack or
excess of jurisdiction considering that under Section
21 of the Manila Revenue Code, as amended, they are mere
collecting agents of the City Government.
V-Whether or not the Honorable Regional Trial Court gravely
abuse[d] its discretion amounting to lack or
excess of jurisdiction in issuing the Writ of Injunction because
petitioner City of Manila and its constituents would result to
greater damage and prejudice thereof. (sic) 8
Without first resolving the above issues, this Court finds that
the instant petition should be denied for being moot and
academic.
Upon perusal of the original records of the instant case, this In view of the foregoing, it clearly appears that the issues
Court discovered that a Decision 9 in the main case had raised in the present petition, which merely involve the
already been rendered by the RTC on August 13, 2007, the incident on the preliminary injunction issued by the RTC, have
dispositive portion of which reads as follows: already become moot and academic considering that the trial
court, in its decision on the merits in the main case, has already
WHEREFORE, in view of the foregoing, this Court hereby
ruled in favor ofrespondents and that the same decision is now
renders JUDGMENT in favor of the plaintiff and against the
final and executory. Well entrenched is the rule that where the
defendant to grant a tax refund or credit for taxes paid
issues have become moot and academic, there is no justiciable
pursuant to Section 21 of the Revenue
controversy, thereby rendering the resolution of the
Code of the City of Manila as amended for the year 2002 in the
same of no practical use or value. 13
following amounts: TCSEcI
In any case, the Court finds it necessary to resolve the issue on
To plaintiff SM Mart, Inc. - P11,462,525.02
jurisdiction raised by petitioners owing to its significance and
for future guidance of both bench and bar. It is a settled
principle that courts will decide a question otherwise moot and
To plaintiff SM Prime Holdings, Inc. - 3,118,104.63 academic if it is capable of repetition, yet evading review. 14

However, before proceeding, to resolve the question on

jurisdiction, the Court deems it proper to likewise address a
To plaintiff Star Appliances Center - 2,152,316.54
procedural error which petitioners committed. STIcaE

Petitioners availed of the wrong remedy when they filed the

To plaintiff Supervalue, Inc.
To plaintiff Ace Hardware Phils.,Inc.
To plaintiff Watsons Personal Care
Health Stores Phils.,Inc.
To plaintiff Jollimart Phils.,Corp.
- 1,362,750.34 instant special civil action for certiorari under Rule 65 of the
Rules of Court in assailing the Resolutions of the CA which
dismissed their petition filed with the said court and their
- 419,689.04 motion for reconsideration of such dismissal. There is no
dispute that the assailed Resolutions of the CA are in the
nature of a final order as they disposed of the petition
completely. It is settled that in cases where an assailed
- 231,453.62
judgment or order is considered final, the remedy of the
aggrieved party is appeal. Hence, in the instant case, petitioner
should have filed a petition for review on certiorari under Rule
45, which is a continuation of the appellate process over the
- 140,908.54 original case. 15

Petitioners should be reminded of the equally-settled rule that

a special civil action for certiorari under Rule 65 is an original
To plaintiff Surplus Marketing Corp. - 220,204.70 or independent action based on grave abuse of discretion
amounting to lack or excess of jurisdiction and it will lie only if
there is no appeal or any other plain, speedy, and adequate
To plaintiff Signature Mktg. Corp. - 94,906.34 remedy in the ordinary course of law. 16 As such, it cannot be
a substitute for a lost appeal. 17 DaCEIc
——————
Nonetheless, in accordance with the liberal spirit pervading
TOTAL: - P19,316,458.77 the Rules of Court and in the interest of substantial justice, this
=========== Court has, before, treated a petition for certiorari as a petition
for review on certiorari, particularly (1) if the petition
Defendants are further enjoined from collecting taxes under for certiorari was filed within the reglementary period within
Section 21, Revenue Code of Manila from herein plaintiff: which to file a petition for review on certiorari; (2) when
errors of judgment are averred; and (3) when there is
The parties did not inform the Court but based on the records,
sufficient reason to justify the relaxation of the
the above Decision had already become final and executory
rules. 18 Considering that the present petition was filed within
per the Certificate of Finality 11 issued by the same trial court
the 15-day reglementary period for filing a petition for review
on October 20, 2008. In fact, a Writ of Execution 12 was issued
on certiorari under Rule 45, that an error of judgment is
by the RTC on November 25, 2009.
2
averred, and because of the significance of the issue on
jurisdiction, the Court deems it proper and justified to relax the
rules and, thus, treat the instant petition for certiorari as a
petition for review on certiorari.
Having disposed of the procedural aspect, we now turn to the
central issue in this case. The basic question posed before this
Court is whether or not the CTA has jurisdiction over a special
civil action for certiorari assailing an interlocutory order issued
by the RTC in a local tax case.
This Court rules in the affirmative.
On June 16, 1954, Congress enacted Republic Act No. 1125 (RA
1125) creating the CTA and giving to the said court jurisdiction
over the following:
(1) Decisions of the Collector of Internal Revenue in cases
involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties imposed in relation
thereto, or other matters arising under the National Internal
Revenue Code or other law or part of law administered by the
Bureau of Internal Revenue;
(2) Decisions of the Commissioner of Customs in cases
involving liability for customs duties, fees or other money
charges; seizure, detention or release ofproperty affected
fines, forfeitures or other penalties imposed in relation
thereto; or other matters arising under the Customs Law or
other law or part of law administered by the
Bureau of Customs; and
(3) Decisions of provincial or City Boards of Assessment
Appeals in cases involving the assessment and taxation of real
property or other matters arising under the Assessment Law,
including rules and regulations relative thereto.
On March 30, 2004, the Legislature passed into law Republic
Act No. 9282 (RA 9282) amending RA 1125 by expanding the
jurisdiction of the CTA, enlarging its membership and elevating
its rank to the level of a collegiate court with special
jurisdiction. Pertinent portions of the amendatory act provides
thus:
Sec. 7. Jurisdiction. — The CTA shall exercise: a. Exclusive
appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases
involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties in relation thereto, or
other matters arising under the National Internal Revenue or
other laws administered by the Bureau ofInternal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases
involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties in relations thereto, or
3
other matters arising under the National Internal Revenue
Code or other laws administered by the Bureau of Internal
Revenue, where the National Internal Revenue Code provides
a specific period of action, in which case the inaction shall be
deemed a denial;
3. Decisions, orders or resolutions of the Regional Trial Courts
in local tax cases originally decided or resolved by them in the
exercise oftheir original or appellate jurisdiction;
4. Decisions of the Commissioner of Customs in cases
involving liability for customs duties, fees or other money
charges, seizure, detention or release of property affected,
fines, forfeitures or other penalties in relation thereto, or other
matters arising under the Customs Law or other laws
administered by the Bureau of Customs; CTDAaE
5. Decisions of the Central Board of Assessment Appeals in
the exercise of its appellate jurisdiction over cases involving
the assessment and taxationof real property originally decided
by the provincial or city board of assessment appeals;
6. Decisions of the Secretary of Finance on customs cases
elevated to him automatically for review from decisions of the
Commissioner of Customs which are adverse to the
Government under Section 2315 of the Tariff and Customs
Code;
7. Decisions of the Secretary of Trade and Industry, in the
case of nonagricultural product, commodity or article, and the
Secretary of Agriculture in the case of agricultural product,
commodity or article, involving dumping and countervailing
duties under Sections 301 and 302, respectively, ofthe Tariff
and Customs Code, and safeguard measures under Republic
Act No. 8800, where either party may appeal the decision to
impose or not to impose said duties.
b. Jurisdiction over cases involving criminal offenses as herein
provided:
1. Exclusive original jurisdiction over all criminal offenses
arising from violations of the National Internal Revenue Code
or Tariff and Customs Code and other laws administered by the
Bureau of Internal Revenue or the Bureau of Customs:
Provided, however, That offenses or felonies mentioned in this
paragraph where the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is less than One
million pesos (P1,000,000.00) or where there is no specified
amount claimed shall be tried by the regular Courts and the
jurisdiction of the CTA shall be appellate. Any provision of law
or the Rules of Court to the contrary notwithstanding, the
criminal action and the corresponding civil action for the
recovery of civil liability for taxes and penalties shall at all
times be simultaneously instituted with, and jointly
determined in the same proceeding by the CTA, the
filing of the criminal action being deemed to necessarily carry
with it the filing of the civil action, and no right to reserve the
filing ofsuch civil action separately from the criminal action will
be recognized.
2. Exclusive appellate jurisdiction in criminal offenses: a. Over
appeals from the judgments, resolutions or orders of the
Regional Trial Courts in tax cases originally decided by them, in
their respected territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or
orders of the Regional Trial Courts in the exercise of their
appellate jurisdiction over tax cases originally decided by the
Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in their respective jurisdiction.
c. Jurisdiction over tax collection cases as herein provided:
1. Exclusive original jurisdiction in tax collection cases
involving final and executory assessments for taxes, fees,
charges and penalties: Provides, however, that collection cases
where the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is less than One
million pesos (P1,000,000.00) shall be tried by the proper
Municipal Trial Court, Metropolitan Trial Court and Regional
Trial Court.
2. Exclusive appellate jurisdiction in tax collection cases:
a. Over appeals from the judgments, resolutions or
orders of the Regional Trial Courts in tax collection cases
originally decided by them, in their respective territorial
jurisdiction.
b. Over petitions for review of the judgments, resolutions or
orders of the Regional Trial Courts in the Exercise of their
appellate jurisdiction over tax collection cases originally
decided by the Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts, in their respective
jurisdiction.
A perusal of the above provisions would show that, while it is
clearly stated that the CTA has exclusive appellate jurisdiction
over decisions, orders or resolutions of the RTCs in local tax
cases originally decided or resolved by them in the
exercise of their original or appellate jurisdiction, there is no
categorical statement under RA 1125 as well as the
amendatory RA 9282, which provides that the CTA has
jurisdiction over petitions for certiorari assailing interlocutory
orders issued by the RTC in local tax cases filed before it.
The prevailing doctrine is that the authority to issue
writs of certiorari involves the exercise of original jurisdiction
which must be expressly conferred by the Constitution or by
law and cannot be implied from the mere
existence of appellate jurisdiction. 20 Thus, in the
4
cases of Pimentel v. COMELEC, 21 Garcia v. De
Jesus, 22Veloria v. COMELEC, 23 Department of Agrarian
Reform Adjudication Board v. Lubrica, 24 and Garcia v.
Sandiganbayan, 25 this Court has ruled against the
jurisdiction ofcourts or tribunals over petitions
for certiorari on the ground that there is no law which
expressly gives these tribunals such power. 26 It must be
observed, however, that with the exception of Garcia v.
Sandiganbayan, 27 these rulings pertain not to regular courts
but to tribunals exercising quasi-judicial powers. With respect
to the Sandiganbayan, Republic Act No. 8249 28 now provides
that the special criminal court has exclusive original jurisdiction
over petitions for the
issuance of the writs ofmandamus, prohibition, certiorari,
habeas corpus, injunctions, and other ancillary writs and
processes in aid of its appellate jurisdiction. TAacIE
In the same manner, Section 5 (1), Article VIII of the 1987
Constitution grants power to the Supreme Court, in the
exercise of its original jurisdiction, to issue
writsof certiorari, prohibition and mandamus. With respect to
the Court of Appeals, Section 9 (1) of Batas Pambansa Blg.
129 (BP 129) gives the appellate court, also in the
exercise of its original jurisdiction, the power to issue, among
others, a writ of certiorari, whether or not in aid of its
appellate jurisdiction. As to Regional Trial Courts, the power to
issue a writ of certiorari, in the exercise of their original
jurisdiction, is provided under Section 21 of BP 129.
The foregoing notwithstanding, while there is no express
grant of such power, with respect to the CTA, Section 1, Article
VIII of the 1987 Constitution provides, nonetheless, that
judicial power shall be vested in one Supreme Court and in
such lower courts as may be established by law and that
judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.
On the strength of the above constitutional provisions, it can
be fairly interpreted that the power of the CTA includes
that of determining whether or not there has been grave
abuse of discretion amounting to lack or excess of jurisdiction
on the part of the RTC in issuing an interlocutory order in cases
falling within the exclusive appellate jurisdiction of the tax
court. It, thus, follows that the CTA, by constitutional mandate,
is vested with jurisdiction to issue writs of certiorari in these
cases.
Indeed, in order for any appellate court, to effectively exercise
its appellate jurisdiction, it must have the authority to issue,
among others, a writ of certiorari. In transferring exclusive
jurisdiction over appealed tax cases to the CTA, it can jurisdiction over the appeal from the decision of the trial court
reasonably be assumed that the law intended to transfer also in the same case. It is more in consonance with logic and legal
such power as is deemed necessary, if not indispensable, in soundness to conclude that the grant of appellate jurisdiction
aid of such appellate jurisdiction. There is no perceivable to the CTA over tax cases filed in and decided by the RTC carries
reason why the transfer should only be considered as partial, with it the power to issue a writ of certiorari when necessary
not total. in aid of such appellate jurisdiction. The supervisory power or
jurisdiction of the CTA to issue a writ of certiorari in aid of its
Consistent with the above pronouncement, this Court has held
appellate jurisdiction should co-exist with, and be a
as early as the case of J.M. Tuason & Co., Inc. v. Jaramillo, et
complement to, its appellate jurisdiction to review, by appeal,
al. 29 that "if a case may be appealed to a particular court or
the final orders and decisions of the RTC, in order to have
judicial tribunal or body, then said court or judicial tribunal or
complete supervision over the acts of the latter. 36
body has jurisdiction to issue the extraordinary
writ of certiorari, in aid of its appellate jurisdiction." 30 This A grant of appellate jurisdiction implies that there is included
principle was affirmed in De Jesus v. in it the power necessary to exercise it effectively, to make all
Court of Appeals, 31 where the Court stated that "a court may orders that will preserve the subjectof the action, and to give
issue a writ of certiorari in aid of its appellate jurisdiction if effect to the final determination of the appeal. It carries with
said court has jurisdiction to review, by appeal or writ of error, it the power to protect that jurisdiction and to make the
the final orders or decisions of the lower court." 32 The rulings decisions of the court thereunder effective. The court, in
in J.M. Tuason and De Jesus were reiterated in the more recent aid of its appellate jurisdiction, has authority to control all
cases of Galang, Jr. v. Geronimo 33 and Bulilis v. Nuez. auxiliary and incidental matters necessary to the efficient and
proper exercise of that jurisdiction. For this purpose, it may,
Furthermore, Section 6, Rule 135 of the present Rules of Court
when necessary, prohibit or restrain the performance of any
provides that when by law, jurisdiction is conferred on a court
act which might interfere with the proper exercise ofits rightful
or judicial officer, all auxiliary writs, processes and other means
jurisdiction in cases pending before it. 37
necessary to carry it into effect may be employed by such court
or officer. Lastly, it would not be amiss to point out that a court which is
endowed with a particular jurisdiction should have powers
If this Court were to sustain petitioners' contention that
which are necessary to enable it to act effectively within such
jurisdiction over their certiorari petition lies with the CA, this
jurisdiction. These should be regarded as powers which are
Court would be confirming the exercise by two judicial bodies,
inherent in its jurisdiction and the court must possess them in
the CA and the CTA, of jurisdiction over basically the same
order to enforce its rules of practice and to suppress any
subject matter — precisely the split-jurisdiction situation
abuses of its process and to defeat any attempted
which is anathema to the orderly
thwarting of such process.
administration of justice. 35 The Court cannot accept that
such was the legislative motive, especially considering that the In this regard, Section 1 of RA 9282 states that the CTA shall
law expressly confers on the CTA, the tribunal with the be of the same level as the CA and shall possess all the inherent
specialized competence over tax and tariff matters, the powers of a court of justice.
role of judicial review over local tax cases without
Indeed, courts possess certain inherent powers which may be
mention of any other court that may exercise such power.
said to be implied from a general grant of jurisdiction, in
Thus, the Court agrees with the ruling of the CA that since
addition to those expressly conferred on them. These inherent
appellate jurisdiction over private respondents' complaint for
powers are such powers as are necessary for the ordinary and
tax refund is vested in the CTA, it follows that a petition
efficient exercise of jurisdiction; or are essential to the
for certiorari seeking nullification of an interlocutory order
existence, dignity and functions of the courts, as well as to the
issued in the said case should, likewise, be filed with the same
due administration of justice; or are directly appropriate,
court. To rule otherwise would lead to an absurd situation
convenient and suitable to the execution of their granted
where one court decides an appeal in the main case while
powers; and include the power to maintain the court's
another court rules on an incident in the very same case.
jurisdiction and render it effective in behalf of the litigants.
Stated differently, it would be somewhat incongruent with the
Thus, this Court has held that "while a court may be expressly
pronounced judicial abhorrence to split jurisdiction to
granted the incidental powers necessary to effectuate its
conclude that the intention of the law is to divide the authority
jurisdiction, a grant of jurisdiction, in the
over a local tax case filed with the RTC by giving to the CA or
absence of prohibitive legislation, implies the necessary and
this Court jurisdiction to issue a writ of certiorari against
usual incidental powers essential to effectuate it, and, subject
interlocutory orders of the RTC but giving to the CTA the
5
to existing laws and constitutional provisions, every regularly
constituted court has power to do all things that are
reasonably necessary for the administration of justice within
the scope of its jurisdiction and for the enforcement of its
judgments and mandates." 39 Hence, demands, matters or
questions ancillary or incidental to, or growing out of, the main
action, and coming within the above principles, may be taken
cognizance of by the court and determined, since such
jurisdiction is in aid of its authority over the principal matter,
even though the court may thus be called on to consider and
decide matters which, as original causes of action, would not
be within its cognizance.
Based on the foregoing disquisitions, it can be reasonably
concluded that the authority of the CTA to take
cognizance of petitions for certiorari questioning interlocutory
orders issued by the RTC in a local tax case is included in the
powers granted by the Constitution as well as inherent in the
exercise of its appellate jurisdiction.
Finally, it would bear to point out that this Court is not
abandoning the rule that, insofar as quasi-judicial tribunals are
concerned, the authority to issue writs ofcertiorari must still
be expressly conferred by the Constitution or by law and
cannot be implied from the mere existence of their appellate
jurisdiction. This doctrine remains as it applies only to quasi-
judicial bodies. WHEREFORE,the petition is DENIED.
6
MEDICAL PLAZA MAKATI CONDOMINIUM CORPORATION, p
etitioner, vs. ROBERT H. CULLEN, respondent. PERALTA, J p:
This is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the Court of Appeals (CA)
Decision 1 dated July 10, 2007 and Resolution 2dated January
25, 2008 in CA-G.R. CV No. 86614. The assailed decision
reversed and set aside the September 9, 2005 Order 3 of the
Regional Trial Court (RTC) of Makati, Branch 58 in Civil Case No.
03-1018; while the assailed resolution denied the separate
motions for reconsideration filed by
petitioner Medical Plaza Makati Condominium Corporation
(MPMCC) and Meridien Land Holding, Inc. (MLHI).
The factual and procedural antecedents are as follows:
Respondent Robert H. Cullen purchased from
MLHI condominium Unit No. 1201 of
the Medical Plaza Makati covered
by Condominium Certificate of Title No. 45808 of the Register
of Deeds of Makati. Said title was later cancelled
and Condominium Certificate of Title No. 64218 was issued in
the name of respondent.
On September 19, 2002, petitioner, through its corporate
secretary, Dr. Jose Giovanni E. Dimayuga, demanded from
respondent payment for alleged unpaid association dues and
assessments amounting to P145,567.42. Respondent disputed
this demand claiming that he had been religiously paying his
dues shown by the fact that he was previously elected
president and director of petitioner. 4 Petitioner, on the other
hand, claimed that respondent's obligation was a carry-over of
that of MLHI. 5 Consequently, respondent was prevented from
exercising his right to vote and be voted for during the 2002
election of petitioner's Board of Directors. 6Respondent thus
clarified from MLHI the veracity of petitioner's claim, but MLHI
allegedly claimed that the same had already been
settled. 7 This prompted respondent to demand from
petitioner an explanation why he was considered a delinquent
payer despite the settlement of the obligation. Petitioner
failed to make such explanation. Hence, the Complaint for
Damages 8 filed by respondent against petitioner and MLHI,
the pertinent portions of which read: CSIHDA
6. Thereafter, plaintiff occupied the said condominium unit
no. 1201 and religiously paid all the corresponding monthly
contributions/association dues and other assessments
imposed on the same. For the years 2000 and 2001, plaintiff
served as President and Director of
the Medical Plaza Makati CondominiumCorporation;
7. Nonetheless, on September 19, 2002, plaintiff was
shocked/surprised to [receive] a letter from the incumbent
Corporate Secretary of the defendant Medical Plaza Makati,
demanding payment of alleged unpaid association dues and
assessments arising from plaintiff's condominium unit no.
1201. The said letter further stressed that plaintiff is
considered a delinquent member of the
defendant Medical Plaza Makati. . . .;
8. As a consequence, plaintiff was not allowed to file his
certificate of candidacy as director. Being considered a
delinquent, plaintiff was also barred from exercising his right
to vote in the election of new members of the Board of
Directors . . .;
9. . . . Again, prior to the said election date, . . . counsel for the
defendant [MPMCC] sent a demand letter to plaintiff, anent
the said delinquency, explaining that the said unpaid amount
is a carry-over from the obligation of defendant Meridien. . . .;
10. Verification with the defendant [MPMCC] resulted to the
issuance of a certification stating that Condominium Unit 1201
has an outstanding unpaid obligation in the total amount of
P145,567.42 as of November 30, 2002, which again, was
attributed by defendant [MPMCC] to defendant Meridien. .
11. Due to the seriousness of the matter, and the feeling that
defendant Meridien made false representations considering
that it fully warranted to plaintiff that condominium unit 1201
is free and clear from all liens and encumbrances, the matter
was referred to counsel, who accordingly sent a letter to
defendant Meridien, to demand for the payment of said
unpaid association dues and other assessments imposed on
the condominium unit and being claimed by defendant
[MPMCC]. . . .;
12. . . . defendant Meridien claimed however, that the
obligation does not exist considering that the matter was
already settled and paid by defendant Meridien to defendant
[MPMCC]. . . .;
13. Plaintiff thus caused to be sent a letter to defendant
[MPMCC] . . . . The said letter . . . sought an explanation on the
fact that, as per the letter of defendant Meridien, the
delinquency of unit 1201 was already fully paid and settled,
contrary to the claim of defendant [MPMCC]. . . .;
14. Despite receipt of said letter on April 24, 2003, and to date
however, no explanation was given by defendant [MPMCC], to
the damage and prejudice of plaintiff who is again obviously
being barred from voting/participating in the election of
members of the board of directors for the year 2003;
15. Clearly, defendant [MPMCC] acted maliciously by insisting
that plaintiff is a delinquent member when in fact, defendant
Meridien had already paid the said delinquency, if any. The
branding of plaintiff as delinquent member was willfully and
deceitfully employed so as to prevent plaintiff from exercising
7
his right to vote or be voted as director of
the condominium corporation;
16. Defendant [MPMCC]'s ominous silence when confronted
with claim of payment made by defendant Meridien is
tantamount to admission that indeed, plaintiff is not really a
delinquent member;
17. Accordingly, as a direct and proximate result of the said
acts of defendant [MPMCC], plaintiff experienced/suffered
from mental anguish, moral shock, and serious anxiety.
Plaintiff, being a doctor of medicine and respected in the
community further suffered from social humiliation and
besmirched reputation thereby warranting the grant of moral
damages in the amount of P500,000.00 and for which
defendant [MPMCC] should be held liable;
18. By way of example or correction for the public good, and
as a stern warning to all similarly situated, defendant [MPMCC]
should be ordered to pay plaintiff exemplary damages in the
amount of P200,000.00;
[19]. As a consequence, and so as to protect his rights and
interests, plaintiff was constrained to hire the services of
counsel, for an acceptance fee of P100,000.00 plus P2,500.00
per every court hearing attended by counsel;
[20]. In the event that the claim of defendant [MPMCC] turned
out to be true, however, the herein defendant Meridien should
be held liable instead, by ordering the same to pay the said
delinquency of condominium unit 1201 in the amount of
P145,567.42 as of November 30, 2002 as well as the above
damages, considering that the non-payment thereof would be
the proximate cause of the damages suffered by plaintiff; 9
Petitioner and MLHI filed their separate motions to dismiss the
complaint on the ground of lack of jurisdiction. 10 MLHI claims
that it is the Housing and Land Use Regulatory Board (HLURB)
which is vested with the exclusive jurisdiction to hear and
decide the case. Petitioner, on the other hand, raises the
following specific grounds for the dismissal of the complaint:
(1) estoppel as respondent himself approved the assessment
when he was the president; (2) lack of jurisdiction as the case
involves an intra-corporate controversy; (3) prematurity for
failure of respondent to exhaust all intra-corporate remedies;
and (4) the case is already moot and academic, the obligation
having been settled between petitioner and MLHI. 11 AIaSTE
On September 9, 2005, the RTC rendered a Decision granting
petitioner's and MLHI's motions to dismiss and, consequently,
dismissing respondent's complaint.
The trial court agreed with MLHI that the action for specific
performance filed by respondent clearly falls within the
exclusive jurisdiction of the HLURB. 12 As to petitioner, the
court held that the complaint states no cause of action,
considering that respondent's obligation had already been
settled by MLHI. It, likewise, ruled that the issues raised are
intra-corporate between the corporation and member. 13
On appeal, the CA reversed and set aside the trial court's
decision and remanded the case to the RTC for further
proceedings. Contrary to the RTC conclusion, the CA held that
the controversy is an ordinary civil action for damages which
falls within the jurisdiction of regular courts. 14 It explained
that the case hinged on petitioner's refusal to confirm MLHI's
claim that the subject obligation had already been settled as
early as 1998 causing damage to respondent. 15 Petitioner's
and MLHI's motions for reconsideration had also been denied.
Aggrieved, petitioner comes before the Court based on the
following grounds:
I.THE COURT A QUO HAS DECIDED A QUESTION OF
SUBSTANCE, NOT THERETOFORE DETERMINED BY THE
SUPREME COURT, OR HAS DECIDED IT IN A WAY NOT IN
ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF
THE SUPREME COURT WHEN IT DECLARED THE INSTANT CASE
AN ORDINARY ACTION FOR DAMAGES INSTEAD OF AN INTRA-
CORPORATE CONTROVERSY COGNIZABLE BY A SPECIAL
COMMERCIAL COURT.
II.THE COURT A QUO HAS DECIDED THE INSTANT CASE IN A
WAY NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THE SUPREME COURT WHEN IT TOOK
COGNIZANCE OF THE APPEAL WHILE RAISING ONLY PURE
QUESTIONS OF LAW. 17
The petition is meritorious. It is a settled rule that jurisdiction
over the subject matter is determined by the allegations in the
complaint. It is not affected by the pleas or the theories set up
by the defendant in an answer or a motion to dismiss.
Otherwise, jurisdiction would become dependent almost
entirely upon the whims of the defendant. 18 Also illuminating
is the Court's pronouncement in Go v. Distinction Properties
Development and Construction, Inc.: 19
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
8
irrespective of whether or not the plaintiff is entitled to
recover upon all or some of the claims asserted therein. . . .
Based on the allegations made by respondent in his complaint,
does the controversy involve intra-corporate issues as would
fall within the jurisdiction of the RTC sitting as a special
commercial court or an ordinary action for damages within the
jurisdiction of regular courts?
In determining whether a dispute constitutes an intra-
corporate controversy, the Court uses two tests, namely,
the relationship test and the nature of the controversy test. 21
An intra-corporate controversy is one which pertains to any of
the following relationships: (1) between the corporation,
partnership or association and the public; (2) between the
corporation, partnership or association and the State insofar
as its franchise, permit or license to operate is concerned; (3)
between the corporation, partnership or association and its
stockholders, partners, members or officers; and (4) among
the stockholders, partners or associates themselves. 22Thus,
under the relationship test, the existence of any of the above
intra-corporate relations makes the case intra-corporate. 23
Under the nature of the controversy test, "the controversy
must not only be rooted in the existence of an intra-corporate
relationship, but must as well pertain to the enforcement of
the parties' correlative rights and obligations under
the Corporation Code and the internal and intra-corporate
regulatory rules of the corporation." 24 In other words,
jurisdiction should be determined by considering both the
relationship of the parties as well as the nature of the question
involved. 25
Applying the two tests, we find and so hold that the case
involves intra-corporate controversy. It obviously arose from
the intra-corporate relations between the parties, and the
questions involved pertain to their rights and obligations under
the Corporation Code and matters relating to the regulation of
the corporation. 26
Admittedly, petitioner is a condominium corporation duly
organized and existing under Philippine laws, charged with the
management of the Medical PlazaMakati. Respondent, on the
other hand, is the registered owner of Unit No. 1201 and is
thus a stockholder/member of the condominium corporation.
Clearly, there is an intra-corporate relationship between the
corporation and a stockholder/member.
The nature of the action is determined by the body rather than
the title of the complaint. Though denominated as an action
for damages, an examination of the allegations made by
respondent in his complaint shows that the case principally
dwells on the propriety of the assessment made by petitioner
against respondent as well as the validity of petitioner's act in
preventing respondent from participating in the election of the
corporation's Board of Directors. Respondent contested the
alleged unpaid dues and assessments demanded by petitioner.
The issue is not novel. The nature of an action involving any
dispute as to the validity of the assessment of association dues
has been settled by the Court inChateau de
Baie Condominium Corporation v. Moreno. 27 In that case,
respondents therein filed a complaint for intra-corporate
dispute against the petitioner therein to question how it
calculated the dues assessed against them, and to ask an
accounting of association dues. Petitioner, however, moved
for the dismissal of the case on the ground of lack of
jurisdiction alleging that since the complaint was against the
owner/developer of
a condominium whose condominium project was registered
with and licensed by the HLURB, the latter has the exclusive
jurisdiction. In sustaining the denial of the motion to dismiss,
the Court held that the dispute as to the validity of the
assessments is purely an intra-corporate matter between
petitioner and respondent and is thus within the exclusive
jurisdiction of the RTC sitting as a special commercial court.
More so in this case as respondent repeatedly questioned his
characterization as a delinquent member and, consequently,
petitioner's decision to bar him from exercising his rights to
vote and be voted for. These issues are clearly corporate and
the demand for damages is just incidental. Being corporate in
nature, the issues should be threshed out before the RTC
sitting as a special commercial court. The issues on damages
can still be resolved in the same special commercial court just
like a regular RTC which is still competent to tackle civil law
issues incidental to intra-corporate disputes filed before it.
Moreover, Presidential Decree No. 902-A enumerates the
cases over which the Securities and Exchange Commission
(SEC) exercises exclusive jurisdiction:
b) Controversies arising out of intra-corporate or partnership
relations, between and among stockholders, members or
associates; between any or all of them and the corporation,
partnership or association of which they are stockholders,
members, or associates, respectively; and between such
corporation, partnership or association and the State insofar
as it concerns their individual franchise or right to exist as such
entity; and
c) Controversies in the election or appointment of directors,
trustees, officers, or managers of such corporations,
partnerships, or associations. 29 cITAaD
To be sure, this action partakes of the nature of an intra-
corporate controversy, the jurisdiction over which pertains to
the SEC. Pursuant to Section 5.2 ofRepublic Act No. 8799,
otherwise known as the Securities Regulation Code, the
9
jurisdiction of the SEC over all cases enumerated under Section
5 of Presidential Decree No. 902-A has been transferred to
RTCs designated by this Court as Special Commercial
Courts. 30 While the CA may be correct that the RTC has
jurisdiction, the case should have been filed not with the
regular court but with the branch of the RTC designated as a
special commercial court. Considering that the RTC
of Makati City, Branch 58 was not designated as a special
commercial court, it was not vested with jurisdiction over
cases previously cognizable by the SEC. 31 The CA, therefore,
gravely erred in remanding the case to the RTC for further
proceedings.
Indeed, Republic Act (RA) No. 9904, or the Magna Carta for
Homeowners and Homeowners' Associations, approved on
January 7, 2010 and became effective on July 10, 2010,
empowers the HLURB to hear and decide inter-association
and/or intra-association controversies or conflicts concerning
homeowners' associations. However, we cannot apply the
same in the present case as it involves a controversy between
a condominium unit owner and a condominium corporation.
While the term association as defined in the law covers
homeowners' associations of other residential real property
which is broad enough to cover a condominium corporation, it
does not seem to be the legislative intent. A thorough review
of the deliberations of the bicameral conference committee
would show that the lawmakers did not intend to extend the
coverage of the law to such kind of association. We quote
hereunder the pertinent portion of the Bicameral Conference
Committee's deliberation, to wit:
THE CHAIRMAN (SEN. ZUBIRI). Let's go back, Mr. Chair, very
quickly on homeowners.
THE ACTING CHAIRMAN (REP. ZIALCITA). Ang sa akin lang, I
think our views are similar, Your Honor, Senator Zubiri, the
entry of the condominium units might just complicate the
whole matters. So we'd like to put it on record that we're very
much concerned about the plight of the Condominium Unit
Homeowners' Association. But this could very well be
addressed on a separate bill that I'm willing to co-sponsor with
the distinguished Senator Zubiri, to address in the
Condominium Act of the Philippines, rather than address it
here because it might just create a red herring into the entire
thing and it will just complicate matters, hindi ba?
THE CHAIRMAN (SEN. ZUBIRI). I also agree with you although I
sympathize with them — although we sympathize with them
and we feel that many times their rights have been also
violated by abusive condominium corporations. However,
there are certain things that we have to reconcile. There are
certain issues that we have to reconcile with this version.
In the Condominium Code, for example, they just raised a very
peculiar situation under the Condominium Code
— Condominium Corporation Act. It's five years the proxy,
whereas here, it's three years. So there would already be
violation or there will be already a problem with their version
and our version. Sino ang matutupad doon? Will it be our
version or their version?
So I agree that has to be studied further. And because they
have a law pertaining to the condominium housing units, I
personally feel that it would complicate matters if we include
them. Although I agree that they should be looked after and
their problems be looked into.
Probably we can ask our staff, Your Honor, to come up already
with the bill although we have no more time. Hopefully we can
tackle this again on the 15th Congress. But I agree with the
sentiments and the inputs of the Honorable Chair of the House
panel.
May we ask our resource persons to also probably give
comments?
MR. DAYRIT. Yes I agree with you. There are many, I think,
practices in their provisions in the Condominium Law that may
be conflicting with this version of ours.
For instance, in the case of, let's say, the condominium, the so-
called common areas and/or maybe so called open spaces that
they may have, especially common areas, they are usually
owned by the condominium corporation. Unlike a subdivision
where the open spaces and/or the common areas are not
necessarily owned by the association. Because sometimes —
generally these are donated to the municipality or to the city.
And it is only when the city or municipality gives the approval
or the conformity that this is donated to the homeowners'
association. But generally, under PD [Presidential Decree] 957,
it's donated. In the CondominiumCorporation, hindi. Lahat ng
mga open spaces and common areas like corridors, the
function rooms and everything, are owned by the corporation.
So that's one main issue that can be conflicting.
THE CHAIRMAN (SEN. ZUBIRI). I'll just ask for a one-minute
suspension so we can talk.
THE ACTING CHAIRMAN (REP. ZIALCITA). Unless you want to
put a catchall phrase like what we did in the Senior Citizen's
Act. Something like, to the extent — paano ba iyon? To the
extent that it is practicable and applicable, the rights and
benefits of the homeowners, are hereby extended to the —
mayroon kaming ginamit na phrase eh. . . to the extent that it
be practicable and applicable to the unit homeowners, is
hereby extended, something like that. It's a catchall phrase.
But then again, it might create a. . .
MR. JALANDONI. It will become complicated. There will be a
lot of conflict of laws between the two laws.
THE ACTING CHAIRMAN (REP. ZIALCITA). Kaya nga eh. At saka,
I don't know. I think the — mayroon naman silang protection
sa ano eh, di ba? Buyers decree doon sa Condominium Act. I'm
sure there are provisions there eh. Huwag na lang, huwag na
lang.
MR. JALANDONI. Mr. Chairman, I think it would be best if your
previous comments that you'd be supporting an amendment.
I think that would be — Well, that would be the best course of
action with all due respect.
THE ACTING CHAIRMAN (REP. ZIALCITA). Yeah. Okay. Thank
you. So iyon na lang final proposal naming 'yung catchall
phrase, "With respect to the. . ." 32
THE CHAIRMAN (SEN. ZUBIRI). . . . And so, what is their final
decision on the definition of homeowners?
THE ACTING CHAIRMAN (REP. ZIALCITA). We stick to the
original, Mr. Chairman. We'll just open up a whole can of
worms and a whole new ball game will come into play. Besides,
I am not authorized, neither are you, by our counterparts to
include the condominium owners. IEAHca
THE CHAIRMAN (SEN. ZUBIRI). Basically that is correct. We are
not authorized by the Senate nor — because we have
discussed this lengthily on the floor, actually, several months
on the floor. And we don't have the authority as well for other
Bicam members to add a provision to include a separate entity
that has already their legal or their established Republic Act
tackling on that particular issue. But we just like to put on
record, we sympathize with the plight of our friends in
the condominium associations and we will just guarantee
them that we will work on an amendment to
the Condominium Corporation Code. So with that — we
skipped, that is correct, we have to go back to homeowners'
association definition, Your Honor, because we had skipped it
altogether. So just quickly going back to Page 7 because there
are amendments to the definition of homeowners. If it is
alright with the House Panel, adopt the opening phrase of
Subsection 7 of the Senate version as opening phrase of
Subsection 10 of the reconciled version.
To be sure, RA 4726 or the Condominium Act was enacted to
specifically govern a condominium. Said law sanctions the
creation of the condominiumcorporation which is especially
formed for the purpose of holding title to the common area, in
which the holders of separate interests shall automatically be
members or shareholders, to the exclusion of others, in
proportion to the appurtenant interest of their respective
units. 34 The rights and obligations of the condominium unit

10
owners and the condominium corporation are set forth in the
above Act.

Clearly, condominium corporations are not covered by the

amendment. Thus, the intra-corporate dispute between
petitioner and respondent is still within the jurisdiction of the
RTC sitting as a special commercial court and not the HLURB.
The doctrine laid down by the Court in Chateau de
Baie Condominium Corporation v. Moreno 35 which in turn
cited Wack Wack Condominium Corporation, et al. v. CA 36 is
still a good law.

WHEREFORE, we hereby GRANT the petition and REVERSE the

Court of Appeals Decision dated July 10, 2007 and Resolution
dated January 25, 2008 in CA-G.R. CV No. 86614. The
Complaint before the Regional Trial Court of Makati City,
Branch 58, which is not a special commercial court, docketed
as Civil Case No. 03-1018 is ordered DISMISSED for lack of
jurisdiction. Let the case REMANDED to the Executive Judge of
the Regional Trial Court of Makati City for re-raffle purposes
among the designated special commercial courts.

11
NESTOR SANDOVAL, petitioner, vs.
HON. DOROTEO CAÑEBA, Presiding Judge, RTC, Manila,
Branch 20, DEPUTY SHERIFF OF MANILA (RTC, Manila, Branch
20), and ESTATE DEVELOPERS & INVESTORS
CORPORATION, respondents. GANCAYCO, J.:
The issue in this petition is whether or not the ordinary courts
have jurisdiction over the collection of unpaid installments
regarding a subdivision lot.
On August 20, 1987 private respondent filed a complaint in the
Regional Trial Court (RTC) of Manila for the collection of unpaid
installments regarding a subdivision lot, pursuant to a
promissory note, plus interest. On January 29, 1988 the trial
court rendered a decision.
It appears that petitioner was declared in default so much so
that after receiving the evidence of private respondent, the
trial court rendered its decision on January 19,1988, the
dispositive portion of which reads as follows:
WHEREFORE, on the allegations and the prayer of the
complaint and the evidence adduced in support therefor,
judgment is hereby rendered, ordering the defendant to pay
plaintiff the following:
1. The sum of P73,867.42 plus interest and other charges
commencing from January 1, 1988 until fully paid; 2. Such sum
which shall not be less than P2,000.00 or 25% of the amount
of delinquency whichever is greater, as and for attorney's fees.
3. Costs against the defendant.
On September 28, 1988 the trial court issued an order directing
the issuance of a writ of execution to enforce its decision that
had become final and executory.
On September 30, 1988 petitioner filed a motion to vacate
judgment and to dismiss the complaint on the ground that the
lower court has no jurisdiction over the subject matter and
that its decision is null and void. A motion for reconsideration
of the writ of execution was also filed by petitioner. An
opposition to both motions was filed by private respondent to
which a reply was filed by petitioner.
On February 17, 1989 the trial court denied the motion to
vacate the judgment on the ground that it is now beyond the
jurisdiction of the Court to do so. It directed the issuance of a
writ of execution anew.
Hence the herein petition wherein it is alleged that the trial
court committed a grave abuse of discretion as follows:
5.1. The respondent Judge gravely abused his discretion and
acted without jurisdiction in taking cognizance of the
complaint before him notwithstanding
that exclusive and original jurisdiction over the subject-matter
thereof is vested with the Housing and Land Use Regulatory
Board (HLURB) pursuant to PD 957.
5.2. The respondent Judge gravely abused his discretion and
acted without jurisdiction in refusing to vacate his judgment
rendered without jurisdiction and in issuing a writ of execution
to implement his abovesaid void judgment. 2
The petition is impressed with merit. Under Section 1 of
Presidential Decree No. 957 the National Housing Authority
(NHA) was given the exclusive jurisdiction to hear and decide
certain cases as follows:
SEC.1. In the exercise of its function to regulate the real estate
trade and business and in addition to its powers provided for
in Presidential Decree No. 957, the National Housing Authority
shall have exclusive jurisdiction to hear and decide cases of the
following nature:
A. Unsound real estate business practices:
B. Claims involving refund and any other claims filed by
subdivision lot or condominium unit buyer against the project
owner, developer, dealer, broker or salesman;and
C. Cases involving specific performance of contractual and
statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner, developer, dealer,
broker or salesman. (Emphasis supplied.)
The language of this section, particularly, the second portion
thereof, leaves no room for doubt that exclusive jurisdiction
over the case between the petitioner and private respondent
is vested not on the RTC but on the NHA. The NHA was re-
named Human Settlements Regulatory Commission and
thereafter it was re-named as the Housing and Land Use
Regulatory Board (HLURB). 3
Undeniably the sum of money sought to be collected by private
respondent from petitioner represented unpaid installments
of a subdivision lot which the petitioner purchased. Petitioner
alleges that he suspended payments thereof because of the
failure of the developer to develop the subdivision pursuant to
their agreement.
In Antipolo Realty Corporation vs. National Housing
Authority, 4 the suit which was filed with the NHA, likewise
involved non-payment of installments over a subdivision lot,
wherein this Court held that the NHA has exclusive authority
to hear and decide the case.
In Solid Homes, Inc. vs. Teresita Payawal, 5 this Court ruled that
upon the issuance of Presidential Decree No. 957, the trial
court may no longer assume jurisdiction over the cases
enumerated in Section 1 of Presidential Decree No. 397. We
even stated therein that the Housing and Land Use Regulatory

12
Board has the authority to award damages in the exercise of
this exclusive power conferred upon it by Presidential Decree
No. 1344.

In Estate Developers and Investors Corporation vs. Antonio

Sarte and Erlinda Sarte, G.R. No. 93646, which is a case
substantially similar to the instant case, in a resolution of
August 13, 1990 this Court upheld the exclusive jurisdiction of
the HLURB over the collection suit.

Considering that the trial court has no jurisdiction under the

circumstances obtaining in this case, the decision it rendered
is null and void ab initio. It is as if no decision was rendered by
the trial court at all.

When as in this case the attention of the trial court is drawn to

its lack of competence and authority to act on the case,
certainly the trial court has a duty to vacate the judgment by
declaring the same to be null and void ab initio.

This is as it should be. Inasmuch as the questioned judgment is

null and void, it is, as above observed, as if no decision had
been rendered by the trial court. It cannot become final and
exucutory, much less can it be enforced by a writ of execution.

The trial court, rather than reiterating the issuance of a writ of

execution in this case, which it did, should have recalled and
cancelled the writ of execution of the judgment.

WHEREFORE, the petition is GRANTED. The questioned

decision of the trial court dated January 29, 1988 is hereby
declared null and void for lack of jurisdiction. No
pronouncement as to costs. SO ORDERED.

13
BENIGNO V. MAGPALE, JR., petitioner, vs. CIVIL SERVICE
COMMISSION and ROGELIO A. DAYAN, in his capacity as the
General Manager of the Philippine Ports
Authority, respondents. MELO, J p:
Before Us is a petition for review on certiorari assailing
Resolution No. 90-962 dated October 19, 1990 of
respondent Civil Service Commission (CSC). Said CSC
resolution set aside and modified the decision dated February
5, 1990 of the Merit Systems Protection Board in MSPB Case
No. 449, which ordered the immediate reinstatement in the
service of herein petitioner Benigno V. Magpale, Jr., without
loss of seniority rights and with payment of back salaries and
other emoluments to which he is entitled under the law. LLphil
The record shows that petitioner started his career in
government as an employee in the Presidential Assistance on
Community Development in 1960. Fifteen years later, or in
1975, he transferred to the Philippine Ports Authority (PPA) as
Arrastre Superintendent. He was promoted to the position of
Port Manager in 1977 of the Port Management Unit (PMU),
General Santos City. Then he was reassigned, in the same year,
to PPA-PMU, Tacloban City where he likewise discharges the
functions of Port Manager. On December 1, 1982, the PPA
General Manager designated Atty. William A. Enriquez as
officer-in-charge of PPA-PMU, Tacloban City effective
December 6, 1982. On January 6, 1983, petitioner was ordered
to immediately report to the Assistant General Manager
(AGM) for Operations, PPA, Manila. Petitioner reported at PPA,
Manila on the same date and performed the duties and
functions assigned to him.
In an Internal Control Department Report dated March 5,
1984, the PMU-Tacloban Inventory Committee and the
Commission on Audit (COA) stated that petitioner failed to
account for equipment of PPA valued at P65,542.25 and to
liquidate cash advances amounting to P130,069.61. He was
found also to have incurred unauthorized absence from May
25, 1984 to July 23, 1984.
On July 23, 1984, or nineteen months after he began reporting
in Manila, a formal charge for Dishonesty, Pursuit of Private
Business without permission as required byCivil Service Rules
and Regulations, Frequent and Unauthorized Absences and
Neglect of Duty was filed against petitioner. Based on said
charges, he was ordered preventively suspended and has been
out of service since then.
For almost four years, the case remained unacted upon. The
formal investigation and hearing resumed on September 18,
1987.
On January 18, 1989, a Decision was rendered by the Secretary
of the Department of Transportation and Communications
(DOTC), through its Administrative Action Board, finding
14
petitioner guilty of Gross Negligence on two counts: (a) for his
failure to account for the forty-four (44) assorted units of
equipment, among them a Sony Betamax, and a TV Camera,
and (b) for failing to render the required liquidation of his cash
advances amounting to P44,877.00 for a period of four years.
Petitioner was also found guilty of frequent and unauthorized
absences. Accordingly, he was meted the penalty of dismissal
from the service with the corresponding accessory
penalties. prLL
When petitioner's motion for reconsideration of the aforesaid
Decision was denied in the DOTC's Order of February 20, 1989,
he appealed to the Merit Systems and Protection Board
(MSPB) of respondent Civil Service Commission.
On February 5, 1990, the MSPB rendered a Decision reversing
the Decision of the DOTC. The pertinent portion of the MSPB'S
Decision reads:
"After a careful review of the records of the case, this Board
found the appeal meritorious. Respondent cannot be held
liable for Gross Negligence for his alleged failure to account for
several properties and for failure to liquidate the cash
advances he received as there was no showing that he has
been specifically required to do so either by law or regulation.
The mere detail of respondent to PPA-Manila, in the absence
of an order requiring him to turn over and account for the
funds and property received for his office at PMU-Tacloban will
not necessarily obligate him to make accounting for the same.
Moreover, Section 105, Chapter 5 of Presidential Decree 1445,
otherwise known as `The Government Auditing Code of the
Philippines', measured the liability of an officer accountable
for government property only to the money value of said
property. Though respondent is the person primarily liable for
these funds and property, he holds this liability jointly with the
person who has the actual possession thereof and who has the
immediate responsibility for their safekeeping.
As to the charge relative to respondent's frequent
unauthorized absences had been sufficiently and convincingly
explained, due to which the Board found him not at all guilty
of the offense charged (sic).
IN VIEW THEREOF, the decision appealed from is hereby
reversed. Respondent-Appellant Magpale should immediately
be reinstated in the service without loss of seniority rights and
with payment of back salaries and other emoluments to which
he is entitled under the law." (pp. 31-32, Rollo.)
On March 1, 1990, PPA, through its General Manager, herein
respondent Rogelio A. Dayan, filed an appeal with
the Civil Service Field Office-PPA, and the latter office indorsed
the appeal to respondent CSC in a letter dated March 5, 1990.
On March 5, 1990, petitioner requested the Secretary of the
DOTC to direct the PPA to implement the MSPB decision as it
has become final and executory. Said request was reiterated in
another letter also dated March 5, 1990 by petitioner to OIC
Wilfredo M. Trinidad of the Office of the Assistant Secretary
for Administration and Legal Affairs, DOTC.LLphil
On March 13, 1990, petitioner filed with the MSPB a Motion
for Implementation of the MSPB decision. This was opposed by
the PPA through its General Manager.
On April 27, 1990, petitioner filed with respondent CSC his
comment to the appeal of the PPA contending that he is not
an accountable officer and is under no obligation to account
for the property and equipment; that said property and
equipment were not received by him as custodian and he
should not be held liable for the loss of the same; that the said
property and equipment were placed in PPA-PMU Tacloban
City which the herein petitioner left on October 8, 1982 and
since then had lost control over them. Moreover, petitioner
averred that as to the unliquidated cash advances of
P44,877.00, the same had long been liquidated. Finally,
petitioner claimed that his failure to secure the clearance for
any possible property or financial obligation in PMU-Tacloban
was due to the urgency of his transfer to PPA-Manila and the
absence of any order or demand to secure the clearance.
On May 29, 1990, the MSPB issued an Order for the immediate
implementation of its February 5, 1990 Decision, ruling that:
"Records further show that a copy of this Board's decision was
received by the Office of the Honorable Secretary, that
Department, thru Mr. Frankie Tampus on February 6, 1990.
Records finally show that as of March 5, 1990, no motion for
reconsideration of this Board's aforementioned decision has
ever been filed as evidenced by the certification of even date
issued and signed by Director Adelaida C. Montero of the
Office for Central Personnel Records, this Commission. Hence,
said decision has long become final and executory". (p. 34,
Rollo.)
On June 28, 1990, petitioner filed a Motion to Dismiss the
appeal of PPA claiming that:
"1. Appeal of PPA was filed out of time and that the CSC has no
jurisdiction over it;
2. The PPA has not exhausted administrative remedies before
appealing to the higher body, the CSC;
3. The MSPB decision has become final and therefore cannot
be disturbed anymore.
(p. 22, Rollo.)
15
On October 19, 1990, respondent CSC rendered its now
assailed Resolution No. 90-962, the pertinent portion of which
reads as follows:
"The Commission thus holds respondent Magpale guilty of
Gross Neglect of Duty on two (2) counts for his failure to
account for the forty-four (44) equipments (sic) under his
charge and to render an accounting for cash advances
amounting to P44,877.90. Accordingly, considering two
mitigating circumstances of length of service and first offense
in favor of respondent, the commission hereby imposes a
penalty of suspension for a period of one (1) year against him.
As he has been out of the service since 1984, the penalty is
deemed served and he should now be reinstated to his former
position. This is, however, without prejudice to any criminal
or civilproceedings that the agency concerned or the COA may
institute as proper under the premises.
Finally, the decision of the MSPB exonerating the
respondent Magpale for Gross Negligence is hereby reversed.
Corollarily, the order of payment of back salaries is hereby set
aside. MSPB is likewise reminded to be more circumspect on
matters of this nature, especially as the instant case involves
accountability of public funds and property. cdphil
WHEREFORE, foregoing premises considered, the Commission
finds respondent Benigno V. Magpale, Jr., guilty of Gross
Neglect of Duty on two (2) counts for failure to account for the
forty-four (44) equipments (sic) under his charge and to render
an accounting for cash advance amounting to P44,877.90. In
view of the attendant mitigating circumstances of length of
service and first offense in favor of respondent and the Neglect
of Duty to account for cash advance in the amount of
P44,877.90 (second count) be appreciated as an aggravating
circumstance, the penalty of suspension for one (1) year shall
be imposed against respondent. This shall be without
prejudice to any criminal or civil proceedings that PPA or COA
may institute against respondent. Accordingly, the Decision
and Order of MSPB dated February 5, 1990 and May 23, 1990,
respectively, are hereby set aside ". (pp. 27-28, Rollo.)
Hence, the present recourse.
The petition alleges that respondent CSC, in issuing its
Resolution No. 90-962, gravely abused its discretion because:
"1. The law did not authorize an appeal by the government
from an adverse decision of the Merit Systems Protection
Board (MSPB);
2. Respondent PPA General Manager did not have the right or
legal personality to appeal from the MSPB decision;
3. Assuming that the appeal was available to respondent
DAYAN, the same was filed out of time after the MSPB decision
had long become final and executory." (pp. 6-7, Petition; pp. 7-
8, Rollo.)
In support of his first contention, petitioner invokes Paragraph
2(a), Section 16, Chapter 3, Subtitle A, Title I, Book V of
Executive Order No. 292, otherwise known as
theAdministrative Code of 1987 which provides:
"SECTION 16. Offices in the Commission. — The Commission
shall have the following offices:
(2) The Merit Systems Protection Board composed of a
Chairman and two (2) members shall have the following
functions:
(a) Hear and decide on appeal administrative cases involving
officials and employees of the Civil Service. Its decision shall be
final except those involving dismissal or separation from the
service which may be appealed to the Commission." (Emphasis
supplied.).
claiming that since the MSPB decision was not for dismissal or
separation from the service, but reinstatement without loss of
seniority rights and with payment of back salaries, the said
MSPB decision should be deemed final, immediately executory
and unappealable.
Petitioner next contends that assuming, for the sake of
argument. that the decision of the MSPB was appealable,
respondent Dayan, even in his capacity as General Manager of
the PPA, did not have the legal personality nor the right to
appeal the decision of the MSPB, citing paragraph 1, Section
49, Chapter 7, Subtitle A, Title I, Book V, of Executive Order No.
292 and the case of Paredes vs. CSC, G.R. No. 88177,
December 4, 1990, 192 SCRA 84.
Assuming further that the MSPB decision was appealable and
that respondent Dayan had the legal personality to appeal the
MSPB decision, petitioner still contends that the appeal should
not have been given due course by the respondent CSC
because the appeal was not filed with the proper disciplining
office in accordance with same Section 49 of Executive Order
No. 292, which, in this case, should be the DOTC, not with the
CSC Field Office at the PPA.
On the merit of the petition, petitioner claims that assuming
even further that an appeal lies from the MSPB decision, that
respondent Dayan had the legal personality or standing to
institute the appeal and that it was filed with the proper office,
still CSC Resolution 90-962 was rendered with grave abuse of
discretion because petitioner cannot be suspended for alleged
failure to account for pieces of equipment and cash advances
since this is not the neglect of duty contemplated by Section
36 of Presidential Decree No. 807 or Section 46 of the chapter
on the Civil Service in Executive Order 292. At most, petitioner
16
can be held liable for the money value of the equipment and
advances as mandated by Section 105 of Presidential Decree
No. 1445, the Government Auditing Code of the Philippines.
For its part, respondent CSC maintains —
First, that the finality of the MSPB decision in disciplinary cases
as stated in Section 16, Paragraph 2(a), Book V of Executive
Order No. 292, relied upon by petitioner, is modified by Section
12, Paragraph 11, Book V, of the same Executive Order No.
292, which reads:
"SECTION 12. Powers and Functions. — The Commission shall
have the following powers and functions:
(11) Hear and decide administrative cases instituted by or
brought directly or on appeal, including contested
appointments, and review decisions and actions of its offices
and of the agencies attached to it."
Furthermore, relevant provisions of Executive Order No. 135
dated February 25, 1987 amending Section 19(b)
of Presidential Decree No. 807 and Section 8 ofPresidential
Decree No. 1409 state, thus:
"WHEREAS, in the interest of justice, there is a need to confer
upon the Civil Service Commission jurisdiction over appeal in
contested or provisional appointments and to make its
decision thereon, as well as in administrative disciplinary cases
final and reviewable by the Supreme Court.
Relationship with the Civil Service Commission. — The
Commission shall hear and decide appeals from other
decisions of the Board provided that the decisions of the
Commission shall be subject to review on certiorari only upon
receipt of a copy thereof by the aggrieved party."
Thus, respondent CSC argues that it is deemed not to have lost
its appellate jurisdiction over the decisions of the MSPB in
administrative disciplinary cases.
Second, the case of Paredes v. CSC is not applicable.
Respondent Dayan appealed the MSPB decision not in his
personal capacity nor in pursuit of his private interest, but as
held of the PPA, being the general manager thereof.
Third, the appeal was filed with the proper disciplining office
because the decision appealed from was that of the MSPB, one
of the offices in respondent CSC. Thus, respondent CSC was
justified in giving due course to PPA's notice of appeal filed
with its (CSC) Field Office at the PPA.
Finally, petitioner's claim that he is liable only for the money
value of the property and cash advances and cannot be
administratively charged for such infraction is untenable and a
mockery of the civil service law. For his failure to account for
the property under his charge and to liquidate his cash
advances, petitioner is guilty of Gross Neglect of Duty and
should have been dismissed from the service if no mitigating
circumstances were considered in his favor.
We gave due course to the petition and required the parties to
file their respective memoranda. After considering the same
and the pertinent laws and jurisprudence, We find that the
petition must be granted.
After Mendez vs. Civil Service Commission, (204 SCRA 965
[1991]), the extent of the authority of respondent CSC to
review the decisions of the MSPB is now a settled matter.
The Court, in said case held:
"It is axiomatic that the right to appeal is merely a statutory
privilege and may be exercised only in the manner and in
accordance with the provision of law. (Victorias Milling Co.,
Inc. vs. Office of the Presidential Assistant for Legal Affairs, 153
SCRA 318).
A cursory reading of P.D. 807, otherwise known as `The
Philippine Civil Service Law' shows that said law does not
contemplate a review of decisions exonerating officers or
employees from administrative charges.
Section 37 paragraph (a) thereof, provides: 'The Commission
shall decide upon appeal all administrative disciplinary cases
involving the imposition of a penalty of suspension for more
than thirty days, or fine in an amount exceeding thirty days'
salary, demotion in rank or salary or transfer, removal or
dismissal from office . . .' (emphasis supplied) (p. 7, Rollo).
Said provision must be read together with Section 39
paragraph (a) of P.D. 805 which contemplates:
'Appeals, where allowable, shall be made by the party
adversely affected by the decision . . .' (emphasis supplied) (p.
104, Rollo)
The phrase 'party adversely affected by the decision' refers to
the government employee against whom the administrative
case is filed for the purpose of disciplinary action which may
take the form of suspension, demotion in rank or salary,
transfer, removal or dismissal from office. In the instant case,
Coloyan who filed the appeal cannot be considered an
aggrieved party because he is not the respondent in the
administrative case below.
Finally, pursuant to Section 37 paragraph (b) of P.D. 807, the
city mayor, as head of the city government, is empowered to
enforce judgment with finality on lesser penalties like
suspension from work for one month and forfeiture of salary
equivalent to one month against erring employees.
By inference or implication, the remedy of appeal may be
availed of only in a case where the respondent is found guilty
17
of the charges filed against him. But when the respondent is
exonerated of said charges, as in this case, there is, no occasion
for appeal." (pp. 967-968).
The above ruling is a reiteration of the earlier pronouncement
in Paredes vs. Civil Service Commission, (192 SCRA 84 [1990])
cited by petitioner, wherein We said:
"Based on the above provisions of law, appeal to
the Civil Service Commission in an administrative case is
extended to the party adversely affected by the decision, that
is, the person or the respondent employee who has been
meted out the penalty of suspension for more than thirty days;
or fine in an amount exceeding thirty days salary demotion in
rank or salary or transfer, removal or dismissal from office. The
decision of the disciplining authority is even final and not
appealable to theCivil Service Commission in cases where the
penalty imposed is suspension for not more than thirty days or
fine in an amount not exceeding thirty days salary. Appeal in
cases allowed by law must be filed within fifteen days from
receipt of the decision.
Here the MSPB after hearing and the submission of
memoranda exonerated private respondent Amor of all
charges except for habitual tardiness. The penalty was only a
reprimand so that even private respondent Amor, the party
adversely affected by the decision, cannot even interpose an
appeal to the Civil Service Commission.
As correctly ruled by private respondent, petitioner Paredes
the complainant is not the party adversely affected by the
decision so that she has no legal personality to interpose an
appeal to the Civil Service Commission. In an administrative
case, the complainant is a mere witness (Gonzalo v. D. Roda,
64 SCRA 120). Even if she is the Head of the Administrative
Services Department of the HSRC as a complainant she is
merely a witness for the government in an administrative case.
No private interest is involved in an administrative case as the
offense is committed against the government." (pp. 98-99).
While it is true, as contended by respondent Civil Service
Commission that under Section 12 (par. 11), Chapter 3, Subtitle
A, Book V of Executive Order 292, the CSC does have the
power to —
"Hear and decide administrative cases instituted by or brought
before it directly or on appeal, including contested
appointments, and review decisions and actions of its offices
and of the agencies attached to it . . ."
the exercise of the power is qualified by and should be read
together with the other sections of the same sub-title and
book of Executive Order 292, particularly Section 49 which
prescribes the following requisites for the exercise of the
power of appeal, to wit:
(a) the decision must be appealable;

(b) the appeal must be made by the party adversely affected

by the decision;

(c) the appeal must be made within fifteen days from receipt
of the decision, unless a petition for reconsideration is
seasonably filed; and

(d) the notice of appeal must be filed with the disciplining

office, which shall forward the records of the case, together
with the notice of appeal to the appellate authority within
fifteen days from filing of the notice of appeal, with its
comments, if any.

Under Section 47 of the same Code, the CSC shall decide on

appeal all administrative disciplinary cases involving the
imposition of:

(a) a penalty of suspension for more than thirty days; or

(b) fine in an amount exceeding thirty days salary; or

(c) demotion in rank or salary or transfer; or

(d) removal or dismissal from office.

The February 5, 1990 decision of the MSPB did not involve

dismissal or separation from office, rather, the decision
exonerated petitioner and ordered him reinstated to his
former position. Consequently, in the light of our
pronouncements in the aforecited cases
of Mendez vs. Civil Service
Commission and Paredes vs. Civil Service Commission, the
MSPB decision was not a proper subject of appeal to the CSC.

Settled is the rule that a tribunal, board, or officer exercising

judicial functions acts without jurisdiction if no authority has
been conferred by law to hear and decide the case.
(Acena v. Civil Service Commission, 193 SCRA 623 [1991]).

WHEREFORE, the decision of the Civil Service Commission is

hereby ANNULLED and SET ASIDE and the decision of the Merit
Systems Protection Board dated February 5, 1990 is hereby
REINSTATED

18
JESUSA VDA. DE MURGA, plaintiff-appellee, vs.
JUANITO CHAN, defendant-appellant. ANGELES, J.:
In this appeal, two issues involving questions of law are posed
for resolution: First, whether or not the allegations in the
complaint constitute a cause of action for unlawful detainer,
and confer jurisdiction over the case to the municipal court
(now city court) of Zamboanga City, under the provisions of
Rule 70 of the Rules of Court and decisions interpreting the
same, when particularly considered in the light of the
contexture of the pertinent letter of demand to vacate the
leased premises (Annex J of the Complaint), couched in the
following wise:
Please be advised further that we reiterate our demand made
to you in our registered letter dated February 4, 1959 (to
vacate the leased premises) which was received by you on the
10th instant, unless you pay the amount of Six Hundred pesos
(P600.00) or Seven Hundred pesos (P700.00) as new rental per
our letter of January 19, 1959, before the expiration of the 15-
day period granted you for vacating the same.
and, Second, whether or not the lessor and the lessee had
agreed upon an automatic renewal of the lease of the
premises, under the stipulation in clause "7" of the
corresponding contract of lease, containing the following
agreement:
7. — That upon the termination of the term of Ten (10) years
above expressed, the said Jesusa Vda. de Murga shall have the
option to purchase the building or buildings belonging to and
constructed by the said Juanito Chan, and the price of said
building or buildings shall be determined by three
commissioners, two of whom shall be appointed by each of the
parties, and the remainder commissioner shall be appointed
by both. However, in the event that the said Jesusa Vda. de
Murga shall not exercise the right granted her for any reason
or cause, this contract of lease shall be automatically renewed
but the period for said renewal shall, however, be fixed and
adjusted again by the parties. It is agreed further that in case
of said renewal, the rental shall also be adjusted by the parties
depending on the business condition which shall then at that
time prevail. (Exhibit A.)
Jesusa Vda. de Murga was the owner of two parcels of land in
the City of Zamboanga, designated as lots 36 and 38 of the
cadastral plan of the place, and covered by Transfer
Certificates of Title Nos. 3237 and 3238, respectively.
On January 31, 1949, a contract of lease over said two lots was
entered into by and between Jesusa Vda. de Murga as lessor,
and Juanito Chan as lessee, the basic terms of which pertinent
to the present case are: The period of the lease was ten (10)
years from January 31, 1949; the lessee to pay a monthly rent
19
of P500.00 within the first ten days of every month; with the
consent of the lessor, the lessee may introduce improvements
on the land; and Clause "7" quoted hereinabove. (Exhibit A.)
Upon taking possession of the leased premises, with the
consent of the lessor, the lessee introduced improvements on
the land consisting of buildings of the total costs of P70,000.00.
It is not disputed that the lessee paid in full the monthly rent
during the ten- year period of the lease.
As early as July 23, 1958, before the expiration of the ten-year
period of the lease, there had been intercourse of
communications between the lessor and the lessee for the
renewal of the lease, but the parties failed to arrive at an
agreement; hence, this action by the lessor against the lessee.
Thus, on July 23, 1958, the lessor informed the lessee of her
willingness to renew the lease for five years at a monthly rent
of P700.00. (Exhibit B.) In his reply the lessee said:
... Much as I am willing to consider the suggested increase of
rental, however, I would like to plead with you that due to very
poor business at present, I may not be able to consider your
indicated increase. (Exhibit C.)
On August 1, 1958, the lessor advised the lessee that:
Beginning February 1, 1959, ... the rental of my lots ... will be
P700.00. (Exhibit D.)
On January 18, 1959, the lessee advised the lessor that she
(lessor) should purchase the buildings constructed on the land
in accordance with the stipulation in the contract of lease, and
—
... In case you do not agree with the purchase of the aforesaid
buildings, I am willing to continue occupying the land and
execute a new contract of lease, but I am appealing to you to
take into consideration the prevailing business conditions by
reducing the monthly rental to P400.00, ... (Exhibit L.)
On January 19, 1959, the lessor replied that —
... she rejects the option to purchase the buildings, ... and her
present last offer is: (a) Six hundred pesos (P600.00) rentals
payable within the first fifteen days of every month, without
contract; or (b) Seven hundred pesos (P700.00) rentals payable
within the first fifteen days of every month, one year advanced
rental, with a five-year contract. (Exhibit F.)
On January 20, 1959, the lessor informed the lessee that the
conditions stated in the latter's letter of January 18, 1959,
were not acceptable to her. (Exhibit G.)
On January 21, 1959, the lessee advised the lessor that he
(lessee) cannot accept the conditions stated in her (lessor's)
letters of January 19 and 20, 1959 —
... y, insists que Vd. compre mis casas enclavadas en los lotes
objeto de arrendamiento. Y en caso de su negative seguire
ocupando el solar bajo el pago de un alquiler mensual de
Quinientos pesos (P500.00) debido al negocio reinante en
estos dias, tal como esta dispuesto en el contrato de
arrendamiento firmado por Vd. y yo el dia 31 de Enero de
1949." (Exhibit H.)
On February 4, 1959, the lessor made demand on the lessee to
vacate the premises —
... for the reason that the lease contract had expired on January
31, 1959, ... and the lessor had waived the right to exercise the
option granted her under paragraph "7" of said contract, ...
(Exhibit I.)
On February 16, 1959, the lessee sent his check for P500.00 to
the lessor in payment of the monthly rental corresponding to
the month of February, 1959. (See Exhibit J.)
On February 19, 1959, the lessor returned to the lessee the
check which the latter had sent to the former, stating further
in the letter that she was demanding that the leased premises
be vacated, if he (lessor) would not agree to pay the new rental
of P600.00 or P700.00 a month beginning February 1, 1959, as
embodied in the letter, Exhibit J, hereinabove quoted.
Disregarding the written demand of the lessor, dated February
19, 1959, Exhibit J, the lessee chose to remain in the possession
of the leased premises and insisted that the contract of lease
stipulated an automatic renewal of the lease, and conformably
thereto, he has a right to continue occupying the premises; and
as token of his decision, he sent to the lessor his check for
P500.00 in payment of the monthly rent corresponding to the
month of February 1959. The lessor was undoubtedly not
satisfied with the tendered amount of P500.00, because she
had demanded P600.00 or P700.00, as new monthly rent as a
condition for the renewal of the lease. And without any
further definite demand on the lessee to vacate the premises
filed, on March 10, 1959, a complaint of unlawful detainer in
the municipal court of Zamboanga City against the lessee,
Juanito Chan, to eject the latter from the leased premises. The
facts alleged in the complaint as cause of action, consisted in
reproducing and reiterating the substance of the
correspondence exchanged between lessor and lessee, as
narrated above, and claiming that the possession of the lessee
of the premises had become illegal by his failure and refusal to
pay the increased new rental. For relief, the plaintiff prayed
that the defendant be ordered to vacate the premises, and "TO
PAY THE NEW RENTS DEMANDED OF P600.00 or P700.00
FROM FEBRUARY 1, 1959 MONTHLY AS THE CASE MAY BE."
Attached to the complaint, as annexes thereto, were copies of
the letters exchanged between the lessor and the lessee,
Exhibits B to J.
20
In his answer (as amended), the defendant admitting the
genuineness and authenticity of the letters annexed to the
complaint, but traversing some of the allegations therein,
raised the defenses of lack of jurisdiction of the court over the
case, and lack of cause of action for unlawful detainer.
After a trial, decision was rendered ordering the defendant to
vacate the premises, to pay the plaintiff the sum of P600.00 as
monthly rent from February 1, 1959, and P500.00 as attorney's
fees.
The defendant appealed from the decision to the Court of First
Instance of Zamboanga City. Before this Court, the defendant
again raised the special defenses of lack of jurisdiction of the
municipal court and lack of cause of action for unlawful
detainer. Ruling on the issue of lack of jurisdiction, the court
said:
With reference to the contention of defendant that the
municipal court had no jurisdiction to try this case because the
interpretation, application and enforcement of the terms of
the Lease Agreement is within the competence of a court
higher than that of the municipal court, deserves hardly any
discussion. Suffice it to say that the jurisdiction of the
municipal court is grounded on Section 88 of the Judiciary Act
of 1948.
After a trial, the Court of First Instance rendered judgment
ordering the defendant to vacate the premises, to pay the
plaintiff the sum of P1,200.00 from February 1, 1959, as
monthly rental of the land, and P2,000.00 as attorney's fees.
From the foregoing decision, the defendant interposed a direct
appeal to this Court. Therefore, only questions of law may be
considered in this appeal.
Among the four errors assigned by the appellant in his brief,
the first two pose the issue of lack of jurisdiction of the
municipal Court and of the lack of cause of action for unlawful
detainer; the remaining errors delving on questions of fact
which, by reason of the nature of the appeal are, therefore,
deemed admitted and may not be reviewed in this appeal.
In relation to the issue of lack of jurisdiction of the municipal
court over the case, it is to be noted that, after the lessor and
the lessee had failed to agree on the renewal of the lease
which terminated on January 31, 1959, the lessor, on February
19, 1959, sent the demand letter hereinabove quoted, Exhibit
J. It was, then, as it is now, the contention of the lessee that
such demand is not that kind of demand contemplated in the
Rules of Court as complying with the jurisdictional requirement
— that demand to vacate is indispensable in order to
determine whether the tenant's possession has become
illegal. On this matter, the rulings in the following cases are
pertinent and applicable:
The notice giving lessee the alternative either to pay the
increased rental or otherwise to vacate the land is not the
demand contemplated by the Rules of Court in unlawful
detainer cases. When after such notice, the lessee elects to
stay, he thereby merely assumes the new rental and cannot be
ejected until he defaults in said obligation and necessary
demand is first made. (Manotok vs. Guinto, L-9540, April 30,
1957.)
The lessor may, under Article 1569 of the Civil Code, judicially
disposses the lessee for default in the payment of the price
agreed upon. But where such default is based on the fact that
the rent sought to be collected is not that agreed upon, an
action for ejectment cannot lie. (Belmonte vs. Martin, 42 Off.
Gaz. No. 10, 2146.)
In the case at bar, it clearly appears from the demand letter of
February 19, 1959, that the obligation to vacate the leased
premises would be dependent on the failure of the lessee to
agree to the new rent demanded by the lessor. As the lessee,
however, was in the physical possession of the land by virtue
of a prior contract of lease, and the demand was in the
alternative imposing a new rental, even without taking into
account the efficacy of the stipulation for an automatic
renewal of the lease, which shall be discussed hereafter, in the
light of the ruling in Belmonte vs. Martin, supra, without any
subsequent definite demand to vacate the premises, subject
to no condition, the lessee did not incur in default which would
give rise to a right on the part of the lessor to bring an action
of unlawful detainer.
Delving on the second special defense to wit, that the
allegations in the complaint do not constitute a cause of action
of unlawful detainer, it is the contention of the lessee-
appellant that clause "7" of the contract of lease, quoted
hereinabove, meant an express grant to the lessee to renew
the lease at his option, contrary to the claim of the lessor-
appellee that there must be a prior mutual agreement of the
parties. As we read clause "7", We find that it envisioned the
happening of two eventualities at the expiration of the lease
on January 31, 1959 — either the lessor may purchase the
improvements constructed by the lessee on the land, or in case
the lessor fails, for any cause or reason, to exercise the option
to buy, the lease shall be deemed automatically renewed. The
evidence has established that the lessor had refused to buy the
buildings on the land. The statement in said clause "7" that in
case of renewal the duration of the lease and the new rental
to be paid shall be adjusted by the parties, is of no moment in
the solution of the issue, whether or not the facts alleged in
the complaint constitute a cause of action of unlawful
detainer. The pleadings of the parties, and the annexes
thereto, clearly show that the jugular vein of the controversy
hinges on the correct interpretation of clause "7" of the
21
contract of lease, a matter outside the jurisdiction of the
municipal court. The lessor-appellee maintains that the lease
had terminated on January 31, 1959, renewable only upon a
new agreement of the parties; on the other hand, the lessee-
appellant contends that, inasmuch as the controversy hinges
on the interpretation of clause "7" of the contract, that is,
whether or not said clause contemplated an automatic
renewal of the lease, the action was not for unlawful detainer
but one not capable of pecuniary estimation and, therefore,
beyond the competence of the municipal court.
The contention of the lessee-appellant must be sustained.
In Cruz vs. Alberto, 39 Phil. 991, the contract of lease had the
following provision:
That the term of this contract of lease shall be six years from
the date of the execution, and extendible for another six years
agreed upon by both parties.
It was contended by the lessor that the lease cannot be
extended except upon mutual agreement. Ruling on the
contention, the Supreme Court said:
We are of the opinion that the trial judge was entirely correct
in his interpretation of the contracts in question; and though it
must be admitted that this interpretation renders the words
"agreed upon by both parties" superfluous yet this does not
involve any strain upon the meaning of the entire passage. If
the interpretation which the appellant would have us adopt be
true, the entire clause relative to the extension of the term
would be superfluous, for if the extension is only to be
effective upon a new agreement of the parties to be made at
the expiration of the original term, why should anything at all
be said about an extension? Parties who are free to make one
contract of lease are certainly free to make a new one when
the old has expired without being reminded of their faculty to
do so by the insertion of a clause of this kind in the first lease.
This would not only be superfluous but nonsensical. The clause
relative to the extension of the lease should, if possible, be so
interpreted as to give it some force.
As we interpret the contracts before us, the parties meant to
express the fact that they had already agreed that there might
be an extension of the lease and had agreed upon its duration,
thus giving the defendant the right of election to take for a
second term or to quit upon the expiration of the original term.
The clause in question has the same meaning as if the words
"agreed upon by both parties" had been omitted and the
passage had closed with a period after the word "years" in the
first contract and after "extension" in the third contract.
It has been held by this court that the word "extendible"
standing without qualification in a contract of lease, means
that the term of the lease may be extended and is equivalent
to a promise to extend, made by the lessor to the lessee, and, conceded by the lessor because he consented thereto in the
as unilateral stipulation, obliges the promisor to fulfill his original contract.
promise. (Legarda Koh vs. Ongsiako, 36 Phil. Rep. 185). Such a
UPON THE FOREGOING CONSIDERATIONS, We declare that the
stipulation is supported by the consideration which is at the
municipal court (now city court) of Zamboanga City had no
basis of the contract of lease (16 R.C.L. pp. 883, 884) and
jurisdiction over the case; therefore, the appealed decision is
obviously involves a mutuality of benefit, or reciprocity,
set aside and reversed, with costs against the plaintiff-
between the parties, notwithstanding the right of election is
appellee.
conceded solely to the lessee. As a general rule, in construing
provisions of this character, the tenant is favored, where there
is any uncertainty, and not the landlord, upon the principle
that a grant should be taken most strongly against the grantor.
(15 R.C.L. p. 884, 24 Cyc. 915.)

In the case of Legarda Koh vs. Ongsiaco, 36 Phil. 189-190, the

contract of lease had this provision:

The term of the said contract shall be for one year, counting
from the 1st of December of the present year (1963) which
term shall be extendible at the will of both parties.

Said the Supreme Court: According to Article 1091 of the Civil

Code, obligations arising from contracts have legal force
between the contracting parties and must be fulfilled in
accordance with their stipulation. Therefore, if the defendant
bound himself to lease his properties for the period of one
year, which term should be extendible, it is evident and strictly
in accord with justice that the plaintiff-lessee has a right, at the
termination of the first period of one year, to have the said
contract of lease renewed in fulfillment of the stipulated
extension of the term of the lease; otherwise, the clause
contained in the document Exhibit 1, that the lease at its
termination would be extendible, would be worthless.

The defendant-appellant is wrong in his contention that the

renewal or extension of the contract depended solely upon
himself, notwithstanding the stipulations contained in said
contract, inasmuch as the renewal and continuation of the
lease could not be left wholly to the plaintiff's free will, without
counting on the defendant's consent — a consent expressly
granted in the promise that the term would be extended,
which term, although its duration was not fixed, should be
understood to be for another year, a period equal to and not
greater than the term of the lease.

When a contract of lease provides that the term thereof is

extendible, the agreement is understood as being in favor of
the lessee, and the latter is authorized to renew the contract
and to continue to occupy the leased property, after notifying
the lessor to that effect. The lessor can withdraw from the said
contract only after having fulfilled his promise to grant the
extension of time stipulated therein, unless the lessee has
failed to comply with or has violated the conditions of the
contract. It is not necessary that the extension be expressly

22
EDITHA PADLAN, Petitioner, v. ELENITA DINGLASAN and
FELICISIMO DINGLASAN, Respondents. 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.
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 P4,000.00. 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.4chanroblesvirtualawlibrary
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.
23
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:chanroblesvirtualawlibrary
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
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 P4,000.00 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. Sibonghanoy 12 was
present in the case. It reasoned that when the RTC denied
petitioner's motion to dismiss the case for lack of jurisdiction,
petitioner neither moved for a reconsideration of the order
nor did she avail of any remedy provided by the Rules. Instead,
she kept silent and only became interested in the case again
when the CA rendered a decision adverse to her claim.
Hence, the petition assigning the following errors:
I.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.13chanroblesvirtualawlibrary
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 P4,000.00,
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,
24
Municipal Trial Courts, and Municipal Circuit Trial Courts,
amending for the purpose BP Blg. 129.
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:chanroblesvirtualawlibrary
(1) In all civil actions in which the subject of the litigation is
incapable of pecuniary estimation;cralawlibrary
(2) In all civil actions which involve the title to, or possession
of, real property, or any interest therein, where the assessed
value of the property involved exceeds Twenty Thousand
Pesos (P20,000.00) or for civil actions in Metro Manila, where
such value exceeds Fifty Thousand Pesos (P50,000.00), except
actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon the
Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts; 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:
(3) Exclusive original jurisdiction in all civil actions which
involve title to, or possession of, real property, or any interest
therein where the assessed value of the property or interest
therein does not exceed Twenty Thousand Pesos (P20,000.00)
or, in civil actions in Metro Manila, where such assessed value
does not exceed Fifty Thousand Pesos (P50,000.00) exclusive
of interest, damages of whatever kind, attorney's fees,
litigation expenses and costs: Provided, That in cases of land
not declared for taxation purposes, the value of such property
shall be determined by the assessed value of the adjacent lots.
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
16
consulted. chanroblesvirtualawlibrary
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 P4,000.00. 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 P50,000.00 and litigation
expenses of P20,000.00, plus cost of
suit.18chanroblesvirtualawlibrary
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
25
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.19chanroblesvirtualawlibrary
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.
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.
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.21 In 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 P4,000.00. 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.23Since the amount alleged in the
Complaint by respondents for the disputed lot is
only P4,000.00, the MTC and not the RTC has jurisdiction over
the action. Therefore, all proceedings in the RTC are null and
void.24chanroblesvirtualawlibrary
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.
EDGARDO V. QUESADA, Petitioner, vs. THE DEPARTMENT OF
JUSTICE and CLEMENTE TERUEL, Respondents. SANDOVAL-
GUTIERREZ, J.:
For our resolution is the Petition for Certiorari 1 (with prayer
for a temporary restraining order and/or preliminary
injunction) assailing the Resolutions dated January 17, 2001
and September 17, 2001 issued by the Secretary of Justice in
I.S. No. 00-29780-C, entitled "Clemente M. Teruel,
complainant, versus Ramon P. Camacho, Jr., Edgardo V.
Quesada and Rodolfo Corgado, respondents."
On March 1, 2000, Clemente M. Teruel, herein respondent,
filed with the Office of the City Prosecutor, Mandaluyong City,
an affidavit-complaint 2 charging Edgardo V. Quesada (herein
petitioner), Ramon P. Camacho, Jr., and Rodolfo Corgado with
the crime of estafa under Article 315, paragraphs 2 and 3 of
the Revised Penal Code, docketed as I.S. No. 00-29780-C. The
affidavit-complaint alleges that on June 13, 1998 at Shangrila
Plaza Hotel, EDSA, Mandaluyong City, Quesada, Camacho, and
Corgado represented themselves to Teruel as the president,
vice-president/treasurer, and managing director, respectively,
of VSH Group Corporation; that they offered to him a
telecommunication device called Star Consultant Equipment
Package which provides the user easy access to the internet via
television; that they assured him that after he pays the
purchase price of P65,000.00, they will immediately deliver to
him two units of the internet access device; that relying on
their representations, he paid them P65,000.00 for the two
units; and that despite demands, they, did not deliver to him
the units.
It was only petitioner Quesada who filed a counter-
affidavit. 3 He alleged that he, Camacho, and Corgado are Star
Consultant Trainers of F.O.M. Philippines, Inc., a corporation
engaged in the business of selling and marketing
telecommunication products and technologies; that they
formed the VSH Group as a corporation "for the principal
purpose of pooling the commissions they will receive as Star
Consultant Trainers and then dividing said commissions among
themselves according to their agreement"; that while he
admitted that the two units of internet access devices
purchased by herein respondent Teruel were not delivered to
him, however, this was not due to their alleged fraudulent
representations since they merely acted as sales agents of
F.O.M. Phils., Inc.; and that they found out too late that the
said company could not cope with its commitment to them as
it ran short of supplies of telecommunication products.
On April 25, 2000, Assistant City Prosecutor Esteban A. Tacla,
Jr. issued a Resolution 4 finding probable cause against
petitioner Quesada, Camacho, and Corgado, and
recommending the filing of the corresponding Information.
26
Consequently, an Information for estafa against petitioner
Quesada, Camacho, and Corgado was filed with the Regional
Trial Court (RTC), Mandaluyong City, docketed as Criminal Case
No. MC-00-2510. This case was later raffled off to Branch 208.
In the meantime, petitioner filed with the Department of
Justice a Petition for Review challenging the April 25, 2000
Resolution of the Investigating Prosecutor. On January 17,
2001, the Secretary of Justice issued a Resolution 5dismissing
the petition. Petitioner’s motion for reconsideration was
denied in a Resolution 6 dated September 17, 2001.
While the RTC was hearing Criminal Case No. MC-00-2510,
petitioner filed with this Court the instant Petition
for Certiorari alleging that the Secretary of Justice, in
dismissing his Petition for Review in I.S. No. 00-29780-C, acted
with grave abuse of discretion amounting to lack or excess of
jurisdiction. Petitioner contends that the element of fraud or
deceit in the crime of estafa is not present 7 and that there is
no evidence which will prove that the accused’s promise to
deliver the purchased items was false or made in bad faith. 8
The Solicitor General, in his Comment, maintains that the
Secretary of Justice, in finding a probable cause against the
three accused, did not act with grave abuse of discretion and
prayed for the dismissal of the instant petition for being
unmeritorious.
Initially, we observe that the present petition was directly filed
with this Court, in utter violation of the rule on hierarchy of
courts.
A petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure, as amended, must be filed with the Court of
Appeals whose decision may then be appealed to this Court by
way of a petition for review on certiorari under Rule 45 of the
same Rules. 9 A direct recourse to this Court is warranted only
where there are special and compelling reasons specifically
alleged in the petition to justify such action. Such ladder of
appeals is in accordance with the rule on hierarchy of courts.
In Vergara, Sr. v. Suelto, 10 we stressed that this should be the
constant policy that must be observed strictly by the courts
and lawyers, thus:
x x x. The Supreme Court is a court of last resort, and must so
remain if it is to satisfactorily perform the functions assigned
to it by the fundamental charter and immemorial tradition. It
cannot and should not be burdened with the task of dealing
with causes in the first instance. Its original jurisdiction to issue
the so-called extraordinary writs should be exercised only
where absolutely necessary or where serious and important
reasons exist therefor. Hence, that jurisdiction should
generally be exercised relative to actions or proceedings
before the Court of Appeals, or before constitutional or other
tribunals, bodies or agencies whose acts for some reason or
another are not controllable by the Court of Appeals. Where
the issuance of an extraordinary writ is also within the
competence of the Court of Appeals or a Regional Trial Court,
it is in either of these courts that the specific action for the
writ’s procurement must be presented. This is and should
continue to be the policy in this regard, a policy that courts and
lawyers must strictly observe. (Underscoring supplied)
We later reaffirmed such policy in People v. Cuaresma 11 after
noting that there is "a growing tendency on the part of litigants
and lawyers to have their applications for the so-called
extraordinary writs, and sometimes even their appeals, passed
upon and adjudicated directly and immediately by the highest
tribunal of the land." We again emphasized that:
x x x. This Court’s original jurisdiction to issue writs of certiorari
(as well as prohibition, mandamus, quo warranto, habeas
corpus and injunction) is not exclusive. x x x. It is also shared
by this Court, and by the Regional Trial Court, with the Court
of Appeals x x x. 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 should also serve 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 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 established policy. It is a policy that is 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. x x x. (Underscoring supplied)
determination of which is better left to the trial court after the
parties shall have adduced their respective evidence. It bears
stressing that a preliminary investigation is merely an inquiry
or proceeding to determine whether there is sufficient ground
to engender a well-founded belief that a crime has been
committed and that the respondent is probably guilty thereof,
and should be held for trial. 12 It does not call for the
application of rules and standards of proof that a judgment of
conviction requires after trial on the merits. 13 As implied by
the words "probably guilty," the inquiry is concerned merely
with probability, not absolute or moral certainty. 14 At this
stage, the complainant need not present proof beyond
reasonable doubt. A preliminary investigation does not require
a full and exhaustive presentation of the parties’ evidence. 15 A
finding of probable cause needs only to rest on evidence
showing that more likely than not, a crime has been committed
and was committed by petitioner and his co-accused. As ruled
by the Investigating Prosecutor and affirmed by the Secretary
of Justice, petitioner’s representation and assurance to
respondent Teruel that the telecommunication equipment
would be delivered to him upon payment of its purchase price
was the compelling reason why he parted with his money. Such
assurance, the Investigating Prosecutor added, is actually a
misrepresentation or deceit.
Thus, we hold that the Secretary of Justice did not gravely
abuse his discretion. An act of a court or tribunal may only be
considered as committed in grave abuse of discretion when
the same was performed in a capricious or whimsical exercise
of judgment which is 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. 16
WHEREFORE, we DISMISS the instant petition. Costs against
petitioner.

Here, we cannot discern any special and compelling reason to

justify the direct filing with this Court of the present petition.
Clearly, it should be dismissed outright.

Even assuming that the petition can be filed directly with this
Court, the same must fail. Petitioner contends that the
element of fraud or deceit as an element of the crime of estafa
is absent. Consequently, the affirmance by the Secretary of
Justice of the Investigating Prosecutor’s finding that there
exists a probable cause is tainted with grave abuse of
discretion.

The issue of whether the element of fraud or deceit is present

is both a question of fact and a matter of defense, the

27
MILAGROS G. LUMBUAN,* Petitioner, vs. ALFREDO A. motion for reconsideration which is a prohibited pleading
RONQUILLO, Respondent. QUISUMBING, J.: under the Rules on Summary Procedure.

This petition for review on certiorari seeks to reverse and set Upon appeal, the case was raffled to the Regional Trial Court
aside the Decision1 dated April 12, 2002, of the Court of (RTC) of Manila, Branch 38, and docketed as Civil Case No. 98-
Appeals in CA-G.R. SP No. 52436 and its Resolution2 dated 87311. On July 8, 1998, the RTC rendered its decision 9 setting
October 14, 2002, denying the petitioner’s motion for aside the MeTC decision. The RTC directed the parties to go
reconsideration. back to the Lupon Chairman or Punong Barangay for further
proceedings and to comply strictly with the condition that
The salient facts, as found by the Court of Appeals,3 are as
should the parties fail to reach an amicable settlement, the
follows:
entire records of the case will be remanded to MeTC of Manila,
Petitioner Milagros G. Lumbuan is the registered owner of Lot Branch 6, for it to decide the case anew.
19-A, Block 2844 with Transfer Certificate of Title No. 193264,
The respondent sought reconsideration but the RTC denied the
located in Gagalangin, Tondo, Manila. On February 20, 1995,
motion in an Order dated March 15, 1999. Thus, he sought
she leased it to respondent Alfredo A. Ronquillo for a period of
relief from the Court of Appeals through a petition for
three years with a monthly rental of P5,000. The parties also
review.10 On April 12, 2002, the appellate court promulgated a
agreed that there will be a 10% annual increase in rent for the
decision, reversing the decision of the RTC and ordering the
succeeding two years, i.e., 1996 and 1997,4 and the leased
dismissal of the ejectment case. The appellate court ruled that
premises will be used exclusively for the respondent’s fastfood
when a complaint is prematurely instituted, as when the
business, unless any other use is given, with the petitioner’s
mandatory mediation and conciliation in the barangay level
prior written consent.5
had not been complied with, the court should dismiss the case
While the respondent at the start operated a fastfood and not just remand the records to the court of origin so that
business, he later used the premises as residence without the the parties may go through the prerequisite proceedings.
petitioner’s prior written consent. He also failed to pay the
The petitioner filed a motion for reconsideration, which was
10% annual increase in rent of P500/month starting 1996
denied by the appellate court. Hence, this present petition.
and P1,000/month in 1997 to the present. Despite repeated
verbal and written demands, the respondent refused to pay In the meantime, while this petition was pending before this
the arrears and vacate the leased premises. Court, the parties went through barangay conciliation
proceedings as directed by the RTC of Manila, Branch 38.
On November 15, 1997, the petitioner referred the matter to
Again, they failed to arrive at an amicable settlement
the Barangay Chairman’s office but the parties failed to arrive
prompting the RTC to issue an Order11 remanding the case to
at a settlement. The Barangay Chairman then issued a
the MeTC of Manila, Branch 6, where the proceedings took
Certificate to File Action.6
place anew. On April 25, 2000, the MeTC rendered a second
On December 8, 1997, the petitioner filed against the decision, the dispositive portion of which reads:
respondent an action for Unlawful Detainer, docketed as Civil
WHEREFORE, premises considered, judgment on the merits is
Case No. 157922-CV. It was raffled to the Metropolitan Trial
hereby rendered for the plaintiff as follows:
Court (MeTC) of Manila, Branch 6. On December 15, 1997, the
respondent received the summons and copy of the complaint. 1. Ordering defendant and all persons claiming right of
On December 24, 1997, he filed his Answer by mail. Before the possession under him to voluntarily vacate the property
MeTC could receive the respondent’s Answer, the petitioner located at Lot 19-A Block 2844, Gagalangin, Tondo, Manila and
filed a Motion for Summary Judgment dated January 7, surrender possession thereof to the plaintiff;
1998.7 Acting upon this motion, the MeTC rendered a
2. Ordering defendant to pay to plaintiff the amount of
decision8 on January 15, 1998, ordering the respondent to
P387,512.00 as actual damages in the form of unpaid rentals
vacate and surrender possession of the leased premises; to pay
and its agreed increase up to January 2000 and to pay the
the petitioner the amount of P46,000 as unpaid rentals with
amount of P6,500.00 a month thereafter until the same is
legal interest until fully paid; and to pay the petitioner P5,000
actually vacated;
as attorney’s fees plus cost of the suit.
3. Ordering the defendant to pay to plaintiff the sum of
The respondent then filed a Manifestation calling the attention
P10,000.00 as and for attorney’s fees plus cost of the suit.
of the MeTC to the fact that his Answer was filed on time and
praying that the decision be set aside. The MeTC denied the SO ORDERED.12
prayer, ruling that the Manifestation was in the nature of a
28
The respondent appealed the foregoing
decision.1avvphil.net The case was raffled to RTC of Manila,
Branch 22, and docketed as Civil Case No. 00-98173. The RTC
ruled in favor of the petitioner and dismissed the appeal. The
respondent elevated the case to the Court of Appeals, where
it is now pending.
The sole issue for our resolution is:
[WHETHER] THE COURT OF APPEALS GRAVELY ERRED IN
DISMISSING THE COMPLAINT FOR THE ALLEGED FAILURE OF
THE PARTIES TO COMPLY WITH THE MANDATORY MEDIATION
AND CONCILIATION PROCEEDINGS IN THE BARANGAY LEVEL.13
With the parties’ subsequent meeting with the Lupon
Chairman or Punong Barangay for further conciliation
proceedings, the procedural defect was cured. Nevertheless, if
only to clear any lingering doubt why the Court of Appeals
erred in dismissing the complaint, we shall delve on the issue.
The petitioner alleges that the parties have gone through
barangay conciliation proceedings to settle their dispute as
shown by the Certificate to File Action issued by the
Lupon/Pangkat Secretary and attested by the Lupon/Pangkat
Chairman. The respondent, on the other hand, contends that
whether there was defective compliance or no compliance at
all with the required conciliation, the case should have been
dismissed.
The primordial objective of the Katarungang
Pambarangay Rules,14 is to reduce the number of court
litigations and prevent the deterioration of the quality of
justice which has been brought about by the indiscriminate
filing of cases in the courts. To attain this objective, Section
412(a) of Republic Act No. 716015 requires the parties to
undergo a conciliation process before the Lupon Chairman or
the Pangkat as a precondition to filing a complaint in
court,16thus:
SECTION 412. Conciliation. – (a) Pre-condition to Filing of
Complaint in Court. – No complaint, petition, action, or
proceeding involving any matter within the authority of the
lupon shall be filed or instituted directly in court or any other
government office for adjudication, unless there has been a
confrontation between the parties before the lupon chairman
or the pangkat, and that no conciliation or settlement has been
reached as certified by the lupon secretary or pangkat
secretary as attested to by the lupon or pangkat chairman….
Here, the Lupon/Pangkat Chairman and Lupon/Pangkat
Secretary signed the Certificate to File Action stating that no
settlement was reached by the parties. While admittedly
no pangkat was constituted, it was not denied that the parties
met at the office of the Barangay Chairman for possible
settlement. The efforts of the Barangay Chairman, however,
29
proved futile as no agreement was reached. Although
no pangkat was formed, in our mind, there was substantial
compliance with the law. It is noteworthy that under the
aforequoted provision, the confrontation before
the Lupon Chairman or the pangkat is sufficient compliance
with the precondition for filing the case in court. 17 This is true
notwithstanding the mandate of Section 410(b) of the same
law that the Barangay Chairman shall constitute a pangkat if
he fails in his mediation efforts. Section 410(b) should be
construed together with Section 412, as well as the
circumstances obtaining in and peculiar to the case. On this
score, it is significant that the Barangay Chairman
or Punong Barangay is herself the Chairman of the Lupon
under the Local Government Code.18
Finally, this Court is aware that the resolution of the
substantial issues in this case is pending with the Court of
Appeals. While ordinarily, we would have determined the
validity of the parties’ substantial claims since to await the
appellate court’s decision will only frustrate speedy justice
and, in any event, would be a futile exercise, as in all
probability the case would end up with this Court, we find that
we cannot do so in the instant case.
It must be underscored that supervening events have taken
place before the lower courts where the parties have been
adequately heard, and all the issues have been ventilated.
Since the records of those proceedings are with the Court of
Appeals, it is in a better position to fully adjudicate the rights
of the parties. To rely on the records before this Court would
prevent us from rendering a sound judgment in this case. Thus,
we are left with no alternative but to leave the matter of ruling
on the merits to the appellate court.
WHEREFORE, the petition is GRANTED. The decision and
resolution of the Court of Appeals in CA-G.R. SP No. 52436
are REVERSED and SET ASIDE, and the decision of the Regional
Trial Court of Manila, Branch 38, in Civil Case No. 98-87311
is AFFIRMED.
The Court of Appeals is ordered to proceed with the appeal in
CA – G.R. No. 73453 and decide the case with dispatch.SO
ORDERED.
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ULYSSES
M. CAWALING, ERNESTO TUMBAGAHAN, RICARDO DE LOS
SANTOS, and HILARIO CAJILO, accused-
appellants.PANGANIBAN, J.:
It is axiomatic that once an accused-appellant admits killing the
victim, he bears the burden of establishing the presence of any
circumstance like self-defense, performance of a lawful duty
or, for that matter, double jeopardy, which may relieve him of
responsibility, or which may mitigate his criminal liability. [1] If
he fails to discharge this burden, his conviction becomes
inevitable. In this Decision, we also reiterate the following
doctrines: (1) the regional trial court, not the Sandiganbayan,
has jurisdiction over informations for murder committed by
public officers, including a town mayor; (2) the assessment of
trial courts on the credibility of witnesses and their testimonies
deserve great respect; (3) the equipoise rule cannot be invoked
where the evidence of the prosecution is overwhelming; (4)
alibi cannot be believed in the face of credible testimony
identifying the appellants; and (5) conspiracy may be proven
by circumstantial evidence.
The Case
Before us is an appeal from the 34-page Decision[2] dated
October 21, 1994, promulgated by the Regional Trial Court of
Romblon in Criminal Case No. OD-269. Convicted of
murder were former Mayor Ulysses M. Cawaling and
Policemen Ernesto Tumbagahan,[3] Ricardo De los Santos and
Hilario Cajilo.
Prior to the institution of the criminal case against all the
appellants, an administrative case[4] had been filed before the
National Police Commission, in which Policemen Ernesto
Tumbagahan, Ricardo De los Santos, Hilario Cajilo (three of
herein appellants) and Andres Fontamillas were charged by
Nelson Ilisan[5] with the killing of his brother Ronie[6] Ilisan. On
April 6, 1986, Adjudication Board No. 14[7] rendered its
Decision which found Tumbagahan, De los Santos, Cajilo and
Fontamillas guilty of grave misconduct and ordered their
dismissal from the service with prejudice.[8] On June 26, 1986,
the Board issued a resolution,[9] dismissing the respondents
motion for reconsideration for lack of merit.
Subsequently, on June 4, 1987, Second Assistant Provincial
Fiscal Alexander Mortel filed, before the Regional Trial Court
(RTC) of Odiongan, Romblon,[10] an Information for
murder[11]against the appellants and Andres Fontamillas. The
accusatory portion reads:
That on or about the 4th day of December 1982, at around 9:00
oclock in the evening, in the Poblacion, [M]unicipality of San
Jose, [P]rovince of Romblon, Philippines, and within the
jurisdiction of this Honorable Court, the said accused, with
intent to kill, conspiring, confederating and mutually helping
30
one another, did then and there, by means of treachery and
with evident premeditation and taking advantage of their
superior strenght [sic] willfully, unlawfully and feloniously
attack, assault and shoot RONIE ILISAN, with the use of
firearms, inflicting upon the latter multiple mortal injuries in
different parts of his body which were the direct and
immediate cause of his death.
Accused Tumbagahan, De los Santos, Cajilo and Fontamillas,
with the assistance of their lawyers Atty. Abelardo V. Calsado
and Juanito Dimaano, pleaded not guilty when arraigned on
February 15, 1988;[12] while Accused Cawaling, assisted by
Counsel Jovencio Q. Mayor, entered a plea of not guilty on
March 16, 1988.[13]
After due trial,[14] the court a quo[15] rendered its Decision
dated October 21, 1994,[16] the decretal portion of which
reads:
WHEREFORE, this Court finds the accused (1) ULYSSES M.
CAWALING, (2) ERNESTO TUMBAGAHAN, (3) RICARDO DELOS
SANTOS, (4) HILARIO CAJILO, AND (5) ANDRES FONTAMILLAS
GUILTY beyond reasonable doubt of the crime of MURDER
under the Information, dated June 4, 1987, and sentences each
of them to suffer the penalty of reclusion perpetua, with the
accessory penalties of the law.
The accused, jointly and severally, are ORDERED to pay Nelson
Elisan the sum of P6,000.00 as actual damages and the heirs of
the deceased Ronie Elisan the sums of P116,666.66 by way of
lost earnings and P50,000.00 as indemnity for death, without
subsidiary imprisonment in case of insolvency, and to pay the
costs.
The bail bonds of all the accused are ORDERED CANCELLED and
all said accused are ORDERED immediately confined in jail.
The slug (Exh. A); the .38 caliber revolver (with 3 empty shells
and 3 live bullets) (Exh. G); and the slug of bullet (Exh. H) are
confiscated in favor of the government.
After the judgment has become final, the Officer-in-Charge,
Office of the Clerk of Court, this Court, is ordered to deliver and
deposit the foregoing Exhibits A, F, G and H, inclusive, to the
Provincial Director, PNP, of the Province of Romblon properly
receipted. Thereafter, the receipt must be attached to the
record of the case and shall form part of the record.
The period of preventive imprisonment the accused had
undergone shall be credited in their favor to its full extent
pursuant to Article 29 of the Revised Penal Code, as amended.
The case against co-accused ALEX BATUIGAS who is at large is
ORDERED ARCHIVED pending his arrest.[17]
Hence, this appeal.[18]
The Facts
Version of the Prosecution
The trial court gives this summary of the facts as viewed by the
prosecution witnesses:
The killing occurred on December 4, 1982 at around 9:00
oclock in the evening at the ricefield of Poblacion, San Jose,
Romblon when the bright moon was already above the sea at
an angle of about 45 degrees, or if it was daytime, it was about
9:00 oclock in the morning (Imelda Elisan Tumbagahon, on
direct examination, tsn, Jan. 17, 1989, p. 5, and on cross
examination, tsn, April 18, 1989, p. 22).
On December 4, 1982, about 8:00 oclock or 8:30 oclock in the
evening, Vicente Elisan and his elder brother Ronie Elisan, the
victim, were drinking tuba at C & J-4 Kitchenette of co-accused
Andres Fontamillas in Poblacion, San Jose, Romblon. When
they stood up to go home, Luz Venus, the wife of Diosdado
Venus, told them not to go out because the accused were
watching them outside about three (3) meters from the
restaurant. Diosdado Venus accompanied them upon their
request and they went out and walked towards home. About
a hundred meters from the restaurant, the six (6) accused, that
is, Mayor Cawaling, the four (4) policemen, namely, Hilario
Cajilo, Andres Fontamillas, Ernesto Tumbagahan and Ricardo
delos Santos, and civilian Alex Batuigas, the mayors brother-in-
law, flashlighted them and Diosdado Venus ran going
back. The two (2) brothers also ran towards home to the house
of their elder sister Imelda Elisan Tumbagahon. Co-accused
Andres Fontamillas and Hilario Cajilo blocked them on the gate
of the fence of their sisters house. Ronie Elisan ran towards the
ricefield. The accused were chasing them. Vicente Elisan saw
his brother Ronie f[a]ll down on the ricefield while he ran
towards the bushes and la[y] on the ground. Ronie Elisan rose
up by kneeling and raising his two (2) hands. All the six (6)
accused approached him with their flashlights and shot
him. Ronie fell down about twenty (20) meters from the
bushes where Vicente Elisan hid behind the coconut tree. Co-
accused Cawaling said []you left him, he is already
dead.[] Mayor Cawaling was armed with .45 caliber, policemen
Andres Fontamillas and Hilario Cajilo were both with armalites,
Ernesto Tumbagahan and Ricardo delos Santos were both with
.38 caliber and so with civilian Alex Batuigas. They left towards
the house of Mayor Cawaling. After they were gone, Vicente
Elisan ran towards the house of his older brother Nelson
Elisan. Upon seeing him, Vicente told Nelson that Ronie was
already dead. Nelson said nothing. While they were there,
elder sister Imelda Elisan Tumbagahon, who was crying
came. She said: Manong, patay ron si Ronie. (Brother, Ronie is
already dead). Nelson said []do not be noisy; they might come
back and kill all of us.[] Imelda stopped crying.
31
After a while, brothers Nelson and Vicente Elisan went to the
house of barangay captain Aldolfo Tumbagahon. The three (3)
went to the townhall and called the police but there was none
there. Going to the house of the Chief of Police Oscar Montero,
they were told by his wife that Commander Montero was in
the house of Mayor Cawaling. They proceeded to the place
where Ronie Elisan was shot. The cadaver was brought to the
house of Nelson Elisan. Vicente Elisan found an empty shell of
a .45 caliber about three (3) arms length from the body of the
victim. They surrendered it to the Napolcom.[19]
Dr. Blandino C. Flores described the gunshot wounds of the
victim as follows:
Gunshot Wounds:
1. Shoulder:
Gun shot wound x inch in diameter shoulder right 2 inches
from the neck with contussion [sic] collar s[u]rrounding the
wound.
2. Right Axilla:
Gun shot wound x inch in diameter, 2 inches below the right
nipple with contussion [sic] collar s[u]rrounding the wound.
3. Left Axilla:
Exit of the gun shot wound from the right axilla, measuring x
inch with edges everted, one inch below the axilla and one inch
below the level of the nipple.
4. Back:
Gun shot wound measuring x inch, along the vertebral column,
right at the level of the 10th ribs with contussion [sic]collar.
5. Leg, Left:
Gun shot wound measuring x anterior aspect upper third leg
with contussion [sic] collar, with the exit x posterior aspect
upper third leg, left.[20]
Based on the death certificate (Exhibit E) issued by Dr. Flores,
Ronie Ilisan died of severe hemorrhage and gun shot
wo[unds].[21]
Version of the Defense
Appellant Cawaling, in his 47-page Brief,[22] presented his own
narration of the incident as follows:
At around 7:00 in the evening of December 4, 1982, Ulysses
Cawaling, then the mayor of the [M]unicipality of San Jose in
the [P]rovince of Romblon, arrived aboard a hired motorized
boat from Manila in the seashore of San Jose. From the
seashore, he immediately proceeded to his home. At around
7:30 in the evening, Cawaling went to the municipal hall to
check on administrative matters that piled up in the course of
his trip to Manila. He also went inside the police station
(located inside the municipal building) to be apprised of
any developments, afterwhich he went out and joined Pfc.
Tumbagahan and Pfc. Cajilo who were standing near the
flagpole in front of the municipal building. The three engaged
in a conversation. Cawaling learned that the two police officers
were the ones assigned for patrol/alert for that night. The
three of them went inside the INP office and there Cawaling
informed the two policemen that he received information
from reliable persons that certain persons were plotting to kill
him and a member of the towns police force. It is to be noted
that this occurred at the height of the communist insurgency
and political violence in the countryside in the early
80s. Hence, such information was taken very seriously, having
been relayed by sources independent of each other.
Cawaling, as town chief then empowered with supervisory
authority over the local police, accompanied Pfc. Tumbagahan
and Pfc. Cajilo in conducting patrol and surveillance operations
around the small municipality. He usually did this as routine
since Romblon was then plagued with political assassinations
and armed conflict. On their way to the seashore, they passed
by C & J-4 Kitchenette, and chanced upon Ronnie Ilisan and his
brother Vicente Ilisan drinking liquor and discussing in very
loud voices. They stopped right in the front of the restaurant
and there they heard Ronnie Ilisan state in a every loud voice
that he will kill a person that night. Inside the restaurant,
without the knowledge then of Cawaling and the two police
officers, witness Gil Palacio, who was buying cigarettes and Luz
Venus, the cook/server of the restaurant, saw Ronnie Ilisan,
very drunk, brandishing in the air a .38 caliber Smith and
Wesson revolver with a protruding screw.
Initially dismissing Ronnie Ilisans statement as just another
hollow swagger of an intoxicated person (salitang lasing),
Cawaling and the two policemen proceeded on their
way. After the patrol, they returned to the municipal building
and stationed themselves in front. At around 8:30 in the
evening, Ronnie Elisan passed by the municipal hall walking
towards the direction of the house of Nelson Ilisan, another
brother, and shouted the challenge, gawas ang maisog,
meaning THOSE WHO ARE BRAVE, COME OUT. Cawaling and
the two police officers again brushed aside [the] challenge as
just another foolish drunken revelry [o]n the part of Ronnie
Ilisan, a well-known troublemaker in the small municipality.
A few moments later, after Ronie Ilisan had passed by, they
distinctly heard a gunshot and hysterical female voices
shouting, pulis, tabang meaning POLICE! HELP! four
times. Impelled by the call of duty, Cawaling and the two
policemen immediately ran in the direction of the gunshot and
the desperate female voices until they reached the house of
32
Nelson Ilisan in San Jose Street. At this point, they saw Ronnie
Ilisan holding a .38 caliber revolver. They also saw Vicente
Ilisan, Francisco Tesnado, Fe Ilisan, the wife of Nelson and
Delma Ilisan, the wife of Vicente, the latter two being the same
persons who cried pulis, tabang four times. Cawaling then told
Ronnie to surrender his gun but the latter responded by
pointing the gun at Cawaling and pulling the trigger.
At the precise moment that the gun fired, Cawaling warned the
two policemen to drop to the ground by
shouting dapa. Fortunately, Cawaling was not hit. Ronnie
Ilisan then turned around and ran towards the church. The two
policemen gave chase. Cawaling, still shaken and trembling
after the mischance was initially left behind but followed
shortly. When Ronnie Ilisan reached the church, he turned
around and again fired at the pursuing Pfc. Cajilo. Fortunately,
the gun misfired. When they finally reached the ricefield, Pfc.
Cajilo fired two (2) warning shots in the air for Ronnie to
surrender. Ronnie responded by firing once again at Pfc.
Tumbagahan but failed to hit the latter. At that instance, Pfc.
Cajilo counter-fired at Ronnie Ilisan hitting him. Pfc.
Tumbagahan also fired his weapon in the heat of exchange and
also hit Ronnie Ilisan. As a result of the gunshot wounds,
Ronnie Ilisan later on succumbed.
Pfc. Tumbagahan picked up the gun still in the hand of the
dead Ronnie Ilisan and gave it to Pfc. Cajilo. The three,
Cawaling, who subsequently caught up with them after the
incident, and the two police officers, then proceeded to the
police station located in the municipal building to formally
report the incident in their station blotter.[23]
The Brief for All of the Accused-Appellants filed by Atty.
Napoleon U. Galit and the Brief for Appellants Ernesto
Tumbagahan and Hilario Cajilo submitted by Atty. Joselito R.
Enriquez merely repeated the facts as narrated by the trial
court.
Ruling of the Trial Court
Finding the prosecution witnesses and their testimonies
credible, the court a quo convicted the appellants. The killing
was qualified to murder because of the aggravating
circumstances of abuse of superior strength and
treachery. The trial court ruled that there was a notorious
inequality of forces between the victim and his assailants, as
the latter were greater in number and armed with guns. It
further ruled that abuse of superior strength absorbed
treachery, as it ratiocinated:
Certain cases, an authority wrote, involving the killing of
helpless victim by assailants superior to them in arms or
numbers, or victims who were overpowered before being
killed, were decided on the theory that the killing was
treacherous, when perhaps the correct qualifying
circumstance would be abuse of superiority. In these cases the
attack was not sudden nor unexpected and the element of
surprise was lacking. (Id., I Aquino, pp. 423-424). In the instant
case, we earlier ruled that the qualifying treachery should be
considered as an exception to the general rule on treachery
because it was not present at the inception of the attack. The
killing was not sudden nor unexpected and the element of
surprise was lacking. It is for this reason that we hold that
alevosia should be deemed absorbed or included in abuse of
superiority. Even assuming ex-gratia argumenti that it should
be the other way around, the situation will not be of help,
penaltywise, to the accused.[24]
The defenses raised by the appellants were dismissed and their
witnesses declared unworthy of belief for the following
reasons:
1. It was highly improbable that Defense Witness Tesnado
would not tell his wife (Dory) and Bebelinia Ilisan Sacapao
about the incident he had allegedly witnessed; more so when
Sacapao was the victims first cousin.
2. The spot report prepared by Station Commander Oscar M.
Montero, the testimonies of Cajilo and Tumbagahan and the
medical findings of Dr. Flores contradicted one another on the
following details: the caliber of the gun used in shooting the
victim, the wounds inflicted and the whereabouts of Cawaling
during the shoot-out.
3. Cawaling and his men, armed with guns, could have
immediately disarmed the victim at the initial encounter. The
court could not understand why the victim was able to fire his
gun, run, then stop and again fire his gun, without being
caught.
4. The positive identification made by the prosecution
witnesses prevails over the alibi posed by De los Santos and
Fontamillas, a defense that was not corroborated by any other
witness.
5. The .38 caliber revolver, allegedly owned by the victim, was
in fact owned and used by Alex Batuigas.
6. The defense presented a photo and a sketch to prove that
Imelda Ilisan Tumabagahan had an obstructed view of the
killing. The trial court ruled that such evidence was misleading,
because the window, from where said witness allegedly saw
the incident, was at the eastern side of her house, and thus
afforded a clear view of the incident, while the window
referred to by the defense was at the southern portion.
7. The questioned testimonies of Dr. Flores, Nelson Ilisan and
Provincial Prosecutor Pedro Victoriano, Jr., though not
formally offered as evidence, may be admitted because of the
33
failure of the defense to object thereto at the time they were
called to testify.
8. The defense failed to prove that the prosecution witnesses
had any ill motive to testify falsely against the appellant.
9. Appellants had a motive to kill the victim. Nelson Ilisan
testified that his brother Ronie (the victim) had witnessed
Bonifacio Buenaventura (a former chief commander of the San
Jose Police Force) kill a certain Ruben Ventura. Cawaling, who
was Buenaventuras first cousin, wanted Ronie dead, because
the latter had not followed his instruction to leave town to
prevent him from testifying in said case.
Assignment of Errors
The appellants, through their common counsel, Atty.
Napoleon Galit, assign the following errors to the lower court:
1. The trial court gravely erred in sustaining prosecutors theory
of conspiracy and thus renders nugatory or has totally
forgotten that policemen when in actual call of duty normally
operate in group but not necessarily in conspiracy.
2. The trial court gravely erred in believing the theory of the
prosecution that accused-appellant Ulysses Cawaling was one
of the alleged co-conspirators in the killing of the deceased
Ronnie Elisan.
3. The trial court gravely erred in not believing the defense of
accused-appellant Ulysses Cawaling that he has nothing to do
with the shooting incident except to shout to arrest the
accused[,] which prompted his co-accused policemen to chase
the accused and sho[o]t him when he resisted, after he fired at
Mayor Cawaling.
4. The trial court gravely erred in not giving weight to accused-
appellant policemen[s] testimonies which carry the
presumption of regularity.
5. The trial court gravely erred in not acquitting all the accused-
appellants by applying the equipoise rule thereby resulting [i]n
reasonable doubts on the guilt.[25]
In their joint brief,[26] Appellants Tumbagahan and Cajilo cite
these other errors:
1. The trial court gravely erred in relying on the theory of the
prosecution that accused-appellants Ernesto Tumbagahan and
Hilario Cajilo were alleged co-conspirators in the killing of the
victim, Ronie Ilisan.
2. The trial court gravely erred in not believing the defense that
herein accused-appellants merely did a lawful duty when the
shooting incident happened which led to the death of Ronnie
Ilisan.
3. The trial court gravely erred in not acquitting herein
accused-appellants by applying the equipoise rule, thereby
resulting in reasonable doubt on their guilt.
4. Prescinding from the foregoing, herein accused-appellants
do press and hold, that the lower court committed grave,
serious and reversible error in appreciating the qualifying
circumstance of treachery (alevosia).
5. The lower court committed grave, serious and reversible
error in convicting both accused-appellants of murder, instead
merely of homicide, defined and penalized under the Revised
Penal Code.
6. The lower court committed grave, serious and reversible
error in appreciating the qualifying circumstance of taking
advantage of superior strength.
7. The consummated crime being merely homicide, the
mitigating circumstance of voluntary surrender should be
considered to lower the penalty of homicide.
8. The lower court committed error in not considering double
jeopardy.
9. The lower court committed error in not dismissing the case
for want of jurisdiction.[27]
Appellant Cawaling imputes these additional errors to the
court a quo:
1. The trial court gravely erred in not acquitting herein
accused-appellant, Ulysses M. Cawaling, considering that he
had no part in the killing and the prosecution failed to prove
his guilt beyond reasonable doubt;
We shall address the first two issues as important preliminary
questions and discuss the merits of the remaining ones, which
we have culled from the errors cited by the appellants in their
aforementioned briefs.
First Issue:
Jurisdiction of the Trial Court
Appellants Tumbagahan and Cajilo argue that the trial court
erred when it assumed jurisdiction over the criminal case. They
insist that the Sandiganbayan, not the regular courts, had
jurisdiction to try and hear the case against the appellants, as
they were public officers at the time of the killing which was
allegedly committed by reason of or in relation to their office.
We do not agree.
The jurisdiction of a court to try a criminal case is determined
by the law in force at the time of the institution of the action.
Once the court acquires jurisdiction, it may not be ousted from
the case by any subsequent events, such as a new legislation
placing such proceedings under the jurisdiction of another
tribunal. The only recognized exceptions to the rule, which find
no application in the case at bar, arise when: (1) there is an
express provision in the statute, or (2) the statute is clearly
intended to apply to actions pending before its enactment. [29]
The statutes pertinent to the issue are PD 1606, as
amended;[30] and PD 1850, as amended by PD 1952 and BP
129.
Section 4 of PD 1606[31] reads:
Sec. 4. Jurisdiction. -- The Sandiganbayan shall exercise:

2. The trial court gravely erred in not finding the shooting (a) Exclusive original jurisdiction in all cases involving:
incident a result of hot pursuit and shoot-out between the
xxxxxxxxx
deceased Ronnie Ilisan and the police officers in the
performance of their duty and self-defense, and in sustaining (2) Other offenses or felonies committed by public officers and
the prosecutions conspiracy theory; employees in relation to their office, including those employed
in government-owned or controlled corporations, whether
3. The trial court gravely erred in not acquitting Accused-
simple or complexed with other crimes, where the penalty
Appellant Ulysses M. Cawaling considering that there was
prescribed by law is higher than prision correccional or
blatant absence of due process in the proceedings tantamount
imprisonment for six (6) years, or a fine
to mistrial.[28]
of P6,000.00: PROVIDED, HOWEVER, that offenses or felonies
This Courts Ruling mentioned in this paragraph where the penalty prescribed by
law does not exceed prision correccional or imprisonment for
We affirm the conviction of the appellants. In so ruling, we will
six (6) years or a fine of P6,000.00 shall be tried by the proper
resolve the following issues: (1) jurisdiction of the trial court,
Regional Trial Court, Metropolitan Trial Court, Municipal Trial
(2) double jeopardy, (3) credibility of prosecution witnesses
Court and Municipal Circuit Trial Court.
and their testimonies, (4) self-defense, (5) performance of
lawful duty, (6) alibi, (7) conspiracy, (8) rule on equipoise, (9) xxxxxxxxx
qualifying circumstances, (10) damages and (11) attending
However, former President Ferdinand Marcos issued two
circumstances as they affect the penalty.
presidential decrees placing the members of the Integrated

34
National Police under the jurisdiction of courts-
martial. Section 1 of PD 1952,[32] amending Section 1 of PD
1850, reads:
SECTION 1. Court Martial Jurisdiction over Integrated National
Police and Members of the Armed Forces. Any provision of law
to the contrary notwithstanding -- (a) uniformed members of
the Integrated National Police who commit any crime or
offense cognizable by the civil courts shall henceforth be
exclusively tried by courts-martial pursuant to and in
accordance with Commonwealth Act No. 408, as amended,
otherwise known as the Articles of War; (b) all persons
subjects to military law under Article 2 of the aforecited
Articles of War who commit any crime or offense shall be
exclusively tried by courts-martial or their case disposed of
under the said Articles of War; Provided, that, in either of the
aforementioned situations, the case shall be disposed of or
tried by the proper civil or judicial authorities when court-
martial jurisdiction over the offense has prescribed under
Article 38 of Commonwealth Act Numbered 408, as amended,
or court-martial jurisdiction over the person of the accused
military or Integrated National Police personnel can no longer
be exercised by virtue of their separation from the active
service without jurisdiction having duly attached beforehand
unless otherwise provided by law:
PROVIDED FURTHER, THAT THE PRESIDENT MAY, IN THE
INTEREST OF JUSTICE, ORDER OR DIRECT, AT ANY TIME BEFORE
ARRAIGNMENT, THAT A PARTICULAR CASE BE TRIED BY THE
APPROPRIATE CIVIL COURT.
As used herein, the term uniformed members of the
Integrated National Police shall refer to police officers,
policemen, firemen, and jail guards.
On the other hand, the jurisdiction of regular courts over civil
and criminal cases was laid down in BP 129, the relevant
portion of which is quoted hereunder:
Sec. 20. Jurisdiction in Criminal Cases. -- Trial Courts shall
exercise exclusive original jurisdiction in all criminal cases not
within the exclusive jurisdiction of any court, tribunal or body,
except those now falling under the exclusive and concurrent
jurisdiction of the Sandiganbayan which shall hereafter be
exclusively taken cognizance of by the latter.[33]
In relation to the above, Section 4-a-2 of PD 1606, as amended
by PD 1861, quoted earlier, lists two requisites that must
concur before the Sandiganbayan may exercise exclusive and
original jurisdiction over a case: (a) the offense was committed
by the accused public officer in relation to his office; and (b)
the penalty prescribed by law is higher than prision
correccionalor imprisonment for six (6) years, or higher than a
fine of six thousand pesos (P6,000).[34] Sanchez vs.
Demetriou[35] clarified that murder or homicide may be
35
committed both by public officers and by private citizens, and
that public office is not a constitutive element of said
crime, viz.:
The relation between the crime and the office contemplated
by the Constitution is, in our opinion, direct and not
accidental. To fall into the intent of the Constitution, the
relation has to be such that, in the legal sense, the offense
cannot exist without the office. In other words, the office must
be a constituent element of the crime as defined in the statute,
such as, for instance, the crimes defined and punished in
Chapter Two to Six, Title Seven, of the Revised Penal Code.
Public office is not the essence of murder. The taking of human
life is either murder or homicide whether done by a private
citizen or public servant, and the penalty is the same except
when the perpetrator, being a public functionary, took
advantage of his office, as alleged in this case, in which event
the penalty is increased.
But the use or abuse of office does not adhere to the crime as
an element; and even as an aggravating circumstance, its
materiality arises, not from the allegations but on the proof,
not from the fact that the criminals are public officials but from
the manner of the commission of the crime.
Furthermore, the Information filed against the appellants
contains no allegation that appellants were public officers who
committed the crime in relation to their office. The charge was
for murder, a felony punishable under Article 248 of the
Revised Penal Code. As clarified in Aguinaldo, et al. vs.
Domagas, et al.,[36] [I]n the absence of such essential
allegation, and since the present case does not involve charges
of violation of R.A. No. 3019 (the Anti-Graft etc. Act), the
Sandiganbayan does not have jurisdiction over the present
case. (Bartolome vs. People, 142 SCRA 459 [1986] Even before
considering the penalty prescribed by law for the offense
charged, it is thus essential to determine whether that offense
was committed or alleged to have been committed by the
public officers and employees in relation to their offices.
Jurisdiction is determined by the allegations in the complaint
or information.[37] In the absence of any allegation that the
offense was committed in relation to the office of appellants
or was necessarily connected with the discharge of their
functions, the regional trial court, not the Sandiganbayan, has
jurisdiction to hear and decide the case.[38]
Second Issue:
Double Jeopardy
In seeking their acquittal, Appellants Tumbagahan and Cajilo
also invoke their right against double jeopardy. They argue
that the first jeopardy attached when a criminal case for
murder was filed before the Judge Advocate Generals Office As a general rule, the factual findings of trial courts deserve
(JAGO), which was allegedly dismissed after several hearings respect and are not disturbed on appeal, unless some facts or
had been conducted.[39] We are not persuaded. circumstances of weight and substance have been overlooked,
misapprehended or misinterpreted, and would otherwise
There is double jeopardy when the following requisites are
materially affect the disposition of the case.[51] This rule,
present: (1) a first jeopardy has attached prior to the
however, does not apply when the judge who penned the
second; (2) the first jeopardy has been validly terminated; and,
decision was not the same one who had heard the prosecution
(3) a second jeopardy is for the same offense as that in the
witnesses testify,[52] as in the present case. Nonetheless, we
first. And the first jeopardy attaches only (a) after a valid
have carefully perused and considered the voluminous records
indictment; (b) before a competent court; (c) after
of this case, and we find no reason to alter the findings of the
arraignment; (d) when a valid plea has been entered; and (e)
court a quo in regard to the credibility of the prosecution
when the accused was acquitted or convicted, or the case was
witnesses and their testimonies.
dismissed or otherwise terminated without his express
consent.[40] Vicente Ilisan, the victims brother, narrated before the trial
court the circumstances relevant to the crime:
For a better appreciation of appellants argument, we must
consider PD 39[41] and its implementing rules,[42] which Q. In the evening of December 4, 1982, at about 8:00 or 8:30,
prescribe the procedure before a military commission. A where were you?
summary preliminary investigation shall be conducted before
A. I was inside the restaurant of Andres Fontamillas.
trial for the purpose of determining whether there is prima
facie evidence to pursue trial before a military xxxxxxxxx
commission. The investigation report shall contain a summary
of the evidence, the acts constituting the offense or offenses Q. What were you doing there?
committed, and the findings and recommendations of the
A. I was drinking tuba.
investigating officer. Thereafter, the report shall be forwarded
to the judge advocate general, who shall determine for either Q. When you were about to finish drinking tuba, what did you
the defense secretary or for the AFP chief of staff whether the do?
case shall be referred for trial to a military
commission.[43] Where a prima facie case is found against the A. I stood up preparing to go home.
accused, formal charges shall be signed by a commissioned Q. Were you able to leave that restaurant actually?
officer designated by the judge advocate general.[44] The
accused shall then be arraigned, during which the charge and A. No, sir.
specification shall be read and the accused shall enter his
Q. Why?
plea.[45] After hearings, a record of the trial shall be forwarded
to the AFP chief of staff for proper action.[46] A. Luz Venus told us not to go out when [I] stood up to go
home.
In the present case, the appellants have presented no
sufficient and conclusive evidence to show that they were Q. Do you know why you were advise[d] not to go out?
charged, arraigned and acquitted in a military commission, or
that the case was dismissed therein without their consent. The A. Yes, sir.
defense merely offered as evidence certain disposition Q. Why?
forms[47] and a letter,[48] dated March 8, 1983, recommending
that the case against Appellants Tumbagahan, Cajilo and De los A. Because we were being watched by Mayor Cawaling, Andres
Santos be dropped and considered closed.[49] No charge sheet Fontamillas, Hilario Cajilo and Alex Bat[ui]gas.
and record of arraignment and trial were presented to
xxxxxxxxx
establish the first jeopardy.
Q. When you were informed by Luz Venus that you should not
As pointed out by the solicitor general, appellants were never
go out because Mayor Cawaling and the persons you
arraigned, they never pleaded before the Judge Advocate
mentioned were outside watching for you, what did you do?
Generals Office, there was no trial, and no judgment on the
merits had been rendered.[50] A. We did not go out.
Third Issue: Q. Since you remained inside, what did you do?
Credibility of Witnesses
36
A. I also viewed thru the window. A. Because the flashlight[s] were bright.

Q. Did you see them? Q. When Diosdado Venus ran back to his restaurant, what did
your brother Ronie Elisan and you do?
A. Yes, sir.
A. We also ran towards home.
Q. How far were they from the restaurant?
Q. To whose house?
A. About three meters.
A. That of my older sister Imelda [E]lisan.
Q. What were they doing outside the restaurant?
Q. Were you able to reach that house?
A. They were also viewing us.
A. No, sir.
Q. For how long did they remain there viewing you?
Q. Why, what happened when you ran away?
A. Just a short time.
A. Andres Fontamillas and Hilario Cajilo were blocking us on
Q. And later on, do you know where did they go? [sic]
the gate of the fence of my sisters house.
A. No, sir. I went out from the restaurant and when I went out,
Q. Since your way was blocked, where did Ronie Elisan go?
I did not see them anymore.
A. We ran towards the ricefield.
Q. Before you went out of the restaurant, what did you do?
Q. When you ran, what did Mayor Cawaling do?
A. Diosdado Venus accompanied us.
A. They were chasing us.
Q. Why did you ask Diosdado Venus to accompany you?
Q. What about Alex Batuigas, what did he do?
A. Yes, sir. Because we were aware that we were being
watched from outside so we asked to be accompanied by A. He also followed helping chasing us. [sic]
Diosdado Venus.
Q. What about the four policemen, what did they do?
Q. From the restaurant accompanied by Diosdado Venus, what
A. The same. They were also chasing us.
did you do?
Q. About how far is that restaurant [from] the spot where you
A. Towards home.
were first lighted by the flashlight of the accused?
Q. Were you able to reach home?
A. About one hundred meters.
A. No, sir.
Q. Now, according to you, you ran towards the ricefield, what
Q. Why, what happened on the way? happened while you were running towards the ricefield?

A. Diosdado Venus ran going back because we were lighted by A. I saw my brother fell [sic] down.
a flashlight.
Q. Fell down where?
Q. How many flashlight[s] were trimed [sic] to you?
A. On the ricefield.
A. Six.
Q. What about you, where were you when your brother fell
Q. Did you come to know who trimed [sic] the flashlight down in the ricefield?
towards you?
A. I ran towards the bushes.
A. Yes, sir.
Q. What did you do upon reaching the bushes?
Q. Who were they?
A. I la[y] on the ground with my belly touch[ing] on the ground
A. Mayor Cawaling, Andres Fontamillas, Hilario Cajilo, Ernesto behind the coconut tree.
Tumbagahan, Ricardo delos Santos and Alex Batuigas.
Q. When your brother according to you had fallen on the
Q. How were you able to recognize them when that was night ricefield, what did he do thereafter?
time?
37
A. He rose up, [raised] his hands and surrender[ed] to them.
Q In rising, what was his position?
A. He was rising like this. (Witness demonstrating by kneeling
[and] raising his two hands).
Q. While Ronie Elisan was kneeling and raising both of his
hands, what happened?
A. Mayor Cawaling approached him together with the four
policemen and his brother-in-law and they shot him.
Q. Do you know what weapon[s] were used in shooting your
brother?
A. Yes, sir.
Q. What weapon were used?
A. The weapon of Mayor Cawaling is .45 caliber and that of
Andres Fontamillas and Hilario Cajilo were both armalite and
that of Ernesto Tumbagahan, Alex Batuigas and Ricardo delos
Santos were .38 caliber.
Q. How were you able to identify their weapons?
A. Because the flashlight[s] were bright.
Q. Now, what happened to your brother when he was fired
upon by the accused in this case?
A. He fell down.
Q. And how far is that spot where your elder brother had fallen
down to the spot where Diosdado Venus left you when he
returned to the restaurant?
A. To my estimate it is about 300 meters.
Q. After your brother had fallen down, what did the accused
do?
A. Mayor Cawaling said, []you left him, he is already dead.[]
Q. Where did they go?
A. They went towards the house of Mayor Cawaling.[53]
Imelda Tumbagahan was at home feeding her child when she
heard her brother Ronie shouting for help. After getting a
flashlight and looking through the window of her house, she
saw Cawaling and Alex Batuigas chasing Ronie who was
running towards her house. Tumbagahan and De los Santos
prevented Ronie from entering the fence of her house, as a
result of which, her brother ran towards a rice field
nearby. There, on bended knees and with hands raised, Ronie
was shot by Cawaling and his men.[54]
38
Nelson Ilisan also heard his younger brother Ronie shouting for
help while being chased by the group of Cawaling. As Cajilo and
Fontamillas blocked Ronie from entering the gate of Imeldas
house, the victim ran towards a rice field. Nelson stopped
Cawaling and asked, Nong, basi guinalagas ninyo ang acon
hali? (Nong, why do you chase my brother?) But the mayor
merely continued chasing Ronie. Thereafter, Nelson saw his
brother, on his knees with both hands raised, shot by
appellants.[55]
The three aforementioned witnesses narrated in detail the
assault against their brother Ronie and positively identified the
appellants as the perpetrators. The trial court cannot be
faulted for relying on their testimonies and accepting them as
true,[56] especially when the defense failed, to prove any ill
motive on their part.[57] In addition, family members who have
witnessed the killing of their loved one usually strive to
remember the faces of the assailants.[58] Thus, the
relationship per se of witnesses with the victim does not
necessarily mean that the former are biased. On the contrary,
it is precisely such relationship that would impel them to seek
justice and put the real culprit behind bars, rather than impute
the offense to the innocent.[59]
Appellant Cawaling submits that the prosecution witnesses
tampered with the evidence by cleaning the cadaver before an
autopsy could be done. Such irregular washing of the cadaver
by a close relative of the deceased, who is educated and who
presumably knew perfectly well the need to preserve it in its
original state for the medico-legal examination[,] is highly
suspicious. It points to the fact that the relatives of the
deceased wanted to hide, or erase something that would
bolster and assist the defense (that is, state of drunkenness,
powder burns or lack thereof, indicating the firing of a weapon
or the proximity of the weapon used on the deceased, etc.).[60]
Such contention is unavailing. First, Bebelinia Sacapao merely
cleaned the cadaver and made no further
examination. Second, appellants had an opportunity to have
the body examined again to determine or prove important
matters, such as whether Ronie was drunk, if he fired a gun,
how many and what caliber of guns were used in shooting him;
they did not, however, avail themselves of this opportunity. As
public officers, appellants knew that it was within their power
to request or secure from the court, or any other competent
authority, an order for another autopsy[61] or any such
evidence as may affirm their innocence. Third, their conviction
lies in the strong and convincing testimonial evidence of the
prosecution, not in the corroborative testimony of Bebelinia
Sacapao.
Relying on the testimonies of Luz Venus and Gil Palacio,
Appellant Cawaling also pointed out that [t]he power of
observation of alleged eyewitness Vicente was severely
affected by his intoxication. It may be inferred that an
intoxicated persons sense[s] of sight and hearing and of touch
are less acute than those of a sober person and that his
observation are inexact as to what actually occurred.[62]
This argument is not persuasive. The evidence presented fails
to show that Vicente was so intoxicated that night as to affect
his powers of observation and retrospection. Defense Witness
Palacio merely saw the witness drinking tuba on the night of
the killing.[63] Meanwhile the whole testimony of Luz on the
matter mainly reveals that Ronie was the person she was
referring to as drunk, as shown by this portion:[64]
Q When Ronie and Vicente both surnamed Ilisan entered the
C & J-4 kitchenette what if any did you observe?
A I saw them so dr[u]nk (Nakita ko sila lasing na lasing).
Q Who was lasing na lasing or so dr[u]nk?
A Ronie Ilisan sir.
Granting that Vicente was drunk, the conviction of the
appellants is still inevitable in view of the positive declarations
of Witnesses Nelson and Imelda, who unequivocally identified
appellants as perpetrators of the senseless killing of their
brother Ronie.
Appellant Cawaling also questions the trial courts reliance on
the testimonies of Dr. Blandino Flores,[65] Nelson
Ilisan[66] and Prosecutor Pedro Victoriano, Jr.,[67] for failure of
the prosecution to offer them as evidence. In People vs.
Java,[68] this Court ruled that the testimony of a witness,
although not formally offered in evidence, may still be
admitted by the courts, if the other party does not object to its
presentation. The Court explained: Section 36 of [Rule 132]
requires that an objection in the course of the oral examination
of a witness should be made as soon as the grounds therefor
shall become reasonably apparent. Since no objection to the
admissibility of evidence was made in the court below, an
objection raised for the first time on appeal will not be
considered. In the present case, a cursory reading of the
stenographic notes reveals that the counsel for the appellants
did not raise any objection when said witnesses testified on the
matters now being impugned. Moreover, they repeatedly
cross-examined the witnesses, which shows that they had
waived their objections to the said testimonies of such
witnesses.
Lastly, Appellant Mayor Cawaling questions the motive of
Prosecutor Pedro Victoriano Jr. This contention is likewise
bereft of merit. Unlike judges who are mandated to display
cold neutrality in hearing cases,[69] prosecutors are not
required to divest themselves of their personal convictions and
refrain from exhibiting partiality. In this case, there is
39
reasonable ground for Prosecutor Victoriano to believe that an
offense has been committed and that the accused was
probably guilty thereof.[70] Under the circumstance, it is his
sworn duty to see that justice is served.[71] Thus, [h]e may
prosecute with earnestness and vigor - - indeed, he should do
so. But, while he may strike hard blows, he is not at liberty to
strike foul ones. It is as much his duty to refrain from improper
methods calculated to produce a wrongful conviction as it is to
use every legitimate means to bring about a just
one.[72] Further,
Under the prevailing criminal procedure, the fiscals sphere of
action is quite extensive, for he has very direct and active
intervention in the trial, assuming as the Governments
representative the defense of society, which has been
disturbed by the crime, and taking public action as though he
were the injured party, for the purpose of securing the
offenders punishment, whenever the crime has been proved
and the guilt of the accused as the undoubted perpetrator
thereof established.[73]
Fourth Issue:
Self-Defense
To escape criminal liability, the appellants also invoke the
justifying circumstances of self-defense and lawful
performance of duty.[74] Allegedly, Ronie was firing his gun and
shouting Guwa ang maisog! (Come out who is brave!). Then
the mayor and the policemen arrived at the scene to pacify
him. Ronie fired at them, which forced them to chase him and
return fire.
We find this scenario bereft of plausibility.
Unlawful aggression on the part of the victim is a condition sine
qua non for the successful invocation of self-defense.[75] As
factually found by the trial court, unlawful aggression did not
start with the victim, but rather with the appellants. Cawaling
and his men proceeded to the C & J-4 Kitchenette and waited
for Ronie to come out. When the victim did, they chased and
shot him without giving him any opportunity to defend
himself.
Granting arguendo the veracity of the defenses factual
version, it is important to note that appellants admitted that
Ronie was running away from them when they chased and
shot him.Thus, unlawful aggression -- assuming it was initially
present had ceased, and the appellants no longer had any right
to pursue the offender. Basic is the rule that when unlawful
aggression ceases, the defender no longer has the right to kill
or even wound the former aggressor. Upon the cessation of
the unlawful aggression and the danger or risk to life and limb,
there should be a corresponding cessation of hostilities on the
part of the person defending himself.[76]
Furthermore, the means employed to ward off the attack was part of the eyewitness testifying on the matter. Alibi and
unreasonably excessive. Being armed, the appellants could denial, if not substantiated by clear and convincing evidence,
have easily ordered the victim to surrender. Even the first shot are negative and self-serving evidence undeserving of weight
at his shoulder would have been sufficient to immobilize him, in law.[83]
yet they fired a succession of shots at him while he was in no
In fact, De los Santos failed to establish with clear and
position to put up a defense.
convincing evidence that it was physically impossible for him
Jurisprudence teaches that when an accused admits having to have been at the scene of the crime during its
committed the crime but invokes self-defense to escape commission.[84] The evidence he had presented demonstrated
criminal liability, the burden of proof is reversed and shifted to only that, at the time, he was sleeping in his house, which was
him.He must then prove the elements of self-defense.[77] It near the locus criminis.
necessarily follows that he must now rely on the strength of
Alibi is always considered with suspicion and received with
his own evidence and not on the weakness of that of the
caution, not only because it is inherently weak and unreliable,
prosecution; for even if the latter evidence were weak, it could
but also because it is easily fabricated and concocted.[85] It is
not be disbelieved after the accused has admitted the
therefore incumbent upon the appellant to prove that he was
killing.[78] Thus, appellants must establish with clear and
at another place when the felony was committed, and that it
convincing evidence that the killing was justified, and that they
was physically impossible for him to have been at the scene of
incurred no criminal liability therefor.[79] They failed to do so,
the crime at the time it was committed.[86] This he failed to
and their conviction thus becomes inevitable.[80]
prove.
Fifth Issue:
Seventh Issue:
Lawful Performance of Duties
Conspiracy
Appellants contend that the killing of Ronie resulted from the
The trial court correctly appreciated the presence of
lawful performance of their duties as police officers. However,
conspiracy. Conspiracy exists when two or more persons come
such justifying circumstance may be invoked only after the
to an agreement concerning the commission of a felony and
defense successfully proves that (1) the accused acted in the
decide to commit it. Direct proof of conspiracy is rarely found,
performance of a duty, and (2) the injury or offense committed
for criminals do not write down their lawless plans and
is the necessary consequence of the due performance or
plots. The agreement to commit a crime, however, may be
lawful exercise of such duty.[81] These two requisites are
deduced from the mode and manner of the commission of the
wanting in this case.
offense or inferred from acts that point to a joint purpose and
The appellants, except Mayor Cawaling, were men in uniform design, concerted action, and community of intent.[87] It does
who happened to be on duty when they killed Ronie. The not matter who inflicted the mortal wound, as the act of one
victim was not committing any offense at the time. Killing the is the act of all, and each incurs the same criminal
victim under the circumstances of this case cannot in any wise liability.[88] We concur with the trial courts elucidation:
be considered a valid performance of a lawful duty by men
All of the accused chased the victim and his brother; four (4) of
who had sworn to maintain peace and order and to protect the
whom blocked their ways, first, to their elder brother Nelson
lives of the people. As aptly held in People vs. De la
Elisans house and, second, to their elder sister Imelda Elisan
Cruz,[82] Performance of duties does not include murder. That
Tumbagahons house. Having changed course by proceeding to
Ronie was a troublemaker in their town is not an excuse; as the
the ricefield in their desperate attempt to evade the accused,
Court declared in the same case of People vs. De la
all the six (6) armed accused continued their pursuit. Their
Cruz, Murder is never justified, regardless of the victim.
victim, having fallen on the rice paddy, and rising and kneeling
Sixth Issue: on it with raised hands, all the said accused with their
flashlights beamed on their victim, in a united and concerted
Alibi
manner, shot him. After Ronie Elisan had fallen down, co-
We likewise brush aside the defenses of alibi and denial raised accused Mayor Cawaling was even heard as saying (Y)ou left
by Appellant De los Santos. Prosecution witnesses positively [sic] him, he is already dead. x x x.[89]
identified him and Fontamillas as part of the group which
Eighth Issue:
chased and shot Ronie Ilisan. It is elementary that alibi and
denial are outweighed by positive identification that is Equipoise Rule
categorical, consistent and untainted by any ill motive on the

40
We reject appellants position that the equipoise rule should
apply to this case.[90] In People vs. Lagnas,[91] the Court through
Mr. Justice Florenz D. Regalado described this rule, as follows:
Once again, albeit in effect a supportive and cumulative
consideration in view of the preceding disquisition, the
equipoise rule finds application in this case, that is, if the
inculpatory facts and circumstances are capable of two or
more explanations, one of which is consistent with the
innocence of the accused and the other consistent with his
guilt, then the evidence does not fulfill the test of moral
certainty, and is not sufficient to support a conviction.
In this case, the inculpatory facts point to only one conclusion:
appellants are guilty. As amplified in the discussion above, the
Court agrees with the trial court that the guilt of the appellants
was proven beyond reasonable doubt.
Ninth Issue:
Murder or Homicide?
The Information alleges three qualifying circumstances:
treachery, evident premeditation and taking advantage of
superior strength. If appreciated, any one of these will qualify
the killing to murder. However, Appellants Tumbagahan and
Cajilo posit that there was no treachery, reasoning that Ronie
was not an unsuspecting victim, as he had been forewarned by
Diosdado Venus of the presence of the appellants inside the
restaurant and there had been a chase prior to the
killing. Further, they contend that abuse of superior strength is
deemed absorbed in treachery, and that the addition of abuse
of superior strength to qualify the case to murder is nothing
more than mere repetition - a legal chicanery, so to
say. Similarly, where treachery is not proved, there can be no
abuse of superior strength, vice-versa.[92]
We partly agree.
Treachery exists when the malefactors employ means and
methods that tend directly and especially to insure their
execution without risk to themselves arising from the defense
which the victims might make. The essence of treachery is the
sudden and unexpected attack without the slightest
provocation on the part of the person attacked. [93] While we
do not disregard the fact that the victim, together with his
brother Vicente, was able to run towards a rice field, we still
believe that treachery attended the killing.
In People vs. Landicho,[94] we ruled that treachery might still be
appreciated even when the victim was warned of danger to his
person, for what is decisive is that the execution of the attack
made it impossible for the victim to defend himself or to
retaliate.
41
The appellants waited for Ronie to come out of the
restaurant. All of them chased the victim and prevented him
from seeking refuge either in the house of his sister Imelda or
that of his brother Nelson. All of them carried firearms and
flashlights. They fired their guns at the victim while he was on
his knees with arms raised, manifesting his intention not to
fight back.
We cannot appreciate the aggravating circumstance of abuse
of superior strength, however, as we have consistently ruled
that it is deemed absorbed in treachery.[95]
We also affirm the finding of the trial court that the
prosecution failed to prove the attending circumstance of
evident premeditation. To prove this aggravating
circumstance, the prosecution must show the following: (1)
the time when the offender determined to commit the crime;
(2) an act manifestly indicating that the offender clung to his
determination; and (3) a lapse of time, between the
determination to commit the crime and the execution thereof,
sufficient to allow the offender to reflect upon the
consequences of his act.[96] Nothing in the records shows how
and when the plan to kill was hatched, or how much time had
elapsed before it was carried out.
Tenth Issue:
Damages
The trial court awarded the following: (a) P50,000.00, as civil
indemnity; (b) P6,000.00, as actual damages; and
(c) P116,666.66, for lost earnings. In computing the latter, the
trial court used the following formula:
Total annual net income = 10% x total annual gross income
= .10 x P25,000.00
= P2,500.00
xxx xxx xxx
Loss of earning capacity of Ronie Elisan = 2/3 (90-20)
x P2,500.00 = P116,666.66.[97]
Consistent with jurisprudence, we affirm the ruling of the trial
court awarding the amount of P50,000 as civil indemnity to the
heirs of the victim.[98]
We cannot do the same to the award of actual damages and
lost earnings, however. The award of actual damages has no
basis, as no receipts were presented to substantiate the
expenses allegedly incurred. An alleged pecuniary loss must be
established by credible evidence before actual damages may
be awarded.[99] Similarly erroneous is the award for loss of
earning capacity, which should be computed as follows:[100]
2/3 x [80 - age of victim at the time of death] x [reasonable award for loss of earning capacity
portion of the annual net income which would have been is INCREASED to P928,000. Costs against appellant.
received as support by heirs]

As testified to by Nelson Ilisan, the deceased had been earning

an average of P100 daily or P3,000 monthly.[101] From this
monthly income must be deducted the reasonable amount
of P1,000 representing the living and other necessary
expenses of the deceased. Hence, the lost earnings of the
deceased should be computed as follows:

= 2/3 x [80 - 22] x [P24,000]

= 2/3 x [58] x [P24,000]

= 2[P 1,392,000]

= P2,784,000

= P928,000.

Eleventh Issue:

Aggravating and Mitigating Circumstances

Prior to the amendment of Section 248 of the Revised Penal

Code,[102] the imposable penalty for murder was reclusion
temporal in its maximum period to death. In their Brief,
Appellants Cajilo and Tumbagahan argue for the imposition of
the lower penalty of reclusion temporal, contending that their
filing of bail bonds/property bonds, before the order for their
arrest was issued, should be treated as voluntary
surrender.[103]

We cannot accept this contention. In the first place, it has no

factual basis. The warrant for the arrest of herein appellants
was issued on August 18, 1987,[104] but appellants counsel filed
the Urgent Motion for Bail only thereafter, on September 2,
1987.[105] In the second place, appellants failed to prove the
requisites for voluntary surrender, which are: (1) the offender
has not been actually arrested; (2) the offender surrenders
himself to a person in authority or to the latters agent; and (3)
the surrender is voluntary.[106] The records reveal that a
warrant of arrest was actually served on Tumbagahan and
Cajilo[107] on September 2, 1987 and that they were in fact
detained.[108]

In view of the absence of any other aggravating or mitigating

circumstance, the trial court correctly imposed reclusion
perpetua.

WHEREFORE, the appeal is hereby DENIED and the assailed

Decision is AFFIRMED with the following MODIFICATIONS: (1)
the award of P6,000 as actual damages is DELETED,and (2) the
42
AVELINA ZAMORA, EMERITA ZAMORA-NICOL, SONNY NICOL,
TERESA ZAMORA-UMALI, CLARENCE UMALI, ROBERTO
ZAMORA, ROLANDO ZAMORA, MARY ANN ZAMORA,
MICHELLE ZAMORA and RODRIGO
ZAMORA, petitioners, vs. HEIRS of CARMEN IZQUIERDO,
represented by their attorney-in-fact, ANITA F.
PUNZALAN, respondents.
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari[1] assailing the
Decision[2] of the Court of Appeals dated September 12, 2000
and its Resolution dated December 1, 2000 in CA-G.R. SP No.
54541, entitled Avelina Zamora, et al., petitioners, versus Heirs
of Carmen Izquierdo, represented by the executrix, Anita F.
Punzalan, respondents.
The records show that sometime in 1973, Carmen Izquierdo
and Pablo Zamora entered into a verbal stipulation whereby
the former leased to the latter one of her apartment units
located at 117-B General Luna Street, Caloocan City. They
agreed on the following: the rental is P3,000.00 per month; the
leased premises is only for residence; and only a single family
is allowed to occupy it.
After the death of Carmen (lessor) in 1996 her attorney-in-fact,
Anita Punzalan, representing the heirs, herein respondents,
prepared a new contract of lease wherein the rental was
increased from P3,000.00 to P3,600.00 per month.[3] However,
petitioners refused to sign it.
In January 1997, Pablo (lessee) died. His wife, Avelina Zamora,
and their children (two of whom have their own families),
herein petitioners, continued to reside in the apartment unit.
However, they refused to pay the increased rental and
persisted in operating a photocopying business in the same
apartment.
Meanwhile, petitioner Avelina Zamora applied with the
Metropolitan Waterworks & Sewerage System (MWSS) for a
water line installation in the premises. Since a written consent
from the owner is required for such installation, she requested
respondents attorney-in-fact to issue it. However, the latter
declined because petitioners refused to pay the new rental
rate and violated the restrictions on the use of the premises by
using a portion thereof for photocopying business and allowing
three families to reside therein.
This prompted petitioner Avelina Zamora to file with the Office
of the Punong Barangay of Barangay 16, Sona 2, District I,
Lungsod ng Caloocan, a complaint against Anita Punzalan
(respondents attorney-in-fact), docketed as Usaping Bgy.
Blg. 1-27-97, Ukol sa: Hindi Pagbibigay ng Pahintulot sa
Pagpapakabit ng Tubig.
43
On August 24, 1997, during the barangay conciliation
proceedings, petitioner Avelina Zamora declared that she
refused to sign the new lease contract because she is not
agreeable with the conditions specified therein.
The following day, Anita Punzalan sent Avelina a
letter[4] informing her that the lease is being terminated and
demanding that petitioners vacate the premises within 30 days
from notice.
Despite several barangay conciliation sessions, the parties
failed to settle their dispute amicably. Hence,
the Barangay Chairman issued a Certification to File Action
dated September 14, 1997.[5]
Consequently, on October 2, 1997, respondents, represented
by Anita Punzalan, filed with the Metropolitan Trial Court
(MTC), Branch 49, Caloocan City, a complaint for unlawful
detainer and damages against petitioners, docketed as Civil
Case No. 23702.[6] Forthwith, petitioners filed a motion to
dismiss[7] the complaint on the ground that the controversy
was not referred to the barangay for conciliation. First, they
alleged that the barangay Certification to File Action is fatally
defective because it pertains to another dispute, i.e., the
refusal by respondents attorney-in-fact to give her written
consent to petitioners request for installation of water
facilities in the premises. And, second, when the parties failed
to reach an amicable settlement before the Lupong
Tagapamayapa, the Punong Barangay (as Lupon Chairman),
did not constitute the Pangkat ng Tagapagkasundo before
whom mediation or arbitration proceedings should have been
conducted, in violation of Section 410(b), Chapter
7 (Katarungang Pambarangay), Title One, Book III of Republic
Act No. 7160[8] (otherwise known as the Local Government
Code of 1991), which reads:
SECTION 410. Procedure for Amicable Settlement.
(a) x x x
(b) Mediation by lupon chairman Upon receipt of the
complaint, the lupon chairman[9] shall, within the next working
day, summon the respondent(s), with notice to the
complainant(s) for them and their witnesses to appear before
him for a mediation of their conflicting interests. If he fails in
his mediation effort within fifteen (15) days from the first
meeting of the parties before him, he shall forthwith set a date
for the constitution of the pangkat in accordance with the
provisions of this Chapter. (Underscoring supplied)
Respondents opposed the motion to dismiss, [10] the same
being prohibited under Section 19 of the 1991 Revised Rule on
Summary Procedure. They prayed that judgment be rendered
as may be warranted by the facts alleged in the complaint,
pursuant to Section 6[11] of the same Rule.
On July 9, 1998, the MTC issued an Order[12] denying
petitioners motion to dismiss and considering the case
submitted for decision in view of their failure to file their
answer to the complaint.
Petitioners filed a motion for reconsideration, [13] contending
that a motion to dismiss the complaint on the ground of failure
to refer the complaint to the Lupon for conciliation is allowed
under Section 19 of the 1991 Revised Rule on Summary
Procedure, which partly provides:
SEC. 19. Prohibited pleadings and motions. The following
pleadings, motions, or petitions shall not be allowed in the
cases covered by this Rule:
(a) Motion to dismiss the complaint or to quash the complaint
or information except on the ground of lack of jurisdiction over
the subject matter, or failure to comply with the preceding
section [referring to Section 18 on referral of the complaint to
the Lupon for conciliation];
x x x.
On August 26, 1998, the MTC rendered a Judgment[14] in favor
of respondents and against petitioners, the dispositive portion
of which reads:
WHEREFORE, Judgment is hereby rendered in favor of the
plaintiff and against the defendants, ordering defendants and
all persons claiming right under them:
1) To vacate the leased premises located at No. 117-B
General Luna Street, Caloocan City and to surrender
possession thereof to the plaintiff;
2) To pay the amount of three thousand six hundred
(P3,600.00) pesos per month starting January, 1997 until the
premises being occupied by them is finally vacated and
possession thereof is restored to the plaintiff;
3) To pay plaintiff the sum of five thousand (P5,000.00)
pesos as and for attorneys fees; and
4) To pay the costs of this suit.
SO ORDERED.
On appeal, the Regional Trial Court (RTC), Branch 125,
Caloocan City, rendered its Decision[15] dated February 15,
1999 affirming the MTC Judgment. Subsequently, it denied
petitioners motion for reconsideration.[16]
Petitioners then filed with the Court of Appeals a petition for
review, docketed as CA-G.R. SP No. 54541. On September 12,
2000, it rendered a Decision[17] affirming the RTC Decision.
44
Thereafter, petitioners filed a motion for reconsideration but
was denied by the Appellate Court in its Resolution dated
December 1, 2000.[18]
Hence, the instant petition.
I
The primordial objective of Presidential Decree No. 1508
(the Katarungang Pambarangay Law), now included under
R.A. No. 7160 (the Local Government Code of 1991), is to
reduce the number of court litigations and prevent the
deterioration of the quality of justice which has been brought
about by the indiscriminate filing of cases in the courts. [19] To
attain this objective, Section 412(a) of R.A. No. 7160 requires
the parties to undergo a conciliation process before
the Lupon Chairman or the Pangkat as a precondition to filing
a complaint in court, thus:
SECTION 412. Conciliation. (a) Pre-condition to Filing of
Complaint in Court. No complaint, petition, action, or
proceeding involving any matter within the authority of
the lupon shall be filed or instituted directly in court or any
other government office for adjudication, unless there has
been a confrontation between the parties before
the lupon chairman or the pangkat, and that no conciliation or
settlement has been reached as certified by
the lupon or pangkat secretary and attested to by
the lupon or pangkat chairman x x x. (Underscoring supplied)
In the case at bar, the Punong Barangay, as Chairman of
the Lupong Tagapamayapa, conducted conciliation
proceedings to resolve the dispute between the parties herein.
Contrary to petitioners contention, the complaint does not
only allege, as a cause of action, the refusal of respondents
attorney-in-fact to give her consent to the installation of water
facilities in the premises, but also petitioners violation of the
terms of the lease, specifically their use of a portion therein for
their photocopying business and their failure to pay the
increased rental. As correctly found by the RTC:
The records show that confrontations before the barangay
chairman were held on January 26, 1997, February 9, 1997,
February 23, 1997, February 28, 1997, July 27, 1997, August 3,
1997, August 10, 1997, August 17, 1997 and August 24, 1997
wherein not only the issue of water installation was discussed
but also the terms of the lease and the proposed execution of
a written contract relative thereto. It appears, however, that
no settlement was reached despite a total of nine meetings at
the barangay level.
It is of no moment that the complaint was initially made by
defendant-appellant Avelina Zamora because herein plaintiff-
appellee was given by the Sangguniang Barangay the authority
to bring her grievance to the Court for resolution. While it is
true that the Sertifikasyon dated September 14, 1997 is
entitled Ukol Sa Hindi Pagbibigay Ng Pahintulot Sa
Pagpapakabit Ng Tubig, this title must not prevail over the
actual issues discussed in the proceedings.
Hence, to require another confrontation at the barangay level
as a sine qua non for the filing of the instant case would not
serve any useful purpose anymore since no new issues would
be raised therein and the parties have proven so many times
in the past that they cannot get to settle their differences
amicably.
As discussed earlier, the case was referred to
the Lupon Chairman for conciliation. Obviously, petitioners
motion to dismiss, even if allowed, is bereft of merit.
WHEREFORE, the petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 54541
sustaining the Decision of the RTC which upheld the MTC
Judgment is AFFIRMED. Costs against petitioners.

We cannot sustain petitioners contention that

the Lupon conciliation alone, without the proceeding before
the Pangkat ng Tagapagkasundo, contravenes the law
on Katarungang Pambarangay. Section 412(a) of R.A. No.
7160, quoted earlier, clearly provides that, as a precondition
to filing a complaint in court, the parties shall go through the
conciliation process either before the Lupon Chairman (as
what happened in the present case), or the Pangkat.

Moreover, in Diu vs. Court of Appeals,[21] we held that

notwithstanding the mandate in Section 410(b) of R.A. No.
7160 that the Barangay Chairman shall constitute a Pangkat if
he fails in his mediation efforts, the same Section 410(b)
should be construed together with Section 412(a) of the same
law (quoted earlier), as well as the circumstances obtaining in
and peculiar to the case. Here, while the Pangkat was not
constituted, however, the parties met nine (9) times at the
Office of the Barangay Chairman for conciliation wherein not
only the issue of water installation was discussed but also
petitioners violation of the lease contract. It is thus manifest
that there was substantial compliance with the law which does
not require strict adherence thereto.[22]

II. We hold that petitioners motion to dismiss the complaint for

unlawful detainer is proscribed by Section 19(a) of the 1991
Revised Rule on Summary Procedure, quoted earlier. Section
19(a) permits the filing of such pleading only when the ground
for dismissal of the complaint is anchored on lack of
jurisdiction over the subject matter, or failure by the
complainant to refer the subject matter of his/her complaint
to the Lupon for conciliation prior to its filing with the court.
This is clear from the provisions of Section 18 of the same Rule,
which reads:

SEC. 18. Referral to Lupon. Cases requiring referral to

the Lupon for conciliation under the provisions of Presidential
Decree No. 1508 where there is no showing of compliance with
such requirement, shall be dismissed without prejudice, and
may be revived only after such requirement shall have been
complied with. This provision shall not apply to criminal cases
where the accused was arrested without a warrant.
(Underscoring supplied)
GENERAL PROVISIONS CASES
45
ESTRELLITA J. TAMANO, petitioner, vs. HON. RODOLFO A. petitioners motion to dismiss and the 22 August 1995 order
ORTIZ, Presiding Judge, RTC-Br. 89, Quezon City, HAJA PUTRI denying reconsideration thereof.
ZORAYDA A. TAMANO, ADIB A. TAMANO and the HON.
In a Resolution dated 13 December 1995 we referred the case
COURT OF APPEALS, respondents. BELLOSILLO, J.:
to the Court of Appeals for consolidation with G.R. No.
This Petition for Review on Certiorari seeks to reverse and set 118371. Zorayda and Adib A. Tamano however filed a motion,
aside the decision of the Court of Appeals of 30 September which the Court of Appeals granted, to resolve the Complaint
1996 in CA-G.R. SP. No. 39656 which affirmed the decision of for Declaration of Nullity of Marriage ahead of the other
the Regional Trial Court-Br. 89, Quezon City, denying the consolidated cases.
motion to dismiss as well as the motion for reconsideration
The Court of Appeals ruled that the instant case would fall
filed by petitioner Estrellita J. Tamano.
under the exclusive jurisdiction of sharia courts only when
On 31 May 1958 Senator Mamintal Abdul Jabar Tamano filed in places where there are sharia courts. But in places
(Tamano) married private respondent Haja Putri Zorayda A. where there are no sharia courts, like Quezon City, the instant
Tamano (Zorayda) in civil rites. Their marriage supposedly case could properly be filed before the Regional Trial Court.
remained valid and subsisting until his death on 18 May
Petitioner is now before us reiterating her earlier argument
1994. Prior to his death, particularly on 2 June 1993, Tamano
that it is the sharia court and not the Regional Trial Court
also married petitioner Estrellita J. Tamano (Estrellita) in civil
which has jurisdiction over the subject and nature of the
rites in Malabang, Lanao del Sur.
action.
On 23 November 1994 private respondent Zorayda joined by
Under The Judiciary Reorganization Act of 1980,[3] Regional
her son Adib A. Tamano (Adib) filed a Complaint for
Trial Courts have jurisdiction over all actions involving the
Declaration of Nullity of Marriage of Tamano and Estrellita on
contract of marriage and marital relations.[4] Personal actions,
the ground that it was bigamous. They contended that Tamano
such as the instant complaint for declaration of nullity of
and Estrellita misrepresented themselves
marriage, may be commenced and tried where the plaintiff or
as divorced and single, respectively, thus making the entries in
any of the principal plaintiffs resides, or where the defendant
the marriage contractfalse and fraudulent.
or any of the principal defendants resides, at the election of
Private respondents alleged that Tamano never divorced the plaintiff.[5] There should be no question by now that what
Zorayda and that Estrellita was not single when she married determines the nature of an action and correspondingly the
Tamano as the decision annulling her previous marriage with court which has jurisdiction over it are the allegations made by
Romeo C. Llave never became final and executory for non- the plaintiff in this case.[6] In the complaint for declaration of
compliance with publication requirements. nullity of marriage filed by private respondents herein, it was
alleged that Estrellita and Tamano were married in accordance
Estrellita filed a motion to dismiss alleging that the Regional
with the provisions of the Civil Code. Never was it mentioned
Trial Court of Quezon City was without jurisdiction over the
that Estrellita and Tamano were married under Muslim laws or
subject and nature of the action. She alleged that "only a party
PD No. 1083. Interestingly, Estrellita never stated in
to the marriage" could file an action for annulment of
her Motion to Dismiss that she and Tamano were married
marriage against the other spouse,[1] hence, it was only
under Muslim laws. That she was in fact married to Tamano
Tamano who could file an action for annulment of their
under Muslim laws was first mentioned only in her Motion for
marriage. Petitioner likewise contended that since Tamano
Reconsideration.
and Zorayda were both Muslims and married in Muslim rites
the jurisdiction to hear and try the instant case was vested in Nevertheless, the Regional Trial Court was not divested of
the sharia courts pursuant to Art. 155 of the Code of Muslim jurisdiction to hear and try the instant case despite the
Personal Laws. allegation in the Motion for Reconsideration that Estrellita and
Tamano were likewise married in Muslim rites. This is because
The lower court denied the motion to dismiss and ruled that
a courts jurisdiction cannot be made to depend upon defenses
the instant case was properly cognizable by the Regional Trial
set up in the answer, in a motion to dismiss, or in a motion for
Court of Quezon City since Estrellita and Tamano were married
reconsideration, but only upon the allegations of the
in accordance with the Civil Code and not exclusively in
complaint.[7] Jurisdiction over the subject matter of a case is
accordance with PD No. 1083[2] or the Code of Muslim Personal
determined from the allegations of the complaint as the latter
laws. The motion for reconsideration was likewise denied;
comprises a concise statement of the ultimate facts
hence, petitioner filed the instant petition with this Court
constituting the plaintiffs causes of action.[8]
seeking to set aside the 18 July 1995 order of respondent
presiding judge of the RTC-Br. 89, Quezon City, denying
46
Petitioner argues that the sharia courts have jurisdiction over
the instant suit pursuant to Art. 13, Title II, PD No.
1083,[9] which provides -

Art. 13. Application. - (1) The provisions of this Title shall apply
to marriage and divorce wherein both parties are Muslims, or
wherein only the male party is a Muslim and the marriage is
solemnized in accordance with Muslim law or this Code in any
part of the Philippines.

(2) In case of a marriage between a Muslim and a non-Muslim,

solemnized not in accordance with Muslim law or this Code,
the Civil Code of the Philippines shall apply.

(3) Subject to the provisions of the preceding paragraphs, the

essential requisites and legal impediments to marriage,
divorce, paternity and filiation, guardianship and custody of
minors, support and maintenance, claims for customary dower
(mahr), betrothal, breach of contract to marry, solemnization
and registration of marriage and divorce, rights and obligations
between husband and wife, parental authority, and the
property relations between husband and wife shall be
governed by this Code and other applicable Muslim laws.

As alleged in the complaint, petitioner and Tamano were

married in accordance with the Civil Code. Hence, contrary to
the position of petitioner, the Civil Code is applicable in the
instant case. Assuming that indeed petitioner and Tamano
were likewise married under Muslim laws, the same would still
fall under the general original jurisdiction of the Regional Trial
Courts.

Article 13 of PD No. 1083 does not provide for a situation

where the parties were married both in civil and Muslim
rites. Consequently, the sharia courts are not vested with
original andexclusive jurisdiction when it comes to marriages
celebrated under both civil and Muslim laws. Consequently,
the Regional Trial Courts are not divested of their general
original jurisdiction under Sec. 19, par. (6) of BP Blg. 129 which
provides -

Sec. 19. Jurisdiction in Civil Cases. - Regional Trial Courts shall

exercise exclusive original jurisdiction: x x x (6) In all cases not
within the exclusive jurisdiction of any court, tribunal, person
or body exercising judicial or quasi-judicial functions x x x x

WHEREFORE, the instant petition is DENIED. The decision of

the Court of Appeals sustaining the 18 July 1995 and 22 August
1995 orders of the Regional Trial Court - Br. 89, Quezon City,
denying the motion to dismiss and reconsideration thereof, is
AFFIRMED. Let the records of this case be immediately
remanded to the court of origin for further proceedings until
terminated. SO ORDERED.

47
FILOMENA DOMAGAS, petitioner, vs. VIVIAN LAYNO
JENSEN, respondent. CALLEJO, SR., J.:
This is a petition for review on certiorari, under Rule 45 of the
Rules of Court, of the Decision[1] of the Court of Appeals (CA)
in CA-G.R. CV No. 73995, which affirmed the Decision [2] of the
Regional Trial Court (RTC) of Dagupan City, Branch 44, in Civil
Case No. 2000-0244-D, which declared null and void the
decision of the Municipal Trial Court (MTC) of Calasiao,
Pangasinan in Civil Case No. 879.[3]
The antecedent facts follow. On February 19, 1999, petitioner
Filomena Domagas filed a complaint for forcible entry against
respondent Vivian Jensen before the MTC of Calasiao,
Pangasinan. The petitioner alleged in her complaint that she
was the registered owner of a parcel of land covered by
Original Certificate of Title (OCT) No. P-30980, situated in
Barangay Buenlag, Calasiao, Pangasinan, and with an area of
827 square meters. On January 9, 1999 the respondent, by
means of force, strategy and stealth, gained entry into the
petitioners property by excavating a portion thereof and
thereafter constructing a fence thereon. As such, the
petitioner was deprived of a 68-square meter portion of her
property along the boundary line. The petitioner prayed that,
after due proceedings, judgment be rendered in her favor,
thus:
3. And, after trial, judgment be rendered:
a) DECLARING the writ of Preliminary Mandatory Injunction
and Writ of Preliminary Injunction permanent;
b) ORDERING defendant, his representatives, agents and
persons acting under her, to vacate the portion of the property
of the plaintiff occupied by them and to desist from entering,
excavating and constructing in the said property of the plaintiff
described in paragraph 2 hereof and/or from disturbing the
peaceful ownership and possession of the plaintiff over the
said land, pending the final resolution of the instant action;
c) ORDERING defendant to pay reasonable rental at FIVE
THOUSAND (P5,000.00) PESOS per month from January 9,
1999 up to the time she finally vacates and removes all
constructions made by her in the property of the plaintiff and
up to the time she finally restores the said property in the
condition before her illegal entry, excavation and construction
in the property of the plaintiff;
d) ORDERING defendant to pay actual damages in the amount
of TWENTY THOUSAND (P20,000.00) PESOS; moral damages in
the amount of TWENTY THOUSAND (P20,000.00) PESOS;
attorneys fees of THIRTY THOUSAND (P30,000.00) PESOS in
retainers fee and ONE THOUSAND FIVE HUNDRED (P1,500.00)
PESOS per court appearance fee; exemplary damages in the
48
amount of TWENTY THOUSAND (P20,000.00) PESOS, and,
costs.
Plaintiff further prays for other reliefs and remedies just and
equitable in the premises.[4]
The case was docketed as Civil Case No. 879. The summons and
the complaint were not served on the respondent because the
latter was apparently out of the country. This was relayed to
the Sheriff by her (the respondents) brother, Oscar Layno, who
was then in the respondents house at No. 572 Barangay
Buenlag, Calasiao, Pangasinan. The Sheriff left the summons
and complaint with Oscar Layno, who received the same.[5]
Nonetheless, on May 17, 1999, the court rendered judgment
ordering the respondent and all persons occupying the
property for and in the latters behalf to vacate the disputed
area and to pay monthly rentals therefor, including actual
damages, attorneys fees, and exemplary damages. The fallo of
the decision reads:
1) Ordering the defendant, her representatives, agents and
persons acting under her, to vacate the 68-square meters
which she encroached upon;
2) Ordering the defendant to pay a monthly rental
of P1,000.00 to the plaintiff;
3) To pay plaintiff actual damages of P20,000.00; attorneys
fees of P15,000.00 and exemplary damages in the amount
of P20,000.00 plus the costs.
SO ORDERED.[6]
The respondent failed to appeal the decision. Consequently, a
writ of execution was issued on September 27, 1999.
On August 16, 2000, the respondent filed a complaint against
the petitioner before the RTC of Dagupan City for the
annulment of the decision of the MTC in Civil Case No. 879, on
the ground that due to the Sheriffs failure to serve the
complaint and summons on her because she was in Oslo,
Norway, the MTC never acquired jurisdiction over her person.
The respondent alleged therein that the service of the
complaint and summons through substituted service on her
brother, Oscar Layno, was improper because of the following:
(a) when the complaint in Civil Case No. 879 was filed, she was
not a resident of Barangay Buenlag, Calasiao, Pangasinan, but
of Oslo, Norway, and although she owned the house where
Oscar Layno received the summons and the complaint, she had
then leased it to Eduardo Gonzales; (b) she was in Oslo,
Norway, at the time the summons and the complaint were
served; (c) her brother, Oscar Layno, was merely visiting her
house in Barangay Buenlag and was not a resident nor an
occupant thereof when he received the complaint and
summons; and (d) Oscar Layno was never authorized to receive
the summons and the complaint for and in her behalf.[7]
The respondent further alleged that the MTC had no
jurisdiction over the subject matter of the complaint in Civil
Case No. 879 because the petitioner, the plaintiff therein,
failed to show prior possession of the property. She further
claimed that the alleged forcible entry was simply based on the
result of the survey conducted by Geodetic Engineer Leonardo
de Vera showing that the property of the respondent
encroached on that of the petitioner.
The respondent filed a Manifestation dated August 31, 2000,
and appended thereto the following: (a) a copy [8] of her
passport showing that she left the country on February 17,
1999; (b) a copy[9] of the Contract of Lease dated November
24, 1997, executed by her and Eduardo D. Gonzales over her
house for a period of three (3) years or until November 24,
2000; (c) her affidavit[10] stating, inter alia, that she owned the
house at Barangay Buenlag, Calasiao, Pangasinan, which she
leased to Eduardo Gonzales; that she was married to Jarl
Jensen, a citizen of Norway, on August 23, 1987 and had
resided in Norway with her husband since 1993; that she
arrived in the Philippines on December 31, 1998, but left on
February 17, 1999; she returned to the Philippines on July 30,
2000 and learned, only then, of the complaint against her and
the decision of the MTC in Civil Case No. 879; her brother Oscar
Layno was not a resident of the house at Barangay Buenlag;
and that she never received the complaint and summons in
said case; (d) the affidavit[11] of Oscar Layno declaring that
sometime in April 1999, he was in the respondents house to
collect rentals from Eduardo Gonzales; that the Sheriff arrived
and served him with a copy of the summons and the complaint
in Civil Case No. 879; and that he never informed the
respondent of his receipt of the said summons and complaint;
(e) an affidavit[12] of Eduardo Gonzales stating that he leased
the house of the respondent and resided thereat; the
respondent was not a resident of the said house although he
(Gonzales) allowed the respondent to occupy a room therein
whenever she returned to the Philippines as a balikbayan; and
that Oscar Layno was not residing therein but only collected
the rentals.
In her answer to the complaint, the petitioner alleged that the
respondent was a resident of Barangay Buenlag, Calasiao,
Pangasinan and was the owner of the subject premises where
Oscar Layno was when the Sheriff served the summons and
complaint; that the service of the complaint and summons by
substituted service on the respondent, the defendant in Civil
Case No. 879, was proper since her brother Oscar Layno, a
resident and registered voter of Barangay. Buenlag, Calasiao,
Pangasinan, received the complaint and summons for and in
her behalf.
49
The petitioner appended the following to her answer: (a) a
copy[13] of the Deed of Absolute Sale executed by Jose Layno in
her favor, dated August 26, 1992, showing that the respondent
was a resident of Barangay Buenlag, Calasiao, Pangasinan; (b)
a Real Estate Mortgage[14] executed by the respondent, dated
February 9, 1999 showing that she was a resident of Barangay
Buenlag, Calasiao, Pangasinan; (c) the Joint Affidavit[15] of
Vicenta Peralta and Orlando Macalanda, both residents of
Barangay Buenlag, Calasiao, Pangasinan, declaring that the
respondent and her brother Oscar Layno were their neighbors;
that the respondent and her brother had been residents of
Barangay Buenlag since their childhood; that although the
respondent left the country on several occasions, she returned
to the Philippines and resided in her house at No. 572 located
in the said barangay; and (d) the Voters Registration
Record[16] of Oscar Layno, approved on June 15, 1997.
After due proceedings, the trial court rendered a decision in
favor of the respondent. The dispositive portion reads:
WHEREFORE, judgment is rendered in favor of plaintiff Vivian
Layno Jensen and against defendant Filomena Domagas, as
follows:
1. The Decision of the Municipal Trial Court of Calasiao,
Pangasinan in Civil Case No. 879, entitled Filomena Domagas
versus Vivian Layno Jensen is declared null and void, for lack of
jurisdiction over the person of the plaintiff and the subject
matter.
2. Defendant Filomena Domagas is ordered to pay plaintiff, the
following:
a.) Actual damages, representing litigation expenses in the
amount of P50,000.00;
b.) Attorneys fees in the amount of P50,000.00;
c.) Moral Damages in the amount of P50,000.00;
d.) Exemplary Damages in the amount of P50,000.00; and
e.) Costs of suit.
SO ORDERED.[17]
The trial court declared that there was no valid service of the
complaint and summons on the respondent, the defendant in
Civil Case No. 879, considering that she left the Philippines on
February 17, 1999 for Oslo, Norway, and her brother Oscar
Layno was never authorized to receive the said complaint and
summons for and in her behalf.
The petitioner appealed the decision to the CA which, on May
6, 2003, rendered judgment affirming the appealed decision
with modifications. The CA ruled that the complaint in Civil
Case No. 879 was one for ejectment, which is an action quasi
in rem. The appellate court ruled that since the defendant
therein was temporarily out of the country, the summons and
the complaint should have been served via extraterritorial
service under Section 15 in relation to Section 16, Rule 14 of
the Rules of Court, which likewise requires prior leave of court.
Considering that there was no prior leave of court and none of
the modes of service prescribed by the Rules of Court was
followed by the petitioner, the CA concluded that there was
really no valid service of summons and complaint upon the
respondent, the defendant in Civil Case No. 879.
Hence, the present petition. The petitioner assails the decision
of the CA, alleging that the appellate court erred in holding that
the respondents complaint for ejectment is an action quasi in
rem. The petitioner insists that the complaint for forcible entry
is an action in personam; therefore, substituted service of the
summons and complaint on the respondent, in accordance
with Section 7, Rule 14 of the Rules of Court, is valid. The
petitioner, likewise, asserts that Oscar Layno is a resident and
a registered voter of Barangay Buenlag, Calasiao, Pangasinan;
hence, the service of the complaint and summons on the
respondent through him is valid.
The respondent, on the other hand, asserts that the action for
forcible entry filed against her was an action quasi in rem, and
that the applicable provision of the Rules of Court is Section 15
of Rule 14, which calls for extraterritorial service of summons.
The sole issue is whether or not there was a valid service of the
summons and complaint in Civil Case No. 879 on the
respondent herein who was the defendant in the said case.
The resolution of the matter is anchored on the issue of
whether or not the action of the petitioner in the MTC against
the respondent herein is an action in personam or quasi in rem.
The ruling of the CA that the petitioners complaint for forcible
entry of the petitioner against the respondent in Civil Case No.
879 is an action quasi in rem, is erroneous. The action of the
petitioner for forcible entry is a real action and one in
personam.
The settled rule is that the aim and object of an action
determine its character.[18] Whether a proceeding is in rem,
or in personam, or quasi in rem for that matter, is determined
by its nature and purpose, and by these only. [19] A proceeding
in personam is a proceeding to enforce personal rights and
obligations brought against the person and is based on the
jurisdiction of the person, although it may involve his right to,
or the exercise of ownership of, specific property, or seek to
compel him to control or dispose of it in accordance with the
mandate of the court.[20] The purpose of a proceeding in
personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the
defendant.[21] Of this character are suits to compel a defendant
50
to specifically perform some act or actions to fasten a
pecuniary liability on him.[22] An action in personam is said to
be one which has for its object a judgment against the person,
as distinguished from a judgment against the propriety to
determine its state. It has been held that an action in
personam is a proceeding to enforce personal rights or
obligations; such action is brought against the person. As far as
suits for injunctive relief are concerned, it is well-settled that it
is an injunctive act in personam.[23] In Combs v. Combs,[24] the
appellate court held that proceedings to enforce personal
rights and obligations and in which personal judgments are
rendered adjusting the rights and obligations between the
affected parties is in personam. Actions for recovery of real
property are in personam.[25]
On the other hand, a proceeding quasi in rem is one brought
against persons seeking to subject the property of such
persons to the discharge of the claims assailed.[26] In an
action quasi in rem, an individual is named as defendant and
the purpose of the proceeding is to subject his interests
therein to the obligation or loan burdening the
property.[27] Actions quasi in rem deal with the status,
ownership or liability of a particular property but which are
intended to operate on these questions only as between the
particular parties to the proceedings and not to ascertain or
cut off the rights or interests of all possible claimants. The
judgments therein are binding only upon the parties who
joined in the action.[28]
Section 1, Rule 70 of the Rules of Court provides: Section
1. Who may institute proceedings, and when. - Subject to the
provisions of the next succeeding section, a person deprived of
the possession of any land or building in force, intimidation,
threat, strategy, or stealth, or a lessor, vendor, vendee, or
other person against whom the possession of any land or
building is unlawfully withheld after the expiration or
termination of the right to hold possession by virtue of any
contract, express or implied, or the legal representatives or
assigns of any such lessor, vendor, vendee, or other person,
may, at any time within one (1) year after such unlawful
deprivation or withholding of possession, bring an action in the
proper Municipal Trial Court against the person or persons
unlawfully withholding or depriving of possession, or any
person or persons claiming under them, for the restitution of
such possession, together with damages and costs.
Under Section 15, Rule 70 of the said Rule, the plaintiff may be
granted a writ of preliminary prohibition or mandatory
injunction:
Sec. 15. Preliminary Injunction. The court may grant
preliminary injunction, in accordance with the provisions of
Rule 58 hereof, to prevent the defendant from committing
further acts of dispossession against the plaintiff.
A possessor deprived of his possession through forcible entry
or unlawful detainer may, within five (5) days from the filing of
the complaint, present a motion in the action for forcible entry
or unlawful detainer for the issuance of a writ of preliminary
mandatory injunction to restore him in his possession. The
court shall decide the motion within thirty (30) days from the
filing thereof.
If, after due proceedings, the trial court finds for the plaintiff,
it shall then render judgment in his or her favor, thus:
Sec. 17. Judgment. If, after trial, the court finds that the
allegations of the complaint are true, it shall render judgment
in favor of the plaintiff for the restitution of the premises, the
sum justly due as arrears of rent or as reasonable
compensation for the use and occupation of the premises,
attorneys fees and costs. If it finds that said allegations are not
true, it shall render judgment for the defendant to recover his
costs. If a counterclaim is established, the court shall render
judgment for the sum found in arrears from either party and
award costs as justice requires.
From the aforementioned provisions of the Rules of Court and
by its very nature and purpose, an action for unlawful detainer
or forcible entry is a real action and in personam because the
plaintiff seeks to enforce a personal obligation or liability on
the defendant under Article 539 of the New Civil Code, [29] for
the latter to vacate the property subject of the action, restore
physical possession thereof to the plaintiff, and pay actual
damages by way of reasonable compensation for his use or
occupation of the property.[30]
As gleaned from the averments of the petitioners complaint in
the MTC, she sought a writ of a preliminary injunction from the
MTC and prayed that the said writ be made permanent. Under
its decision, the MTC ordered the defendant therein (the
respondent in this case), to vacate the property and pay a
monthly rental of P1,000.00 to the plaintiff therein (the
petitioner in this case).
On the issue of whether the respondent was validly served
with the summons and complaint by the Sheriff on April 5,
1999, the petitioner asserts that since her action of forcible
entry against the respondent in Civil Case No. 879 was in
personam, summons may be served on the respondent, by
substituted service, through her brother, Oscar Layno, in
accordance with Section 7, Rule 14 of the Rules of Court. The
petitioner avers that Oscar Layno, a person of suitable age and
discretion, was residing in the house of the respondent on April
5, 1999. She avers that the fact that the house was leased to
and occupied by Eduardo Gonzales was of no moment.
Moreover, the Sheriff is presumed to have performed his duty
of properly serving the summons on the respondent by
substituted service.
51
The contention of the petitioner has no merit.
In Asiavest Limited v. Court of Appeals,[31] the Court had the
occasion to state:
In an action in personam, jurisdiction over the person of the
defendant is necessary for the court to validly try and decide
the case. Jurisdiction over the person of a resident defendant
who does not voluntarily appear in court can be acquired by
personal service of summons as provided under Section 7, Rule
14 of the Rules of Court. If he cannot be personally served with
summons within a reasonable time, substituted service may be
made in accordance with Section 8 of said Rule. If he is
temporarily out of the country, any of the following modes of
service may be resorted to: (a) substituted service set forth in
Section 8; (2) personal service outside the country, with leave
of court; (3) service by publication, also with leave of court; or
(4) any other manner the court may deem sufficient.[32]
Thus, any judgment of the court which has no jurisdiction over
the person of the defendant is null and void.[33]
In the present case, the records show that the respondent,
before and after his marriage to Jarl Jensen on August 23,
1987, remained a resident of Barangay Buenlag, Calasiao,
Pangasinan. This can be gleaned from the Deed of Absolute
Sale dated August 26, 1992 in which she declared that she was
a resident of said barangay. Moreover, in the Real Estate
Mortgage Contract dated February 9, 1999, ten days before
the complaint in Civil Case No. 879 was filed, the petitioner
categorically stated that she was a Filipino and a resident of
Barangay Buenlag, Calasiao, Pangasinan. Considering that the
respondent was in Oslo, Norway, having left the Philippines on
February 17, 1999, the summons and complaint in Civil Case
No. 879 may only be validly served on her through substituted
service under Section 7, Rule 14 of the Rules of Court, which
reads:
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 defendants residence
with some person of suitable age and discretion then residing
therein, or (b) by leaving the copies at defendants office or
regular place of business with some competent person in
charge thereof.
Strict compliance with the mode of service is required in order
that the court may acquire jurisdiction over the person of the
defendant.[34] The statutory requirement of substituted
service must be followed faithfully and strictly and any
substituted service other than that authorized by the statute is
rendered ineffective.[35] As the Court held in Hamilton v.
Levy:[36]
The pertinent facts and circumstances attendant to the service
of summons must be stated in the proof of service or Officers
Return; otherwise, any substituted service made in lieu of
personal service cannot be upheld. This is necessary because
substituted service is in derogation of the usual method of
service. It is a method extraordinary in character and hence
may be used only as prescribed and in the circumstances
authorized by statute. Here, no such explanation was made.
Failure to faithfully, strictly, and fully comply with the
requirements of substituted service renders said service
ineffective.[37]
In Keister v. Narcereo,[38] the Court held that the term dwelling
house or residence are generally held to refer to the time of
service; hence, it is not sufficient to leave the summons at the
formers dwelling house, residence or place of abode, as the
case may be. Dwelling house or residence refers to the place
where the person named in the summons is living at the time
when the service is made, even though he may be temporarily
out of the country at the time. It is, thus, the service of the
summons intended for the defendant that must be left with
the person of suitable age and discretion residing in the house
of the defendant. Compliance with the rules regarding the
service of summons is as much important as the issue of due
process as of jurisdiction.[39]
The Voters Registration Record of Oscar Layno dated June 15,
1997 wherein he declared that he was a resident of No. 572
Barangay Buenlag, Calasiao, Pangasinan, as well as the Joint
Affidavit of Vicenta Peralta and Orlando Macasalda cannot
prevail over the Contract of Lease the respondent had
executed in favor of Eduardo Gonzales showing that the latter
had resided and occupied the house of the respondent as
lessee since November 24, 1997, and the affidavit of Eduardo
Gonzales that Oscar Layno was not residing in the said house
on April 5, 1999.
In sum, then, the respondent was not validly served with
summons and the complaint in Civil Case No. 879 on April 5,
1999, by substituted service. Hence, the MTC failed to acquire
jurisdiction over the person of the respondent; as such, the
decision of the MTC in Civil Case No. 879 is null and void.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for
lack of merit. No costs. SO ORDERED.

The Return of Service filed by Sheriff Eduardo J. Abulencia on

the service of summons reads:

Respectfully returned to the court of origin the herein

summons and enclosures in the above-entitled case, the
undersigned caused the service on April 5, 1999.

Defendant Vivian Layno Jensen is out of the country as per

information from her brother Oscar Layno, however, copy of
summons and enclosures was received by her brother Oscar
Layno on April 5, 1999 as evidenced by his signature appearing
in the original summons.

Calasiao, Pangasinan, April 6, 1999.

(Sgd.) EDUARDO J. ABULENCIA Junior Process Server[40]

As gleaned from the said return, there is no showing that as of

April 5, 1999, the house where the Sheriff found Oscar Layno
was the latters residence or that of the respondent herein.
Neither is there any showing that the Sheriff tried to ascertain
where the residence of the respondent was on the said date.
It turned out that the occupant of the house was a lessor,
Eduardo Gonzales, and that Oscar Layno was in the premises
only to collect the rentals from him. The service of the
summons on a person at a place where he was a visitor is not
considered to have been left at the residence or place or
abode, where he has another place at which he ordinarily stays
and to which he intends to return.[41]
52
ERNESTO V. YU and ELSIE O. YU, Petitioners, vs. BALTAZAR
PACLEB,1 Respondent. CORONA, J.:
The present petition filed under Rule 45 of the Rules of Court
originated from an action for forcible entry and damages filed
by petitioners Ernesto and Elsie Yu against respondent Baltazar
Pacleb.
The antecedent facts follow. Sometime in September 1992,
Ruperto Javier allegedly offered to sell Lot No. 6853-D to
petitioners for P75 per sq.m.lawphil.net The lot was
approximately 18,000 square meters and was located in
Barangay Langkaan, Dasmariñas, Cavite. Javier supposedly
purchased the lot from one Rebecca del Rosario who, in turn,
acquired it from respondent and his wife. The title of the
property (Transfer Certificate of Title [TCT] No. T-118375),
however, remained in the names of respondent and his wife.
The instruments in support of the series of alleged sales were
not registered.
On September 11, 1992, petitioners accepted the offer and
gave Javier P200,000 as downpayment for the lot. Javier then
delivered his supposed muniments of title to petitioners. After
the execution of a contract to sell, he formally turned over the
property to petiti oners.
At the time of the turn-over, a portion of the lot was occupied
by Ramon C. Pacleb, respondent’s son, and his wife as tenants.
On September 12, 1992, Ramon and his wife allegedly
surrendered possession of their portion to petitioners. Later
on, petitioners appointed Ramon as their trustee over the
subject lot.
Aside from taking possession of the property, petitioners also
caused the annotation on TCT No. T-118375 of a decision
rendered in their favor in Civil Case No. 741-93.2 This decision
attained finality on April 19, 1995.
Petitioners alleged that they exercised ownership rights as well
as enjoyed open, public and peaceful possession over the
property from September 12, 1992 until the early part of
September 1995. During this time, respondent was in the
United States.
Upon respondent’s return to the Philippines in May 1995, he
allegedly entered the property by means of force, threat,
intimidation, strategy and stealth thereby ousting petitioners
and their trustee, Ramon.
Despite repeated demands, respondent, asserting his rights as
registered owner of the property, refused to vacate the
premises and surrender its possession to petitioners.
Petitioners filed an action for forcible entry3 in the Municipal
Trial Court (MTC) of Dasmariñas, Cavite on November 23,
1995. Respondent filed an answer with compulsory
53
counterclaim dated December 8, 1995. After the issues were
joined, the MTC required the submission of the parties’
position papers at a preliminary conference on March 11,
1996. Respondent failed to comply.
On June 17, 1996, the MTC ruled:
WHEREFORE, in view of the foregoing, the [respondent] and
other persons claiming right under him are hereby ordered to
surrender physical possession of Lot No. 6853-D in favor of the
[petitioners] and to pay the sum of TWENTY-FIVE THOUSAND
(P25,000.00) PESOS as attorney’s fees.SO ORDERED.4
On appeal,5 the Regional Trial Court (RTC) of Imus, Cavite
rendered a decision affirming the MTC decision in toto.6
Respondent elevated his case to the Court of Appeals
(CA)7 which rendered the assailed decision on March 18, 1997:
WHEREFORE, the Petition is GRANTED; the Decision dated
October 25, 1996 of the [RTC] of Imus, Cavite in Civil Case No.
052-96 and the Decision of the [MTC] of Dasmariñas, Cavite in
Civil Case No. 182 are SET ASIDE; and Civil Case No. 182 for
Forcible Entry and Damages is hereby ordered DISMISSED. No
pronouncement as to costs. SO ORDERED.8
In a resolution dated August 20, 1997, the CA denied
petitioners’ motion for reconsideration for lack of merit.
Before us now come petitioners who claim that the appellate
court erred in finding that respondent had prior physical
possession of the subject property.lawphil.net
"In an action for forcible entry, the plaintiff must prove that he
was in prior possession of the land or building and that he was
deprived thereof by means of force, intimidation, threat,
strategy or stealth."9 The plaintiff, however, cannot prevail
where it appears that, as between himself and the defendant,
the latter had possession antedating his own. 10 We are
generally precluded in a Rule 45 petition from reviewing
factual evidence tracing the events prior to the first act of
spoliation.11 However, the conflicting factual findings of the
MTC and RTC on one hand, and the CA on the other, require us
to make an exception.
We overrule petitioners’ contentions.
The Civil Code states that possession is the holding of a thing
or the enjoyment of a right.12 In the grammatical sense, to
possess means to have, to actually and physically occupy a
thing, with or without right.13 "Possession always includes the
idea of occupation x x x. It is not necessary that the person in
possession should himself be the occupant. The occupancy can
be held by another in his name."14 Without occupancy, there
is no possession.15
Two things are paramount in possession.16 First, there must be
occupancy, apprehension or taking. Second, there must be
intent to possess (animus possidendi).17
Here, petitioners failed to establish that they had prior physical
possession to justify a ruling in their favor in the complaint for
forcible entry against respondent.
In the decision in Civil Case No. 741-93 (a case for specific
performance and damages against Javier, the alleged vendor
of the lot in question) upon which petitioners based their right
to possess in the first place, the trial court categorically stated:
The [petitioners were never placed] in possession of the
subject property on which [was] planned to be [site of] a
piggery, nor [were they] given a clearance or certification from
the Municipal Agrarian Reform Officer. 18(emphasis ours)
The claim that the lot was turned over to petitioners in 1992
was self-serving in the face of this factual finding. On the other
hand, the tax declarations and receipts in the name of
respondent in 1994 and 1995 established the possession of
respondent.19 The payment of real estate tax is one of the
most persuasive and positive indications showing the will of a
person to possess in concepto de dueño or with claim of
ownership.20
"[P]ossession in the eyes of the law does not mean that a man
has to have his feet on every square meter of the ground
before he is deemed in possession."21 In this case, Ramon, as
respondent’s son, was named caretaker when respondent left
for the United States in 1983.22 Due to the eventual loss of
trust and confidence in Ramon, however, respondent
transferred the administration of the land to his other son,
Oscar, in January 1995 until his return in May 1995. 23 In other
words, the subject land was in the possession of the
respondent’s sons during the contested period.
time the Kusangloob na Pagsasauli document was executed,
the caretaker of the land was no longer Ramon but Oscar.24
Most important, the title of the land in question (TCT No. T-
118375) remained in the name of respondent.25 "As the
registered owner, petitioner had a right to the possession of
the property, which is one of the attributes of
ownership."26 The Civil Code states:
Art. 538. Possession as a fact cannot be recognized at the same
time in two different personalities except in the cases of co-
possession. Should a question arise regarding the fact of
possession, the present possessor shall be preferred; if there
are two possessors, the one longer in possession; if the dates
of the possession are the same, the one who presents a title;
and if all these conditions are equal, the thing shall be placed
in judicial deposit pending determination of its possession or
ownership through proper proceedings.
In view of the evidence establishing respondent’s continuing
possession of the subject property, petitioners’ allegation that
respondent deprived them of actual possession by means of
force, intimidation and threat was clearly untenable. In Gaza
v. Lim, we held that:
Where a dispute over possession arises between two persons,
the person first having actual possession is the one who is
entitled to maintain the action granted by law; otherwise, a
mere usurper without any right whatever, might enter upon
the property of another and, by allowing himself to be ordered
off, could acquire the right to maintain the action of forcible
entry and detainer, however momentary his intrusion might
have been.27
WHEREFORE, the petition is hereby DENIED. The decision of
the Court of Appeals dated March 18, 1997 in CA-G.R. SP No.
42604 is AFFIRMED.osts against petitioners.SO ORDERED.

Petitioners cite an alleged document (Kusangloob na

Pagsasauli ng Lupang Sakahan at Pagpapahayag ng
Pagtalikod sa Karapatan) dated March 10, 1995 executed by
them and Ramon to prove a turn over of possession. They also
seek to prove their exercise of rights over the land through
alleged frequent visits and the designation of Ramon as their
own trustee as declared in a joint affidavit attached to their
position paper filed with the MTC. These instruments,
however, fail to convince us of petitioners’ actual occupancy of
the subject land. First, petitioners themselves acknowledged
that Ramon and his wife occupied part of the land as tenants
of respondent. Second, Ramon, a mere tenant, had no
authority to sign such document dated March 10, 1995 waiving
all rights to the land. Third, there was no clear proof in the
records of the appointment of Ramon as petitioners’ trustee
save their self-serving statements to this effect. Finally, at the

54
REBECCA T. CABUTIHAN, petitioner, vs. LANDCENTER
CONSTRUCTION & DEVELOPMENT
CORPORATION, respondent. PANGANIBAN, J.:
Breach of contract gives rise to a cause of action for specific
performance or for rescission. A suit for such breach is not
capable of pecuniary estimation; hence, the assessed value of
the real estate, subject of the said action, should not be
considered in computing the filing fees. Neither a misjoinder
nor a non-joinder of parties is a ground for dismissal of an
action, because parties may be dropped or added at any stage
of the proceedings.
The Case Before us is a Petition for Review on Certiorari under
Rule 45, assailing the Orders dated September 8, 2000 and
November 21, 2000, promulgated by of the Regional Trial
Court (RTC) of Pasig City, Branch 263.[1] The first assailed Order
disposed as follows:
WHEREFORE, foregoing premises considered, this Court
hereby resolves to dismiss the instant complaint.[2]
Reconsideration was denied in the second challenged Order.[3]
The Facts Culled from the pleadings, the facts of this case are
as follows. On December 3, 1996, herein respondent
Landcenter Construction & Development Corporation,
represented by Wilfredo B.Maghuyop -- entered into an
Agreement[4] with Petitioner Rebecca Cabutihan.The
Agreement stipulates:
WHEREAS, [respondent corporation], x x x is the absolute
owner, x x x of a parcel of land situated at Kay-biga, Paranaque,
Metro Manila covered under Transfer Certificate of Title No.
(S-30409) (partially cancelled by TCT Nos. 110001 to 110239)
and particularly described as follows:
A parcel of land (Plan Psu-80206, Case No. 290, G.L.R.O. Record
No. 2291), situated in the Barrio of Kay-biga, Municipality of
Paranaque, Province of Rizal. Bounded on the NE., by
properties of Eulogio Cruz and Isidro Alano; on the E., by
property of Justo Bernardo; on the SE., by properties of
Marcelo Nofuente and Lorenzo Molera; on the SW., by
properties of Higino and Pedro P. Lopez; on the W., by property
of Odon Rodriguez; and on the NW., by properties of Evaristo
de los Santos and Pastor Leonardo.....; containing an area of
ONE HUNDRED SEVEN THOUSAND AND FORTY SEVEN
(107,047) SQUARE METERS, more or less.
WHEREAS, [respondent corporation] decided to engage the
assistance of [petitioner] and x x x herein called the
FACILITATOR for the purpose of facilitating and arranging the
recovery of the property in question, as well as the financing
of such undertakings necessary in connection thereto;
55
WHEREFORE, premises considered and of the mutual
covenants of the parties, they have agreed, as follows:
1. The FACILITATOR undertakes to effect the recovery of the
property subject hereof, including the financing of the
undertaking, up to the registration of the same in the name of
[respondent corporation], except any and all taxes due;
2. The FACILITATOR shall be responsible for whatever
arrangements necessary in relation to the squatters presently
occupying [a] portion of the property, as well as the legitimate
buyers of lots thereof;
3. As compensation for the undertaking of the FACILITATOR,
[she] shall be entitled to Twenty [Percent] (20%) of the total
area of the property thus recovered for and in behalf of
[respondent corporation].
Armed with Board Resolution No. 01, Series of 1997,[6] which
had authorized her to represent the corporation, Luz Baylon
Ponce entered into a February 11, 1997 Deed of Undertaking
with a group composed of petitioner, Wenifredo P. Forro,
Nicanor Radan Sr. and Atty. Prospero A. Anave. The Deed
states the following:
WHEREAS, the UNDERTAKER [respondent corporation]
solicited, engaged and hereby voluntarily acknowledges the
assistance of certain persons, in recovering, arranging and
financing the undertaking up to completion/consummation of
the same;
WHEREAS, the UNDERTAKER freely, voluntarily,
unconditionally and irrevocably agreed, committed and
undertook to compensate x x x said persons, in the manner,
specified hereinbelow;
WHEREFORE, considering the foregoing premises, and the
mutual covenants of the parties, the UNDERTAKER hereby
unconditionally and irrevocably [c]ommit[s] and
[u]ndertake[s], as follows:
1. To pay or compensate the following persons, based on the
gross area of the afore-described parcel of land or gross
proceeds of the sale thereof, as the case may be, to wit:
Rebecca T. Cabutihan ------------------------------------ 20%
Wenifredo P. Forro ----------------------------------- 10%
Nicanor Radan, Sr. ------------------------------------ 4%
Atty. Prospero A. Anave ----------------------------------- 2.5%
TOTAL ----------------------------------- 36.5%
2. Execute a Deed of Assignment unto and in favor of each of
the persons above-mentioned corresponding to their
respective shares in the subject parcel of land or in the
proceeds thereof;
3. This Undertaking as well as the Deed of Assignment above-
stated shall be effective and binding upon the heirs,
successors-in-interest, assigns or designates of the parties
herein.[7]
An action for specific performance with damages was filed by
petitioner on October 14, 1999 before the RTC of Pasig City,
Branch 263. She alleged:
[6.] [Petitioner] accomplished her undertakings under the
subject Agreement and the Undertaking. So in a letter dated
18 April 1997, x x x, [respondent corporation] was informed
accordingly thereof.Simultaneously, [petitioner] demanded
upon [respondent corporation] to execute the corresponding
Deed of Assignment of the lots in the subject property, as
compensation for the services rendered in favor of the
[respondent corporation]. The subject letter was duly received
and acknowledged receipt, by then Acting Corporate Secretary
of the [respondent corporation].
[7.] [Respondent corporation] failed and refused to act on x x
x said demand of [petitioner]. Hence, [she] sent a letter dated
May 8, 1997, to the Register of Deeds for Paranaque, to inform
x x x said Office of x x x [her] claim x x x;
[8.] x x x [T]he subject property was already transferred to and
registered in the name of [respondent corporation] under
Transfer Certificate of Title No. -123917-, of the Registry of
Deeds for Paranaque City x x x;
[10.] With x x x said title of the property now in the possession
of the [respondent corporation], [petitioner] is apprehensive
that the more that [she] will not be able to obtain from
[respondent corporation], compliance with the afore-stated
Agreement and Undertaking, to the extreme detriment and
prejudice of [petitioner] and her group, x x x;
[12.] Then in a letter,[8] dated 10 September 1999, [petitioner]
through counsel sent to [respondent corporation] a Formal
Demand, to comply with its obligation x x x but x x x
[respondent corporation] did not heed the demand. x x x.[9]
Petitioner prayed, inter alia, that respondent corporation be
ordered to execute the appropriate document assigning,
conveying, transferring and delivering the particular lots in her
favor. The lots represented compensation for the undertakings
she performed and accomplished, as embodied in the
Agreement.
Respondent then filed a Motion to Dismiss, alleging the
following:
56
5. Because of the troubled situation obtaining at the
management level of [respondent corporation], the sale
between [respondent corporation] and PCIB regarding the
Fourth Estate Subdivision was not registered with the Register
of Deeds office, although [respondent corporation] continued
holding the deed of sale over the Fourth Estate Subdivision.
6. A group of persons led by one Wilfredo Maghuyop, including
herein [petitioner], Wenifredo Forro, Nicanor Radan, and
others, taking advantage of the management mess at
[respondent corporation], tried to grab ownership of the
[respondent corporation], and with use of fraud, cheat,
misrepresentation and theft of vital documents from the office
of [respondent corporation], succeeded in filing with the
Securities and Exchange Commission false papers and
documents purporting to show that the Articles of
Incorporation of [respondent corporation] had been amended,
installing Maghuyop as president of [respondent
corporation]. It was on these occasions that [petitioner] and
her companions x x x, with use of fraud, stealth, tricks, deceit
and cheat succeeded in letting Luz Baylon Ponce sign a so-
called Deed of Undertaking by virtue of which [respondent
corporation] is duty-bound to give to [petitioner], Forro, Radan
and Atty. Prospero Anave 36.5% of the land area of the Fourth
Estate Subdivision as compensation for alleged services and
expenses made by these people in favor of [respondent
corporation]. They also caused said x x x Maghuyop to sign an
Agreement with [petitioner] expressing an obligation on the
part of [respondent corporation] to give a big part of the land
x x x to [petitioner]. These Agreement and Deed of
Undertaking are being made by herein [petitioner] as her
causes of action in the present case.
Wilfredo Maghuyop was a stranger to [respondent
corporation], and he was an impostor used by [petitioner] and
her companions to barge into the management of [respondent
corporation] for the purpose of stealing and creating an
obligation against [respondent corporation] in their favor.
7. But Luz Baylon Ponce, whose signature appears on the
instrument denominated as Deed of Undertaking, vehemently
denies that she signed said instrument freely and
voluntarily. She says that Wenifredo Forro and Nicanor Radan
were once real estate agents of [respondent corporation] who
promised to help sell lots from her project Villaluz II
Subdivision located [in] Malibay, Pasay City. According to Luz
Baylon Ponce, the Board of Directors of [respondent
corporation] negotiated with Forro and Radan for the latter to
sell units/lots of Villaluz II Subdivision, and to help obtain a
financier who would finance for the expenses for the
reconstitution of the lost title of the Fourth Estate Subdivision
situated [in] Sucat, Paranaque City. Shortly thereafter, these
two men resigned from [respondent corporation] as agents,
after they manipulated the signing of x x x said Deed of
Undertaking by Luz Baylon Ponce on February 11, 1997. The
latter is an old woman 80 years of age. She is weak, has x x x
poor sight, and is feeble in her mental ability. Forro and Radan
inserted the Deed of Undertaking among the papers intended
for application for reconstitution of [respondent corporations]
title which these men caused Luz Baylon Ponce to sign, and she
unknowingly signed the Deed of Undertaking. x x x.[10]
In the Motion, respondent sought the dismissal of the
Complaint on the grounds of (1) improper venue, (2) lack of
jurisdiction over the subject matter, and (3) nonpayment of
the proper docket fees.Specifically, it contended:
8. That venue is improperly laid
(b) In other words, the present case filed by [petitioner] is for
her recovery (and for her companions) of 36.5% of
[respondent corporations] land (Fourth Estate Subdivision) or
her interest therein. x x x therefore, x x x the present case filed
x x x is a real action or an action in rem.
(c) x x x [Following] Section 1, Rule 4 of the Rules of Court, as
amended x x x the present case should have been filed by
[petitioner] with the proper court in Paranque City which has
jurisdiction over the x x x Fourth Estate Subdivision because
said subdivision is situated in Paranaque City. Since
[petitioner] filed the present case with this x x x [c]ourt in Pasig
City, she chose a wrong venue x x x.
9. That the [c]ourt has no jurisdiction over the subject matter
of the claim
(c) x x x Wenifredo P. Forro, Nicanor Radan, Sr. and Atty.
Prospero A. Anave are not named as plaintiffs in the
complaint. [Petitioner] x x x is not named as representative of
Forro, Radan and Anave by virtue of a Special Power of
Attorney or other formal written authority. According to the
Rules, where the action is allowed to be prosecuted or
defended by a representative or someone acting in a fiduciary
capacity, the beneficiary shall be included in the title of the
case and shall be deemed to be the real party in interest (Sec.
3, Rule 3, Rules of Court, as amended x x x).
10. That a condition precedent for filing the claim has not been
complied with
(b) Obviously, [petitioner] has not paid the docket or filing fees
on the value of her land claim x x x. Thirty-six percent (36%) x
x x is P180,000,000.00, x x x.[11]
Ruling of the Trial Court. The RTC ruled that the allegations in
the Complaint show that its primary objective was to recover
real property. Equally important, the prayer was to compel
respondent to execute the necessary deeds of transfer and
conveyance of a portion of the property corresponding to 36.5
57
percent of its total area or, in the alternative, to hold
respondent liable for the value of the said portion, based on
the prevailing market price. The RTC further ruled that, since
the suit would affect the title to the property, it should have
been instituted in the trial court where the property was
situated.[12]
Furthermore, the action was filed only by petitioner. There
was no allegation that she had been authorized by Forro,
Radan and Anave to represent their respective shares in the
compensation.
Finally, since this case was an action in rem, it was imperative
for petitioner to pay the appropriate docket or filing fees
equivalent to the pecuniary value of her claim, a duty she failed
to discharge.Consequently, following Manchester
Development Corp. v. Court of Appeals,[13] the trial court never
acquired jurisdiction over the case.
Hence, this Petition.[14]
Issues
In her Memorandum, petitioner phrases the issue in this wise:
Whether or not the dismissal of the [C]omplaint was in
accordance with the pertinent law and jurisprudence on the
matter.[15]
She argues that the RTC erred in dismissing her Complaint on
the grounds of (1) improper venue, (2) non-joinder of
necessary parties, and (3) non-payment of proper docket fees.
This Courts Ruling The Petition is meritorious.
First Issue: Proper Venue
Maintaining that the action is in personam, not in
rem, petitioner alleges that the venue was properly laid. The
fact that she ultimately sought the conveyance of real property
not located in the territorial jurisdiction of the RTC of Pasig is,
she claims, an anticipated consequence and beyond the cause
for which the action was instituted.
On the other hand, the RTC ruled that since the primary
objective of petitioner was to recover real property -- even
though her Complaint was for specific performance and
damages -- her action should have been instituted in the trial
court where the property was situated, in accordance
with Commodities Storage & Ice Plant Corp. v. Court of
Appeals.[16]
We agree with petitioner. Sections 1 and 2, Rule 4 of the Rules
of Court provide an answer to the issue of venue. [17] Actions
affecting title to or possession of real property or an interest
therein (real actions), shall be commenced and tried in the
proper court that has territorial jurisdiction over the area
where the real property is situated. On the other hand, all
other actions, (personal actions) shall be commenced and tried
in the proper courts where the plaintiff or any of the principal
plaintiffs resides or where the defendant or any of the principal
defendants resides.
In Commodities Storage cited earlier, petitioner spouses
obtained a loan secured by a mortgage over their land and ice
plant in Sta. Maria, Bulacan. Because they had failed to pay the
loan, the mortgage was foreclosed and the ice plant
auctioned. Before the RTC of Manila, they sued the bank for
damages and for the fixing of the redemption period. Since the
spouses ultimately sought redemption of the mortgaged
property, the action affected the mortgage debtors title to the
foreclosed property; hence, it was a real action.[18] Where the
action affects title to the property, it should be instituted in the
trial court where the property is situated.[19]
In National Steel Corp. v. Court of Appeals, [20] the Court held
that an action in which petitioner seeks the execution of a deed
of sale of a parcel of land in his favor x x x has been held to be
for the recovery of the real property and not for specific
performance since his primary objective is to regain the
ownership and possession of the parcel of land.
However, in La Tondea Distillers, Inc. v. Ponferrada,[21] private
respondents filed an action for specific performance with
damages before the RTC of Bacolod City. The defendants
allegedly reneged on their contract to sell to them a parcel of
land located in Bago City - - a piece of property which the latter
sold to petitioner while the case was pending before the said
RTC. Private respondent did not claim ownership but, by
annotating a notice of lis pendens on the title, recognized
defendants ownership thereof. This Court ruled that the venue
had properly been laid in the RTC of Bacolod, even if the
property was situated in Bago.
In Siasoco v. Court of Appeals,[22] private respondent filed a
case for specific performance with damages before the RTC of
Quezon City. It alleged that after it accepted the offer of
petitioners, they sold to a third person several parcels of land
located in Montalban, Rizal. The Supreme Court sustained the
trial courts order allowing an amendment of the original
Complaint for specific performance with damages. Contrary to
petitioners position that the RTC of Quezon City had no
jurisdiction over the case, as the subject lots were located in
Montalban, Rizal, the said RTC had jurisdiction over the original
Complaint. The Court reiterated the rule that a case for specific
performance with damages is a personal action which may be
filed in a court where any of the parties reside.
A close scrutiny of National Steel and Ruiz reveals that the
prayers for the execution of a Deed of Sale were not in any way
connected to a contract, like the Undertaking in this
58
case. Hence, even if there were prayers for the execution of a
deed of sale, the actions filed in the said cases were not for
specific performance.
In the present case, petitioner seeks payment of her services
in accordance with the undertaking the parties signed. Breach
of contract gives rise to a cause of action for specific
performance or for rescission.[23] If petitioner had filed an
action in rem for the conveyance of real property, the
dismissal of the case would have been proper on the ground of
lack of cause of action.
Second Issue: Non-Joinder of Proper Parties
Petitioner claims that she was duly authorized and empowered
to represent the members of her group and to prosecute their
claims on their behalf via a Special Power of Attorney executed
by Forro, Radan and Anave. Besides, she argues that the
omission of her companions as plaintiffs did not prevent the
RTC from proceeding with the action, because whatever
judgment would be rendered would be without prejudice to
their rights. In the alternative, she avers that the trial court
may add or drop a party or parties at any stage of the action
and on such terms as are just.
The RTC ruled that there was no allegation anywhere in the
records that petitioner had been authorized to represent
Forro, Radan and Anave, who were real parties-in-interest with
respect to their respective shares of the 36.5 percent
claim. Such being the case, the trial court never acquired
jurisdiction over the subject matter of their claims.
Again, we side with petitioner. Neither a misjoinder nor a non-
joinder of parties is a ground for the dismissal of an
action. Parties may be dropped or added by order of the court,
on motion of any party or on the courts own initiative at any
stage of the action.[24] The RTC should have ordered the joinder
of such party, and noncompliance with the said order would
have been ground for dismissal of the action.
Although the Complaint prayed for the conveyance of the
whole 36.5 percent claim without impleading the companions
of petitioner as party-litigants, the RTC could have separately
proceeded with the case as far as her 20 percent share in the
claim was concerned, independent of the other 16.5
percent. This fact means that her companions are not
indispensable parties without whom no final determination
can be had.[25] At best, they are mere necessary parties who
ought to be impleaded for a complete determination or
settlement of the claim subject of the action.[26] The non-
inclusion of a necessary party does not prevent the court from
proceeding with the action, and the judgment rendered
therein shall be without prejudice to the rights of such party.[27]
Third Issue:
Correct Docket Fees. Petitioner insists that the value of the real
property, which was the subject of the contract, has nothing to
do with the determination of the correct docket or filing fees.

The RTC ruled that although the amount of damages sought

had not been specified in the body of the Complaint, one can
infer from the assessed value of the disputed land that it would
amount to P50 million. Hence, when compared to this figure,
the P210 paid as docket fees would appear paltry.

We hold that the trial court and respondent used technicalities

to avoid the resolution of the case and to trifle with the
law. True, Section 5, Rule 141 of the Rules of Court requires
that the assessed value of the real estate, subject of an action,
should be considered in computing the filing fees. But the
Court has already clarified that the Rule does not apply to an
action for specific performance,[28] which is classified as an
action not capable of pecuniary estimation.[29]

Besides, if during the course of the trial, petitioners 20 percent

claim on the Fourth Estate Subdivision can no longer be
satisfied and the payment of its monetary equivalent is the
only solution left, Sunlife Insurance Office, Ltd. v.
Asuncion[30] holds as follows: Where the filing of the initiatory
pleading is not accompanied by payment of the docket fee, the
court may allow payment of the fee within a reasonable time
but in no case beyond the applicable prescriptive or
reglementary period.

WHEREFORE, the Petition is hereby GRANTED, and the

assailed Orders REVERSED and SET ASIDE. The case
is REMANDED to the court of origin which is ordered
to PROCEED with deliberate speed in disposing of the case. No
costs.

59
CITIZENS’ SURETY & INSURANCE COMPANY, INC., Petitioner, properties and causes valid summons to be served personally
v. HON. JUDGE A. MELENCIO-HERRERA, SANTIAGO or by publication as the case may be. In this manner, the tolling
DACANAY, and JOSEFINA DACANAY, Respondents. of the period of prescription for as long as the debtor remains
in hiding would properly be a matter of court record, and he
SYLLABUS can not emerge after a sufficient lapse of time from the
dismissal of the case to profit from his own misdeed and claim
1. REMEDIAL LAW; JURISDICTION; ACTION IN PERSONAM;
prescription of his just debt. REYES, J.B.L., J.:
PERSONAL SERVICE OF SUMMONS REQUIRED. — We agree
with respondent Judge that the action of plaintiff petitioner,
being in personam, the Court could not validly acquire
jurisdiction on a non-appearing defendant, absent a personal
Petitioner Citizens’ Surety & Insurance Company, Inc. seeks
service of summons within the forum. We have explicitly so
review of an order of respondent Judge in Civil Case No. 77134
ruled in Pantaleon v. Asuncion, 105 Phil. 765, pointing out
of the Court of First Instance of Manila, Branch XVII, entitled
without such personal service, any judgment on a non-
"Citizens’ Surety & Insurance Co., Inc. v. Santiago Dacanay and
appearing defendant would be violative of due process. In the
Josefina Dacanay," dismissing the complaint for lack of proper
aforecited case this Court, through Justice Roberto
service of summons upon defendants.
Concepcion, now Chief Justice, ruled as follows: . . . "It is a well-
settled principle of Constitutional Law that, in an action strictly
The record is to the effect that petitioner had filed its
in personam, like the one at bar, personal service of summons,
complaint in the Court below, alleging that at request of
within the forum, is essential to the acquisition of jurisdiction
defendant Santiago Dacanay, the plaintiff Surety Company had
over the person of the defendant, who does not voluntary
issued its Surety Bonds Nos. 4942 and 4944, the first, in favor
submit himself to the authority of the court. In other words,
of Gregorio Fajardo to guarantee payment of a P5,000-
summons by publication cannot — consistently with the due
promissory note executed by said Dacanay, and the second, in
process clause in the Bill of Rights — confer upon the court
favor of Manufacturers Bank & Trust Co., to guarantee
jurisdiction over said defendants.’Due process of law requires
payment of another promissory note in like amount; that in
personal service to support a personal judgment, and, when
consideration of said bonds, Santiago and Josefina Dacanay
the proceeding is strictly in personam brought to determine
executed Indemnity Agreements, binding themselves jointly
the personal rights and obligations of the parties, personal
and severally to indemnify plaintiff for any losses, costs and
service within the state or a voluntary appearance in the case
expenses which it might sustain in connection with the
is essential to the acquisition of jurisdiction so as to constitute
issuance of the bonds aforesaid, with interest at 12% per
compliance with the constitutional requirement of due
annum; that as additional security, the Dacanays mortgaged to
process. . . .’Although a state legislature has more control over
plaintiff a parcel of land in Baguio City, covered by Certificate
the form of service on its own residents than nonresidents, it
of Title No. T-8116, the mortgage having been duly recorded;
has been held that in actions in personam . . . service by
that the promissory notes were not paid .and as a result,
publication on resident defendants who are personally within
plaintiff Surety was compelled to pay P5,000.00 to Gregorio
the state and can be found therein is not "due process of law,"
Fajardo and P4,081.69 to the Manufacturers’ Bank; that the
and statute allowing it is unconstitutional.’ (16A C.J.S., pp. 786,
Dacanays failed to reimburse the Surety for such payments,
789; Emphasis our)"
whereupon the Surety caused the extrajudicial foreclosure of
the mortgage to pay its claim of P12,941.69 representing its
2. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CREDITORS;
payments, interest and stipulated liquidated damages: that at
REMEDY AGAINST ABSCONDING DEBTORS. — The proper
the foreclosure sale, the land mortgaged was sold to plaintiff,
recourse for a creditor in the same situation as petitioner is to
as highest bidder, for the sum of P2,000.00 — leaving an
locate properties, real or personal, of the resident defendant
unsatisfied balance of P10,491.69, that plaintiff sought to
debtor with unknown address and cause them to be attached
recover from defendants Dacanay, plus 10% thereof as
under Rule 57, Sec. l(f), in which case, the enactment converts
attorneys’ fees, and the costs.
the action into a proceeding in rem or quasi in rem and the
summons by publication may then accordingly be deemed
At petitioner’s request, respondent Judge caused summons to
valid and effective But because debtors who abscond and
be made by publication in the newspaper Philippines Herald.
conceal themselves are also quite adept at concealing their
But despite the publication and deposit of a prepaid copy of
properties, the dismissal of the case below by respondent
the complaint at the Manila post office, defendants did not
Judge should be set aside and the case held pending in the
appear within the period of 60 days from last publication, as
court’s archives, until petitioner as plaintiff succeed in
required by the summons.
determining the whereabouts of the defendants’ person or
60
Plaintiff then asked that defendants be declared in default; but But because debtors who abscond and conceal themselves are
:instead, the Judge, by order of May 16, 1970, asked it to show also quite adept at concealing their properties, the dismissal of
cause why the action should not be dismissed, the suit being the case below by respondent Judge should be set aside and
in personam and defendants not having appeared. Then, on the case held pending in the court’s archives, until petitioner
May 29, 1970, respondent Judge dismissed the case, despite as plaintiff succeeds in determining the whereabouts of the
plaintiff Surety’s argument that the summons by publication defendants’ person or properties and causes valid summons to
was sufficient and valid under section 16 of Rule 14 of the be served personally or by publication as the case may be. In
Revised Rules of Court. this manner, the tolling of the period of prescription for as long
as the debtor remains in hiding would properly be a matter of
We agree with respondent Judge that the action of plaintiff
court records and he cannot emerge after a sufficient lapse of
petitioner, being in personam, the Court could not validly
time from the dismissal of the case to profit from his own
acquire jurisdiction on a non-appearing defendant, absent a
misdeed and claim prescription of his just debt.
personal service of summons within the forum. We have
explicitly so ruled in Pantaleon v. Asunción, 105 Phil. 765,
WHEREFORE, the order of dismissal of the case issued by the
pointing out without such personal service, any judgment on a
Court below is hereby set aside, and in the interest of justice,
non-appearing defendant would be violative of due process. In
the proceedings are ordered suspended, to be held pending
the aforecited case this Court, through Justice Roberto
until the plaintiff petitioner succeeds in ascertaining the
Concepción, now Chief Justice, ruled as follows:
whereabouts of the defendants and/or locating properties of
the same, to enable proper summons to be issued
"Apart from the foregoing, it is well-settled principle of
conformably to this Opinion. No costs.
Constitutional Law that, in an action strictly in personam, like
the one at bar, personal service of summons, within the forum.
is essential to the acquisition of jurisdiction over the person of
the defendant, who does not voluntarily submit himself to the
authority of the court. In other words, summons by publication
cannot — consistently with the due process clause in the Bill
of Rights — confer upon the court jurisdiction over said
defendants.

‘Due process of law requires personal service to support a

personal judgment, and. when the proceeding is strictly in
personam brought to determine the personal rights and
obligations of the parties, personal service within the state or
a voluntary appearance in the case is essential to the
acquisition of jurisdiction so as to constitute compliance with
the constitutional requirement of due process. . . .

‘Although a state legislature has more control over the form of

service on its own residents than nonresidents, it has been
held that in actions in personam . . . service by publication on
resident defendants, who are personally within the state and
can be found therein is not "due process of law," and a statute
allowing it is unconstitutional.’ (16A C.J.S., pp. 786, 789;
Emphasis ours.)"

The proper recourse for a creditor in the same situation as

petitioner is to locate properties, real or personal, of the
resident defendant debtor with unknown address and cause
them to be attached under Rule 57, section 1(f), in which case,
the attachment converts the action into a proceeding in rem
or quasi in rem and the summons by publication may then
accordingly be deemed valid and effective.
61
JIMMY T. GO, petitioner, vs. UNITED COCONUT PLANTERS
BANK, ANGELO V. MANAHAN, FRANCISCO C. ZARATE,
PERLITA A. URBANO and ATTY. EDWARD
MARTIN, respondents. CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari[1] assailing the
Decision[2] dated 31 July 2002 of the Court of Appeals in CA-
G.R. SP No. 62625, the decretal portion of which reads:
WHEREFORE, the petition is GRANTED and the assailed orders
dated June 7, 2000, August 9, 2000 and November 8, 2000 are
SET ASIDE.
Respondent judge is directed to DISMISS Civil Case No. 67878
on the ground of improper venue.[3]
Petitioner Jimmy T. Go and Alberto T. Looyuko are co-owners
of Noahs Ark International, Noahs Ark Sugar Carriers, Noahs
Ark Sugar Truckers, Noahs Ark Sugar Repacker, Noahs Ark
Sugar Insurers, Noahs Ark Sugar Terminal, Noahs Ark Sugar
Building, and Noahs Ark Sugar Refinery.[4]
Sometime in August 1996, petitioner Jimmy T. Go and Alberto
T. Looyuko applied for an Omnibus Line accommodation with
respondent United Coconut Planters Bank (UCPB) in the
amount of Nine Hundred Million (P900,000,000) Pesos,[5] and
was favorably acted upon by the latter.
The transaction was secured by Real Estate Mortgages over
parcels of land, covered by Transfer Certificate of Title (TCT)
No. 64070, located at Mandaluyong City with an area of 24,837
square meters, and registered in the name of Mr. Looyuko; and
TCT No. 3325, also located at Mandaluyong City with an area
of 14,271 square meters, registered in the name of Noahs Ark
Sugar Refinery.
On 21 July 1997, the approved Omnibus Line accommodation
granted to petitioner was subsequently cancelled[6] by
respondent UCPB. As a consequence, petitioner Jimmy T. Go
demanded from UCPB the return of the two (2) TCTs (No.
64070 and No. 3325) covered by Real Estate Mortgages earlier
executed. UCPB refused to return the same and proceeded to
have the two (2) pre-signed Real Estate Mortgages notarized
on 22 July 1997 and caused the registration thereof before the
Registry of Deeds of Mandaluyong City on 02 September 1997.
On 15 June 1999, respondent UCPB filed with the Office of the
Clerk of Court and Ex-Officio Sheriff of Mandaluyong City an
extrajudicial foreclosure of real estate mortgage[7] covered by
TCT No. 64070, for nonpayment of the obligation secured by
said mortgage. As a result, the public auction sale of the
mortgaged property was set on 11 April 2000 and 03 May
2000.
To protect his interest, petitioner Jimmy T. Go filed a complaint
for Cancellation of Real Estate Mortgage and damages, with
62
prayer for temporary restraining order and/or writ of
preliminary injunction, against respondent bank and its
officers, namely, Angelo V. Manahan, Francisco C. Zarate,
Perlita A. Urbano and Atty. Edward E. Martin, together with Ex-
Officio Sheriff Lydia G. San Juan and Sheriff IV Helder A.
Dyangco, with the Regional Trial Court of Pasig City, Branch
266, docketed as Civil Case No. 67878. The complaint was
subsequently amended[8] on 22 May 2000. The amended
complaint alleged, among other things, the following: that
petitioner Jimmy T. Go is a co-owner of the property covered
by TCT No. 64070, although the title is registered only in the
name of Looyuko; that respondent bank was aware that he is
a co-owner as he was asked to sign two deeds of real estate
mortgage covering the subject property; that the approved
omnibus credit line applied for by him and Looyuko did not
materialize and was cancelled by respondent bank on 21 July
1997, so that the pre-signed real estate mortgages were
likewise cancelled; that he demanded from respondent bank
that TCTs No. 64070 and No. 3325 be returned to him, but
respondent bank refused to do so; that despite the
cancellation of the omnibus credit line on 21 July 1997,
respondent bank had the two deeds of real estate mortgage
dated and notarized on 22 July 1997 and caused the
extrajudicial foreclosure of mortgage constituted on TCT No.
64070; that the auction sale scheduled on 11 April 2000 and 03
May 2000 be enjoined; that the two real estate mortgages be
cancelled and TCTs No. 64070 and No. 3325 be returned to
him; and that respondent bank and its officers be ordered to
pay him moral and exemplary damages and attorneys fees.
On 07 June 2000, respondent bank, instead of filing an answer,
filed a motion to dismiss[9] based on the following grounds: 1)
that the court has no jurisdiction over the case due to
nonpayment of the proper filing and docket fees; 2) that the
complaint was filed in the wrong venue; 3) an indispensable
party/real party in interest was not impleaded and, therefore,
the complaint states no cause of action; 4) that the complaint
was improperly verified; and 5) that petitioner is guilty of
forum shopping and submitted an insufficient and false
certification of non-forum shopping.
On 07 June 2000, the trial court issued an order[10] granting
petitioners application for a writ of preliminary injunction.
Correspondingly, the auction sale, scheduled on 11 April 2000
and 03 May 2000, was enjoined.
On 09 August 2000, the trial court denied[11] respondent banks
motion to dismiss Civil Case No. 67878. A motion for
reconsideration[12] was filed, but the same was likewise denied
in an Order[13] dated 08 November 2000.
Respondent bank questioned said orders before the Court of
Appeals via a petition for certiorari[14] dated 03 January 2001,
alleging that the trial court acted without or in excess of
jurisdiction or with grave abuse of discretion in issuing an order
denying the motion to dismiss and the motion for
reconsideration thereof.
On 31 July 2002, the Court of Appeals[15] set aside the Orders
dated 07 June 2000, 09 August 2000 and 08 November 2000
issued by the trial court and directed the trial court to dismiss
Civil Case No. 67878 on the ground of improper venue.
A motion for reconsideration was filed by petitioner,[16] which
was denied in an order dated 14 November 2002.[17]
Hence, this petition for review on certiorari.[18]
On 16 June 2003, the Court gave due course to the petition,
and required[19] the parties to file their respective memoranda.
Respondents filed their Joint Memorandum on 27 August
2003, while petitioner filed his on 25 September 2003 upon
prior leave of court for extension. With leave of this Court,
private respondents filed their reply to petitioners
memorandum.
In his memorandum, petitioner raised a lone issue: WHETHER
OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT FAILED TO APPLY THE LAW AND ESTABLISHED
JURISPRUDENCE ON THE MATTER BY ISSUING THE
QUESTIONED RESOLUTIONS FINDING THAT THE CASE A QUO IS
A REAL ACTION.
Simply put, the issue to be resolved in this case is whether
petitioners complaint for cancellation of real estate mortgage
is a personal or real action for the purpose of determining
venue.
In a real action, the plaintiff seeks the recovery of real
property, or as provided for in Section 1, Rule 4,[20] a real action
is an action affecting title to or possession of real property, or
interest therein. These include partition or condemnation of,
or foreclosure of mortgage on, real property. The venue for
real actions is the same for regional trial courts and municipal
trial courts -- the court which has territorial jurisdiction over
the area where the real property or any part thereof lies. [21]
Personal action is one brought for the recovery of personal
property, for the enforcement of some contract or recovery of
damages for its breach, or for the recovery of damages for the
commission of an injury to the person or property. [22] The
venue for personal actions is likewise the same for the regional
and municipal trial courts -- the court of the place where the
plaintiff or any of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides, at the
election of the plaintiff, as indicated in Section 2 of Rule 4.[23]
It is quite clear then that the controlling factor in determining
venue for cases of the above nature is the primary objective
for which said cases are filed. Thus:
63
1. In Commodities Storage & Ice Plant Corp. v. Court of
Appeals,[24] this Court ruled that an action to redeem by the
mortgage debtor affects his title to the foreclosed property. If
the action is seasonably made, it seeks to erase from the title
of the judgment or mortgage debtor the lien created by
registration of the mortgage and sale. If not made seasonably,
it may seek to recover ownership to the land since the
purchasers inchoate title to the property becomes
consolidated after [the] expiration of the redemption period.
Either way, redemption involves the title to the foreclosed
property. It is a real action.
2. In Fortune Motors, (Phils.), Inc., v. Court of
Appeals,[25] this Court quoting the decision of the Court of
Appeals ruled that since an extrajudicial foreclosure of real
property results in a conveyance of the title of the property
sold to the highest bidder at the sale, an action to annul the
foreclosure sale is necessarily an action affecting the title of
the property sold. It is therefore a real action which should be
commenced and tried in the province where the property or
part thereof lies.
3. In Punsalan, Jr. v. Vda. de Lacsamana,[26] this court ruled
that while it is true that petitioner does not directly seek the
recovery . . . of the property in question, his action for
annulment of sale and his claim for damages are closely
intertwined with the issue of ownership of the building which,
under the law, is considered immovable property, the recovery
of which is petitioners primary objective. The prevalent
doctrine is that an action for the annulment or rescission of a
sale of real property does not operate to efface the
fundamental and prime objective and nature of the case,
which is to recover said real property. It is a real action.
Respondent Court, therefore, did not err in dismissing the case
on the ground of improper venue which was timely raised.
4. In Ruiz v. J. M. Tuason Co., Inc., et al.,[27] the court ruled
that although [a] complaint is entitled to be one for specific
performance, yet the fact that [complainant] asked that a deed
of sale of a parcel of land . . . be issued in his favor and that a
transfer certificate of title covering said land be issued to him,
shows that the primary objective and nature of the action is to
recover the parcel of land itself because to execute in favor of
complainant the conveyance requested there is need to make
a finding that he is the owner of the land which in the last
analysis resolves itself into an issue of ownership. Hence, the
action must be commenced in the province where the
property is situated . . . ."
5. In Dr. Antonio A. Lizares, Inc. v. Hon. Hermogenes
Caluag,[28] this Court ruled that an action praying that
defendant be ordered `to accept the payment being made by
plaintiff for the lot which the latter contracted to buy on
installment basis from the former, to pay plaintiff
compensatory damages and attorneys fees and to enjoin
defendant and his agents from repossessing the lot in
question, is one that affects title to the land under Section 3 of
Rule 5, of the Rules of Court, and shall be commenced and tried
in the province where the property or any part thereof lies,
because, although the immediate remedy is to compel the
defendant to accept the tender of payment allegedly made, it
is obvious that this relief is merely the first step to establish
plaintiffs title to [the] real property.
6. In Land Tenure Administration, et al. v. The Honorable
Higinio B. Macadaeg and Alejandro T. Lim, [29] this Court ruled
that where the lessee seeks to establish an interest in an
hacienda that runs with the land and one that must be
respected by the purchaser of the land even if the latter is not
a party to the original lease contract, the question of whether
or not the standing crop is immovable property become[s]
irrelevant, for venue is determined by the nature of the
principal claim. Since the lessee is primarily interested in
establishing his right to recover possession of the land for the
purpose of enabling him to gather his share of the crops, his
action is real and must be brought in the locality where the
land is situated.
7. In Espineli & Mojica v. Hon. Santiago and Vda. de
Ramirez,[30] the court ruled that although the main relief
sought in the case at bar was the delivery of the certificate of
title, said relief, in turn, entirely depended upon who, between
the parties, has a better right to the lot in question. As it is not
possible for the court to decide the main relief, without passing
upon the claim of the parties with respect to the title to and
possession of the lot in question, the claim shall be determined
x x x in the province where [the] said property or any part
thereof lies.
The case of Carandang v. Court of Appeals,[31] is more
particularly instructive. There, we held that an action for
nullification of the mortgage documents and foreclosure of the
mortgaged property is a real action that affects the title to the
property. Thus, venue of the real action is before the court
having jurisdiction over the territory in which the property lies,
which is the Court of First Instance of Laguna.
found in Section 2(a) of Rule 4 of the Old Civil Procedure and
now under Section 1, Rule 4 of the 1997 Rules of Civil
Procedure, does not involve titles to the mortgaged lots. It is a
personal action and not a real action. The mortgagee has not
foreclosed the mortgage. The plaintiffs title is not in question.
They are in possession of the mortgaged lots. Hence, the venue
of the plaintiffs personal action is the place where the
defendant or any of the defendants resides or may be found,
or where the plaintiff or any of the plaintiffs resides, at the
election of the plaintiff. In the case at bar, the action for
cancellation of real estate mortgage filed by herein petitioner
was primarily an action to compel private respondent bank to
return to him the properties covered by TCTs No. 64070 and
No. 3325 over which the bank had already initiated foreclosure
proceedings because of the cancellation by the said
respondent bank of the omnibus credit line on 21 July 1997.
The prime objective is to recover said real properties.
Secondly, Carandang distinctly articulated that the ruling
in Hernandez does not apply where the mortgaged property
had already been foreclosed. Here, and as correctly pointed
out by the appellate court, respondent bank had already
initiated extrajudicial foreclosure proceedings, and were it not
for the timely issuance of a restraining order secured by
petitioner Go in the lower court, the same would have already
been sold at a public auction.
In a relatively recent case, Asset Privatization Trust v. Court of
Appeals,[34] it was succinctly stated that the prayer for the
nullification of the mortgage is a prayer affecting real property,
hence, is a real action.
In sum, the cancellation of the real estate mortgage, subject of
the instant petition, is a real action, considering that a real
estate mortgage is a real right and a real property by
itself.[35]An action for cancellation of real estate mortgage is
necessarily an action affecting the title to the property. It is,
therefore, a real action which should be commenced and tried
in Mandaluyong City, the place where the subject property lies.
WHEREFORE, the instant petition is DENIED for lack of merit.
The assailed decision dated 31 July 2002 and the Order dated
14 November 2002 denying the motion for reconsideration are

Petitioner in this case contends that a case for cancellation of hereby AFFIRMED. With costs.
mortgage is a personal action and since he resides at Pasig City,
venue was properly laid therein. He tries to make a point by
alluding to the case of Francisco S. Hernandez v. Rural Bank of
Lucena.[32]

Petitioners reliance in the case of Francisco S. Hernandez v.

Rural Bank of Lucena[33] is misplaced. Firstly, said case was
primarily an action to compel the mortgagee bank to accept
payment of the mortgage debt and to release the mortgage.
That action, which is not expressly included in the enumeration

64
MANCHESTER DEVELOPMENT CORPORATION, ET
AL., petitioners, vs. COURT OF APPEALS, CITY LAND
DEVELOPMENT CORPORATION, STEPHEN ROXAS, ANDREW
LUISON, GRACE LUISON and JOSE DE MAISIP, respondents.
GANCAYCO, J.:
Acting on the motion for reconsideration of the resolution of
the Second Division of January 28,1987 and another motion to
refer the case to and to be heard in oral argument by the
Court En Banc filed by petitioners, the motion to refer the case
to the Court en banc is granted but the motion to set the case
for oral argument is denied.
Petitioners in support of their contention that the filing fee
must be assessed on the basis of the amended complaint cite
the case of Magaspi vs. Ramolete. 1 They contend that the
Court of Appeals erred in that the filing fee should be levied by
considering the amount of damages sought in the original
complaint.
The environmental facts of said case differ from the present in
that — 1. The Magaspi case was an action for recovery of
ownership and possession of a parcel of land with
damages.2While the present case is an action for torts and
damages and specific performance with prayer for temporary
restraining order, etc.3
2. In the Magaspi case, the prayer in the complaint seeks not
only the annulment of title of the defendant to the property,
the declaration of ownership and delivery of possession
thereof to plaintiffs but also asks for the payment of actual
moral, exemplary damages and attorney's fees arising
therefrom in the amounts specified therein. 4However, in the
present case, the prayer is for the issuance of a writ of
preliminary prohibitory injunction during the pendency of the
action against the defendants' announced forfeiture of the
sum of P3 Million paid by the plaintiffs for the property in
question, to attach such property of defendants that maybe
sufficient to satisfy any judgment that maybe rendered, and
after hearing, to order defendants to execute a contract of
purchase and sale of the subject property and annul
defendants' illegal forfeiture of the money of plaintiff, ordering
defendants jointly and severally to pay plaintiff actual,
compensatory and exemplary damages as well as 25% of said
amounts as maybe proved during the trial as attorney's fees
and declaring the tender of payment of the purchase price of
plaintiff valid and producing the effect of payment and to make
the injunction permanent. The amount of damages sought is
not specified in the prayer although the body of the complaint
alleges the total amount of over P78 Million as damages
suffered by plaintiff.5
3. Upon the filing of the complaint there was an honest
difference of opinion as to the nature of the action in the
65
Magaspi case. The complaint was considered as primarily an
action for recovery of ownership and possession of a parcel of
land. The damages stated were treated as merely to the main
cause of action. Thus, the docket fee of only P60.00 and P10.00
for the sheriff's fee were paid. 6
In the present case there can be no such honest difference of
opinion. As maybe gleaned from the allegations of the
complaint as well as the designation thereof, it is both an
action for damages and specific performance. The docket fee
paid upon filing of complaint in the amount only of P410.00 by
considering the action to be merely one for specific
performance where the amount involved is not capable of
pecuniary estimation is obviously erroneous. Although the
total amount of damages sought is not stated in the prayer of
the complaint yet it is spelled out in the body of the complaint
totalling in the amount of P78,750,000.00 which should be the
basis of assessment of the filing fee.
4. When this under-re assessment of the filing fee in this case
was brought to the attention of this Court together with similar
other cases an investigation was immediately ordered by the
Court. Meanwhile plaintiff through another counsel with leave
of court filed an amended complaint on September 12, 1985
for the inclusion of Philips Wire and Cable Corporation as co-
plaintiff and by emanating any mention of the amount of
damages in the body of the complaint. The prayer in the
original complaint was maintained. After this Court issued an
order on October 15, 1985 ordering the re- assessment of the
docket fee in the present case and other cases that were
investigated, on November 12, 1985 the trial court directed
plaintiffs to rectify the amended complaint by stating the
amounts which they are asking for. It was only then that
plaintiffs specified the amount of damages in the body of the
complaint in the reduced amount of P10,000,000.00. 7 Still no
amount of damages were specified in the prayer. Said
amended complaint was admitted.
On the other hand, in the Magaspi case, the trial court ordered
the plaintiffs to pay the amount of P3,104.00 as filing fee
covering the damages alleged in the original complaint as it did
not consider the damages to be merely an or incidental to the
action for recovery of ownership and possession of real
property. 8 An amended complaint was filed by plaintiff with
leave of court to include the government of the Republic as
defendant and reducing the amount of damages, and
attorney's fees prayed for to P100,000.00. Said amended
complaint was also admitted. 9
In the Magaspi case, the action was considered not only one
for recovery of ownership but also for damages, so that the
filing fee for the damages should be the basis of assessment.
Although the payment of the docketing fee of P60.00 was
found to be insufficient, nevertheless, it was held that since the
payment was the result of an "honest difference of opinion as The Court serves warning that it will take drastic action upon a
to the correct amount to be paid as docket fee" the court "had repetition of this unethical practice.
acquired jurisdiction over the case and the proceedings
To put a stop to this irregularity, henceforth all complaints,
thereafter had were proper and regular." 10 Hence, as the
petitions, answers and other similar pleadings should specify
amended complaint superseded the original complaint, the
the amount of damages being prayed for not only in the body
allegations of damages in the amended complaint should be
of the pleading but also in the prayer, and said damages shall
the basis of the computation of the filing fee. 11
be considered in the assessment of the filing fees in any case.
In the present case no such honest difference of opinion was Any pleading that fails to comply with this requirement shall
possible as the allegations of the complaint, the designation not bib accepted nor admitted, or shall otherwise be expunged
and the prayer show clearly that it is an action for damages and from the record.
specific performance. The docketing fee should be assessed by
The Court acquires jurisdiction over any case only upon the
considering the amount of damages as alleged in the original
payment of the prescribed docket fee. An amendment of the
complaint.
complaint or similar pleading will not thereby vest jurisdiction
As reiterated in the Magaspi case the rule is well-settled "that in the Court, much less the payment of the docket fee based
a case is deemed filed only upon payment of the docket fee on the amounts sought in the amended pleading. The ruling in
regardless of the actual date of filing in court . 12 Thus, in the the Magaspi case 14 in so far as it is inconsistent with this
present case the trial court did not acquire jurisdiction over the pronouncement is overturned and reversed.
case by the payment of only P410.00 as docket fee. Neither can
the amendment of the complaint thereby vest jurisdiction WHEREFORE, the motion for reconsideration is denied for
upon the Court. 13 For an legal purposes there is no such lack of merit.
original complaint that was duly filed which could be amended.
Consequently, the order admitting the amended complaint
and all subsequent proceedings and actions taken by the trial
court are null and void.

The Court of Appeals therefore, aptly ruled in the present case

that the basis of assessment of the docket fee should be the
amount of damages sought in the original complaint and not
in the amended complaint.

The Court cannot close this case without making the

observation that it frowns at the practice of counsel who filed
the original complaint in this case of omitting any specification
of the amount of damages in the prayer although the amount
of over P78 million is alleged in the body of the complaint. This
is clearly intended for no other purpose than to evade the
payment of the correct filing fees if not to mislead the docket
clerk in the assessment of the filing fee. This fraudulent
practice was compounded when, even as this Court had taken
cognizance of the anomaly and ordered an investigation,
petitioner through another counsel filed an amended
complaint, deleting all mention of the amount of damages
being asked for in the body of the complaint. It was only when
in obedience to the order of this Court of October 18, 1985,
the trial court directed that the amount of damages be
specified in the amended complaint, that petitioners' counsel
wrote the damages sought in the much reduced amount of
P10,000,000.00 in the body of the complaint but not in the
prayer thereof. The design to avoid payment of the required
docket fee is obvious.

66
SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS and D.J.
WARBY, petitioners, vs. HON. MAXIMIANO C. ASUNCION,
Presiding Judge, Branch 104, Regional Trial Court, Quezon
City and MANUEL CHUA UY PO TIONG, respondents.
GANCAYCO, J.:
Again the Court is asked to resolve the issue of whether or not
a court acquires jurisdiction over a case when the correct and
proper docket fee has not been paid.
On February 28, 1984, petitioner Sun Insurance Office, Ltd.
(SIOL for brevity) filed a complaint with the Regional Trial Court
of Makati, Metro Manila for the consignation of a premium
refund on a fire insurance policy with a prayer for the judicial
declaration of its nullity against private respondent Manuel Uy
Po Tiong. Private respondent as declared in default for failure
to file the required answer within the reglementary period.
On the other hand, on March 28, 1984, private respondent
filed a complaint in the Regional Trial Court of Quezon City for
the refund of premiums and the issuance of a writ of
preliminary attachment which was docketed as Civil Case No.
Q-41177, initially against petitioner SIOL, and thereafter
including E.B. Philipps and D.J. Warby as additional defendants.
The complaint sought, among others, the payment of actual,
compensatory, moral, exemplary and liquidated damages,
attorney's fees, expenses of litigation and costs of the suit.
Although the prayer in the complaint did not quantify the
amount of damages sought said amount may be inferred from
the body of the complaint to be about Fifty Million Pesos
(P50,000,000.00).
Only the amount of P210.00 was paid by private respondent as
docket fee which prompted petitioners' counsel to raise his
objection. Said objection was disregarded by respondent
Judge Jose P. Castro who was then presiding over said case.
Upon the order of this Court, the records of said case together
with twenty-two other cases assigned to different branches of
the Regional Trial Court of Quezon City which were under
investigation for under-assessment of docket fees were
transmitted to this Court. The Court thereafter returned the
said records to the trial court with the directive that they be
re-raffled to the other judges in Quezon City, to the exclusion
of Judge Castro. Civil Case No. Q-41177 was re-raffled to
Branch 104, a sala which was then vacant.
On October 15, 1985, the Court en banc issued a Resolution in
Administrative Case No. 85-10-8752-RTC directing the judges
in said cases to reassess the docket fees and that in case of
deficiency, to order its payment. The Resolution also requires
all clerks of court to issue certificates of re-assessment of
docket fees. All litigants were likewise required to specify in
their pleadings the amount sought to be recovered in their
complaints.
67
On December 16, 1985, Judge Antonio P. Solano, to whose sala
Civil Case No. Q-41177 was temporarily assigned, issuedan
order to the Clerk of Court instructing him to issue a certificate
of assessment of the docket fee paid by private respondent
and, in case of deficiency, to include the same in said
certificate.
On January 7, 1984, to forestall a default, a cautionary answer
was filed by petitioners. On August 30,1984, an amended
complaint was filed by private respondent including the two
additional defendants aforestated.
Judge Maximiano C. Asuncion, to whom Civil Case No. Q41177
was thereafter assigned, after his assumption into office on
January 16, 1986, issued a Supplemental Order requiring the
parties in the case to comment on the Clerk of Court's letter-
report signifying her difficulty in complying with the Resolution
of this Court of October 15, 1985 since the pleadings filed by
private respondent did not indicate the exact amount sought
to be recovered. On January 23, 1986, private respondent filed
a "Compliance" and a "Re-Amended Complaint" stating
therein a claim of "not less than Pl0,000,000. 00 as actual
compensatory damages" in the prayer. In the body of the said
second amended complaint however, private respondent
alleges actual and compensatory damages and attorney's fees
in the total amount of about P44,601,623.70.
On January 24, 1986, Judge Asuncion issued another Order
admitting the second amended complaint and stating therein
that the same constituted proper compliance with the
Resolution of this Court and that a copy thereof should be
furnished the Clerk of Court for the reassessment of the docket
fees. The reassessment by the Clerk of Court based on private
respondent's claim of "not less than P10,000,000.00 as actual
and compensatory damages" amounted to P39,786.00 as
docket fee. This was subsequently paid by private respondent.
Petitioners then filed a petition for certiorari with the Court of
Appeals questioning the said order of Judie Asuncion dated
January 24, 1986.
On April 24, 1986, private respondent filed a supplemental
complaint alleging an additional claim of P20,000,000.00 as
d.qmages so the total claim amounts to about P64,601,623.70.
On October 16, 1986, or some seven months after filing the
supplemental complaint, the private respondent paid the
additional docket fee of P80,396.00.1
On August 13, 1987, the Court of Appeals rendered a decision
ruling, among others, as follows:
WHEREFORE, judgment is hereby rendered:
1. Denying due course to the petition in CA-G.R. SP No. 1,
09715 insofar as it seeks annulment of the order
(a) denying petitioners' motion to dismiss the complaint, as
amended, and
(b) granting the writ of preliminary attachment, but giving due
course to the portion thereof questioning the reassessment of
the docketing fee, and requiring the Honorable respondent
Court to reassess the docketing fee to be paid by private
respondent on the basis of the amount of P25,401,707.00. 2
Hence, the instant petition.
During the pendency of this petition and in conformity with the
said judgment of respondent court, private respondent paid
the additional docket fee of P62,432.90 on April 28, 1988. 3
The main thrust of the petition is that the Court of Appeals
erred in not finding that the lower court did not acquire
jurisdiction over Civil Case No. Q-41177 on the ground of
nonpayment of the correct and proper docket fee. Petitioners
allege that while it may be true that private respondent had
paid the amount of P182,824.90 as docket fee as herein-above
related, and considering that the total amount sought to be
recovered in the amended and supplemental complaint is
P64,601,623.70 the docket fee that should be paid by private
respondent is P257,810.49, more or less. Not having paid the
same, petitioners contend that the complaint should be
dismissed and all incidents arising therefrom should be
annulled. In support of their theory, petitioners cite the latest
ruling of the Court in Manchester Development Corporation vs.
CA, 4 as follows:
The Court acquires jurisdiction over any case only upon the
payment of the prescribed docket fee. An amendment of the
complaint or similar pleading will not thereby vest jurisdiction
in the Court, much less the payment of the docket fee based
on the amounts sought in the amended pleading. The ruling in
the Magaspi Case in so far as it is inconsistent with this
pronouncement is overturned and reversed.
On the other hand, private respondent claims that the ruling
in Manchester cannot apply retroactively to Civil Case No.
Q41177 for at the time said civil case was filed in court there
was no such Manchester ruling as yet. Further, private
respondent avers that what is applicable is the ruling of
this Court in Magaspi v. Ramolete, 5 wherein this Court held
that the trial court acquired jurisdiction over the case even if
the docket fee paid was insufficient.
The contention that Manchester cannot apply retroactively to
this case is untenable. Statutes regulating the procedure of the
courts will be construed as applicable to actions pending and
undetermined at the time of their passage. Procedural laws are
retrospective in that sense and to that extent. 6
68
In Lazaro vs. Endencia and Andres, 7 this Court held that the
payment of the full amount of the docket fee is an
indispensable step for the perfection of an appeal. In a forcible
entry and detainer case before the justice of the peace court
of Manaoag, Pangasinan, after notice of a judgment dismissing
the case, the plaintiff filed a notice of appeal with said court
but he deposited only P8.00 for the docket fee, instead of
P16.00 as required, within the reglementary period of appeal
of five (5) days after receiving notice of judgment. Plaintiff
deposited the additional P8.00 to complete the amount of the
docket fee only fourteen (14) days later. On the basis of these
facts, this court held that the Court of First Instance did
notacquire jurisdiction to hear and determine the appeal as
the appeal was not thereby perfected.
In Lee vs. Republic, 8 the petitioner filed a verified declaration
of intention to become a Filipino citizen by sending it through
registered mail to the Office of the Solicitor General in 1953
but the required filing fee was paid only in 1956, barely 5V2
months prior to the filing of the petition for citizenship. This
Court ruled that the declaration was not filed in accordance
with the legal requirement that such declaration should be
filed at least one year before the filing of the petition for
citizenship. Citing Lazaro, this Court concluded that the filing
of petitioner's declaration of intention on October 23, 1953
produced no legal effect until the required filing fee was paid
on May 23, 1956.
In Malimit vs. Degamo, 9 the same principles enunciated in
Lazaro and Lee were applied. It was an original petition for quo
warranto contesting the right to office of proclaimed
candidates which was mailed, addressed to the clerk of the
Court of First Instance, within the one-week period after the
proclamation as provided therefor by law.10However, the
required docket fees were paid only after the expiration of said
period. Consequently, this Court held that the date of such
payment must be deemed to be the real date of filing of
aforesaid petition and not the date when it was mailed.
Again, in Garica vs, Vasquez, 11 this Court reiterated the rule
that the docket fee must be paid before a court will act on a
petition or complaint. However, we also held that said rule is
not applicable when petitioner seeks the probate of several
wills of the same decedent as he is not required to file a
separate action for each will but instead he may have other
wills probated in the same special proceeding then pending
before the same court.
Then in Magaspi, 12 this Court reiterated the ruling
in Malimit and Lee that a case is deemed filed only upon
payment of the docket fee regardless of the actual date of its
filing in court. Said case involved a complaint for recovery of
ownership and possession of a parcel of land with damages
filed in the Court of First Instance of Cebu. Upon the payment
of P60.00 for the docket fee and P10.00 for the sheriffs fee, the
complaint was docketed as Civil Case No. R-11882. The prayer
of the complaint sought that the Transfer Certificate of Title
issued in the name of the defendant be declared as null and
void. It was also prayed that plaintiff be declared as owner
thereof to whom the proper title should be issued, and that
defendant be made to pay monthly rentals of P3,500.00 from
June 2, 1948 up to the time the property is delivered to
plaintiff, P500,000.00 as moral damages, attorney's fees in the
amount of P250,000.00, the costs of the action and exemplary
damages in the amount of P500,000.00.
The defendant then filed a motion to compel the plaintiff to
pay the correct amount of the docket fee to which an
opposition was filed by the plaintiff alleging that the action was
for the recovery of a parcel of land so the docket fee must be
based on its assessed value and that the amount of P60.00 was
the correct docketing fee. The trial court ordered the plaintiff
to pay P3,104.00 as filing fee.
The plaintiff then filed a motion to admit the amended
complaint to include the Republic as the defendant. In the
prayer of the amended complaint the exemplary damages
earlier sought was eliminated. The amended prayer merely
sought moral damages as the court may determine, attorney's
fees of P100,000.00 and the costs of the action. The defendant
filed an opposition to the amended complaint. The opposition
notwithstanding, the amended complaint was admitted by the
trial court. The trial court reiterated its order for the payment
of the additional docket fee which plaintiff assailed and then
challenged before this Court. Plaintiff alleged that he paid the
total docket fee in the amount of P60.00 and that if he has to
pay the additional fee it must be based on the amended
complaint.
The question posed, therefore, was whether or not the
plaintiff may be considered to have filed the case even if the
docketing fee paid was not sufficient. In Magaspi, We
reiterated the rule that the case was deemed filed only upon
the payment of the correct amount for the docket fee
regardless of the actual date of the filing of the complaint; that
there was an honest difference of opinion as to the correct
amount to be paid as docket fee in that as the action appears
to be one for the recovery of property the docket fee of P60.00
was correct; and that as the action is also one, for damages,
We upheld the assessment of the additional docket fee based
on the damages alleged in the amended complaint as against
the assessment of the trial court which was based on the
damages alleged in the original complaint.
However, as aforecited, this Court
overturned Magaspi in Manchester. Manchester involves an
action for torts and damages and specific performance with a
prayer for the issuance of a temporary restraining order, etc.
69
The prayer in said case is for the issuance of a writ of
preliminary prohibitory injunction during the pendency of the
action against the defendants' announced forfeiture of the
sum of P3 Million paid by the plaintiffs for the property in
question, the attachment of such property of defendants that
may be sufficient to satisfy any judgment that may be
rendered, and, after hearing, the issuance of an order requiring
defendants to execute a contract of purchase and sale of the
subject property and annul defendants' illegal forfeiture of the
money of plaintiff. It was also prayed that the defendants be
made to pay the plaintiff jointly and severally, actual,
compensatory and exemplary damages as well as 25% of said
amounts as may be proved during the trial for attorney's fees.
The plaintiff also asked the trial court to declare the tender of
payment of the purchase price of plaintiff valid and sufficient
for purposes of payment, and to make the injunction
permanent. The amount of damages sought is not specified in
the prayer although the body of the complaint alleges the total
amount of over P78 Millon allegedly suffered by plaintiff.
Upon the filing of the complaint, the plaintiff paid the amount
of only P410.00 for the docket fee based on the nature of the
action for specific performance where the amount involved is
not capable of pecuniary estimation. However, it was obvious
from the allegations of the complaint as well as its designation
that the action was one for damages and specific performance.
Thus, this court held the plaintiff must be assessed the correct
docket fee computed against the amount of damages of about
P78 Million, although the same was not spelled out in the
prayer of the complaint.
Meanwhile, plaintiff through another counsel, with leave of
court, filed an amended complaint on September 12, 1985 by
the inclusion of another co-plaintiff and eliminating any
mention of the amount of damages in the body of the
complaint. The prayer in the original complaint was
maintained.
On October 15, 1985, this Court ordered the re-assessment of
the docket fee in the said case and other cases that were
investigated. On November 12, 1985, the trial court directed
the plaintiff to rectify the amended complaint by stating the
amounts which they were asking for. This plaintiff did as
instructed. In the body of the complaint the amount of
damages alleged was reduced to P10,000,000.00 but still no
amount of damages was specified in the prayer. Said amended
complaint was admitted.
Applying the principle in Magaspi that "the case is deemed
filed only upon payment of the docket fee regardless of the
actual date of filing in court," this Court held that the trial court
did not acquire jurisdiction over the case by payment of only
P410.00 for the docket fee. Neither can the amendment of the
complaint thereby vest jurisdiction upon the Court. For all legal
purposes there was no such original complaint duly filed which
could be amended. Consequently, the order admitting the
amended complaint and all subsequent proceedings and
actions taken by the trial court were declared null and void.13
The present case, as above discussed, is among the several
cases of under-assessment of docket fee which were
investigated by this Court together with Manchester. The facts
and circumstances of this case are similar to Manchester. In
the body of the original complaint, the total amount of
damages sought amounted to about P50 Million. In the prayer,
the amount of damages asked for was not stated. The action
was for the refund of the premium and the issuance of the writ
of preliminary attachment with damages. The amount of only
P210.00 was paid for the docket fee. On January 23, 1986,
private respondent filed an amended complaint wherein in the
prayer it is asked that he be awarded no less than
P10,000,000.00 as actual and exemplary damages but in the
body of the complaint the amount of his pecuniary claim is
approximately P44,601,623.70. Said amended complaint was
admitted and the private respondent was reassessed the
additional docket fee of P39,786.00 based on his prayer of not
less than P10,000,000.00 in damages, which he paid.
On April 24, 1986, private respondent filed a supplemental
complaint alleging an additional claim of P20,000,000.00 in
damages so that his total claim is approximately
P64,601,620.70. On October 16, 1986, private respondent paid
an additional docket fee of P80,396.00. After the promulgation
of the decision of the respondent court on August 31, 1987
wherein private respondent was ordered to be reassessed for
additional docket fee, and during the pendency of this petition,
and after the promulgation of Manchester, on April 28, 1988,
private respondent paid an additional docket fee of
P62,132.92. Although private respondent appears to have paid
a total amount of P182,824.90 for the docket fee considering
the total amount of his claim in the amended and
supplemental complaint amounting to about P64,601,620.70,
petitioner insists that private respondent must pay a docket
fee of P257,810.49.
The principle in Manchester could very well be applied in the
present case. The pattern and the intent to defraud the
government of the docket fee due it is obvious not only in the
filing of the original complaint but also in the filing of the
second amended complaint.
However, in Manchester, petitioner did not pay any additional
docket fee until] the case was decided by this Court on May 7,
1987. Thus, in Manchester, due to the fraud committed on the
government, this Court held that the court a quo did not
acquire jurisdiction over the case and that the amended
complaint could not have been admitted inasmuch as the
original complaint was null and void.
70
In the present case, a more liberal interpretation of the rules is
called for considering that, unlike Manchester, private
respondent demonstrated his willingness to abide by the rules
by paying the additional docket fees as required. The
promulgation of the decision in Manchester must have had
that sobering influence on private respondent who thus paid
the additional docket fee as ordered by the respondent court.
It triggered his change of stance by manifesting his willingness
to pay such additional docket fee as may be ordered.
Nevertheless, petitioners contend that the docket fee that was
paid is still insufficient considering the total amount of the
claim. This is a matter which the clerk of court of the lower
court and/or his duly authorized docket clerk or clerk in-charge
should determine and, thereafter, if any amount is found due,
he must require the private respondent to pay the same.
Thus, the Court rules as follows:
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed docket
fee, that vests a trial court with jurisdiction over the subject
matter or nature of the action. Where the filing of the initiatory
pleading is not accompanied by payment of the docket fee, the
court may allow payment of the fee within a reasonable time
but in no case beyond the applicable prescriptive or
reglementary period.
2. The same rule applies to permissive counterclaims, third
party claims and similar pleadings, which shall not be
considered filed until and unless the filing fee prescribed
therefor is paid. The court may also allow payment of said fee
within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by
the filing of the appropriate pleading and payment of the
prescribed filing fee but, subsequently, the judgment awards a
claim not specified in the pleading, or if specified the same has
been left for determination by the court, the additional filing
fee therefor shall constitute a lien on the judgment. It shall be
the responsibility of the Clerk of Court or his duly authorized
deputy to enforce said lien and assess and collect the
additional fee.
WHEREFORE, the petition is DISMISSED for lack of merit. The
Clerk of Court of the court a quo is hereby instructed to
reassess and determine the additional filing fee that should be
paid by private respondent considering the total amount of the
claim sought in the original complaint and the supplemental
complaint as may be gleaned from the allegations and the
prayer thereof and to require private respondent to pay the
deficiency, if any, without pronouncement as to costs.
MAXIMO TACAY, PONCIANO PANES and ANTONIA
NOEL, petitioners, vs. REGIONAL TRIAL COURT OF TAGUM
Davao del Norte, Branches 1 and 2, Presided by Hon. Marcial
Fernandez and Hon. Jesus Matas, respectively, PATSITA
GAMUTAN, Clerk of Court, and GODOFREDO
PINEDA, respondents. NARVASA, J.:
In the Regional Trial Court at Tagum, Davao del Norte, 1 three
(3) actions for recovery of possession (acciones publicianas 2 )
were separately instituted by Godofredo Pineda against three
(3) defendants, docketed as follows:
1) vs. Antonia Noel Civil Case No. 2209
2) vs. Ponciano Panes Civil Case No. 2210
3) vs. Maximo Tacay Civil Case No. 2211.
Civil Cases Numbered 2209 and 2211 were raffled to Branch I
of the Trial Court, presided over by Judge Marcial Hernandez.
Civil No. 2210 was assigned to Branch 2, presided over by
Judge Jesus Matas.
The complaints 3 all alleged the same essential facts (1) Pineda
was the owner of a parcel of land measuring 790 square
meters, his ownership being evidenced by TCT No. T-46560; (2)
the previous owner had allowed the defendants to occupy
portions of the land by mere tolerance; (3) having himself need
to use the property, Pineda had made demands on the
defendants to vacate the property and pay reasonable rentals
therefor, but these demands had been refused; and (4) the last
demand had been made more than a year prior to the
commencement of suit. The complaints prayed for the same
reliefs, to wit:
1) that plaintiff be declared owner of the areas occupied by the
defendants;
2) that defendants and their "privies and allies" be ordered to
vacate and deliver the portions of the land usurped by them;
3) that each defendant be ordered to pay:
1 ) P 2,000 as monthly rents from February, 1987;
2 ) Actual damages, as proven;
3 ) Moral and nominal damages as the Honorable Court may
fix ;
4) P30,000.00, "as attorney's fees, and representation fees of
P5,000.00 per day of appearance;" 4
and
4) that he (Pineda) be granted such "further relief and
remedies ... just and equitable in the premises.
71
The prayer of each complaint contained a handwritten
notation (evidently made by plaintiff's counsel) reading,
"P5,000.00 as and for," immediately above the typewritten
words, "Actual damages, as proven," the intention apparently
being to make the entire phrase read, " P5,000.00 as and for
actual damages as proven. 5
Motions to dismiss were filed in behalf of each of the
defendants by common counsel .6 Every motion alleged that
the Trial Court had not acquired jurisdiction of the case —
. . . for the reason that the ... complaint violates the mandatory
and clear provision of Circular No. 7 of the ... Supreme Court
dated March 24,1988, by failing to specify all the amounts of
damages which plaintiff is claiming from defendant;" and
. . . for ... failure (of the complaint) to even allege the basic
requirement as to the assessed value of the subject lot in
dispute.
Judge Matas denied the motion to dismiss filed in Civil Case
No. 2210 but ordered the expunction of the "allegations in
paragraph 11 of the ... complaint regarding moral as well as
nominal damages . 7 On motion of defendant Panes, Judge
Matas later ordered the striking out, too, of the "handwritten
amount of 'P5,000. 00 as and for.' including the typewritten
words 'actual damages as proven' ... in sub-paragraph b of
paragraph 4 in the conclusion and prayer of the complaint ..." 8
The motions to dismiss submitted in Civil Cases Numbered
2211 and 2209 were also denied in separate orders
promulgated by Judge Marcial Fernandez. 9 His Order in Case
No. 2209 dated March 15, 1989 (a) declared that since the
"action at bar is for Reivindicatoria, Damages and Attorney's
fees ... (d)efinitely this Court has the exclusive jurisdiction," (b)
that the claims for actual, moral and nominal damages "are
only one aspect of the cause of action," and (c) because of
absence of specification of the amounts claimed as moral,
nominal and actual damages, they should be "expunged from
the records."
Ascribing grave abuse of discretion to both Judges Matas and
Fernandez in the rendition of the Orders above described, the
defendants in all three (3) actions have filed with this Court a
"Joint Petition" for certiorari, prohibition and mandamus, with
prayer for temporary restraining order and/or writ of
preliminary prohibitory injunction," praying essentially that
said orders be annulled and respondent judges directed to
dismiss all the complaints "without prejudice to private
respondent Pineda's re-filing a similar complaint that complies
with Circular No. 7." The joint petition (a) re-asserted the
proposition that because the complaints had failed to state the
amounts being claimed as actual, moral and nominal damages,
the Trial Courts a quo had not acquired jurisdiction over the
three (3) actions in question-indeed, the respondent Clerk of
Court should not have accepted the complaints which initiated
said suits, and (b) it was not proper merely to expunge the
claims for damages and allow "the so-called cause of action for
"reivindicatoria" remain for trial" by itself. 10
The joint petition should be, as it is hereby, dismissed.
It should be dismissed for failure to comply with this Court's
Circular No. 1-88 (effective January 1, 1989). The copies of the
challenged Orders thereto attached 11 were not certified by
the proper Clerk of Court or his duly authorized representative.
Certification was made by the petitioners' counsel, which is not
allowed.
The petition should be dismissed, too, for another equally
important reason. It fails to demonstrate any grave abuse of
discretion on the part of the respondent Judges in rendering
the Orders complained of or, for that matter, the existence of
any proper cause for the issuance of the writ of mandamus. On
the contrary, the orders appear to have correctly applied the
law to the admitted facts.
It is true that the complaints do not state the amounts being
claimed as actual, moral and nominal damages. It is also true,
however, that the actions are not basically for the recovery of
sums of money. They are principally for recovery of possession
of real property, in the nature of an accion publiciana.
Determinative of the court's jurisdiction in this type of actions
is the nature thereof, not the amount of the damages allegedly
arising from or connected with the issue of title or possession,
and regardless of the value of the property. Quite obviously,
an action for recovery of possession of real property (such as
an accion plenaria de possesion) or the title thereof, 12 or for
partition or condemnation of, or the foreclosure of a mortgage
on, said real property 13 - in other words, a real action-may be
commenced and prosecuted without an accompanying claim
for actual, moral, nominal or exemplary damages; and such an
action would fall within the exclusive, original jurisdiction of
the Regional Trial Court.
Batas Pambansa Bilang 129 provides that Regional Trial Courts
shall exercise exclusive original jurisdiction inter alia over "all
civil actions which involve the title to, or possession of, real
property, or any interest therein, except actions for forcible
entry into and unlawful detainer of lands or buildings, original
jurisdiction over which is conferred upon Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts." 14 The rule applies regardless of the value of the real
property involved, whether it be worth more than P20,000.00
or not, infra. The rule also applies even where the complaint
involving realty also prays for an award of damages; the
amount of those damages would be immaterial to the question
of the Court's jurisdiction. The rule is unlike that in other cases
e.g., actions simply for recovery of money or of personal
72
property, 15 or actions in admiralty and maritime
jurisdiction 16 in which the amount claimed, 17 or the value of
the personal property, is determinative of jurisdiction; i.e., the
value of the personal property or the amount claimed should
exceed twenty thousand pesos (P20,000.00) in order to be
cognizable by the Regional Trial Court.
Circular No. 7 of this Court, dated March 24, 1988, cannot thus
be invoked, as the petitioner does, as authority for the
dismissal of the actions at bar. That circular, avowedly inspired
by the doctrine laid down in Manchester Development
Corporation v. Court of appeals, 149 SCRA 562 (May 7, 1987),
has but limited application to said actions, as shall presently be
discussed. Moreover, the rules therein laid down have since
been clarified and amplified by the Court's subsequent
decision in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, et al.,
G.R. Nos. 79937-38, February 13, 1989.
Circular No. 7 was aimed at the practice of certain parties who
omit from the prayer of their complaints "any specification of
the amount of damages," the omission being "clearly intended
for no other purposes than to evade the payment of the
correct filing fees if not to mislead the docket clerk, in the
assessment of the filing fee." The following rules were
therefore set down:
1. All complaints, petitions, answers, and similar pleadings
should specify the amount of damages being prayed for not
only in the body of the pleading but also in the prayer, and said
damages shall be considered in the assessment of the filing
fees in any case.
2. Any pleading that fails to comply with this requirement shall
not be accepted nor admitted, or shall otherwise be expunged
from the record.
3. The Court acquires jurisdiction over any case only upon the
payment of the prescribed docket fee. An amendment of the
complaint or similar pleading will not thereby vest jurisdiction
in the Court, much less the payment of the docket fee based
on the amount sought in the amended pleading.
The clarificatory and additional rules laid down in Sun
Insurance Office, Ltd. v. Asuncion, supra, read as follows:
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but (also) the payment of the prescribed
docket fee that vests a trial court with jurisdiction over the
subject-matter or nature of the action. Where the filing of the
initiatory pleading is not accompanied by payment of the
docket fee, the court may allow payment of the fee within a
reasonable time but in no case beyond the applicable
prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-
party claims and similar pleadings, which shall not be
considered filed until and unless the filing fee prescribed
therefor is paid. The court may also allow payment of said fee
within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by
the filing of the appropriate pleading and payment of the
prescribed filing fee but, subsequently, the judgment awards a
claim not specified in the pleading, or if specified, the same has
been left for determination by the court, the additional filing
fee therefor shall constitute a lien on the judgment. It shall be
the responsibility of the Clerk of Court or his duly authorized
deputy to enforce said lien and assess and collect the
additional fee.
As will be noted, the requirement in Circular No. 7 that
complaints, petitions, answers, and similar pleadings should
specify the amount of damages being prayed for not only in
the body of the pleading but also in the prayer, has not been
altered. What has been revised is the rule that subsequent
"amendment of the complaint or similar pleading will not
thereby vest jurisdiction in the Court, much less the payment
of the docket fee based on the amount sought in the amended
pleading," the trial court now being authorized to allow
payment of the fee within a reasonable time but in no case
beyond the applicable prescriptive or reglementary period.
Moreover, a new rule has been added, governing awards of
claims not specified in the pleading - i.e., damages arising after
the filing of the complaint or similar pleading-as to which the
additional filing fee therefor shall constitute a lien on the
judgment.
Now, under the Rules of Court, docket or filing fees are
assessed on the basis of the "sum claimed," on the one hand,
or the "value of the property in litigation or the value of the
estate," on the other. 18 There are, in other words, as already
above intimated, actions or proceedings involving real
property, in which the value of the property is immaterial to
the court's jurisdiction, account thereof being taken merely for
assessment of the legal fees; and there are actions or
proceedings, involving personal property or the recovery of
money and/or damages, in which the value of the property or
the amount of the demand is decisive of the trial court's
competence (aside from being the basis for fixing the
corresponding docket fees). 19
Where the action is purely for the recovery of money or
damages, the docket fees are assessed on the basis of the
aggregate amount claimed, exclusive only of interests and
costs. In this case, the complaint or similar pleading should,
according to Circular No. 7 of this Court, "specify the amount
of damages being prayed for not only in the body of the
73
pleading but also in the prayer, and said damages shall be
considered in the assessment of the filing fees in any case."
Two situations may arise. One is where the complaint or similar
pleading sets out a claim purely for money or damages and
there is no precise statement of the amounts being claimed. In
this event the rule is that the pleading will "not be accepted
nor admitted, or shall otherwise be expunged from the
record." In other words, the complaint or pleading may be
dismissed, or the claims as to which the amounts are
unspecified may be expunged, although as aforestated the
Court may, on motion, permit amendment of the complaint
and payment of the fees provided the claim has not in the
meantime become time-barred. The other is where the
pleading does specify the amount of every claim, but the fees
paid are insufficient; and here again, the rule now is that the
court may allow a reasonable time for the payment of the
prescribed fees, or the balance thereof, and upon such
payment, the defect is cured and the court may properly take
cognizance of the action, unless in the meantime prescription
has set in and consequently barred the right of action.
Where the action involves real property and a related claim for
damages as well, the legal fees shall be assessed on the basis
of both (a) the value of the property and (b) the total amount
of related damages sought. The Court acquires jurisdiction
over the action if the filing of the initiatory pleading is
accompanied by the payment of the requisite fees, or, if the
fees are not paid at the time of the filing of the pleading, as of
the time of full payment of the fees within such reasonable
time as the court may grant, unless, of course, prescription has
set in the meantime. But where-as in the case at bar-the fees
prescribed for an action involving real property have been
paid, but the amounts of certain of the related damages
(actual, moral and nominal) being demanded are unspecified,
the action may not be dismissed. The Court undeniably has
jurisdiction over the action involving the real property,
acquiring it upon the filing of the complaint or similar pleading
and payment of the prescribed fee. And it is not divested of
that authority by the circumstance that it may not have
acquired jurisdiction over the accompanying claims for
damages because of lack of specification thereof. What should
be done is simply to expunge those claims for damages as to
which no amounts are stated, which is what the respondent
Courts did, or allow, on motion, a reasonable time for the
amendment of the complaints so as to allege the precise
amount of each item of damages and accept payment of the
requisite fees therefor within the relevant prescriptive period.
AYALA CORPORATION, LAS PIÑAS VENTURES, INC., and
FILIPINAS LIFE ASSURANCE COMPANY, INC., petitioners vs.
THE HONORABLE JOB B. MADAYAG, PRESIDING JUDGE,
REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL
REGION, BRANCH 145 and THE SPOUSES CAMILO AND MA.
MARLENE SABIO, respondents GANCAYCO, J.:
Once more the issue relating to the payment of filing fees in an
action for specific performance with damages is presented by
this petition for prohibition.
Private respondents filed against petitioners an action for
specific performance with damages in the Regional Trial Court
of Makati. Petitioners filed a motion to dismiss on the ground
that the lower court has not acquired jurisdiction over the case
as private respondents failed to pay the prescribed docket fee
and to specify the amount of exemplary damages both in the
body and prayer of the amended and supplemental complaint.
The trial court denied the motion in an order dated April 5,
1989. A motion for reconsideration filed by petitioners was
likewise denied in an order dated May 18, 1989. Hence this
petition.
The main thrust of the petition is that private respondent paid
only the total amount of P l,616.00 as docket fees instead of
the amount of P13,061.35 based on the assessed value of the
real properties involved as evidenced by its tax declaration.
Further, petitioners contend that private respondents failed to
specify the amount of exemplary damages sought both in the
body and the prayer of the amended and supplemental
complaint.
In Manchester Development Corporation vs. Court of
Appeals 1 a similar case involving an action for specific
performance with damages, this Court held that the docket fee
should be assessed by considering the amount of damages as
alleged in the original complaint.
However, the contention of petitioners is that since the action
concerns real estate, the assessed value thereof should be
considered in computing the fees pursuant to Section 5, Rule
141 of the Rules of Court. Such rule cannot apply to this case
which is an action for specific performance with damages
although it is in relation to a transaction involving real estate.
Pursuant to Manchester, the amount of the docket fees to be
paid should be computed on the basis of the amount of
damages stated in the complaint.
Petitioners also allege that because of the failure of the private
respondents to state the amount of exemplary damages being
sought, the complaint must nevertheless be dismissed in
accordance to Manchester. The trial court denied the motion
stating that the determination of the exemplary damages is
within the sound discretion of the court and that it would be
unwarrantedly presumptuous on the part of the private
74
respondents to fix the amount of exemplary damages being
prayed for. The trial court cited the subsequent case of Sun
Insurance vs. Judge Asuncion 2 in support of its ruling.
The clarificatory and additional rules laid down in Sun
Insurance are as follows:
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but (also) the payment of the prescribed
docket fee that vests a trial court with jurisdiction over the
subject-matter or nature of the action. Where the filing of the
initiatory pleading is not accompanied by payment of the
docket fee, the court may allow payment of the fee within a
reasonable tune but in no case beyond the applicable
prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third
party claims and similar pleadings, which shall not be
considered filed until and unless the filing fee prescribed
therefor is paid. The court may also allow payment of said fee
within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by
the filing of the appropriate pleading and payment of the
prescribed filing fee but, subsequently, the judgment awards a
claim not specified in the pleading, or if specified, the same has
been left for determination by the court, the additional filing
fee therefor shall constitute a lien on the judgment. It shall be
the responsibility of the Clerk of Court or his duly authorized
deputy to enforce said lien and assess and collect the
additional fee.
Apparently, the trial court misinterpreted paragraph 3 of the
above ruling of this Court wherein it is stated that "where the
judgment awards a claim not specified in the pleading, or if
specified, the same has been left for the determination of the
court, the additional filing fee therefor shall constitute a lien
on the judgment" by considering it to mean that where in the
body and prayer of the complaint there is a prayer, say for
exemplary or corrective damages, the amount of which is left
to the discretion of the Court, there is no need to specify the
amount being sought, and that any award thereafter shall
constitute a lien on the judgment.
In the latest case Tacay vs. Regional Trial Court of Tagum, 3 this
Court had occasion to make the clarification that the phrase
"awards of claims not specified in the pleading" refers only to
"damages arising after the filing of the complaint or similar
pleading . . . as to which the additional filing fee therefor shall
constitute a lien on the judgment." The amount of any claim
for damages, therefore, arising on or before the filing of the
complaint or any pleading, should be specified. While it is true
that the determination of certain damages as exemplary or
corrective damages is left to the sound discretion of the court,
it is the duty of the parties claiming such damages to specify
the amount sought on the basis of which the court may make
a proper determination, and for the proper assessment of the
appropriate docket fees. The exception contemplated as to
claims not specified or to claims although specified are left for
determination of the court is limited only to any damages that
may arise after the filing of the complaint or similar pleading
for then it will not be possible for the claimant to specify nor
speculate as to the amount thereof.

The amended and supplemental complaint in the present case,

therefore, suffers from the material defect in failing to state
the amount of exemplary damages prayed for.

As ruled in Tacay the trial court may either order said claim to
be expunged from the record as it did not acquire jurisdiction
over the same or on motion, it may allow, within a reasonable
time, the amendment of the amended and supplemental
complaint so as to state the precise amount of the exemplary
damages sought and require the payment of the requisite fees
therefor within the relevant prescriptive period. 4

WHEREFORE, the petition is GRANTED. The trial court is

directed either to expunge from the record the claim for
exemplary damages in the amended and supplemental
complaint, the amount of which is not specified, or it may
otherwise, upon motion, give reasonable time to private
respondents to amend their pleading by specifying its amount
and paying the corresponding docketing fees within the
appropriate reglementary or prescriptive period. No costs.

75
 NEGROS ORIENTAL
PLANTERS ASSOCIATION,
INC. (NOPA),
Petitioner,- versus - HON.
PRESIDING JUDGE OF RTC-
NEGROS OCCIDENTAL,
BRANCH 52, BACOLOD CITY,
and ANICETO
MANOJO CAMPOS,
Respondents.
CHICO-NAZARIO, J.:
Whats sauce for the goose is sauce for the gander.
This is a Petition for Review on Certiorari seeking the reversal
of the Resolutions[1] of the Court of Appeals dated 23 May
2007 and 16 August 2007, respectively, in CA-G.R. SP No.
02651 outrightly dismissing the Petition for Certiorari filed by
petitioner Negros Oriental Planters Association, Inc. (NOPA)
against private respondent Aniceto Manojo Campos (Campos).
On 17 March 1999, Campos filed a Complaint for Breach of
Contract with Damages, docketed as Civil Case No. 99-10773,
against NOPA before the Regional Trial Court (RTC) of Negros
Occidental, Bacolod City. According to the
Complaint, Campos and NOPA entered into two separate
contracts denominated as Molasses Sales
Agreement.Campos allegedly paid the consideration of the
Molasses Sales Agreement in full, but was only able to receive
a partial delivery of the molasses because of a disagreement as
to the quality of the products being delivered.
On 17 August 2005, more than six years after NOPA filed its
Answer, NOPA filed a Motion to Dismiss on the ground of an
alleged failure of Campos to file the correct filing
fee. According to NOPA, Campos deliberately concealed in his
Complaint the exact amount of actual damages by opting to
estimate the value of the unwithdrawn molasses in order to
escape the payment of the proper docket fees.
On 30 June 2006, the RTC issued an Order denying the Motion
to Dismiss. NOPA received this Order on 17 July 2006.
On 1 August 2006, NOPA filed a Motion for Reconsideration of
the 30 June 2006 Order. On 5 January 2007, the RTC issued an
Order denying NOPAs Motion for Reconsideration.
On 2 April 2007, NOPA filed a Petition for Certiorari before the
Court of Appeals assailing the Orders of the RTC dated 30 June
2006 and 5 January 2007.
On 23 May 2007, the Court of Appeals issued the first assailed
Resolution dismissing the Petition for Certiorari on the
following grounds:
76
1. Failure of the Petitioner to state in its Verification that the
allegations in the petition are based on authentic records, in
violation of Section 4, Rule 7, of the 1997 Rules of Civil
Procedure, as amended by A.M. No. 00-2-10-SC (May 1, 2000),
which provides:
x x x - A pleading is verified by an affidavit that the affiant has
read the pleading and that the allegations therein are true and
correct of his personal knowledge or based on authentic
records.
A pleading required to be verified which contains a verification
based on information and belief, or lacks a proper
verification, shall be treated as an unsigned pleading.
2. Failure of the petitioner to append to the petition relevant
pleadings and documents, which would aid in the resolution of
the instant petition, in violation of Section 1, Rule 65 of the
Rules of Court, such as:
a. Ex-parte Motion to Set the Case for Pre-Trial dated July
27, 1999;
b. Notice of Pre-Trial;
c. Motion for Leave to File Third Party Complaint;
d. Orders dated July 31, 2000, March 20 2001, November
17, 2004, and May 17, 2005, respectively;
e. Motion to Suspend the Proceedings dated August 10,
2003;
f. Motion to Dismiss for Failure to Prosecute; and
g. Motion for Reconsideration to the Order dated May 12,
2005.
Section 1, Rule 65 of the Rules of Court, provides: 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, or 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 be rendered annulling or modifying the proceedings
of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of
the judgment, order or resolution subject thereof, copies of all
pleadings and documents relevant and pertinent thereto, and
a sworn certification of non-forum shopping as provided in the
paragraph of section 3, Rule 46.
3. Failure of petitioners counsel to indicate in the petition his
current IBP Official Receipt Number, in violation of Bar Matter
No. 1132 and/or A.M. No. 287, which reads as follows:
The Court resolved, upon recommendation of the Office of the
Bar Confidant, to GRANT the request of the Board of Governors
of the Integrated Bar of the Philippinesand the Sanguniang
Panlalawigan of Ilocos Norte to require all lawyers to indicate
their Roll of Attorneys Number in all papers or pleadings
submitted to the various judicial or quasi-judicial bodies in
addition to the requirement of indicating the current
Professional Tax Receipt (PTR) and the IBP Official Receipt or
Lifetime Member Number.[2]
On 22 June 2007, NOPA filed a Motion for Reconsideration of
the above Resolution, attaching thereto an Amended Petition
for Certiorari in compliance with the requirements of the Court
of Appeals deemed to have been violated by NOPA. The Court
of Appeals denied the said Motion in the second assailed
Resolution dated 16 August 2007.
Hence, this Petition for Review on Certiorari, where NOPA
raises the following issue and arguments:
ISSUE . WHETHER OR NOT THE PUBLIC RESPONDENT CA
COMMITTED REVERSIBLE ERROR WHEN IT RULED THAT THERE
WAS NO SUBSTANTIAL COMPLIANCE WITH THE PROCEDURAL
REQUIREMENTS WHEN PETITIONER FAILED TO ALLEGE IN ITS
VERIFICATION THAT THE ALLEGATIONS THEREIN ARE TRUE
AND CORRECT OF HIS PERSONAL KNOWLEDGE OR BASED ON
AUTHENTIC RECORDS AND FAILURE TO ATTACH THE
NECESSARY DOCUMENTS ON ITS PLEADINGS AS REQUIRED BY
SECTION 1, RULE 65 OF THE 1997 RULES OF CIVIL
PROCEDURE.[3]
ARGUMENTS
1. The requirement that a pleading be verified is merely
formal and not jurisdictional. The court may give due course to
an unverified pleading where the material facts alleged are a
matter of record and the questions raised are mainly of law
such as in a petition for certiorari.[4]
2. Petitioner had attached to its Petition for Certiorari clearly
legible and duplicate original or a certified true copy of the
judgment or final order or resolution of the court a quo and
the requisite number of plain copies thereof and such material
portions of the record as would support the petition.[5]
3. Substantial compliance of the rules, which was further
supplied by the petitioners subsequent full compliance
demonstrates its good faith to abide by the procedural
requirements.[6]
77
4. The resolution of the important jurisdictional issue raised by
the petitioner before the PUBLIC RESPONDENT CA would
justify a relaxation of the rules.[7]
The original Verification in the original Petition
for Certiorari filed by NOPA states as follows:
1. That I am the President and Chairman of the Board of
Directors of Negros Oriental Planters Association, Inc. (NOPA),
the petitioner in this case, a domestic corporation duly
organized under Philippine Laws, with principal place of
business at Central Bais, Bais City, Philippines; that I am duly
authorized by the Board of NOPA (Secretarys Certificate
attached as Annex A) to cause the preparation of the foregoing
petition; and that I hereby affirm and confirm that all the
allegations contained herein are true and correct to my own
knowledge and belief;[8]
NOPA claims that this Court has in several cases allowed
pleadings with a Verification that contains the allegation to the
best of my knowledge and the allegation are true and correct,
without the words of his own knowledge, citing Decano v.
Edu,[9] and Quimpo v. De la Victoria.[10] NOPA claims that the
allegations in these cases constitute substantial compliance
with the Rules of Court, and should likewise apply to the case
at bar.
NOPA is mistaken. NOPA cited cases promulgated before 1
May 2000, when Section 4 of Rule 7 was amended by A.M. No.
00-2-10. Before the amendment, said Section 4 stated:
SEC. 4. Verification.Except when otherwise specifically
required by law or rule, pleadings need not be under oath,
verified or accompanied by affidavit.A pleading is verified by
an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his knowledge and
belief.
As amended, said Section 4 now states: SEC.
4. Verification.Except when otherwise specifically required by
law or rule, pleadings need not be under oath, verified or
accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read
the pleading and that the allegations therein are true and
correct of his personal knowledge or based on authentic
records.
Clearly, the amendment was introduced in order to make the
verification requirement stricter, such that the party cannot
now merely state under oath that he believes the statements
made in the pleading. He cannot even merely state under oath
that he has knowledge that such statements are true and
correct. His knowledge must be specifically alleged under oath
to be either personal knowledge or at least based on authentic
records.
Unlike, however, the requirement for a Certification against
Forum Shopping in Section 5, wherein failure to comply with
the requirements is not curable by amendment of the
complaint or other initiatory pleading,[11] Section 4 of Rule 7,
as amended, states that the effect of the failure to properly
verify a pleading is that the pleading shall be treated as
unsigned:
A pleading required to be verified which contains a
verification based on information and belief, or upon
knowledge, information and belief, or lacks a proper
verification, shall be treated as an unsigned pleading.
Unsigned pleadings are discussed in the immediately
preceding section of Rule 7:
SEC. 3. Signature and address. x x x.x x x x
An unsigned pleading produces no legal effect. However, the
court may, in its discretion, allow such deficiency to be
remedied if it shall appear that the same was due to mere
inadvertence and not intended for delay. Counsel who
deliberately files an unsigned pleading, or signs a pleading in
violation of this Rule, or alleges scandalous or indecent matter
therein, or fails to promptly report to the court a change of his
address, shall be subject to appropriate disciplinary action. (5a)
A pleading, therefore, wherein the Verification is merely
based on the partys knowledge and belief produces no
legal effect, subject to the discretion of the court to allow the
deficiency to be remedied. In the case at bar, the Court of
Appeals, in the exercise of this discretion, refused to allow the
deficiency in the Verification to be remedied, by denying
NOPAs Motion for Reconsideration with attached Amended
Petition for Certiorari.
May an appellate court reverse the exercise of discretion by a
lower court? The old case of Lino Luna v. Arcenas[12] states
that it can, but only in exceptional cases when there is grave
abuse of this discretion or adverse effect on the substantial
rights of a litigant:
Discretionary power is generally exercised by trial judges in
furtherance of the convenience of the courts and the litigants,
the expedition of business, and in the decision of interlocutory
matters on conflicting facts where one tribunal could not easily
prescribe to another the appropriate rule of procedure.
The general rule, therefore, and indeed one of the
fundamental principles of appellate procedure is that
decisions of a trial court which "lie in discretion" will not be
reviewed on appeal, whether the case be civil or criminal at
law or in equity.
78
We have seen that where such rulings have to do with minor
matters, not affecting the substantial rights of the parties, the
prohibition of review in appellate proceedings is made
absolute by the express terms of the statute; but it would be a
monstrous travesty on justice to declare that where the
exercise of discretionary power by an inferior court affects
adversely the substantial legal rights of a litigant, it is not
subject to review on appeal in any case wherein a clear and
affirmative showing is made of an abuse of discretion, or of a
total lack of its exercise, or of conduct amounting to an abuse
of discretion, such as its improper exercise under a
misapprehension of the law applicable to the facts upon which
the ruling is based.
In its very nature, the discretionary control conferred upon the
trial judge over the proceedings had before him implies the
absence of any hard-and-fast rule by which it is to be exercised,
and in accordance with which it may be reviewed. But the
discretion conferred upon the courts is not a willful, arbitrary,
capricious and uncontrolled discretion. It is a sound, judicial
discretion which should always be exercised with due regard
to the rights of the parties and the demands of equity and
justice. As was said in the case of The Styria vs. Morgan (186 U.
S., 1, 9): "The establishment of a clearly defined rule of action
would be the end of discretion, and yet discretion should not
be a word for arbitrary will or inconsiderate action." So in the
case of Goodwin vs. Prime (92 Me., 355), it was said that
"discretion implies that in the absence of positive law or fixed
rule the judge is to decide by his view of expediency or by the
demands of equity and justice."
There being no "positive law or fixed rule" to guide the judge
in the court below in such cases, there is no "positive law or
fixed rule" to guide a court of appeal in reviewing his action in
the premises, and such courts will not therefore attempt to
control the exercise of discretion by the court below unless it
plainly appears that there was "inconsiderate action" or the
exercise of mere "arbitrary will," or in other words that his
action in the premises amounted to "an abuse of discretion."
But the right of an appellate court to review judicial acts which
lie in the discretion of inferior courts may properly be invoked
upon a showing of a strong and clear case of abuse of power
to the prejudice of the appellant, or that the ruling objected to
rested on an erroneous principle of law not vested in
discretion.[13]
The case at bar demonstrates a situation in which there is no
effect on the substantial rights of a litigant. NOPAs Petition
for Certiorari is seeking the reversal of the Orders of the RTC
denying NOPAs Motion to Dismiss on the ground of failure to
pay the proper docket fees. The alleged deficiency in the
payment of docket fees by Campos, if there is any, would not
inure to the benefit of NOPA.
There is therefore no substantive right that will be prejudiced
by the Court of Appeals exercise of discretion in the case at
bar. While the payment of docket fees is jurisdictional, it is
nevertheless unmistakably also a technicality. Ironically, in
seeking the leniency of this Court on the basis of substantial
justice, NOPA is ultimately praying for a Writ
of Certiorari enjoining the action for breach of contract from
being decided on the merits. Whats sauce for the goose is
sauce for the gander. A party cannot expect its opponent to
comply with the technical rules of procedure while, at the
same time, hoping for the relaxation of the technicalities in its
favor.
There was therefore no grave abuse of discretion on the part
of the Court of Appeals warranting this Courts reversal of the
exercise of discretion by the former. However, even if we
decide to brush aside the lapses in technicalities on the part of
NOPA in its Petition for Certiorari, we nevertheless find that
such Petition would still fail.
NOPA seeks in its Petition for Certiorari for the application of
this Courts ruling in Manchester Development Corporation v.
Court of Appeals,[14] wherein we ruled that the court acquires
jurisdiction over any case only upon payment of the prescribed
docket fee. An amendment of the complaint or similar
pleading will not thereby vest jurisdiction in the court, much
less the payment of the docket fee based on the amount
sought in the amended pleading.
In denying[15] NOPAs Motion to Dismiss, the RTC cited Sun
Insurance Office, Ltd. (SIOL) v. Asuncion,[16] wherein
we modified our ruling in Manchester and decreed that where
the initiatory pleading is not accompanied by the payment of
the docket fee, the court may allow payment of the fee within
a reasonable period of time, but in no case beyond the
applicable prescriptive or reglementary period. The aforesaid
ruling was made on the justification that, unlike in Manchester,
the private respondent in Sun Insurance Office, Ltd.
(SIOL) demonstrated his willingness to abide by the rules by
paying the additional docket fees required. NOPA claims
that Sun is not applicable to the case at bar,
since Campos deliberately concealed his claim for damages in
the prayer.
In United Overseas Bank (formerly Westmont Bank) v.
Ros,[17] we discussed how Manchester was not applicable to
said case in view of the lack of deliberate intent to defraud
manifested in the latter:
This Court wonders how the petitioner could possibly arrive at
the conclusion that the private respondent was moved by
fraudulent intent in omitting the amount of damages claimed
in its Second Amended Complaint, thus placing itself on the
same footing as the complainant in Manchester, when it is
79
clear that the factual milieu of the instant case is far from that
of Manchester.
First, the complainant in Manchester paid the docket fee only
in the amount of P410.00, notwithstanding its claim for
damages in the amount of P78,750,000.00, while in the
present case, the private respondent paid P42,000.00 as
docket fees upon filing of the original complaint.
Second, complainant's counsel in Manchester claimed, in the
body of the complaint, damages in the amount of P78,750.00
but omitted the same in its prayer in order to evade the
payment of docket fees. Such fraud-defining circumstance is
absent in the instant petition.
Finally, when the court took cognizance of the issue of non-
payment of docket fees in Manchester, the complainant
therein filed an amended complaint, this time omitting all
mention of the amount of damages being claimed in the body
of the complaint; and when directed by the court to specify the
amount of damages in such amended complaint, it reduced
the same from P78,750,000.00 to P10,000,000.00, obviously
to avoid payment of the required docket fee. Again, this patent
fraudulent scheme is wanting in the case at bar.
This Court is not inclined to adopt the petitioner's piecemeal
construction of our rulings in Manchester and Sun Insurance.
Its attempt to strip the said landmark cases of one or two lines
and use them to bolster its arguments and clothe its position
with jurisprudential blessing must be struck down by this
Court.
All told, the rule is clear and simple. In case where the party
does not deliberately intend to defraud the court in payment
of docket fees, and manifests its willingness to abide by the
rules by paying additional docket fees when required by the
court, the liberal doctrine enunciated in Sun Insurance and not
the strict regulations set in Manchester will apply.
In the case at bar, Campos filed an amount of P54,898.50 as
docket fee, based on the amounts of P10,000,000.00
representing the value of unwithdrawn molasses, P100,00.00
as storage fee, P200,00.00 as moral damages, P100,000.00 as
exemplary damages and P500,000.00 as attorneys fees. The
total amount considered in computing the docket fee
was P10,900,000.00. NOPA alleges that Campos deliberately
omitted a claim for unrealized profit of P100,000.00 and an
excess amount of storage fee in the amount of P502,875.98 in
its prayer and, hence, the amount that should have been
considered in the payment of docket fees
is P11,502,875.98. The amount allegedly deliberately omitted
was therefore only P602,875.98 out of P11,502,875.98, or
merely 5.2% of said alleged total. Camposs pleadings
furthermore evince his willingness to abide by the rules by
paying the additional docket fees when required by the Court.

Since the circumstances of this case clearly show that there

was no deliberate intent to defraud the Court in the payment
of docket fees, the case of Sun should be applied, and the
Motion to Dismiss by NOPA should be denied.

WHEREFORE, the Resolutions of the Court of Appeals dated 23

May 2007 and 16 August 2007, respectively, in CA-G.R. SP No.
02651, outrightly dismissing the Petition for Certiorari filed by
petitioner Negros Oriental Planters Association, Inc. against
private respondent Aniceto Manojo Campos,
are AFFIRMED. No costs.

80
HEIRS OF BERTULDO[1] HINOG: Bertuldo Hinog II, Bertuldo
Hinog III, Bertuldo Hinog, Jr., Jocelyn Hinog, Bertoldo Hinog
IV, Bertoldo Hinog V, Edgardo Hinog, Milagros H. Pabatao,
Lilian H. King, Victoria H. Engracia, Terisita C. Hinog, Paz H.
Besana, Roberto C. Hinog, Vicente C. Hinog, Roel C. Hinog,
Marilyn C. Hinog, Bebot C. Hinog, lordes C. Hinog, Pablo
Chiong, Arlene Lanasang (All respresented by Bertuldo Hinog
III), petitioners, vs. HON. ACHILLES MELICOR, in his capacity
as Presiding Judge, RTC, Branch 4, 7th Judicial Region,
Tagbiliran City, Bohol, and CUSTODIO BALANE, RUFO
BALANE, HONORIO BALANE, and TOMAS
BALANE, respondents. AUSTRIA-MARTINEZ, J.:
Before us is a petition for certiorari and prohibition under Rule
65 of the Rules of Court which assails the Orders dated March
22, 1999, August 13, 1999 and October 15, 1999 of the
Regional Trial Court, Branch 4, of Tagbilaran City, Bohol in Civil
Case No. 4923.
The factual background of the case is as follows: On May 21,
1991, private respondents Custodio, Rufo, Tomas and Honorio,
all surnamed Balane, filed a complaint for Recovery of
Ownership and Possession, Removal of Construction and
Damages against Bertuldo Hinog (Bertuldo for brevity). They
alleged that: they own a 1,399- square meter parcel of land
situated in Malayo Norte, Cortes, Bohol, designated as Lot No.
1714; sometime in March 1980, they allowed Bertuldo to use
a portion of the said property for a period of ten years and
construct thereon a small house of light materials at a nominal
annual rental of P100.00 only, considering the close relations
of the parties; after the expiration of the ten-year period, they
demanded the return of the occupied portion and removal of
the house constructed thereon but Bertuldo refused and
instead claimed ownership of the entire property.
Accordingly, private respondents sought to oust Bertuldo from
the premises of the subject property and restore upon
themselves the ownership and possession thereof, as well as
the payment of moral and exemplary damages, attorneys fees
and litigation expenses in amounts justified by the evidence. [2]
On July 2, 1991, Bertuldo filed his Answer. He alleged
ownership of the disputed property by virtue of a Deed of
Absolute Sale dated July 2, 1980, executed by one Tomas
Pahac with the knowledge and conformity of private
respondents.[3]
After the pre-trial, trial on the merits ensued. On November
18, 1997, private respondents rested their case. Thereupon,
Bertuldo started his direct examination. However, on June 24,
1998, Bertuldo died without completing his evidence.
On August 4, 1998, Atty. Sulpicio A. Tinampay withdrew as
counsel for Bertuldo as his services were terminated by
81
petitioner Bertuldo Hinog III. Atty. Veronico G. Petalcorin then
entered his appearance as new counsel for Bertuldo.[4]
On September 22, 1998, Atty. Petalcorin filed a motion to
expunge the complaint from the record and nullify all court
proceedings on the ground that private respondents failed to
specify in the complaint the amount of damages claimed so as
to pay the correct docket fees; and that under Manchester
Development Corporation vs. Court of Appeals,[5] non-payment
of the correct docket fee is jurisdictional.[6]
In an amended motion, filed on October 2, 1998, Atty.
Petalcorin further alleged that the private respondents failed
to pay the correct docket fee since the main subject matter of
the case cannot be estimated as it is for recovery of ownership,
possession and removal of construction.[7]
Private respondents opposed the motion to expunge on the
following grounds: (a) said motion was filed more than seven
years from the institution of the case; (b) Atty. Petalcorin has
not complied with Section 16, Rule 3 of the Rules of Court
which provides that the death of the original defendant
requires a substitution of parties before a lawyer can have
legal personality to represent a litigant and the motion to
expunge does not mention of any specific party whom he is
representing; (c) collectible fees due the court can be charged
as lien on the judgment; and (d) considering the lapse of time,
the motion is merely a dilatory scheme employed by
petitioners.[8]
In their Rejoinder, petitioners manifested that the lapse of
time does not vest the court with jurisdiction over the case due
to failure to pay the correct docket fees. As to the contention
that deficiency in payment of docket fees can be made as a lien
on the judgment, petitioners argued that the payment of filing
fees cannot be made dependent on the result of the action
taken.[9]
On January 21, 1999, the trial court, while ordering the
complaint to be expunged from the records and the
nullification of all court proceedings taken for failure to pay the
correct docket fees, nonetheless, held:
The Court can acquire jurisdiction over this case only upon the
payment of the exact prescribed docket/filing fees for the main
cause of action, plus additional docket fee for the amount of
damages being prayed for in the complaint, which amount
should be specified so that the same can be considered in
assessing the amount of the filing fees. Upon the complete
payment of such fees, the Court may take appropriate action
in the light of the ruling in the case of Manchester
Development Corporation vs. Court of Appeals, supra.[10]
Accordingly, on January 28, 1999, upon payment of deficiency
docket fee, private respondents filed a manifestation with
prayer to reinstate the case.[11] Petitioners opposed the
reinstatement[12] but on March 22, 1999, the trial court issued
the first assailed Order reinstating the case.[13]
On May 24, 1999, petitioners, upon prior leave of
court,[14] filed their supplemental pleading, appending therein
a Deed of Sale dated November 15, 1982.[15] Following the
submission of private respondents opposition thereto, [16] the
trial court, in its Order dated July 7, 1999, denied the
supplemental pleading on the ground that the Deed of
Absolute Sale is a new matter which was never mentioned in
the original answer dated July 2, 1991, prepared by Bertuldos
original counsel and which Bertuldo verified; and that such
new document is deemed waived in the light of Section 1, Rule
9[17] of the Rules of Court. The trial court also noted that no
formal substitution of the parties was made because of the
failure of defendants counsel to give the names and addresses
of the legal representatives of Bertuldo, so much so that the
supposed heirs of Bertuldo are not specified in any pleading in
the case. [18]
On July 14, 1999, petitioners manifested that the trial court
having expunged the complaint and nullified all court
proceedings, there is no valid case and the complaint should
not be admitted for failure to pay the correct docket fees; that
there should be no case to be reinstated and no case to
proceed as there is no complaint filed.[19]
After the submission of private respondents opposition[20] and
petitioners rejoinder,[21] the trial court issued the second
assailed Order on August 13, 1999, essentially denying
petitioners manifestation/rejoinder. The trial court held that
the issues raised in such manifestation/rejoinder are
practically the same as those raised in the amended motion to
expunge which had already been passed upon in the Order
dated January 21, 1999. Moreover, the trial court observed
that the Order dated March 22, 1999 which reinstated the case
was not objected to by petitioners within the reglementary
period or even thereafter via a motion for reconsideration
despite receipt thereof on March 26, 1999.[22]
On August 25, 1999, petitioners filed a motion for
reconsideration[23] but the same was denied by the trial court
in its third assailed Order dated October 15, 1999. The trial
court held that the Manchester rule was relaxed in Sun
Insurance Office, Ltd. vs. Asuncion.[24] Noting that there has
been no substitution of parties following the death of
Bertuldo, the trial court directed Atty. Petalcorin to comply
with the provisions of Section 16, Rule 3 of the Rules of Court.
The trial court also reiterated that the Order dated March 22,
1999 reinstating the case was not assailed by petitioners
within the reglementary period, despite receipt thereof on
March 26, 1999.[25]
82
On November 19, 1999, Atty. Petalcorin complied with the
directive of the trial court to submit the names and addresses
of the heirs of Bertuldo.[26]
On November 24, 1999, petitioners filed before us the present
petition for certiorari and prohibition.[27] They allege that the
public respondent committed grave abuse of discretion in
allowing the case to be reinstated after private respondents
paid the docket fee deficiency since the trial court had earlier
expunged the complaint from the record and nullified all
proceedings of the case and such ruling was not contested by
the private respondents. Moreover, they argue that the public
respondent committed grave abuse of discretion in allowing
the case to be filed and denying the manifestation with motion
to dismiss, despite the defect in the complaint which prayed
for damages without specifying the amounts, in violation of SC
Circular No. 7, dated March 24, 1988.
In their Comment, private respondents aver that no grave
abuse of discretion was committed by the trial court in
reinstating the complaint upon the payment of deficiency
docket fees because petitioners did not object thereto within
the reglementary period. Besides, Atty. Petalcorin possessed
no legal personality to appear as counsel for the heirs of
Bertuldo until he complies with Section 16, Rule 3 of the Rules
of Court.[28]
At the outset, we note the procedural error committed by
petitioners in directly filing the instant petition before this
Court for it violates the established policy of strict observance
of the judicial hierarchy of courts.
Although the Supreme Court, Court of Appeals and the
Regional Trial Courts have concurrent jurisdiction to issue writs
of certiorari, prohibition, mandamus, quo warranto, habeas
corpus and injunction, such concurrence does not give the
petitioner unrestricted freedom of choice of court forum.[29] As
we stated in People vs. Cuaresma:[30]
This Court's original jurisdiction to issue writs of certiorari is
not exclusive. It is shared by this Court with Regional Trial
Courts and with the Court of Appeals. This concurrence of
jurisdiction is not, however, to be taken as according to parties
seeking any of the writs an absolute, unrestrained freedom of
choice of the court to which application therefor will be
directed. There is after all a hierarchy of courts. That hierarchy
is determinative of the venue of appeals, and also serves as a
general determinant of the appropriate forum for petitions for
the extraordinary writs. A becoming regard for that judicial
hierarchy most certainly indicates that petitions for the
issuance of extraordinary writs against first level (inferior)
courts should be filed with the Regional Trial Court, and those
against the latter, with the Court of Appeals. A direct
invocation of the Supreme Courts original jurisdiction to issue
these writs should be allowed only when there are special and passed, did they raise the issue that the complaint should not
important reasons therefor, clearly and specifically set out in have been reinstated in the first place because the trial court
the petition. This is [an] established policy. It is a policy had no jurisdiction to do so, having already ruled that the
necessary to prevent inordinate demands upon the Courts complaint shall be expunged.
time and attention which are better devoted to those matters
After recognizing the jurisdiction of the trial court by seeking
within its exclusive jurisdiction, and to prevent further over-
affirmative relief in their motion to serve supplemental
crowding of the Courts docket.[31]
pleading upon private respondents, petitioners are effectively
The rationale for this rule is two-fold: (a) it would be an barred by estoppel from challenging the trial courts
imposition upon the precious time of this Court; and (b) it jurisdiction.[38] If a party invokes the jurisdiction of a court, he
would cause an inevitable and resultant delay, intended or cannot thereafter challenge the courts jurisdiction in the same
otherwise, in the adjudication of cases, which in some case.[39] To rule otherwise would amount to speculating on the
instances had to be remanded or referred to the lower court fortune of litigation, which is against the policy of the Court.[40]
as the proper forum under the rules of procedure, or as better
Nevertheless, there is a need to correct the erroneous
equipped to resolve the issues because this Court is not a trier
impression of the trial court as well as the private respondents
of facts.[32]
that petitioners are barred from assailing the Order dated
Thus, this Court will not entertain direct resort to it unless the March 22, 1999 which reinstated the case because it was not
redress desired cannot be obtained in the appropriate courts, objected to within the reglementary period or even thereafter
and exceptional and compelling circumstances, such as cases via a motion for reconsideration despite receipt thereof on
of national interest and of serious implications, justify the March 26, 1999.
availment of the extraordinary remedy of writ of certiorari,
It must be clarified that the said order is but a resolution on an
calling for the exercise of its primary jurisdiction. Exceptional
incidental matter which does not touch on the merits of the
and compelling circumstances were held present in the
case or put an end to the proceedings.[41] It is an interlocutory
following cases: (a) Chavez vs. Romulo[33] on citizens right to
order since there leaves something else to be done by the trial
bear arms; (b) Government of the United States of America vs.
court with respect to the merits of the case.[42] As such, it is not
Purganan[34] on bail in extradition proceedings; (c) Commission
subject to a reglementary period. Reglementary period refers
on Elections vs. Quijano-Padilla[35] on government contract
to the period set by the rules for appeal or further review of a
involving modernization and computerization of voters
final judgment or order, i.e., one that ends the litigation in the
registration list; (d) Buklod ng Kawaning EIIB vs. Zamora[36] on
trial court.
status and existence of a public office; and (e) Fortich vs.
Corona[37] on the so-called Win-Win Resolution of the Office of Moreover, the remedy against an interlocutory order is
the President which modified the approval of the conversion generally not to resort forthwith to certiorari, but to continue
to agro-industrial area. with the case in due course and, when an unfavorable verdict
is handed down, to take an appeal in the manner authorized
In this case, no special and important reason or exceptional
by law.[43] Only when the court issued such order without or in
and compelling circumstance analogous to any of the above
excess of jurisdiction or with grave abuse of discretion and
cases has been adduced by the petitioners so as to justify
when the assailed interlocutory order is patently erroneous
direct recourse to this Court. The present petition should have
and the remedy of appeal would not afford adequate and
been initially filed in the Court of Appeals in strict observance
expeditious relief will certiorari be considered an appropriate
of the doctrine on the hierarchy of courts. Failure to do so is
remedy to assail an interlocutory order.[44] Such special
sufficient cause for the dismissal of the petition at bar.
circumstances are absolutely wanting in the present case.
In any event, even if the Court disregards such procedural flaw,
Time and again, the Court has held that the Manchester
the petitioners contentions on the substantive aspect of the
rule has been modified in Sun Insurance Office, Ltd. (SIOL) vs.
case fail to invite judgment in their favor.
Asuncion[45] which defined the following guidelines involving
The unavailability of the writ of certiorari and prohibition in the payment of docket fees:
this case is borne out of the fact that petitioners principally
1. It is not simply the filing of the complaint or appropriate
assail the Order dated March 22, 1999 which they never
initiatory pleading, but the payment of the prescribed docket
sought reconsideration of, in due time, despite receipt thereof
fee, that vests a trial court with jurisdiction over the subject-
on March 26, 1999. Instead, petitioners went through the
matter or nature of the action. Where the filing of the initiatory
motion of filing a supplemental pleading and only when the
pleading is not accompanied by payment of the docket fee, the
latter was denied, or after more than three months have
court may allow payment of the fees within a reasonable time
83
but in no case beyond the applicable prescriptive or Thus, while the docket fees were based only on the real
reglementary period. property valuation, the trial court acquired jurisdiction over
the action, and judgment awards which were left for
2. The same rule applies to permissive counterclaims, third-
determination by the court or as may be proven during trial
party claims and similar pleadings, which shall not be
would still be subject to additional filing fees which shall
considered filed until and unless the filing fee prescribed
constitute a lien on the judgment. It would then be the
therefor is paid. The court may also allow payment of said fee
responsibility of the Clerk of Court of the trial court or his duly
within a reasonable time but also in no case beyond its
authorized deputy to enforce said lien and assess and collect
applicable prescriptive or reglementary period.
the additional fees.[51]
3. Where the trial court acquires jurisdiction over a claim by
It is worth noting that when Bertuldo filed his Answer on July
the filing of the appropriate pleading and payment of the
2, 1991, he did not raise the issue of lack of jurisdiction for non-
prescribed filing fee but, subsequently, the judgment awards a
payment of correct docket fees. Instead, he based his defense
claim not specified in the pleading, or if specified the same has
on a claim of ownership and participated in the proceedings
been left for determination by the court, the additional filing
before the trial court. It was only in September 22, 1998 or
fee therefor shall constitute a lien on the judgment. It shall be
more than seven years after filing the answer, and under the
the responsibility of the Clerk of Court or his duly authorized
auspices of a new counsel, that the issue of jurisdiction was
deputy to enforce said lien and assess and collect the
raised for the first time in the motion to expunge by Bertuldos
additional fee.
heirs.
Plainly, while the payment of the prescribed docket fee is a
After Bertuldo vigorously participated in all stages of the case
jurisdictional requirement, even its non-payment at the time
before the trial court and even invoked the trial courts
of filing does not automatically cause the dismissal of the case,
authority in order to ask for affirmative relief, petitioners,
as long as the fee is paid within the applicable prescriptive or
considering that they merely stepped into the shoes of their
reglementary period, more so when the party involved
predecessor, are effectively barred by estoppel from
demonstrates a willingness to abide by the rules prescribing
challenging the trial courts jurisdiction. Although the issue of
such payment.[46] Thus, when insufficient filing fees were
jurisdiction may be raised at any stage of the proceedings as
initially paid by the plaintiffs and there was no intention to
the same is conferred by law, it is nonetheless settled that a
defraud the government, the Manchester rule does not
party may be barred from raising it on ground of laches or
apply.[47]
estoppel.[52]
Under the peculiar circumstances of this case, the
Moreover, no formal substitution of the parties was effected
reinstatement of the complaint was just and proper
within thirty days from date of death of Bertuldo, as required
considering that the cause of action of private respondents,
by Section 16, Rule 3[53] of the Rules of Court. Needless to
being a real action, prescribes in thirty years, [48] and private
stress, the purpose behind the rule on substitution is the
respondents did not really intend to evade the payment of the
protection of the right of every party to due process. It is to
prescribed docket fee but simply contend that they could not
ensure that the deceased party would continue to be properly
be faulted for inadequate assessment because the clerk of
represented in the suit through the duly appointed legal
court made no notice of demand or reassessment. [49] They
representative of his estate.[54] Non-compliance with the rule
were in good faith and simply relied on the assessment of the
on substitution would render the proceedings and judgment of
clerk of court.
the trial court infirm because the court acquires no jurisdiction
Furthermore, the fact that private respondents prayed for over the persons of the legal representatives or of the heirs on
payment of damages in amounts justified by the evidence does whom the trial and the judgment would be binding. [55] Thus,
not call for the dismissal of the complaint for violation of SC proper substitution of heirs must be effected for the trial court
Circular No. 7, dated March 24, 1988 which required that all to acquire jurisdiction over their persons and to obviate any
complaints must specify the amount of damages sought not future claim by any heir that he was not apprised of the
only in the body of the pleadings but also in the prayer in order litigation against Bertuldo or that he did not authorize Atty.
to be accepted and admitted for filing. Sun Petalcorin to represent him.
Insurance effectively modified SC Circular No. 7 by providing
The list of names and addresses of the heirs was submitted
that filing fees for damages and awards that cannot be
sixteen months after the death of Bertuldo and only when the
estimated constitute liens on the awards finally granted by the
trial court directed Atty. Petalcorin to comply with the
trial court.[50]
provisions of Section 16, Rule 3 of the Rules of Court. Strictly
speaking therefore, before said compliance, Atty. Petalcorin
84
had no standing in the court a quo when he filed his pleadings.
Be that as it may, the matter has been duly corrected by the
Order of the trial court dated October 15, 1999.

To be sure, certiorari under Rule 65[56] is a remedy narrow in

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

Petitioners utterly failed to show that the trial court gravely

abused its discretion in issuing the assailed resolutions. On the
contrary, it acted prudently, in accordance with law and
jurisprudence.

CAUSES OF ACTION
85
 JUANA COMPLEX I
HOMEOWNERS ASSOCIATION,
INC.,Petitioners,
- versus - FIL-ESTATE LAND,
INC.,
Before the Court are two (2) consolidated petitions assailing
the July 31, 2001 Decision[1] and February 21, 2002
Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No.
60543, which annulled and set aside the March 3, 1999
Order[3] of the Regional Trial Court, Branch 25, Bian,
Laguna (RTC), granting the application for the issuance of a
writ of preliminary injunction, and upheld the June 16, 2000
Omnibus Order[4] denying the motion to dismiss.
The Facts: On January 20, 1999, Juana Complex I Homeowners
Association, Inc. (JCHA), together with individual residents of
Juana Complex I and other neighboring
subdivisions (collectively referred as JCHA, et. al.), instituted a
complaint[5] for damages, in its own behalf and as a class suit
representing the regular commuters and motorists of Juana
Complex I and neighboring subdivisions who were deprived of
the use of La Paz Road, against Fil-Estate Land, Inc. (Fil-Estate),
Fil-estate Ecocentrum Corporation (FEEC), La Paz Housing &
Development Corporation (La Paz), and Warbird Security
Agency and their respective officers (collectively referred as Fil-
Estate, et al.).
The complaint alleged that JCHA, et al. were regular
commuters and motorists who constantly travelled towards
the direction of Manila and Calamba; that they used the entry
and exit toll gates of South Luzon Expressway (SLEX) by passing
through right-of-way public road known as La Paz Road; that
they had been using La Paz Road for more than ten (10) years;
that in August 1998, Fil-estate excavated, broke and
deliberately ruined La Paz Road that led to SLEX so JCHA, et al.
would not be able to pass through the said road; that La Paz
Road was restored by the residents to make it passable but Fil-
estate excavated the road again; that JCHA reported the
matter to the Municipal Government and the Office of the
Municipal Engineer but the latter failed to repair the road to
make it passable and safe to motorists and pedestrians; that
the act of Fil-estate in excavating La Paz Road caused damage,
prejudice, inconvenience, annoyance, and loss of precious
hours to them, to the commuters and motorists because traffic
86
was re-routed to narrow streets that caused terrible traffic
congestion and hazard; and that its permanent closure would
not only prejudice their right to free and unhampered use of
the property but would also cause great damage and
irreparable injury.
Accordingly, JCHA, et al. also prayed for the immediate
issuance of a Temporary Restraining Order (TRO) or a writ of
preliminary injunction (WPI) to enjoin Fil-Estate, et al. from
stopping and intimidating them in their use of La Paz Road.
On February 10, 1999, a TRO was issued ordering Fil-Estate, et
al, for a period of twenty (20) days, to stop preventing,
coercing, intimidating or harassing the commuters and
motorists from using the La Paz Road. [6]
Subsequently, the RTC conducted several hearings to
determine the propriety of the issuance of a WPI.
On February 26, 1999, Fil-Estate, et al. filed a motion to
dismiss[7] arguing that the complaint failed to state a cause of
action and that it was improperly filed as a class suit. On March
5, 1999, JCHA, et al. filed their comment[8] on the motion to
dismiss to which respondents filed a reply.[9]
On March 3, 1999, the RTC issued an Order [10] granting the
WPI and required JCHA, et al. to post a bond. On March 19,
1999, Fil-Estate, et al. filed a motion for
[11]
reconsideration arguing, among others, that JCHA, et al.
failed to satisfy the requirements for the issuance of a WPI.
On March 23, 1999, JCHA, et al. filed their opposition to the
motion.[12]
The RTC then issued its June 16, 2000 Omnibus Order, denying
both the motion to dismiss and the motion for reconsideration
filed by Fil-Estate, et al.
Not satisfied, Fil-Estate, et al. filed a petition for certiorari and
prohibition before the CA to annul (1) the Order dated March
3, 1999 and (2) the Omnibus Order dated June 16, 2000. They
contended that the complaint failed to state a cause of action
and that it was improperly filed as a class suit. With regard to
the issuance of the WPI, the defendants averred that JCHA, et
al. failed to show that they had a clear and unmistakable right
to the use of La Paz Road; and further claimed that La Paz Road
was a torrens registered private road and there was neither a
voluntary nor legal easement constituted over it.[13]
On July 31, 2001, the CA rendered the decision partially
granting the petition, the dispositive portion of which reads:
WHEREFORE, the petition is hereby partially GRANTED. The
Order dated March 3, 1999 granting the writ of preliminary
injunction is hereby ANNULLED and SET ASIDE but the portion
of the Omnibus Order dated June 16, 2000 denying the motion
to dismiss is upheld. SO ORDERED.[14]
 The CA ruled that the complaint sufficiently stated a cause of
action when JCHA, et al. alleged in their complaint that they
had been using La Paz Road for more than ten (10) years and
that their right was violated when Fil-Estate closed and
excavated the road. It sustained the RTC ruling that the
complaint was properly filed as a class suit as it was shown that
the case was of common interest and that the individuals
sought to be represented were so numerous that it was
impractical to include all of them as parties. The CA, however,
annulled the WPI for failure of JCHA, et al. to prove their clear
and present right over La Paz Road. The CA ordered the
remand of the case to the RTC for a full-blown trial on the
merits.
Hence, these petitions for review.
In G.R. No. 152272, JCHA, et al. come to this Court, raising the
following issues: (A). THE HONORABLE COURT OF APPEALS, IN
HOLDING THAT A FULL-BLOWN TRIAL ON THE MERITS IS
REQUIRED TO DETERMINE THE NATURE OF THE LA PAZ ROAD,
HAD DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF
JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE
POWER OF SUPERVISION.
(B) THE HONORABLE COURT OF APPEALS, IN HOLDING THAT
THE PETITIONERS FAILED TO SATISFY THE REQUIREMENTS FOR
THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION, HAD
DECIDED NOT IN ACCORD WITH LAW AND WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT.[15]
In G.R. No. 152397, on the other hand, Fil-Estate, et al. anchor
their petition on the following issues:
I.The Court of Appeals declaration that respondents
Complaint states a cause of action is contrary to existing law
and jurisprudence.
II.The Court of Appeals pronouncement that respondents
complaint was properly filed as a class suit is contrary to
existing law and jurisprudence. III. The Court of Appeals
conclusion that full blown trial on the merits is required to
determine the nature of the La Paz Road is contrary to existing
laws and jurisprudence.[16]
JCHA, et al. concur with the CA that the complaint sufficiently
stated a cause of action. They, however, disagree with the CAs
pronouncement that a full-blown trial on the merits was
necessary. They claim that during the hearing on the
application of the writ of injunction, they had sufficiently
proven that La Paz Road was a public road and that commuters
and motorists of their neighboring villages had used this road
as their means of access to the San Agustin Church, Colegio De
San Agustin and to SLEX in going to Metro Manila and to
Southern Tagalog particularly during the rush hours when
87
traffic at Carmona Entry/Exit and Susana Heights Entry/Exit
was at its worst.
JCHA, et al. argue that La Paz Road has attained the status and
character of a public road or burdened by an apparent
easement of public right of way. They point out that La Paz
Road is the widest road in the neighborhood used by motorists
in going to Halang Road and in entering the SLEX-Halang toll
gate and that there is no other road as wide as La Paz
Road existing in the vicinity. For residents of San Pedro,
Laguna, the shortest, convenient and safe route towards SLEX
Halang is along Rosario Avenue joining La Paz Road.
Finally, JCHA, et al. argue that the CA erred when it voided the
WPI because the public nature of La Paz Road had been
sufficiently proven and, as residents of San Pedro and Bian,
Laguna, their right to use La Paz Road is undeniable.
In their Memorandum,[17] Fil-Estate, et al. explain that La Paz
Road is included in the parcels of land covered by Transfer
Certificates of Title (TCT) Nos. T-120008, T-90321 and T-90607,
all registered in the name of La Paz. The purpose of
constructing La Paz Road was to provide a passageway for La
Paz to its intended projects to the south, one of which was the
Juana Complex I. When Juana Complex I was completed, La Paz
donated the open spaces, drainage, canal, and lighting
facilities inside the Juana Complex I to the Municipality of Bian.
The streets within the subdivisions were then converted to
public roads and were opened for use of the general public.
The La Paz Road, not being part of the Juana Complex I, was
excluded from the donation. Subsequently, La Paz became a
shareholder of FEEC, a consortium formed to develop several
real properties in Bian, Laguna, known as Ecocentrum Project.
In exchange for shares of stock, La Paz contributed some of its
real properties to the Municipality of Bian, including the
properties constituting La Paz Road, to form part of the
Ecocentrum Project.
Fil-Estate, et al. agree with the CA that the annulment of the
WPI was proper since JCHA, et al. failed to prove that they have
a clear right over La Paz Road. Fil-Estate, et al. assert that JCHA,
et al. failed to prove the existence of a right of way or a right
to pass over La Paz Road and that the closure of the said road
constituted an injury to such right. According to them, La Paz
Road is a torrens registered private road and there is neither a
voluntary nor legal easement constituted over it. They claim
that La Paz Road is a private property registered under the
name of La Paz and the beneficial ownership thereof was
transferred to FEEC when La Paz joined the consortium for the
Ecocentrum Project.
Fil-Estate, et al., however, insist that the complaint did not
sufficiently contain the ultimate facts to show a cause of
action. They aver the bare allegation that one is entitled to
something is an allegation of a conclusion which adds nothing
to the pleading.
They likewise argue that the complaint was improperly filed as
a class suit for it failed to show that JCHA, et al. and the
commuters and motorists they are representing have a well-defined
community of interest over La Paz Road. They claim that the
excavation of La Paz Road would not necessarily give rise to a
common right or cause of action for JCHA, et al. against them since
each of them has a separate and distinct purpose and each may be
affected differently than the others.
The Courts Ruling. The issues for the Courts resolution are: (1)
whether or not the complaint states a cause of action; (2)
whether the complaint has been properly filed as a class suit;
and (2) whether or not a WPI is warranted.
Section 2, Rule 2 of the Rules of Court defines a cause of action
as an act or omission by which a party violates the right of
another. A complaint states a cause of action when it contains
three (3) essential elements of a cause of action, namely:
(1) the legal right of the plaintiff,
(2) the correlative obligation of the defendant, and
(3) the act or omission of the defendant in violation of said
legal right.[18]
The question of whether the complaint states a cause of
action is determined by its averments regarding the acts
committed by the defendant.[19] Thus, it must contain a
concise statement of the ultimate or essential facts
constituting the plaintiffs cause of action.[20] To be taken into
account are only the material allegations in the complaint;
extraneous facts and circumstances or other
matters aliunde are not considered.[21]
The test of sufficiency of facts alleged in the complaint as
constituting a cause of action is whether or not admitting the
facts alleged, the court could render a valid verdict in
accordance with the prayer of said complaint.[22] Stated
differently, if the allegations in the complaint furnish sufficient
basis by which the complaint can be maintained, the same
should not be dismissed regardless of the defense that may be
asserted by the defendant.[23]
In the present case, the Court finds the allegations in the
complaint sufficient to establish a cause of action. First, JCHA,
et al.s averments in the complaint show a demandable right
over La Paz Road. These are: (1) their right to use the road on
the basis of their allegation that they had been using the road
for more than 10 years; and (2) an easement of a right of way
has been constituted over the said roads. There is no other
road as wide as La Paz Road existing in the vicinity and it is the
shortest, convenient and safe route towards SLEX Halang that
88
the commuters and motorists may use. Second, there is an
alleged violation of such right committed by Fil-Estate, et al.
when they excavated the road and prevented the commuters
and motorists from using the same. Third, JCHA, et al.
consequently suffered injury and that a valid judgment could
have been rendered in accordance with the relief sought
therein.
With respect to the issue that the case was improperly
instituted as a class suit, the Court finds the opposition without
merit.
Section 12, Rule 3 of the Rules of Court defines a class suit, as
follows: Sec. 12. Class suit. When the subject matter of the
controversy is one of common or general interest to many
persons so numerous that it is impracticable to join all as
parties, a number of them which the court finds to be
sufficiently numerous and representative as to fully protect
the interests of all concerned may sue or defend for the benefit
of all. Any party in interest shall have the right to intervene to
protect his individual interest.
The necessary elements for the maintenance of a class suit
are: 1) the subject matter of controversy is one of common or
general interest to many persons; 2) the parties affected are
so numerous that it is impracticable to bring them all to court;
and 3) the parties bringing the class suit are sufficiently
numerous or representative of the class and can fully protect
the interests of all concerned.[24]
In this case, the suit is clearly one that benefits all commuters
and motorists who use La Paz Road. As succinctly stated by the
CA:
The subject matter of the instant case, i.e., the closure and
excavation of the La Paz Road, is initially shown to be of
common or general interest to many persons. The records
reveal that numerous individuals have filed manifestations
with the lower court, conveying their intention to join private
respondents in the suit and claiming that they are similarly
situated with private respondents for they were also
prejudiced by the acts of petitioners in closing and excavating
the La Paz Road. Moreover, the individuals sought to be
represented by private respondents in the suit are so
numerous that it is impracticable to join them all as parties and
be named individually as plaintiffs in the complaint. These
individuals claim to be residents of various barangays in Bian,
Laguna and other barangays in San Pedro, Laguna.
Anent the issue on the propriety of the WPI, Section 3, Rule 58
of the Rules of Court lays down the rules for the issuance
thereof. Thus:
 (a) That the applicant is entitled to the relief demanded, and the justification for the preliminary injunction pending the
whole or part of such relief consists in restraining the commission or decision of the case on the merits.[30] There are vital facts that
continuance of the acts complained of, or in the performance of an have yet to be presented during the trial which may not be
act or acts, either for a limited period or perpetually; obtained or presented during the hearing on the application
for the injunctive writ.[31] Moreover, the quantum of evidence
(b) That the commission, continuance or non-performance of the act
required for one is different from that for the other.[32]
or acts complained of during the litigation would probably work
injustice to the applicant; or WHEREFORE, the petitions are DENIED. Accordingly, the July
31, 2001 Decision and February 21, 2002 Resolution of the
(c) That a party, court, or agency or a person is doing, threatening, or
Court of Appeals in CA-G.R. SP No. 60543 are AFFIRMED.
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.

A writ of preliminary injunction is available to prevent a threatened

or continuous irremediable injury to parties before their claims can
be thoroughly studied and adjudicated.[25] The requisites for its
issuance are: (1) the existence of a clear and unmistakable right that
must be protected; and (2) an urgent and paramount necessity for
the writ to prevent serious damage.[26]For the writ to issue, the right
sought to be protected must be a present right, a legal right which
must be shown to be clear and positive.[27] This means that the
persons applying for the writ must show that they have an
ostensible right to the final relief prayed for in their
complaint.[28]

In the case at bench, JCHA, et al. failed to establish a prima facie proof
of violation of their right to justify the issuance of a WPI. Their right to
the use of La Paz Road is disputable since they have no clear legal right
therein. As correctly ruled by the CA:

Here, contrary to the ruling of respondent Judge, private

respondents failed to prove as yet that they have a clear and
unmistakable right over the La Paz Road which was sought to be
protected by the injunctive writ. They merely anchor their purported
right over the La Paz Road on the bare allegation that they have been
using the same as public road right-of-way for more than ten years. A
mere allegation does not meet the standard of proof that would
warrant the issuance of the injunctive writ. Failure to establish the
existence of a clear right which should be judicially protected through
the writ of injunction is a sufficient ground for denying the injunction.

Consequently, the case should be further heard by the RTC so that

the parties can fully prove their respective positions on the issues.

Due process considerations dictate that the assailed injunctive

writ is not a judgment on the merits but merely an order for
the grant of a provisional and ancillary remedy to preserve the
status quo until the merits of the case can be heard. The
hearing on the application for issuance of a writ of preliminary
injunction is separate and distinct from the trial on the merits
of the main case. [29] The evidence submitted during the
hearing of the incident is not conclusive or complete for only a
"sampling" is needed to give the trial court an idea of the
89
DEL ROSARIO VS. FAR EAST BANK COMPANY
The Regional Trial Court (RTC) of Makati City, Branch 65
(sic)[2] having, by Decision[3] of July 10, 2001, dismissed
petitioners complaint in Civil Case No. 00-540 on the ground
of res judicata and splitting of a cause of action, and by Order
of September 24, 2001[4] denied their motion for
reconsideration thereof, petitioners filed the present petition
for review on certiorari.
From the rather lengthy history of the present controversy, a
recital of the following material facts culled from the records
is in order.
On May 21, 1974, petitioner Davao Timber Corporation
(DATICOR) and respondent Private Development Corporation
of the Philippines (PDCP) entered into a loan agreement under
which PDCP extended to DATICOR a foreign currency loan of
US $265,000 and a peso loan of P2.5 million or a total amount
of approximately P4.4 million, computed at the then prevailing
rate of exchange of the dollar with the peso.
The loan agreement provided, among other things, that
DATICOR shall pay: (1) a service fee of one percent (1%) per
annum (later increased to six percent [6%] per annum) on the
outstanding balance of the peso loan; (2) 12 percent (12%) per
annum interest on the peso loan; and (3) penalty charges of
two percent (2%) per month in case of default.
The loans were secured by real estate mortgages over six
parcels of land one situated in Manila (the Otis property)
which was registered in the name of petitioner Ernesto C. Del
Rosario, and five in Mati, Davao Oriental and chattel
mortgages over pieces of machinery and equipment.
Petitioners paid a total of P3 million to PDCP, which the latter
applied to interest, service fees and penalty charges. This left
petitioners, by PDCPs computation, with an outstanding
balance on the principal of more than P10 million as of May 15,
1983.
By March 31, 1982, petitioners had filed a complaint
againstPDCP before the then Court of First Instance (CFI)
of Manila for violation of the Usury Law, annulment of
contract and damages. The case, docketed as Civil Case No. 82-
8088, was dismissed by the CFI.
On appeal, the then Intermediate Appellate Court (IAC) set
aside the CFIs dismissal of the complaint and declared void and
of no effect the stipulation of interest in the loan agreement
between DATICOR and PDCP.
PDCP appealed the IACs decision to this Court where it was
docketed as G.R. No. 73198.
90
In the interim, PDCP assigned a portion of its receivables from
petitioners (the receivables) to its co-respondent Far East Bank
and Trust Company (FEBTC) under a Deed of Assignment
dated April 10, 1987[5] for a consideration of P5,435,000. The
Deed of Assignment was later amended by two
Supplements.[6]
FEBTC, as assignee of the receivables, and petitioners later
executed a Memorandum of Agreement (MOA)
dated December 8, 1988 whereby petitioners agreed to, as
they did pay FEBTC[7] the amount of P6.4 million as full
settlement of the receivables.
On September 2, 1992, this Court promulgated its Decision in
G.R. No. 73198[8] affirming in toto the decision of the IAC. It
determined that after deducting the P3 million earlier paid by
petitioners to PDCP, their remaining balance on the principal
loan was only P1.4 million.
Petitioners thus filed on April 25, 1994 a Complaint[9] for sum
of money against PDCP and FEBTC before the RTC of Makati,
mainly to recover the excess payment which they computed to
be P5.3 million[10] P4.335 million from PDCP, and P965,000
from FEBTC. The case, Civil Case No. 94-1610, was raffled to
Branch 132 of the MakatiRTC.
On May 31, 1995, Branch 132 of the Makati RTC rendered a
decision[11] in Civil Case No. 94-1610 ordering PDCP to pay
petitioners the sum of P4.035 million,[12] to bear interest at
12% per annum from April 25, 1994 until fully paid; to execute
a release or cancellation of the mortgages on the five parcels
of land in Mati, Davao Oriental and on the pieces of machinery
and equipment and to return the corresponding titles to
petitioners; and to pay the costs of the suit.
As for the complaint of petitioners against respondent FEBTC,
the trial court dismissed it for lack of cause of action,
ratiocinating that the MOA between petitioners and FEBTC
was not subject to this Courts Decision in G.R. No. 73198,
FEBTC not being a party thereto.
From the trial courts decision, petitioners and respondent
PDCP appealed to the Court of Appeals (CA). The appeal was
docketed as CA-G.R. CV No. 50591.
On May 22, 1998, the CA rendered a decision[13] in CA-G.R. CV
No. 50591, holding that petitioners outstanding obligation,
which this Court had determined in G.R. No. 73198 to be P1.4
million, could not be increased or decreased by any act of the
creditor PDCP.
The CA held that when PDCP assigned its receivables, the
amount payable to it by DATICOR was the same amount
payable to assignee FEBTC, irrespective of any stipulation
that PDCP and FEBTC might have provided in the Deed of
Assignment, DATICOR not having been a party thereto, hence,
not bound by its terms.
Citing Articles 2154[14] and 2163[15] of the Civil Code which
embody the principle of solutio indebiti, the CA held that the
party bound to refund the excess payment of P5 million[16] was
FEBTC as it received the overpayment; and that FEBTC could
recover from PDCP the amount of P4.035 million representing
its overpayment for the assigned receivables based on the
terms of the Deed of Assignment or on the general principle of
equity.
Noting, however, that DATICOR claimed in its complaint only
the amount of P965,000 from FEBTC, the CA held that it could
not grant a relief different from or in excess of that prayed for.
Finally, the CA held that the claim of PDCP against DATICOR
for the payment of P1.4 million had no
basis, DATICORs obligation having already been paid in full,
overpaid in fact, when it paid assignee FEBTC the amount
of P6.4 million.
Accordingly, the CA ordered PDCP to execute a release or
cancellation of the mortgages it was holding over the Mati real
properties and the machinery and equipment, and to return
the corresponding certificates of title to petitioners. And it
ordered FEBTC to pay petitioners the amount of P965,000 with
legal interest from the date of the promulgation of its
judgment. FEBTCs motion for reconsideration of the CA
Decision was denied, and so was its subsequent appeal to this
Court.
On April 25, 2000, petitioners filed before the RTC of Makati a
Complaint[17] against FEBTC to recover the balance of the
excess payment of P4.335 million.[18] The case was docketed as
Civil Case No. 00-540, the precursor of the present case and
raffled to Branch 143 of the RTC.
In its Answer,[19] FEBTC denied responsibility, it submitting that
nowhere in the dispositive portion of the CA Decision in CA-
G.R. CV No. 50591 was it held liable to return the whole
amount of P5.435 million representing the consideration for
the assignment to it of the receivables, and since petitioners
failed to claim the said whole amount in their original
complaint in Civil Case No. 94-1610 as they were merely
claiming the amount of P965,000 from it, they were barred
from claiming it.
FEBTC later filed a Third Party Complaint[20] against PDCP
praying that the latter be made to pay the P965,000 and the
interests adjudged by the CA in favor of petitioners, as well as
91
the P4.335 million and interests that petitioners were claiming
from it. It posited that PDCP should be held liable because it
received a consideration of P5.435 million when it assigned the
receivables.
Answering[21] the Third Party Complaint, PDCP contended that
since petitioners were not seeking the recovery of the amount
of P965,000, the same cannot be recovered via the third party
complaint.
PDCP went on to contend that since the final and executory
decision in CA-G.R. CV No. 50591 had held that DATICOR has
no cause of action against it for the refund of any part of the
excess payment, FEBTC can no longer re-litigate the same
issue.
Moreover, PDCP contended that it was not privy to the MOA
which explicitly excluded the receivables from the effect of the
Supreme Court decision, and that the amount of P6.4 million
paid by petitioners to FEBTC was clearly intended as
consideration for the release and cancellation of the lien on
the Otis property.
Replying,[22] FEBTC pointed out that PDCP cannot deny that it
benefited from the assignment of its rights over the
receivables from petitioners. It added that the third party
claim being founded on a valid and justified cause, PDCPs
counterclaims lacked factual and legal basis.
Petitioners thereafter filed a Motion for Summary
Judgment[23] to which FEBTC filed its opposition.[24]
By Order of March 5, 2001, the trial court denied the motion
for summary judgment for lack of merit.[25]
On July 10, 2001, the trial court issued the assailed Decision
dismissing petitioners complaint on the ground
of res judicata and splitting of cause of action. It recalled that
petitioners had filed Civil Case No. 94-1610 to recover the
alleged overpayment both from PDCP and FEBTC and to secure
the cancellation and release of their mortgages on real
properties, machinery and equipment; that when said case
was appealed, the CA, in its Decision, ordered PDCP to release
and cancel the mortgages and FEBTC to pay P965,000 with
interest, which Decision became final and executory on
November 23, 1999; and that a Notice of Satisfaction of
Judgment between petitioners and FEBTC was in fact
submitted on August 8, 2000, hence, the issue between them
was finally settled under the doctrine of res judicata.
The trial court moreover noted that the MOA between
petitioners and FEBTC clearly stated that the pending litigation
before the Supreme Court of the Philippines with respect
to the Loan exclusive of the Receivables assigned to FEBTC
shall prevail up to the extent not covered by this
Agreement. That statement in the MOA, the trial court ruled,
categorically made only the loan subject to this Courts Decision
in G.R. No. 73198, hence, it was with the parties full knowledge
and consent that petitioners agreed to pay P6.4 million to
FEBTC as consideration for the settlement. The parties cannot
thus be allowed to welsh on their contractual obligations, the
trial court concluded.
Respecting the third party claim of FEBTC, the trial court held
that FEBTCs payment of the amount of P1,224,906.67
(P965,000 plus interest) to petitioners was in compliance with
the final judgment of the CA, hence, it could not entertain such
claim because the Complaint filed by petitioners merely sought
to recover from FEBTC the alleged overpayment of P4.335
million and attorneys fees of P200,000.
Petitioners motion for reconsideration[26] of the July 10,
2001 decision of the trial court was denied by Order
of September 24, 2001. Hence, the present petition.
In their Memorandum,[27] petitioners proffer that, aside from
the issue of whether their complaint is dismissible on the
ground of res judicata and splitting of cause of action, the
issues of 1) whether FEBTC can be held liable for the balance
of the overpayment of P4.335 million plus interest
which petitioners previously claimed against PDCP in Civil Case
No. 94-1610, and 2) whether PDCP can interpose as defense
the provision in the Deed of Assignment and the MOA that the
assignment of the receivables shall not be affected by this
Courts Decision in G.R. No. 73198, be considered.
Stripped of the verbiage, the only issue for this Courts
consideration is the propriety of the dismissal of Civil Case No.
00-540 upon the grounds stated by the trial court.This should
be so because a Rule 45 petition, like the one at bar, can raise
only questions of law (and that justifies petitioners elevation
of the case from the trial court directly to this Court) which
must be distinctly set forth.[28]
The petition is bereft of merit.
Section 47 of Rule 39 of the Rules of Court, on the doctrine
of res judicata, reads: Sec. 47. Effect of judgments or final
orders. The effect of a judgment or final order rendered by a
court of the Philippines, having jurisdiction to pronounce the
judgment or final order, may be as follows:
(b) In other cases, the judgment or final order is, with respect
to the matter directly adjudged or as to any other matter that
could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent
to the commencement of the action or special proceeding,
litigating for the same thing and under the same title and in the
same capacity; and
92
(c) In any other litigation between the same parties or their
successors in interest, that only is deemed to have been
adjudged in a former judgment or final order which appears
upon its face to have been so adjudged, or which was actually
and necessarily included therein or necessary
thereto. (Underscoring supplied)
The above-quoted provision lays down two main
rules. Section 49(b) enunciates the first rule of res
judicata known as bar by prior judgment or estoppel by
judgment, which states that the judgment or decree of a court
of competent jurisdiction on the merits concludes the parties
and their privies to the litigation and constitutes a bar to a new
action or suit involving the same cause of action either before
the same or any other tribunal.[29]
Stated otherwise, bar by former judgment makes the
judgment rendered in the first case an absolute bar to the
subsequent action since that judgment is conclusive not only
as to the matters offered and received to sustain it but also as
to any other matter which might have been offered for that
purpose and which could have been adjudged therein. [30] It is
in this concept that the term res judicata is more commonly
and generally used as a ground for a motion to dismiss in civil
cases.[31]
The second rule of res judicata embodied in Section 47(c), Rule
39 is conclusiveness of judgment. This rule provides that any
right, fact, or matter in issue directly adjudicated or necessarily
involved in the determination of an action before a competent
court in which a judgment or decree is rendered on the merits
is conclusively settled by the judgment therein and cannot
again be litigated between the parties and their privies
whether or not the claim or demand, purpose, or subject
matter of the two suits is the same.[32] It refers to a situation
where the judgment in the prior action operates as an
estoppel only as to the matters actually determined or which
were necessarily included therein.[33]
The case at bar satisfies the four essential requisites of bar by
prior judgment, viz:
(a) finality of the former judgment;
9b) the court which rendered it had jurisdiction over the
subject matter and the parties;
(c) it must be a judgment on the merits; and
(d) there must be, between the first and second actions,
identity of parties, subject matter and causes of action.[34]
There is no doubt that the judgment on appeal relative to Civil
Case No. 94-1610 (that rendered in CA-G.R. CV No. 50591) was
a final judgment. Not only did it dispose of the case on the
merits; it also became executory as a consequence of the Notably, the same facts were also pleaded by the parties in
denial of FEBTCs motion for reconsideration and appeal.[35] support of their allegations for, and defenses against, the
recovery of the P4.335 million. Petitioners, of course, plead
Neither is there room to doubt that the judgment in Civil Case
the CA Decision as basis for their subsequent claim for the
No. 94-1610 was on the merits for it determined the rights and
remainder of their overpayment. It is well established,
liabilities of the parties.[36] To recall, it was ruled that: (1)
however, that a party cannot, by varying the form of action or
DATICOR overpaid by P5.3 million; (2) FEBTC was bound to
adopting a different method of presenting his case, or by
refund the excess payment but because DATICORs claim
pleading justifiable circumstances as herein petitioners are
against FEBTC was only P965,000, the court could only grant so
doing, escape the operation of the principle that one and the
much as the relief prayed for; and (3) PDCP has no further
same cause of action shall not be twice litigated.[40]
claim against DATICOR because its obligation had
already been paid in full. In fact, authorities tend to widen rather than restrict the
doctrine of res judicata on the ground that public as well as
Right or wrong, that judgment bars another case based upon
private interest demands the ending of suits by requiring the
the same cause of action.[37]
parties to sue once and for all in the same case all the special
As to the requisite of identity of parties, subject matter and proceedings and remedies to which they are entitled.[41]
causes of action, it cannot be gainsaid that the first case, Civil
This Court finds well-taken then the pronouncement of the
Case No. 94-1610, was brought by petitioners to recover an
court a quo that to allow the re-litigation of an issue that was
alleged overpayment of P5.3 million P965,000 from FEBTC
finally settled as between petitioners and FEBTC in the prior
and P4.335 million from PDCP.
case is to allow the splitting of a cause of action, a ground for
On the other hand, Civil Case No. 00-540, filed by the same dismissal under Section 4 of Rule 2 of the Rules of Court
petitioners, was for the recovery of P4.335 million which is reading:
admittedly part of the P5.3 million earlier sought to be
SEC. 4. Splitting of a single cause of action; effect of. If two or
recovered in Civil Case No. 94-1610. This time, the action was
more suits are instituted on the basis of the same cause of
brought solely against FEBTC which in turn impleaded PDCP as
action, the filing of one or a judgment upon the merits in any
a third party defendant.
one is available as a ground for the dismissal of the others.
In determining whether causes of action are identical to (Emphasis and underscoring supplied)
warrant the application of the rule of res judicata, the test is to
This rule proscribes a party from dividing a single or indivisible
ascertain whether the same evidence which is necessary to
cause of action into several parts or claims and instituting two
sustain the second action would suffice to authorize a recovery
or more actions based on it.[42] Because the plaintiff cannot
in the first even in cases in which the forms or nature of the
divide the grounds for recovery, he is mandated to set forth in
two actions are different.[38] Simply stated, if the same facts or
his first action every ground for relief which he claims to exist
evidence would sustain both, the two actions are considered
and upon which he relies; he cannot be permitted to rely upon
the same within the rule that the judgment in the former is a
them by piecemeal in successive actions to recover for the
bar to the subsequent action.
same wrong or injury.[43]
It bears remembering that a cause of action is the delict or the
Clearly then, the judgment in Civil Case No. 94-1610 operated
wrongful act or omission committed by the defendant in
as a bar to Civil Case No. 00-540, following the above-quoted
violation of the primary rights of the plaintiff.[39]
Section 4, Rule 2 of the Rules of Court.
In the two cases, petitioners imputed to FEBTC the same
A final word. Petitioners are sternly reminded that both the
alleged wrongful act of mistakenly receiving and refusing to
rules on res judicata and splitting of causes of action are based
return an amount in excess of what was due it in violation of
on the salutary public policy against unnecessary multiplicity
their right to a refund. The same facts and evidence presented
of suits interest reipublicae ut sit finis litium.[44] Re-litigation of
in the first case, Civil Case No. 94-1610, were the very same
matters already settled by a courts final judgment merely
facts and evidence that petitioners presented in Civil Case No.
burdens the courts and the taxpayers, creates uneasiness and
00-540.
confusion, and wastes valuable time and energy that could be
Thus, the same Deed of Assignment between PDCP and FEBTC, devoted to worthier cases.[45]
the first and second supplements to the Deed, the MOA
WHEREFORE, the Petition is DENIED. The assailed Decision of
between petitioners and FEBTC, and this Courts Decision in
the RTC, Branch 143, Makati dismissing petitioners complaint
G.R. No. 73198 were submitted in Civil Case No. 00-540.
in Civil Case No. 00-540 is AFFIRMED.
93
PROGRESSIVE DEVELOPMENT CORPORATION,
INC., petitioner, vs. COURT OF APPEALS and WESTIN
SEAFOOD MARKET, INC., respondents. BELLOSILLO, J.:
May the lessee which instituted before the Metropolitan Trial
Court an action for forcible entry with damages against its
lessor file a separate suit with the Regional Trial Court against
the same lessor for moral and exemplary damages plus actual
and compensatory damages based on the same forcible entry?
On grounds of litis pendencia and forum-shopping, petitioner
invokes established jurisprudence that a party cannot by
varying the form of action or adopting a different method
of presenting his case evade the principle that the same cause
of action shall not be litigated twice between the same
parties or their privies.[1] Petitioner therefore prays for
reversal of the decision of the Court of Appeals dated 27 May
1995, as well as its Resolution dated 17 January 1996 denying
reconsideration, which upheld the denial by the Regional Trial
Court of petitioner's motion to dismiss private respondent's
damage suit.
The antecedents: On 27 May 1991 petitioner leased to private
respondent Westin Seafood Market, Inc., a parcel of land with
a commercial building thereon located at Araneta Center,
Cubao, Quezon City, for a period of nine (9) years and three (3)
months, i.e., from 2 January 1989 to 30 April 1998, with a
monthly rental of approximately P600,000.00. The contract
contained, among others, the following pertinent terms and
conditions:
EFFECT OF VIOLATIONS
25. LESSEE hereby agrees that all the provisions contained in
this Contract shall be deemed as conditions, as well as
covenants, and that this Contract shall be automatically
terminated and cancelled without resorting to court action
should LESSEE violate any or all said conditions, including the
payment of Rent, CUSA and other charges indicated in the FLP
when due within the time herein stipulated and in any such
cases, LESSEE hereby irrevocably appoints LESSOR, its
authorized agents, employees and/or representatives as his
duly authorized attorney-in-fact, even after the termination,
expiration or cancellationof this Contract, with full power and
authority to open, enter, repossess, secure, enclose, fence and
otherwise take full and complete physical possession and
control of the leased premises and its contents without
resorting to court action and/or to summarily disconnect
electrical and/or water services thereof, and that LESSEE
hereby irrevocably empowers LESSOR, his authorized agents,
employees and/or representatives to take inventory and
possession of whatever equipment, furniture, articles,
merchandise, appliances, etc., found therein belonging to
LESSEE, consignors and/or to any other persons and to place
94
the same in LESSORs warehouse or any other place at
LESSORs discretion for safekeeping; charging LESSEE the
corresponding storage fees therefor; that in case LESSEE fails
to claim said equipment, furniture, articles, merchandise,
appliances, etc. from storage and simultaneously liquidate any
liability with LESSOR within seven (7) days from date of said
transfer to LESSORs warehouse, LESSOR is likewise hereby
expressly authorized and empowered by LESSEE to dispose of
said property/properties in a public sale through a Notary
Public of LESSORs choice and to apply the proceeds thereof to
whatever liability and/or indebtedness LESSEE may have to
LESSOR plus reasonable expenses for the same, including
storage fees, and the balance, if any, shall be turned over to
LESSEE; that LESSEE hereby expressly agrees that any or all acts
performed by LESSOR, his authorized agents, employees
and/or representatives under the provisions of this Section
may not be the subject of any petition for a Writ of Preliminary
Injunction or Mandatory Injunction in court, and that LESSOR
and/or his authorized agents, employees, and/or
representatives shall be free from any civil and/or criminal
liability or responsibility whatsoever therefor.
TERMINATION OF LEASE
26. Upon the automatic termination of this lease contract, as
the case may be, LESSEE shall immediately vacate and
redeliver physical possession of the leased premises, including
the keys appertaining thereto, to LESSOR in good, clean and
sanitary condition, reasonable wear and tear excepted, devoid
of all occupants, equipment, furniture, articles, merchandise,
etc., belonging to LESSEE or to any other person except those
belonging to LESSOR; that should LESSEE fail to comply with
this provision, LESSOR is hereby given the same rights and
power to proceed against LESSEE as expressly granted in the
immediately preceding section.
Private respondent failed to pay rentals despite several
demands by petitioner. As of 19 October 1992 the arrearages
amounted to P8,608,284.66. Admittedly, non-payment of
rentals constituted breach of their contract; thus, pursuant to
the express authority granted petitioner under the above-
quoted Secs. 25 and 26 of the lease agreement, petitioner on
31 October 1992 repossessed the leased premises, inventoried
the movable properties found within and owned by private
respondent and scheduled public auction for the sale of the
movables on 19 August 1993 with notice to private
respondent.
On 26 November 1992 private respondent filed with the
Metropolitan Trial Court of Quezon City a complaint against
petitioner for forcible entry with damages and a prayer for a
temporary restraining order and/or writ of
preliminary injunction.[2] The case was raffled to Branch 40
presided over by Judge Guillermo L. Loja Jr. who issued a
temporary restraining order enjoining petitioner from selling
private respondents properties at a public auction.
On 9 December 1992 Judge Loja inhibited himself from trying
the case and directed its transfer to Branch 34 presided over
by Judge Joselito SD Generoso. Soon after, petitioner filed an
urgent motion for the inhibition of Judge Generoso and the
immediate reraffle of the case arguing that the summary
transfer of the case to Judge Generoso was irregular as it was
not done by raffle.
The motion was granted and the case went to Branch 36
presided over by Judge Francisco D. Villanueva. Thereafter, on
22 December 1992, at the continuation of the hearing on the
issuance of a writ preliminary mandatory injunction, the
parties agreed, among others, on the following: (a) private
respondent would deposit with the Philippine Commercial and
Industrial Bank in the name of theMetropolitan Trial Court,
Branch 36, the amount of P8,000,000.00 to guarantee the
payment of its back rentals; (b) petitioner would defer the sale
of the personal properties of the Westin Seafood Market, Inc.,
until a final settlement of the case had been arrived at; (c)
petitioner shall allow private respondent to retrieve all the
perishable goods from inside the leased premises like frozen
meat, vegetables and fish, all properly receipted for; (d)
petitioner shall allow three (3) maintenance personnel of
private respondent to enter the premises at reasonable
working hours to maintain the restaurant equipment; and (e)
the parties shall negotiate for the restoration of the premises
to private respondent, and if no settlement be arrived at on or
before January 8, 1993, the hearing on the merits of the case
shall proceed and the disposition of the amount deposited
representing the rental arrearages shall be left to the
discretion of the court.
This agreement was incorporated in the order of the court
dated 22 December 1992[3] which in effect terminated for all
intents and purposes the incident on the issuance of a
preliminary writ of injunction.
Private respondent did not comply with its undertaking to
deposit with the designated bank the amount representing its
back rentals. Instead, with the forcible entry case still pending
with the MeTC, private respondent instituted on 9 June 1993
another action for damages against petitioner with the
Regional Trial Court of Quezon City. The case was raffled to
Branch 101 presided over by Judge Pedro T. Santiago.[4]
Petitioner filed a motion to dismiss the damage suit on the
ground of litis pendencia and forum shopping. On 2 July 1993,
instead of ruling on the motion, Judge Santiago issued an order
archiving the case pending the outcome of the forcible entry
case being heard at the MeTC for the reason that "the damages
is (sic) principally anchored on whether or not the defendants
95
(petitioner herein) have committed forcible entry."[5] On 2
August 1993 petitioner moved for reconsideration of the order
and reiterated its motion to dismiss the suit for damages.
Before petitioner's motion to dismiss could be resolved,
private respondent filed with the RTC on 18 August 1993 an
amended complaint for damages. On 14 September 1993 it
also filed an Urgent Ex-Parte Motion for the Issuance of a
Temporary Restraining Order and Motion for the Grant of a
Preliminary Prohibitory and Preliminary Mandatory
Injunction. On the very same day, Judge Santiago issued an
order (a) denying petitioner's motion to dismiss, (b) admitting
private respondent's amended complaint, and (c) granting
private respondent's application for a temporary restraining
order against petitioner.
Thus, petitioner filed with the Court of Appeals a special civil
action for certiorari and prohibition on the ground that Judge
Santiago acted in excess of his jurisdiction and/or committed
grave abuse of discretion amounting to lack of jurisdiction
in admitting the amended complaint of private respondent
and issuing a restraining order against petitioner; in allowing
private respondent to engage in forum shopping; and, taking
cognizance of the action for damages despite lack of
jurisdiction.[6]
But the Court of Appeals dismissed the petition due to the
failure of petitioner to file a motion for reconsideration of
Judge Santiago's order of 14 September 1993 which, it
explained, was a prerequisite to the institution of a petition
for certiorari and prohibition. It also found that the elements
of litis pendencia were lacking to justify the dismissal of the
action for damages with the RTC because despite the
pendency of the forcible entry case with the MeTC the only
damages recoverable thereat were those caused by the loss of
the use and occupation of the property and not the kind of
damages being claimed before the RTC which had no direct
relation to loss of material possession. It clarified that since
the damages prayed for in the amended complaint with the
RTC were those caused by the alleged high-handed manner
with which petitioner reacquired possession of the leased
premises and the sale of private respondents movables found
therein, the RTC and not the MeTC had jurisdiction over the
action of damages.[7]
Petitioner, aggrieved by the decision of the appellate court,
filed the instant petition for review on certiorari under Rule 45
of the Rules of Court alleging that it erred in (a) finding that
petitioner failed to avail of its plain, speedy and adequate
remedy of a prior motion for reconsideration with the
RTC; (b) ruling that the trial judge did not act with grave abuse
of discretion in taking cognizance of the action for damages
and injunction despite the pendency of the forcible entry case
with the MeTC; and, (c) ruling that private respondent did not
commit forum shopping since the causes of action before the
RTC and MeTC were not identical with each other.
There is merit in the petition. While generally a motion for
reconsideration must first be filed before resorting
to certiorari in order to give the lower court an opportunity to
correct the errors imputed to it[8] this rule admits of exceptions
and is not intended to be applied without considering the
circumstances of the case.[9] The filing of the motion for
reconsideration before availing of the remedy of certiorariis
not sine qua non when the issue raised is one purely of
law,[10] or where the error is patent or the disputed order is
void,[11] or the questions raised on certiorari are the same as
those already squarely presented to and passed upon by the
lower court.
In its motion for dismissal of the action for damages with the
RTC petitioner raised the ground that another action for
forcible entry was pending at the MeTC between the same
parties involving the same matter and cause of
action. Outrightly rejected by the RTC, the same issue was
elevated by petitioner on certiorari before the Court of
Appeals. Clearly, under the prevailing circumstance, any
motion for reconsideration of the trial court would have been
a pointless exercise.[12]
We now turn to the issue of whether an action for damages
filed with the Regional Trial Court by the lessee against the
lessor should be dismissed on the ground of pendency of
another action for forcible entry and damages earlier filed by
the same lessee against the same lessor before the
Metropolitan Trial Court.
Section 1 of Rule 70 of the Rules of Court provides that any
person deprived of the possession of any land or building by
force, indimidation, threat, strategy or stealth, or against
whom the possession of any land or building is unlawfully
withheld, may bring an action in the proper Municipal Trial
Court against the person or persons unlawfully withholding or
depriving of possession, together with damages and costs. The
mandate under this rule is categorical: that all cases for
forcible entry or unlawful detainer shall be filed before the
Municipal Trial Court which shall include not only the plea for
restoration of possession but also all claims for damages and
costs arising therefrom. Otherwise expressed, no claim for
damages arising out of forcible entry or unlawful detainer may
be filed separately and independently of the claim for
restoration of possession.
This is consistent with the principle laid down in Sec. 1, par. (e),
of Rule 16 of the Rules of Court which states that the pendency
of another action between the same parties for the same
cause is a ground for dismissal of an action. Res
adjudicata requires that there must be between the action
96
sought to be dismissed and the other action the following
elements: (a) identity of parties or at least such as representing
the same interest in both actions; (b) identity of rights asserted
and relief prayed for, the relief being founded on the same
facts; and, (c) the identity in the two (2) preceding particulars
should be such that any judgment which may be rendered on
the other action will, regardless of which party is successful,
amount to res adjudicata in the action under consideration.[13]
It is likewise basic under Sec. 3 of Rule 2 of the Revised Rules
of Court, as amended, that a party may not institute more than
one suit for a single cause of action. Under Sec. 4 of the same
Rule, if two or more suits are instituted on the basis of the
same cause of action, the filing of one or a judgment upon the
merits in any one is available as a ground for the dismissal of
the other or others. "Cause of action" is defined by Sec. 2 of
Rule 2 as the act of omission by which a party violates a right
of another.[14] These premises obtaining, there is no question
at all that private respondent's cause of action in the forcible
entry case and in the suit for damages is the alleged illegal
retaking of possession of the leased premises by the lessor,
petitioner herein, from which all legal reliefs arise. Simply
stated, the restoration of possession and demand for actual
damages in the case before the MeTC and the demand
for damages with the RTC both arise from the same cause of
action, i.e., the forcible entry by petitioner into the leased
premises.
A comparative study of the two (2) complaints filed by private
respondent against petitioner before the two (2) trial courts
shows that not only are the elements of res
adjudicata present, at least insofar as the claim for actual and
compensatory damages is concerned, but also that the claim
for damages - moral and exemplary in addition to actual and
compensatory - constitutes splitting a single cause of
action.Since this runs counter to the rule against multiplicity of
suits, the dismissal of the second action becomes imperative.
The complaint for forcible entry contains the following
pertinent allegations -
2.01 On 02 January 1989, plaintiff entered into a contract of
lease with defendant PDC over a property designated as
Ground Floor, Seafood Market (hereinafter Subject Premises)
situated at the corner of EDSA corner MacArthur Street,
Araneta Center, Cubao, Quezon City, for a period of ten (10)
years from 02 January 1989 to 30 April 1998.
2.02 Immediately after having acquired actual physical
possession of the Subject Premises, plaintiff established and
now operates thereon the now famous Seafood Market
Restaurant. Since then, plaintiff had been in actual,
continuous, and peaceful physical possession of the Subject
Premises until 31 October 1992.
xxxx
3.02 Plaintiff, being the lessee of the Subject Premises, is
entitled to the peaceful occupation and enjoyment of the
Subject Premises to the exclusion of all others, including
defendants herein.
3.03 Defendants resort to strong arms tactics to forcibly wrest
possession of the Subject Premises from plaintiff and maintain
possession thereof through the use of force, threat, strategy
and intimidation by the use of superior number of men and
arms amounts to the taking of the law into their own hands.
3.04 Thus, defendants act of unlawfully evicting out plaintiff
from the Subject Premises it is leasing from defendant PDC and
depriving it of possession thereof through the use of force,
threat, strategy and intimidation should be condemned and
declared illegal for being contrary to public order and policy.
3.05 Consequently, defendants should be enjoined from
continuing with their illegal acts and be ordered to vacate the
Subject Premises and restore possession thereof, together
with its contents, to plaintiff.
xxxx
4.07 Considering that defendants act of forcibly grabbing
possession of the Subject Premises from plaintiff is illegal and
null and void, defendant should be adjudged liable to plaintiff
for all the aforedescribed damages which plaintiff incurred as
a result thereof.
The amended complaint for damages filed by private
respondent alleges basically the same factual circumstances
and issues as bases for the relief prayed for, to wit:
4. On May 28, 1991, plaintiff and defendant PDC entered into
a Contract of Lease for a period of ten years or from January 2,
1989 up to April 30, 1998 over a property designated as
Ground Floor, Seafood Market (hereinafter referred to as
Subject Premises) situated at the corner of EDSA corner
McArthur Street, Araneta Center, Cubao, Quezon City. A copy
of the lease contract is attached hereto as Annex A.
5. Immediately thereafter, plaintiff took over actual physical
possession of Subject Premises, and established thereon the
now famous Seafood Market Restaurant.
xxxx
7. On October 31, 1992 at around 8:30 p.m., defendant PDC,
without the benefit of any writ of possession or any lawful
court order and with the aid of approximately forty (40) armed
security guards and policemen under the supervision of
defendant Tejam, forcibly entered the subject premises
through force, intimidation, threats and stealth and relying on
brute force and in a thunderboltish manner and against
97
plaintiffs will, unceremoniously drew away all of plaintiffs men
out of the subject premises, thereby depriving herein
plaintiff of its actual, physical and natural possession of the
subject premises. The illegal, high-handed manner and
gestapo like take-over by defendants of subject premises is
more particularly described as follows: x x x
8. To date, defendants continue to illegally possess and hold
the Subject Premises, including all the multi-million
improvements, fixtures and equipment therein owned by
plaintiff, all to the damage and prejudice of plaintiff. The
actuations of defendants constitute an unlawful appropriation,
seizure and taking of property against the will and consent of
plaintiff. Worse, defendants are threatening to sell at public
auction and without the consent of plaintiff and without
lawful authority, the multi-million fixtures and equipment of
plaintiff and at prices way below the market value
thereof. Plaintiff hereby attaches as Annex B the letter from
defendants dated August 6, 1993 addressed to plaintiff,
informing the latter that the former intends to sell at an
auction on August 19, 1993 at 2:00 p.m. properties of the
plaintiff presently in defendants possession.
xxxx
12. Defendants unlawful takeover of the premises constitutes
a violation of its obligation under Art. 1654 of the New Civil
Code requiring the lessor to maintain the lessee in peaceful
and adequate enjoyment of the lease for the entire duration
of the contract. Hence, plaintiff has filed the present suit for
the recovery of damages under Art. 1659 of the New Civil Code
xxxx
Restated in its bare essentials, the forcible entry case has one
cause of action, namely, the alleged unlawful entry by
petitioner into the leased premises out of which three (3)
reliefs (denominated by private respondent as its causes of
action) arose: (a) the restoration by the lessor (petitioner
herein) of the possession of the leased
premises to the lessee; (b) the claim for actual damages due to
the losses suffered by private respondent such as the
deterioration of perishable foodstuffs stored inside the
premises and the deprivation of the use of the premises
causing loss of expected profits; and, (c) the claim for
attorney's fees and costs of suit.
On the other hand, the complaint for damages prays for a
monetary award consisting of (a) moral damages
of P500,000.00 and exemplary damages of
another P500,000.00; (b) actual damages of P20,000,000.00
and compensatory damages of P1,000,000.00 representing
unrealized profits; and, (c) P200,000.00 for attorney's fees and
costs, all based on the alleged forcible takeover of the leased
premises by petitioner. Since actual
and compensatory damages were already prayed for in the
forcible entry case before the MeTC, it is obvious that this
cannot be relitigated in the damage suit before the RTC
by reason of res adjudicata.
The other claims for moral and exemplary damages cannot
also succeed considering that these sprung from the main
incident being heard before the MeTC. Jurisprudence is
unequivocal that when a single delict or wrong is committed -
like the unlawful taking or detention of the property of another
- there is but one single cause of action regardless of the
number of rights that may have been violated, and all such
rights should be alleged in a single complaint as constituting
one single cause of action.[15] In a forcible entry case, the real
issue is the physical possession of the real property. The
question of damages is merely secondary or incidental, so
much so that the amount thereof does not affect
the jurisdiction of the court. In other words, the unlawful act
of a deforciant in taking possession of a piece of land by means
of force and intimidation against the rights of the party actually
in possession thereof is a delict or wrong, or a cause of action
that gives rise to two (2) remedies, namely, the recovery of
possession and recovery of damages arising from the loss of
possession, but only to one action. For obvious reasons, both
remedies cannot be the subject of two (2) separate and
independent actions, one for recovery of possession only, and
the other, for the recovery of damages. That would inevitably
lead to what is termed in law as splitting up a cause of
action.[16] In David v. de la Cruz[17] we observed -
Herein tenants have but one cause of action against their
landlord, their illegal ejectment or removal from their
landholdings, which cause of action however entitles
them to two (2) claims or remedies - for reinstatement and
damages. As both claims arise from the same cause of action,
they should be alleged in a single complaint.
A claim cannot be divided in such a way that a part of the
amount of damages may be recovered in one case and the rest,
in another.[18] In Bachrach v. Icarangal[19] we explained that
the rule was aimed at preventing repeated litigations between
the same parties in regard to the same subject of the
controversy and to protect the defendant from unnecessary
vexation. Nemo debet bis vexari pro una et eadem causa.
What then is the effect of the dismissal of the other
action? Since the rule is that all such rights should be alleged
in a single complaint, it goes without
saying that those not therein included cannot be the subject of
subsequent complaints for they are barred forever.[20] If a suit
is brought for a part of a claim, a judgment obtained in that
action precludes the plaintiff from bringing a second action for
the residue of the claim, notwithstanding that the second form
of action is not identical with the first or different grounds for
98
relief are set for the second suit. This principle not only
embraces what was actually determined, but also extends to
every matter which the parties might have litigated in the
case.[21] This is why the legal basis upon which private
respondent anchored its second claim for damages, i.e., Art.
1659 in relation to Art. 1654 of the Civil Code,[22] not otherwise
raised and cited by private respondent in the forcible entry
case, cannot be used as justification for the second suit for
damages. We note, not without some degree of displeasure,
that by filing a second suit for damages, private respondent
was not only able to press a claim for moral and exemplary
damages which by its failure to allege the same in its suit
before the MeTC foreclosed its right to sue on it, but it was also
able to obtain from the RTC, by way of another temporary
restraining order, a second reprieve from an impending public
auction sale of its movables which it could not anymore secure
from the MeTC before which the matter of the issuance of a
preliminary writ of injunction was already closed.
The foregoing discussions provide sufficient basis to
petitioner's charge that private respondent and its counsel in
the trial courts committed forum shopping. In Crisostomo v.
Securities and Exchange Commission[23] we ruled -
There is forum-shopping whenever, as a result of an adverse
opinion in one forum, a party seeks a favorable opinion (other
than by appeal or certiorari) in another. The principle applies x
x x with respect to suits filed in the courts x x x in connection
with litigations commenced in the court x x x in anticipation of
an unfavorable x x x ruling and a favorable case where the
court in which the second suit was brought, has no jurisdiction.
This Court likewise elucidated in New Pangasinan Review, Inc.
v. National Labor Relations Commission[24] that there is forum
shopping when the actions involve the same transactions, the
same essential facts and circumstances. The reason behind the
proscription of forum shopping is obvious. This unnecessarily
burdens our courts with heavy caseloads, unduly taxes the
manpower and financial resources of the judiciary and trifles
with and mocks our judicial processes, thereby adversely
affecting the efficient administration of justice. This
condemnable conduct has prompted the Court to issue
circulars[25]ordering among others that a violation thereof shall
be cause for the dismissal of the case or cases without
prejudice to the taking of appropriate action against the
counsel or party concerned.
The records ineluctably show that the complaint lodged by
private respondent with the Regional Trial Court of Quezon
City contained no certification of non-forum shopping. When
petitioner filed a motion to dismiss the case raising among
others the ground of forum shopping it pointed out the
absence of the required certification. The amended complaint,
as well as the second and third amended complaints,
attempted to rectify the error by invariably stating that there
was no other action pending between the parties involving the
same causes of action although there was actually a forcible
entry case pending before the MTC of Quezon City. By its
admission of a pending forcible entry case, it is obvious that
private respondent was indulging in forum shopping. While
private respondent conveniently failed to inform the RTC that
it had likewise sought damages in the MTC on the basis of the
same forcible entry, the fact remains that it precisely did so,
which stratagem was being duplicated in the second case.This
is a compelling reason to dismiss the second case.

WHEREFORE, the Petition is GRANTED. The questioned

Decision of the Court of Appeals dated 27 September
1995 and the Order of the Regional Trial Court of Quezon City
dated 24 September 1993 are REVERSED and SET ASIDE. The
Regional Trial Court of Quezon City is directed to dismiss Civil
Case No. Q-93-16409, "Westin Seafood Market, Inc. v.
Progressive Development Corporation, et al.," and the
Metropolitan Trial Court of Quezon City to proceed with the
proper disposition of Civil Case No. 6589, "Westin Seafood
Market, Inc. v. Progressive Development Corporation, et al.,"
with dispatch considering the summary nature of the
case. Treble costs against private respondent.

99
LUIS JOSEPH, petitioner vs. HON. CRISPIN V. BAUTISTA,
PATROCINIO PEREZ, ANTONIO SIOSON, JACINTO
PAGARIGAN, ALBERTO CARDENO and LAZARO
VILLANUEVA, respondents. REGALAD0, J.:
Petitioner prays in this appeal by certiorari for the annulment
and setting aside of the order, dated July 8, 1975, dismissing
petitioner's complaint, as well as the order, dated August 22,
1975, denying his motion for reconsideration of said dismissal,
both issued by respondent Judge Crispin V. Bautista of the
former Court of First Instance of Bulacan, Branch III.
Petitioner herein is the plaintiff in Civil Case No. 50-V-73
entitled "Luis Joseph vs. Patrocinio Perez, Domingo Villa y de
Jesus, Rosario Vargas, Antonio Sioson, Lazaro Villanueva and
Jacinto Pagarigan", filed before the Court of First Instance of
Bulacan, Branch III, and presided over by respondent Judge
Crispin V. Bautista; while private respondents Patrocinio Perez,
Antonio Sioson, Jacinto Pagarigan and Lazaro Villanueva are
four of the defendants in said case. Defendant Domingo Villa y
de Jesus did not answer either the original or the amended
complaint, while defendant Rosario Vargas could not be served
with summons; and respondent Alberto Cardeno is included
herein as he was impleaded by defendant Patrocinio Perez,
one of respondents herein, in her cross-claim.
The generative facts of this case, as culled from the written
submission of the parties, are as follows: Respondent
Patrocinio Perez is the owner of a cargo truck with Plate No.
25-2 YT Phil. '73 for conveying cargoes and passengers for a
consideration from Dagupan City to Manila. On January 12,
1973, said cargo truck driven by defendant Domingo Villa was
on its way to Valenzuela, Bulacan from Pangasinan. Petitioner,
with a cargo of livestock, boarded the cargo truck at Dagupan
City after paying the sum of P 9.00 as one way fare to
Valenzuela, Bulacan. While said cargo truck was negotiating
the National Highway proceeding towards Manila, defendant
Domingo Villa tried to overtake a tricycle likewise proceeding
in the same direction. At about the same time, a pick-up truck
with Plate No. 45-95 B, supposedly owned by respondents
Antonio Sioson and Jacinto Pagarigan, then driven by
respondent Lazaro Villanueva, tried to overtake the cargo
truck which was then in the process of overtaking the tricycle,
thereby forcing the cargo truck to veer towards the shoulder
of the road and to ram a mango tree. As a result, petitioner
sustained a bone fracture in one of his legs. 1
The following proceedings thereafter took place: 2
Petitioner filed a complaint for damages against respondent
Patrocinio Perez, as owner of the cargo truck, based on a
breach of contract of carriage and against respondents
Antonio Sioson and Lazaro Villanueva, as owner and driver,
respectively, of the pick-up truck, based on quasi-delict.
100
Respondent Sioson filed his answer alleging that he is not and
never was an owner of the pick-up truck and neither would he
acquire ownership thereof in the future.
On September 24, 1973, petitioner, with prior leave of court,
filed his amended complaint impleading respondents Jacinto
Pagarigan and a certain Rosario Vargas as additional
alternative defendants. Petitioner apparently could not
ascertain who the real owner of said cargo truck was, whether
respondents Patrocinio Perez or Rosario Vargas, and who was
the real owner of said pick-up truck, whether respondents
Antonio Sioson or Jacinto Pagarigan.
Respondent Perez filed her amended answer with crossclaim
against her co-defendants for indemnity and subrogation in
the event she is ordered to pay petitioner's claim, and therein
impleaded cross-defendant Alberto Cardeno as additional
alternative defendant.
On September 27, 1974, respondents Lazaro Villanueva,
Alberto Cardeno, Antonio Sioson and Jacinto Pagarigan, thru
their insurer, Insurance Corporation of the Philippines, paid
petitioner's claim for injuries sustained in the amount of P
1,300.00. By reason thereof, petitioner executed a release of
claim releasing from liability the following parties, viz:
Insurance Corporation of the Philippines, Alberto Cardeno,
Lazaro Villanueva, Antonio Sioson and Jacinto Pagarigan.
On December 2, 1974, respondents Lazaro Villanueva, Alberto
Cardeno and their insurer, the Insurance Corporation of the
Philippines, paid respondent Patrocinio Perez' claim for
damages to her cargo truck in the amount of P 7,420.61.
Consequently, respondents Sioson, Pagarigan, Cardeno and
Villanueva filed a "Motion to Exonerate and Exclude Defs/
Cross defs. Alberto Cardeno, Lazaro Villanueva, Antonio Sioson
and Jacinto Pagarigan on the Instant Case", alleging that
respondents Cardeno and Villanueva already paid P 7,420.61
by way of damages to respondent Perez, and alleging further
that respondents Cardeno, Villanueva, Sioson and Pagarigan
paid P 1,300.00 to petitioner by way of amicable settlement.
Thereafter, respondent Perez filed her "Opposition to Cross-
defs.' motion dated Dec. 2, 1974 and Counter Motion" to
dismiss. The so-called counter motion to dismiss was premised
on the fact that the release of claim executed by petitioner in
favor of the other respondents inured to the benefit of
respondent Perez, considering that all the respondents are
solidarity liable to herein petitioner.
On July 8, 1975, respondent judge issued the questioned order
dismissing the case, and a motion for the reconsideration
thereof was denied. Hence, this appeal, petitioner contending
that respondent judge erred in declaring that the release of
claim executed by petitioner in favor of respondents Sioson,
Villanueva and Pagarigan inured to the benefit of respondent debtors and their subsequent release from any and all liability
Perez; ergo, it likewise erred in dismissing the case. to petitioner inevitably resulted in the extinguishment and
release from liability of the other solidary debtors, including
We find the present recourse devoid of merit. The argument
herein respondent Patrocinio Perez.
that there are two causes of action embodied in petitioner's
complaint, hence the judgment on the compromise agreement The claim that there was an agreement entered into between
under the cause of action based on quasi-delict is not a bar to the parties during the pre-trial conference that, after such
the cause of action for breach of contract of carriage, is payment made by the other respondents, the case shall
untenable. proceed as against respondent Perez is both incredible and
unsubstantiated. There is nothing in the records to show,
A cause of action is understood to be the delict or wrongful act
either by way of a pre-trial order, minutes or a transcript of the
or omission committed by the defendant in violation of the
notes of the alleged pre-trial hearing, that there was indeed
primary rights of the plaintiff. 3 It is true that a single act or
such as agreement.
omission can be violative of various rights at the same time, as
when the act constitutes juridically a violation of several WHEREFORE, the challenged orders of the respondent judge
separate and distinct legal obligations. However where there are hereby AFFIRMED.
is only one delict or wrong, there is but a single cause of action
REMEDIO V. FLORES, petitioner,.
regardless of the number of rights that may have been violated
HON. JUDGE HEILIA S. MALLARE-PHILLIPPS, IGNACIO
belonging to one person. 4
BINONGCAL & FERNANDO CALION, respondents. FERIA, J.:
The singleness of a cause of action lies in the singleness of the-
The Court rules that the application of the totality rule under
delict or wrong violating the rights of one person.
Section 33(l) of Batas Pambansa Blg. 129 and Section 11 of the
Nevertheless, if only one injury resulted from several wrongful
Interim Rules is subject to the requirements for the permissive
acts, only one cause of action arises. 5 In the case at bar, there
joinder of parties under Section 6 of Rule 3 which provides as
is no question that the petitioner sustained a single injury on
follows:
his person. That vested in him a single cause of action, albeit
with the correlative rights of action against the different Permissive joinder of parties.-All persons in whom or against
respondents through the appropriate remedies allowed by whom any right to relief in respect to or arising out of the same
law. transaction or series of transactions is alleged to exist, whether
jointly, severally, or in the alternative, may, except as
The trial court was, therefore, correct in holding that there was
otherwise provided in these rules, join as plaintiffs or be joined
only one cause of action involved although the bases of
as defendants in one complaint, where any question of law or
recovery invoked by petitioner against the defendants therein
fact common to all such plaintiffs or to all such defendants may
were not necessarily Identical since the respondents were not
arise in the action; but the court may make such orders as may
identically circumstanced. However, a recovery by the
be just to prevent any plaintiff or defendant from being
petitioner under one remedy necessarily bars recovery under
embarrassed or put to expense in connection with any
the other. This, in essence, is the rationale for the proscription
proceedings in which he may have no interest.
in our law against double recovery for the same act or omission
which, obviously, stems from the fundamental rule against Petitioner has appealed by certiorari from the order of Judge
unjust enrichment. Heilia S. Mallare-Phillipps of the Regional Trial Court of Baguio
City and Benguet Province which dismissed his complaint for
There is no question that the respondents herein are solidarily
lack of jurisdiction. Petitioner did not attach to his petition a
liable to petitioner. On the evidence presented in the court
copy of his complaint in the erroneous belief that the entire
below, the trial court found them to be so liable. It is
original record of the case shall be transmitted to this Court
undisputed that petitioner, in his amended complaint, prayed
pursuant to the second paragraph of Section 39 of BP129. This
that the trial court hold respondents jointly and severally
provision applies only to ordinary appeals from the regional
liable. Furthermore, the allegations in the amended complaint
trial court to the Court of Appeals (Section 20 of the Interim
clearly impleaded respondents as solidary debtors. We cannot
Rules). Appeals to this Court by petition for review on certiorari
accept the vacuous contention of petitioner that said
are governed by Rule 45 of the Rules of Court (Section 25 of
allegations are intended to apply only in the event that
the Interim Rules).
execution be issued in his favor. There is nothing in law or
jurisprudence which would countenance such a procedure. However, the order appealed from states that the first cause
of action alleged in the complaint was against respondent
The respondents having been found to be solidarity liable to
Ignacio Binongcal for refusing to pay the amount of P11,643.00
petitioner, the full payment made by some of the solidary
101
representing cost of truck tires which he purchased on credit
from petitioner on various occasions from August to October,
1981; and the second cause of action was against respondent
Fernando Calion for allegedly refusing to pay the amount of
P10,212.00 representing cost of truck tires which he purchased
on credit from petitioner on several occasions from March,
1981 to January, 1982.
On December 15, 1983, counsel for respondent Binongcal filed
a Motion to Dismiss on the ground of lack of jurisdiction since
the amount of the demand against said respondent was only
P11,643.00, and under Section 19(8) of BP129 the regional trial
court shall exercise exclusive original jurisdiction if the amount
of the demand is more than twenty thousand pesos
(P20,000.00). It was further averred in said motion that
although another person, Fernando Calion, was allegedly
indebted to petitioner in the amount of P10,212.00, his
obligation was separate and distinct from that of the other
respondent. At the hearing of said Motion to Dismiss, counsel
for respondent Calion joined in moving for the dismissal of the
complaint on the ground of lack of jurisdiction. Counsel for
petitioner opposed the Motion to Dismiss. As above stated,
the trial court dismissed the complaint for lack of jurisdiction.
Petitioner maintains that the lower court has jurisdiction over
the case following the "novel" totality rule introduced in
Section 33(l) of BP129 and Section 11 of the Interim Rules.
The pertinent portion of Section 33(l) of BP129 reads as
follows:
... Provided,That where there are several claims or causes of
action between the same or different parties, embodied in the
same complaint, the amount of the demand shall be the
totality of the claims in all the causes of action, irrespective of
whether the causes of action arose out of the same or different
transactions. ...
Section 11 of the Interim Rules provides thus:
Application of the totality rule.-In actions where the
jurisdiction of the court is dependent on the amount involved,
the test of jurisdiction shall be the aggregate sum of all the
money demands, exclusive only of interest and costs,
irrespective of whether or not the separate claims are owned
by or due to different parties. If any demand is for damages in
a civil action, the amount thereof must be specifically alleged.
Petitioner compares the above-quoted provisions with the
pertinent portion of the former rule under Section 88 of the
Judiciary Act of 1948 as amended which reads as follows:
... Where there are several claims or causes of action between
the same parties embodied in the same complaint, the amount
of the demand shall be the totality of the demand in all the
102
causes of action, irrespective of whether the causes of action
arose out of the same or different transactions; but where the
claims or causes of action joined in a single complaint are
separately owned by or due to different parties, each separate
claim shall furnish the jurisdictional test. ...
and argues that with the deletion of the proviso in the former
rule, the totality rule was reduced to clarity and brevity and the
jurisdictional test is the totality of the claims in all, not in each,
of the causes of action, irrespective of whether the causes of
action arose out of the same or different transactions.
This argument is partly correct. There is no difference between
the former and present rules in cases where a plaintiff sues a
defendant on two or more separate causes of action. In such
cases, the amount of the demand shall be the totality of the
claims in all the causes of action irrespective of whether the
causes of action arose out of the same or different
transactions. If the total demand exceeds twenty thousand
pesos, then the regional trial court has jurisdiction. Needless
to state, if the causes of action are separate and independent,
their joinder in one complaint is permissive and not
mandatory, and any cause of action where the amount of the
demand is twenty thousand pesos or less may be the subject
of a separate complaint filed with a metropolitan or municipal
trial court.
On the other hand, there is a difference between the former
and present rules in cases where two or more plaintiffs having
separate causes of action against a defendant join in a single
complaint. Under the former rule, "where the claims or causes
of action joined in a single complaint are separately owned by
or due to different parties, each separate claim shall furnish
the jurisdictional test" (Section 88 of the Judiciary Act of 1948
as amended, supra). This was based on the ruling in the case
of Vda. de Rosario vs. Justice of the Peace, 99 Phil. 693. As
worded, the former rule applied only to cases of permissive
joinder of parties plaintiff. However, it was also applicable to
cases of permissive joinder of parties defendant, as may be
deduced from the ruling in the case of Brillo vs. Buklatan, thus:
Furthermore, the first cause of action is composed of separate
claims against several defendants of different amounts each of
which is not more than P2,000 and falls under the jurisdiction
of the justice of the peace court under section 88 of Republic
Act No, 296. The several claims do not seem to arise from the
same transaction or series of transactions and there seem to
be no questions of law or of fact common to all the defendants
as may warrant their joinder under Rule 3, section 6.
Therefore, if new complaints are to be filed in the name of the
real party in interest they should be filed in the justice of the
peace court. (87 Phil. 519, 520, reiterated in Gacula vs.
Martinez, 88 Phil. 142, 146)
Under the present law, the totality rule is applied also to cases complaint, it appears that there is a misjoinder of parties for
where two or more plaintiffs having separate causes of action the reason that the claims against respondents Binongcal and
against a defendant join in a single complaint, as well as to Calion are separate and distinct and neither of which falls
cases where a plaintiff has separate causes of action against within its jurisdiction.
two or more defendants joined in a single complaint. However,
WHEREFORE, the order appealed from is affirmed, without
the causes of action in favor of the two or more plaintiffs or
pronouncement as to costs.
against the two or more defendants should arise out of the
same transaction or series of transactions and there should be
a common question of law or fact, as provided in Section 6 of
Rule 3.

The difference between the former and present rules in cases

of permissive joinder of parties may be illustrated by the two
cases which were cited in the case of Vda. de Rosario vs. Justice
of the Peace (supra) as exceptions to the totality rule. In the
case of Soriano y Cia vs. Jose (86 Phil. 523), where twenty-nine
dismissed employees joined in a complaint against the
defendant to collect their respective claims, each of which was
within the jurisdiction of the municipal court although the total
exceeded the jurisdictional amount, this Court held that under
the law then the municipal court had jurisdiction. In said case,
although the plaintiffs' demands were separate, distinct and
independent of one another, their joint suit was authorized
under Section 6 of Rule 3 and each separate claim furnished
the jurisdictional test. In the case of International Colleges, Inc.
vs. Argonza (90 Phil. 470), where twenty-five dismissed
teachers jointly sued the defendant for unpaid salaries, this
Court also held that the municipal court had jurisdiction
because the amount of each claim was within, although the
total exceeded, its jurisdiction and it was a case of permissive
joinder of parties plaintiff under Section 6 of Rule 3.

Under the present law, the two cases above cited (assuming
they do not fall under the Labor Code) would be under the
jurisdiction of the regional trial court. Similarly, in the
abovecited cases of Brillo vs. Buklatan and Gacula vs.
Martinez (supra), if the separate claims against the several
defendants arose out of the same transaction or series of
transactions and there is a common question of law or fact,
they would now be under the jurisdiction of the regional trial
court.

In other words, in cases of permissive joinder of parties,

whether as plaintiffs or as defendants, under Section 6 of Rule
3, the total of all the claims shall now furnish the jurisdictional
test. Needless to state also, if instead of joining or being joined
in one complaint separate actions are filed by or against the
parties, the amount demanded in each complaint shall furnish
the jurisdictional test.

In the case at bar, the lower court correctly held that the
jurisdictional test is subject to the rules on joinder of parties
pursuant to Section 5 of Rule 2 and Section 6 of Rule 3 of the
Rules of Court and that, after a careful scrutiny of the
103
RAYO VS METROBANK
Before us is a petition for review assailing the Resolutions
dated June 15, 2004[1] and August 23, 2004[2] of the Court of
Appeals in CA-G.R. SP No. 83895 for annulment of judgment.
The pertinent facts are undisputed.
Midas Diversified Export Corp. (Midas), thru its president, Mr.
Samuel U. Lee, obtained six (6) loans from private respondent
Metropolitan Bank and Trust Company (Metrobank),
amounting to P588,870,000 as evidenced by promissory
notes. To secure the payment of an P8,000,000 loan, Louisville
Realty & Development Corporation (Louisville), thru its
president, Mr. Samuel U. Lee, executed in favor of Metrobank,
a real estate mortgage over three parcels of land situated
at No. 40 Timog Ave., Brgy. Laging Handa, Quezon City, with all
the buildings and improvements thereon. The properties are
covered by Transfer Certificates of Title (TCT) Nos. N-163455,
N-166349 and N-166350 issued by the Registry of Deeds of
Quezon City.
When the debtor-mortgagor failed to pay, Metrobank extra-
judicially foreclosed the real estate mortgage in accordance
with Act No. 3135,[3] as amended. Thereafter, in a public
auction, Metrobank was the highest bidder. A Certificate of
Sale[4] dated December 11, 2000 was duly registered with the
Registry of Deeds of Quezon City on December 13,
2000. When Louisville refused to turn over the real properties,
on March 17, 2001, Metrobank filed before the Regional Trial
Court (RTC), Branch 223, Quezon City,
an ex partepetition[5] for the issuance of a writ of possession
docketed as LRC Case No. Q-13915(01). After presentation of
evidence ex parte, the RTC granted the petition in an
Order[6]dated July 5, 2001, the dispositive portion of which
reads as follows:
WHEREFORE, in consideration of the foregoing premises, the
instant petition is hereby GRANTED. Upon the filing of a bond
in the amount of ONE HUNDRED THOUSAND PESOS
([P]100,000.00), let a Writ of Possession over the properties
covered by Transfer Certificates of Title Nos. N-163455, N-
166349 & N-166350 issue in favor of the petitioner
METROPOLITAN BANK & TRUST COMPANY to be implemented
by the Deputy Sheriff of Branch 223, Regional Trial Court of
Quezon City by placing the petitioner in possession over the
parcels of land with all its improvements.SO ORDERED.[7]
On September 24, 2001, Metrobank posted the required bond.
Consequently, a writ of possession was issued on October 9,
2001. This was partially implemented as to TCT No. N-163455,
as evidenced by the Turn-Over Receipt[8] dated December 13,
2002. The writ over the two remaining properties, under TCT
Nos. N-166349 and N-166350, were subsequently
104
implemented as evidenced by the Turn-Over
Receipt[9] dated December 3, 2003.
Meanwhile, on April 3, 2002, petitioner Eduardo L. Rayo filed a
complaint[10] docketed as Civil Case No. Q02-46514 against
Metrobank for Nullification of Real Estate Mortgage
Contract(s) and Extrajudicial Foreclosure Sale, in the RTC,
Branch 99, Quezon City.
On May 13, 2004, petitioner Rayo filed with the Court of
Appeals a Petition[11] for Annulment of Judgment on the
ground of absolute lack of due process. Petitioner alleged that
his predecessor, Louisville, was not notified of the proceedings
and that Section 7[12] (ex parte motion or petition for the
issuance of a writ of possession) of Act No. 3135 is
unconstitutional.
On June 15, 2004, the Court of Appeals denied the petition for
lack of merit. The Court of Appeals ruled that petitioner is
neither the registered owner nor the successor-in-interest of
the registered owner; hence, not a real party-in-interest. It
also ruled that there is no basis to challenge the
constitutionality of Section 7 of Act No. 3135, as amended as it
constitutes a collateral attack against said provision. Further,
petitioner availed of the wrong remedy in filing Civil Case No.
Q02-46514. Petitioner sought reconsideration, but was
likewise denied.
Petitioner now comes before us raising the following as
primary issue:
WHETHER OR NOT SECTION 7 OF ACT NO. 3135 IS CONTRARY
TO THE DUE PROCESS PROVISION OF THE PHILIPPINE
CONSTITUTION CONSIDERING THAT SUCH SECTION 7 OF THE
LAW PROVIDES OR ALLOWS, ACCORDING TO THIS
HONORABLE COURT, FOR AN EX-PARTE PROCEEDING WHICH
IS A JUDICIAL PROCEEDING BROUGHT FOR THE BENEFIT OF
ONE PARTY ONLY, AND WITHOUT NOTICE TO, OR CONSENT
BY ANY PERSON ADVERSELY INTERESTED OR A PROCEEDING
WHEREIN RELIEF IS GRANTED WITHOUT AN
OPPORTUNITY FOR THE PERSON AGAINST WHOM THE RELIEF
IS SOUGHT TO BE HEARD, AS HELD IN THE CASE
OF GOVERNMENT SERVICE INSURANCE SYSTEM VS. COURT OF
APPEALS, 169 SCRA 244 @ 255, JANUARY 20, 1989.[13]
He also raises the following as secondary issues:
I.WHETHER OR NOT THE PETITIONER HAS THE LEGAL
PERSONALITY TO SEEK THE ANNULMENT OF JUDGMENT IN
[THE] SUBJECT LRC CASE NO. Q-13915(01).
II.WHETHER OR NOT PRIVATE RESPONDENT VIOLATED THE
RULE AGAINST FORUM-SHOPPING WHEN IT DID NOT INFORM
THE HONORABLE BRANCH 223 OF THE REGIONAL TRIAL COURT
OF QUEZON CITY REGARDING THE FILING OF CIVIL CASE NO. Q-
02-46514 FOR NULLIFICATION OF REAL ESTATE MORTGAGE
CONTRACT AND THE EXTRA-JUDICIAL FORECLOSURE SALE OF
THE SAME SUBJECT REAL PROPERTIES AND THE PENDENCY OF
THE SAME BEFORE THE HONORABLE BRANCH 99 OF THE SAME
REGIONAL TRIAL COURT.[14]
Stated simply, the issues raised are: (1) Does petitioner have
the legal personality in the annulment of judgment
proceedings? (2) Is Section 7 of Act No. 3135, as amended,
unconstitutional? (3) Is respondent guilty of forum-shopping?
Petitioner insists that contrary to the ruling of the Court of
Appeals, he has the legal personality to institute the
annulment of judgment case against Metrobank, considering
that the March 25, 2002 deed of assignment he entered into
with Louisville and Winston Linwy L. Chua makes him a co-
assignee over the subject real properties.
For its part, Metrobank claims that it was not a party to the
deed of assignment among Louisville, Chua and petitioner,
hence, it has no privity of contract with petitioner
Rayo. Moreover, Metrobank points out that the real
properties had already been extrajudicially foreclosed when
petitioner and his assignors executed the deed of assignment.
Under Section 2,[15] Rule 3 of the Rules of Court, every action
must be prosecuted or defended in the name of the real party-
in-interest, or one who stands to be benefited or injured by the
judgment in the suit.[16] A real party-in-interest is one with a
present substantial interest which means such interest of a
party in the subject matter of the action as will entitle him,
under the substantive law, to recover if the evidence is
sufficient, or that he has the legal title to demand.[17]
Now, is petitioner Rayo a real party-in-interest? Initially, we
recognized herein petitioner as the co-assignee of the subject
real properties as shown in the March 25, 2002deed of
assignment. However, while petitioner would be injured by
the judgment in this suit, we find that petitioner has no present
substantial interest to institute the annulment of judgment
proceedings and nullify the order granting the writ of
possession.
First, there was no violation of petitioners right to
constitutional due process. In a long line of cases,[18] we have
consistently ruled that the issuance of a writ of possession in
favor of the purchaser in a foreclosure sale of a mortgaged
property under Section 7 of Act No. 3135, as amended is a
ministerial duty of the court. The purchaser of the foreclosed
property, upon ex parte application and the posting of the
required bond, has the right to acquire possession of the
foreclosed property during the 12-month redemption period
and with more reason, after the expiration of the redemption
period.
105
An ex parte petition for the issuance of a writ of possession
under Section 7 of Act No. 3135 is not, strictly speaking, a
judicial process as contemplated in Article 433[19]of the Civil
Code. It is a judicial proceeding for the enforcement of ones
right of possession as purchaser in a foreclosure sale. It is not
an ordinary suit filed in court, by which one party sues another
for the enforcement of a wrong or protection of a right, or the
prevention or redress of a wrong. It is a non-litigious
proceeding authorized in an extrajudicial foreclosure of
mortgage pursuant to Act No. 3135, as amended, and is
brought for the benefit of one party only, and without notice
to, or consent by any person adversely interested. It is a
proceeding where the relief is granted without requiring an
opportunity for the person against whom the relief is sought
to be heard. No notice is needed to be served upon persons
interested in the subject property.[20]
Second, in the deed of assignment, petitioner also
acknowledged that the subject real properties were already
sold at various extrajudicial foreclosure sales and bought by
Metrobank. Clearly, petitioner recognized the prior existing
right of Metrobank as the mortgagee-purchaser over the
subject real properties. [21] Actual knowledge of a prior
mortgage with Metrobank is equivalent to notice of
registration[22] in accordance with Article 2125 [23] of the Civil
Code. Conformably with Articles 1312 [24] and 2126[25] of the
Civil Code, a real right or lien in favor of Metrobank had
already been established, subsisting over the properties until
the discharge of the principal obligation, whoever the
possessor(s) of the land might be. [26] As petitioner is not a
party whose interest is adverse to that of Louisville, there
was no bar to the issuance of a writ of possession to
Metrobank. It does not matter that petitioner was not
specifically named in the writ of possession nor notified of
such proceedings.
Third, we also note that petitioner availed of the wrong
remedy in filing Civil Case No. Q02-46514, for nullification of
real estate mortgage and extrajudicial foreclosure sale, more
than six (6) months after the issuance of the writ of possession
considering the mandate of Section 8[27] of Act No. 3135, as
amended. Hence, even petitioners action for annulment of
judgment cannot prosper as it cannot be a substitute for a lost
remedy.
Now, petitioner is challenging the constitutionality of Section
7 of Act No. 3135, as amended. He avers that Section 7 violates
the due process clause because, by the mere filing of
an ex parte motion in the proper cadastral court, the
purchaser in a foreclosure sale is allowed to obtain possession
of the foreclosed property during the redemption period.
The Court of Appeals ruled that petitioners attempt to
challenge the constitutionality of Section 7 of Act No. 3135, as
amended, constitutes a collateral attack that is not
allowed. We fully agree with the appellate courts ruling. For
reasons of public policy, the constitutionality of a law cannot
be attacked collaterally.[28]

With regard to forum-shopping; forum-shopping is the filing

of multiple suits involving the same parties for the same
cause of action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment. It exists where
the elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in
another.[29] The issuance of the writ of possession being a
ministerial function, and summary in nature, it cannot be said
to be a judgment on the merits. It is only an incident in the
transfer of title. Hence, a separate case for annulment of
mortgage and foreclosure sale cannot be barred by litis
pendentia or res judicata.[30] Clearly, insofar as LRC Case No.
Q-13915(01) and Civil Case No. Q02-46514 are concerned,
Metrobank is not guilty of forum-shopping.

WHEREFORE, the petition is DENIED for lack of merit. The

assailed Resolutions dated June 15, 2004 and August 23,
2004 of the Court of Appeals in CA-G.R. SP No. 83895 are
hereby AFFIRMED. Costs against the petitioner. SO ORDERED.

106
COMMISSIONER ANDREA D. DOMINGO, BUREAU OF
IMMIGRATION, petitioner, vs. HERBERT MARKUS EMIL
SCHEER, respondent. CALLEJO, SR., J.:
This is a petition for review under Rule 45 of the Rules of Court,
as amended, of the Decision[1] of the Court of Appeals in CA-
G.R. SP No. 71094 granting the respondents petition
for certiorari and prohibition annulling the order of arrest
issued by the petitioner, and permanently enjoining her from
deporting the respondent from the Philippines. Through its
decision, the CA virtually reversed the Summary Deportation
Order[2] of the Board of Commissioners (BOC) and its Omnibus
Resolution[3] denying the respondents Urgent Motion for
Reconsideration of said Order, and enjoining the petitioner
from deporting the respondent.
The facts as culled from the records are as follows: Respondent
Herbert Markus Emil Scheer, a native of Ochsenfurt, Germany,
was a frequent visitor of the Philippines. On July 18, 1986, his
application for permanent resident status was granted.[4] The
Bureau of Immigration and Deportation (BID) issued in favor of
the respondent Alien Certificate of Registration No. B-396907
dated September 16, 1987[5] and Immigration Certificate of
Residence No. 256789 dated February 24, 1988.[6] The
Commissioner stated that the granting of the petition would
redound to the benefit of the Filipino people. [7] During his
sojourn in the Philippines, the respondent married widowed
Edith delos Reyes[8] with whom he had two daughters. They
had a son, Herbert Scheer, Jr., but he passed away on
November 13, 1995.[9] They resided in Puerto Princesa City,
Palawan, where the respondent established and managed the
Bavaria Restaurant. On May 21, 1991, he was appointed
Confidential Agent by then NBI Director Alfredo S. Lim.[10]
In a Letter dated June 29, 1995, Vice Consul Jutta Hippelein
informed the Philippine Ambassador to Bonn, Germany, that
the respondent had police records and financial liabilities in
Germany.[11]
The Department of Foreign Affairs received from the German
Embassy in Manila Note Verbale No. 369/95 dated July 26,
1995, informing it that the respondent was wanted by the
German Federal Police; that a warrant of arrest had been
issued against him; and that the respondent will be served with
an official document requesting him to turn over his German
passport to the Embassy which was invalidated on July 2,
1995.[12] The Embassy requested the Department of Foreign
Affairs to inform the competent Philippine authorities of the
matter.The BOC thereafter issued a Summary Deportation
Order dated September 27, 1997. The penultimate paragraph
of the Order reads:
WHEREFORE, the foregoing considered, the Board of
Commissioners hereby orders the following:
107
1. Cancellation of respondents permanent residence visa;
2. Respondents summary deportation and permanent
exclusion from the Philippines; and
3. Inclusion of his name on the Bureaus Blacklist.
PROVIDED, however that said summary deportation should be
held in abeyance in case said alien has a pending final and
executory criminal conviction where the imposed penalty is
imprisonment, in which case, he has to serve first such
imposed penalty, and/or has a pending criminal, civil or
administrative action and a Hold Departure Order has been
issued or that his presence in said action is indispensable. In
such instances, the alien should remain in the custody of the
Bureau until his turnover to the proper authorities in case he
has to serve imprisonment or in case of pendency of civil or
criminal administrative action, he shall remain in the custody
of the Bureau until such time that his pending cases shall have
been decided, terminated or settled, as the case may be,
unless circumstances demand the immediate implementation
of this summary deportation. SO ORDERED.[13]
In issuing the said order, the BOC relied on the correspondence
from the German Vice Consul on its speculation that it was
unlikely that the German Embassy will issue a new passport to
the respondent; on the warrant of arrest issued by the District
Court of Germany against the respondent for insurance fraud;
and on the alleged illegal activities of the respondent in
Palawan.[14] The BOC concluded that the respondent was not
only an undocumented but an undesirable alien as well.
When the respondent was apprised of the deportation order,
he forthwith aired his side to then BID Commissioner Leandro
T. Verceles. The Commissioner allowed the respondent to
remain in the Philippines, giving the latter time to secure a
clearance and a new passport from the German
Embassy.[15] Then Presidential Assistant Teodorico K. Imperial
wrote a Testimonial dated November 24, 1995, in behalf of the
respondent addressed to Commissioner
Verceles. Nonetheless, the respondent, through counsel, filed
on December 5, 1995 an Urgent Motion for Reconsideration of
the Summary Deportation Order of the BOC.[16] In his motion,
the respondent alleged, inter alia, that:
1. The elementary rules of due process require notice and
opportunity to be heard before a person can be lawfully
deprived of his right (Ute Paterok vs. Bureau of Customs, 193
SCRA 132). In the instant case, although it is acknowledged that
the Honorable Office may conduct summary deportation
proceedings, respondent was not given notice and opportunity
to be heard before said Summary Deportation Order was
issued. Respondents right to procedural due process was
therefore violated. Consequently, the Summary Deportation
Order is invalid.
2. In issuing, the Summary Deportation Order, this Honorable Employment approved his application for Alien Employment
Office relied on Note Verbal No. 369/95 issued by the Embassy Registration Certificate as manager of the Bavaria Restaurant
of the Federal Republic of Germany, Manila, notifying the in Puerto Princesa City.
Department of Foreign Affairs and this Honorable Office about
In the meantime, petitioner Immigration Commissioner
the warrant of arrest against respondent for alleged illegal
Andrea T. Domingo assumed office. She wrote the German
insurance fraud and illegal activities. However, a close scrutiny
Embassy and inquired if the respondent was wanted by the
of said note verbal shows that nowhere therein does it state
German police. On April 12, 2002, the German Embassy replied
that respondent was involved in insurance fraud or in any kind
that the respondent was not so wanted.[20] At about midnight
of illegal activities in Germany or anywhere else in the world,
on June 6, 2002, Marine operatives and BID agents
such as in Palawan. Therefore, the main basis of the Summary
apprehended the respondent in his residence on orders of the
Deportation Order is incompetent as evidence against
petitioner. He was whisked to the BID Manila Office and there
respondent who is, like every Filipino, presumed to be
held in custody while awaiting his deportation. Despite
innocent until his guilt is proven beyond reasonable doubt.
entreaties from the respondents wife[21] and his employees,
3. The power to deport alien is a police power measure the petitioner refused to release the respondent.[22]
necessary against undesirable alien whose presence in the
Shocked at the sudden turn of events, the respondent
country is injurious to the public good and domestic tranquility
promptly communicated with his lawyer. The latter filed with
of the country (Board of Commissioner Commission on
the BID a motion for bail to secure the respondents temporary
Immigration vs. De la Rosa, 197 SCRA 853). It is respectfully
liberty.On June 11, 2002, the respondents counsel filed with
submitted that respondent is not an undesirable alien. He has
the Court of Appeals a petition for certiorari, prohibition
stayed in the Philippines for more or less than (10) years. He
and mandamus with a prayer for temporary restraining order
has married a Filipina and has three (3) minor children. He has
and writ of preliminary injunction, to enjoin the petitioner
established his business in Palawan and he has no police record
from proceeding with the respondents deportation. [23] The
whatsoever. Respondent has considered the Philippines his
respondent (petitioner therein) alleged, inter alia, that his
second home and he has nowhere else to go back to in
arrest and detention were premature, unjust, wrongful, illegal
Germany. Under the circumstances and for humanitarian
and unconstitutional, effected without sufficient cause and
considerations, respondent is not an undesirable alien whose
without jurisdiction or with grave abuse of discretion. He
deportation is warranted. Likewise, the mere fact that his
asserted that there was no speedy remedy open to him in the
passport was not renewed by the German Embassy does not
ordinary course of law[24] and that his Urgent Motion for
also automatically justify the deportation of respondent. [17]
Reconsideration of the Summary Deportation Order of the
However, the BOC did not resolve the respondents motion. BOC had not yet been resolved despite the lapse of more than
The respondent was neither arrested nor deported. six years. The respondent averred that he was a fully
documented alien, a permanent resident and a law-abiding
Meanwhile, on February 15, 1996, the District Court of
citizen. He, thus, prayed as follows:
Straubing rendered a Decision dismissing the criminal case
against the respondent for physical injuries.[18] The German PRAYER. WHEREFORE, it is most respectfully prayed of this
Embassy in Manila, thereafter, issued a temporary passport to Honorable Court that:
the respondent.
1. Upon the filing of this Petition, this Honorable Court issue a
In a Letter dated March 1, 1996, the respondent informed Temporary Restraining Order to enjoin respondent
Commissioner Verceles that his passport had been renewed Commissioner from enforcing any order to deport petitioner;
following the dismissal of the said criminal case. He reiterated
2. After due hearing, a writ of preliminary and mandatory
his request for the cancellation of the Summary Deportation
injunction be correspondingly issued to maintain the status
Order dated September 27, 1995 and the restoration of his
quo pending resolution of the Petition on the merits.
permanent resident status.[19] Subsequently, on March 12,
1996, the German Embassy issued to the respondent a regular 3. After hearing, judgment be rendered:
passport, to expire on March 11, 2006.
a) Directing and mandating respondent Commissioner and the
The BOC still failed to resolve the respondents Urgent Motion body she heads to resolve the Motion for Reconsideration filed
for Reconsideration. Commissioner Verceles did not respond in 1995, in his favor, and nullifying or suspending the
to the respondents March 1, 1996 Letter. The respondent implementation of any order, oral or written, she may have
remained in the Philippines and maintained his business in issued or issue to deport petitioner; and
Palawan. On March 20, 1997, the Department of Labor and

108
b) Making the injunction in petitioners favor permanent.
Petitioner likewise prays for such other and further relief as
may be deemed just and equitable in the premises, such as
directing respondent, if Herbert Scheer is deported before the
matter is heard on notice, to authorize his return.[25]
The BOC ruled that its September 27, 1995 Order had become
final and executory after the lapse of one year, citing our
rulings in Sy vs. Vivo,[26] and Lou vs. Vivo.[27] The BOC also held
that it was not competent to reverse the September 27, 1995
Order, citing our ruling in Immigration Commissioner vs.
Fernandez.[28] It declared that the respondent may seek the
waiver of his exclusion via deportation proceedings through
the exceptions provided by Commonwealth Act No.
613,[29] Section 29 (a)(15), but that his application for the
waiver presupposes his prior removal from the Philippines.
In a parallel development, the respondent procured a letter
from the National Bureau of Investigation (NBI) in Puerto
Princesa City certifying that he had no pending criminal
record.[30]The Puerto Princesa City Philippine National Police
(PNP) also issued a certification that the respondent had no
pending criminal or derogatory records in the said office.[31]
Meanwhile, on June 26, 2002, the Court of Appeals issued
a status quo order restraining the petitioner from deporting
the respondent on a bond of P100,000.00.[32] On July 18, 2002,
the BOC issued an Omnibus Resolution dated June 14,
2002, pendente lite denying the respondents Urgent Motion
for Reconsideration, Motion for Bail/Recognizance, and the
Letter dated June 11, 2002. The decretal portion of the
resolution reads:
Wherefore, in view of the foregoing circumstances, we deny
the prayers of the Urgent Motion for Reconsideration of 5
December 1995, the Motion for Bail/Recognizance dated 7
June 2002 and the Letter of 11 June 2002. Further, we hereby
order the following:
1. Subject to the submission of appropriate clearances, the
summary deportation order the respondent Herbert Scheer,
German, under BI Office Memorandum Order No. 34 (series of
1989) and the BOC Summary Deportation Order of 27
September 1995;
2. Permanent exclusion of Herbert Scheer from the Philippines
under C.A. No. 613, Section 40 (a)(15).
3. Inclusion of the name of Herbert Scheer in the Immigration
Black List; and
4. Forfeiture of the bail bond, if any, of Herbert Scheer under
C.A. No. 613, Section 40 (a)(15).
...
109
During the hearing of the respondents plea for a writ of
preliminary mandatory injunction before the CA on July 22,
2002, the Office of the Solicitor General (OSG) manifested that
the State had no opposition to the respondents re-entry and
stay in the Philippines, provided that he leave the country first
and re-apply for admission and residency status with the
assurance that he would be re-admitted.[34] The respondents
counsel manifested to the appellate court that he had just
been informed by the OSG of the Omnibus Resolution of the
BOC dated June 14, 2002.
In her Comment on the Petition, the petitioner (the
respondent therein) alleged, inter alia, the following:
1) that the BOC was an indispensable party to the petition;
2) the petitioners failure to implead the BOC warranted the
denial of the petition;
3) the allowance by then Immigration Commissioner Leandro
Verceles for the petitioner therein to renew his passport and
secure clearances, even if proved, was not binding on the BOC;
4) the September 27, 1995 Order of the BOC was already
executory when the respondent filed her petition in the CA;
5) the German Embassys issuance of a new passport did not
legalize the respondents stay in this country, which became
illegal on July 2, 1995 when his passport expired;
6) the respondent therein did not act with abuse of discretion
in causing the arrest and detention of the respondent based
on the BOCs Summary Deportation Order; and
7) the BOC did not act with grave abuse of discretion in issuing
its Summary Deportation Order and Omnibus Resolution and
such order and resolution were not mooted by the German
Embassys issuance of a new passport in favor of the
respondent.
In view of the Omnibus Resolution of the BOC, the respondent
(petitioner therein) in his Memorandum prayed for the
nullification of the BOCs Order, as well as its Omnibus
Resolution denying his Urgent Motion for Reconsideration
considering that with the issuance of a new passport, there
was no more basis for his deportation, thus:
R E L I E F. WHEREFORE, it is most respectfully prayed of this
Honorable Court that:
1. Upon the filing of this Memorandum, this Honorable Court
forthwith direct and authorize the immediate release of
petitioner, even on undersigneds recognizance, until further
orders from this Honorable Court;
2. The Summary Deportation Order of September 27, 19[9]5,
affirmed by respondent allegedly on June 14, 2002 and made
known only yesterday, be nullified to the extent that it directs b) In the case of Caruncho III vs. COMELEC (315 SCRA 693), it
the deportation of petitioner, who has removed the very basis was pronounced that: Ordinarily, the nonjoinder of an
of said Order of not having a valid passport, and that the indispensable party or the real party interest is not by itself a
Resolution of June 14, 2002 be nullified in toto; and, ground for the dismissal of the petition. The court before
which the petition is filed must first require the joinder of such
3. The Temporary Restraining Order of June 26, 2002 be
party. It is the noncompliance with said order that would be a
converted into a permanent injunction or writ of prohibition.
ground for the dismissal of the petition.
Petitioner likewise prays for such other and further relief as
thus, c) respondent may be estopped for not raising such issue
may be deemed just and equitable in the premises.[35]
earlier.[38]
Surprisingly, the respondents counsel received on July 24,
Aggrieved, the respondent therein, now the petitioner,
2003 a Letter from the petitioner dated July 16, 2002 stating
through the Office of the Solicitor General, appealed to us for
that, the BOC was in the course of reviewing the deportation
relief. The petitioner contends that the Court of Appeals erred
case against Mr. Scheer, and that its findings would be given in
on a question of law in granting the respondents petition in CA-
due time.[36]
G.R. SP No. 71094.[39]
On August 20, 2002, the Court of Appeals rendered a Decision
In support of his contention, the Solicitor General has
in favor of the respondent granting his petition for certiorari
submitted the following arguments:
and prohibition and permanently enjoining the petitioner from
deporting the respondent. The decretal portion of the Decision I. THE WRIT OF MANDAMUS DOES NOT LIE AGAINST THE
reads: COMMISSIONER OF THE BUREAU OF IMMIGRATION TO
RESOLVE RESPONDENTS URGENT MOTION FOR
WHEREFORE, premises considered, the petitions for certiorari
RECONSIDERATION OF THE SUMMARY DEPORTATION ORDER,
and prohibition are hereby GRANTED. Accordingly, any order,
CONSIDERING THAT IT IS THE BOARD OF COMMISSIONERS,
oral or written, issued by respondent Commissioner Domingo
AND NOT THE COMMISSIONER ALONE, WHICH HAS
against petitioner, in relation to his deportation, is hereby
AUTHORITY TO MAKE SAID RESOLUTION.
ANNULLED, and respondent Commissioner Domingo is hereby
permanently enjoined/prohibited from deporting petitioner, II. THE WRIT OF CERTIORARI DOES NOT LIE AGAINST THE
in so far as this case is concerned. COMMISSIONER OF THE BUREAU OF IMMIGRATION,
CONSIDERING THAT IT IS THE BOARD OF COMMISSIONERS,
It is likewise ordered that petitioner be released from his
AND NOT THE COMMISSIONER ALONE, WHICH ISSUED THE
confinement/detention in the Bureau of Immigration UNLESS
SUMMARY DEPORTATION ORDER AND THE OMNIBUS
there is/are fresh new grounds/cases that will warrant his
RESOLUTION.
continued detention. SO ORDERED.[37]
III. THE WRIT OF PROHIBITION DOES NOT LIE AGAINST THE
The Court of Appeals ruled that the German Embassys
COMMISSIONER OF THE BUREAU OF IMMIGRATION,
subsequent issuance of passport to the respondent before the
PROHIBITING THE IMPLEMENTATION OF THE SUMMARY
BOCs issuance of its Omnibus Resolution had mooted the
DEPORTATION ORDER AND THE OMNIBUS RESOLUTION,
September 27, 1995 Summary Deportation Order, as well as
CONSIDERING THAT THE BOARD OF COMMISSIONERS WAS
the arrest and detention of the respondent. According to the
NOT IMPLEADED AS PARTY-RESPONDENT IN THE PETITION IN
court, it made no sense to require the respondent to leave the
CA-G.R. SP NO. 71094.
country and thereafter re-apply for admission with the
BOC. Furthermore, since the grounds cited by the BOC in its IV. ASSUMING BUT WITHOUT ADMITTING THAT THE BOARD
Summary Deportation Order no longer existed, there was no OF COMMISSIONERS WAS PROPERLY IMPLEADED AS PARTY-
factual and legal basis to disqualify the respondent from RESPONDENT IN THE PETITION IN CA-G.R. SP NO. 71094,
staying in the country. NEVERTHELESS, THE SUMMARY DEPORTATION ORDER AND
THE OMNIBUS RESOLUTION WERE NOT ISSUED WITHOUT OR
On the issue of whether the members of the BOC were
IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
indispensable parties, the CA ruled as follows:
DISCRETION AMOUNTING TO LACK OF (SIC) EXCESS OF
a) There are quite a number of cases in relevant jurisprudence JURISDICTION.
wherein only the Immigration Commissioner was impleaded to
V. FURTHER ASSUMING BUT WITHOUT ADMITTING THAT THE
decide whether an alien may stay or be deported, such as in
BOARD OF COMMISSIONERS WAS PROPERLY IMPLEADED AS
the case of Vivo vs. Arca (19 SCRA 878) and Vivo vs. Cloribel (22
PARTY-RESPONDENT IN THE PETITION IN CA-G.R. SP NO.
SCRA 159).
110
71094, THE COMMISSIONER OF THE BUREAU OF
IMMIGRATION DID NOT ACT WITHOUT OR IN EXCESS OF
JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
IMPLEMENTING THE SUMMARY DEPORTATION ORDER AND
THE OMNIBUS RESOLUTION.[40]
Elucidating on his first three arguments, the petitioner
maintains that the respondents petition for certiorari,
prohibition and mandamus before the Court of Appeals should
have been dismissed because he failed to implead the real
party-in-interest as mandated by Rule 3, Section 7 of the Rules
of Court, as amended; in this case, the BOC. According to the
Solicitor General, this was a fatal procedural error. The
inclusion of the BOC as respondent in the case was necessary
in order that its actions could be directly attacked and for the
court to acquire jurisdiction over it. The fact that Immigration
Commissioner Andrea T. Domingo was impleaded as the sole
respondent was not enough, as she is only one of the four
Commissioners.Furthermore, the assailed Orders were issued
by the Board, and not by the Immigration Commissioner alone.
The respondent counters that the petitioner is already
estopped from raising this issue. He argues that -
In quite a number of jurisprudence, only the Immigration
Commissioner is impleaded to decide whether an alien may
stay here or not. The bottom line is petitioner, head of the
Bureau of Immigration, was more than fully heard on its
institutional position, a Bureau which speaks with a single
voice in this case. She is in estoppel for not raising the issue
earlier, either in a timely Comment or during the oral
argument[41]
In Caruncho III v. Comelec, it was held that-
[O]rdinarily, the nonjoinder of an indispensable party or real
party in interest is not by itself a ground for the dismissal of the
petition. The court before which the petition is filed must first
require the joinder of such party. It is the noncompliance with
said order that would be a ground for the dismissal of the
petition.
But even as the Court of Appeals did not require respondent of
such joinder of parties, the respondent, in fact, begged leave,
ad cautelam, in its Reply Memorandum dated July 31, 2002 to
implead the Board which speaks with a single voice anyway in
this case, and therefore, no claim can be made that a valid
point of view has not been heard[42]
Moreover, according to the respondent, the petitioner is
clearly the BIDs chosen instrumentality for the relevant
purpose. What the respondent ultimately questioned are the
acts or orders of the petitioner for the arrest and immediate
111
deportation of the respondent by way of implementing the
BOCs Summary Deportation Order.
By way of reply, the Office of the Solicitor General asserted
that the Summary Deportation Order and Omnibus Resolution
were collegial actions of the BOC and not of the petitioner
alone. Although its Chairperson, the petitioner, is merely a
member thereof, her decisions and actions are still subject to
the collective will of the majority.[43]
The Ruling of the Court. The BOC is an Indispensable Party
We agree with the petitioners contention that the BOC was an
indispensable party to the respondents petition for certiorari,
prohibition and mandamus in the Court of Appeals. The
respondent was arrested and detained on the basis of the
Summary Deportation Order of the BOC. The petitioner caused
the arrest of the respondent in obedience to the said
Deportation Order. The respondent, in his Memorandum,
prayed that the CA annul not only the Summary Deportation
Order of the BOC but also the latters Omnibus Resolution, and,
thus, order the respondents immediate release. The
respondent also prayed that the CA issue a writ of mandamus
for the immediate resolution of his Urgent Motion for
Reconsideration. The said motion had to be resolved by the
BOC as the order sought to be resolved and reconsidered was
issued by it and not by the petitioner alone. The powers and
duties of the BOC may not be exercised by the individual
members of the Commission.[44]
Section 7, Rule 3 of the Rules of Court, as amended, requires
indispensable parties to be joined as plaintiffs or defendants.
The joinder of indispensable parties is mandatory. Without the
presence of indispensable parties to the suit, the judgment of
the court cannot attain real finality.[45] Strangers to a case are
not bound by the judgment rendered by the court. [46] The
absence of an indispensable party renders all subsequent
actions of the court null and void. Lack of authority to act not
only of the absent party but also as to those present. [47] The
responsibility of impleading all the indispensable parties rests
on the petitioner/plaintiff.[48]
However, the non-joinder of indispensable parties is not a
ground for the dismissal of an action. Parties may be added by
order of the court on motion of the party or on its own
initiative at any stage of the action and/or such times as are
just.[49] If the petitioner/plaintiff refuses to implead an
indispensable party despite the order of the court, the latter
may dismiss the complaint/petition for the
petitioner/plaintiffs failure to comply therefor.[50] The remedy
is to implead the non-party claimed to be indispensable.[51] In
this case, the CA did not require the respondent (petitioner
therein) to implead the BOC as respondent, but merely relied
on the rulings of the Court in Vivo v. Arca,[52] and Vivo v.
Cloribel.[53] The CAs reliance on the said rulings is, however,
misplaced. The acts subject of the petition in the two cases
were those of the Immigration Commissioner and not those of
the BOC; hence, the BOC was not a necessary nor even an
indispensable party in the aforecited cases.
The Non-joinder of an Indispensable Party is not a Ground for
the Dismissal of the Petition
The Court may be curing the defect in this case by adding the
BOC as party-petitioner. The petition should not be dismissed
because the second action would only be a repetition of the
first.[54] In Salvador, et al., v. Court of Appeals, et al.,[55] we held
that this Court has full powers, apart from that power and
authority which is inherent, to amend the processes,
pleadings, proceedings and decisions by substituting as party-
plaintiff the real party-in-interest. The Court has the power to
avoid delay in the disposition of this case, to order its
amendment as to implead the BOC as party-respondent.
Indeed, it may no longer be necessary to do so taking into
account the unique backdrop in this case, involving as it does
an issue of public interest.[56] After all, the Office of the
Solicitor General has represented the petitioner in the instant
proceedings, as well as in the appellate court, and maintained
the validity of the deportation order and of the BOCs Omnibus
Resolution. It cannot, thus, be claimed by the State that the
BOC was not afforded its day in court, simply because only the
petitioner, the Chairperson of the BOC,[57] was the respondent
in the CA, and the petitioner in the instant recourse. In Alonso
v. Villamor,[58] we had the occasion to state:
There is nothing sacred about processes or pleadings, their
forms or contents. Their sole purpose is to facilitate the
application of justice to the rival claims of contending parties.
They were created, not to hinder and delay, but to facilitate
and promote, the administration of justice. They do not
constitute the thing itself, which courts are always striving to
secure to litigants. They are designed as the means best
adapted to obtain that thing. In other words, they are a means
to an end. When they lose the character of the one and
become the other, the administration of justice is at fault and
courts are correspondingly remiss in the performance of their
obvious duty.
The CA had Jurisdiction Over the Petition for Certiorari,
Prohibition and Mandamus
We do not agree with the petitioners contention that the issue
before the CA, as to the power of the President to determine
whether an alien may remain or be deported from the
Philippines, is beyond the appellate courts competence to
delve into and resolve. The contention of the petitioner is
based on a wrong premise.
112
The settled rule is that the authority to exclude or expel aliens
by a power affecting international relation is vested in the
political department of the government, and is to be regulated
by treaty or by an act of Congress, and to be executed by the
executive authority according to the regulations so
established, except in so far as the judicial department has
been authorized by treaty or by statute, or is required by the
Constitution to intervene.[59] The judicial department cannot
properly express an opinion upon the wisdom or the justice of
the measures executed by Congress in the exercise of the
power conferred on it,[60] by statute or as required by the
Constitution. Congress may, by statute, allow the decision or
order of the Immigration Commissioner or the BOC to be
reviewed by the President of the Philippines or by the courts,
on the grounds and in the manner prescribed by law.
Article VIII, Section 1 of the Constitution has vested judicial
power in the Supreme Court and the lower courts such as the
Court of Appeals, as established by law. Although the courts
are without power to directly decide matters over which full
discretionary authority has been delegated to the legislative or
executive branch of the government and are not empowered
to execute absolutely their own judgment from that of
Congress or of the President, [61] the Court may look into and
resolve questions of whether or not such judgment has been
made with grave abuse of discretion, when the act of the
legislative or executive department violates the law or the
Constitution. In Harvy Bridges v. I.F. Wixon,[62] the United
States Federal Supreme Court reversed an Order of
Deportation made by the Attorney General for insufficiency of
evidence and for improper admission of evidence. In Nging v.
Nagh,[63] the United States Court of Appeals (9th Circuit Court)
held that conclusions of administrative offices on the issues of
facts are invulnerable in courts unless when they are not
rendered by fair-minded men; hence, are arbitrary. In Toon v.
Stump,[64] the Court ruled that courts may supervise the
actions of the administrative offices authorized to deport
aliens and reverse their rulings when there is no evidence to
sustain them. When acts or omissions of a quasi-judicial
agency are involved, a petition for certiorari or prohibition may
be filed in the Court of Appeals as provided by law or by the
Rules of Court, as amended.[65]
In this case, the respondent alleges that the petitioner acted
arbitrarily, contrary to law and with grave abuse of discretion
in causing his arrest and detention at a time when his Urgent
Motion for Reconsideration of the BOCs Summary Deportation
Order had yet to be resolved. There was no factual or legal
basis for his deportation considering that he was a
documented alien and a law-abiding citizen; the respondent,
thus, prayed for a writ of mandamus to compel the petitioner,
the Chairperson of the BOC, to resolve the said motion. The
petition before the CA did not involve the act or power of the
President of the Philippines to deport or exclude an alien from
the country. This being so, the petition necessarily did not call
for a substitution of the Presidents discretion on the matter of
the deportation of the respondent with that of the judgment
of the CA.
Irrefragably, the CA had jurisdiction over the petition of the
respondent.
The BOC Committed a GraveAbuse of Discretion AmountingTo
Lack or Excess of JurisdictionIn Issuing its Summary
DeportationOrder and Omnibus Resolution; ThePetitioner
Committed a Grave AbuseOf Her Discretion Amounting toLack
or Excess of Jurisdiction inCausing the Arrest and DetentionOf
The Private Respondent
On the Solicitor Generals fourth and fifth arguments, we are
convinced that the BOC committed a grave abuse of discretion
amounting to excess or lack of jurisdiction in issuing its
Summary Deportation Order and Omnibus Resolution, and
that the petitioner committed grave abuse of discretion
amounting to excess or lack of jurisdiction in causing the arrest
and detention of the private respondent.
The settled rule is that the entry or stay of aliens in the
Philippines is merely a privilege and a matter of grace; such
privilege is not absolute nor permanent and may be revoked.
However, aliens may be expelled or deported from the
Philippines only on grounds and in the manner provided for by
the Constitution, the Immigration Act of 1940, as amended,
and administrative issuances pursuant thereto. In Mejoff v.
Director of Prisons,[66] we held, thus:
Moreover, by its Constitution (Art. II, Sec. 3) the Philippines
adopts the generally accepted principles of international law a
part of the law of Nation. And in a resolution entitled Universal
Declaration of Human Rights and approved by the General
Assembly of the United Nations of which the Philippines is a
member, at its plenary meeting on December 10, 1948, the
right to life and liberty and all other fundamental rights as
applied to all human beings were proclaimed. It was there
resolved that All human beings are born free and equal in
degree and rights (Art. 1); that Everyone is entitled to all the
rights and freedom set forth in this Declaration, without
distinction of any kind, such as race, color, sex, language,
religion, political or other opinion, nationality or social origin,
property, birth, or other status (Art. 2); that Every one has the
right to an effective remedy by the competent national
tribunals for acts violating the fundamental rights granted him
by the Constitution or by law (Art. 8); that No one shall be
subjected to arbitrary arrest, detention or exile (Art. 9); etc.
In this case, the BOC ordered the private respondents
deportation on September 27, 1995 without even conducting
summary deportation proceedings. The BOC merely relied on
113
the June 29, 1995 Letter of the German Vice Consul and of the
German Embassys Note Verbale No. 369/95 dated July 26,
1995. It issued the Summary Deportation Order on September
27, 1995 allegedly under paragraph 3 of Office Memorandum
Order No. 34 dated August 21, 1989 which reads:
3. If a foreign embassy cancels the passport of the alien or does
not reissue a valid passport to him, the alien loses the privilege
to remain in the country, under the Immigration Act, Sections
10 and 15 (Schonemann vs. Santiago, et al., G.R. No. 81461, 30
May 1989). The automatic loss of the privilege obviates
deportation proceedings. In such instance, the Board of
Commissioners may issue summary judgment of deportation
which shall be immediately executory.
However, as gleaned from the Summary Deportation Order,
the respondent was ordered deported not only because his
passport had already expired; the BOC speculated that the
respondent committed insurance fraud and illegal activities in
the Philippines and would not, thus, be issued a new
passport. This, in turn, caused the BOC to conclude that the
respondent was an undesirable alien. Section 37(c) of
Commonwealth Act No. 613, as amended, provides that:
No alien shall be deported without being informed of the
specific grounds for deportation or without being given a
hearing under rules of procedure to be prescribed by the
Commissioner of Immigration.
Under paragraphs 4 and 5 of Office Memorandum Order No.
34, an alien cannot be deported unless he is given a chance to
be heard in a full deportation hearing, with the right to adduce
evidence in his behalf, thus:
4. All other cases shall be tried in full deportation hearing, with
due observance of the pertinent provisions of Law Instruction
No. 39.
5. In all cases, the right of the alien to be informed of the
charges against him, to be notified of the time and place of
hearing, when necessary, to examine the evidence against
him, and to present evidence in his own behalf, where
appropriate, shall be observed.
The respondent was not afforded any hearing at all. The BOC
simply concluded that the respondent committed insurance
fraud and illegal activities in Palawan without any evidence.
The respondent was not afforded a chance to refute the
charges. He cannot, thus, be arrested and deported without
due process of law as required by the Bill of Rights of the
Constitution.In Lao Gi v. Court of Appeals,[67] we held that:
Although a deportation proceeding does not partake of the
nature of a criminal action, however, considering that it is a
harsh and extraordinary administrative proceeding affecting
the freedom and liberty of a person, the constitutional right of
such person to due process should not be denied. Thus, the
provisions of the Rules of Court of the Philippines particularly
on criminal procedure are applicable to deportation
proceedings.
It must be noted that the respondent was a permanent
resident before his passport expired on July 2, 1995. In Chew
v. Colding,[68] the United States Federal Supreme Court ruled:
It is well established that if an alien is a lawful permanent
resident of the United States and remains physically present
there, he is a person within the protection of the Fifth
Amendment. He may not be deprived of his life, liberty or
property without due process of law. Although it later may be
established, as respondents contend, that petitioner can be
expelled and deported, yet before his expulsion, he is entitled
to notice of the nature of the charge and a hearing at least
before an executive or administrative tribunal. Although
Congress may prescribe conditions for his expulsion and
deportation, not even Congress may expel him without
allowing him a fair opportunity to be heard.
As Mr. Justice Murphy said in his concurring opinion in Bridges
v. Wixon:[69] The Bill of Rights belongs to them as well as to all
citizens. It protects them as long as they reside within the
boundaries of our land. It protects them in the exercise of the
great individual rights necessary to a sound political and
economic democracy.
According to Vattal,[70] an alien who is a permanent resident in
a country is a member of the new society, at least as a
permanent inhabitant, and is a kind of citizen of inferior order
from the native citizens; but is, nevertheless, limited and
subject to the society, without participating in all its
advantages. Sir Robert Philconse called them de facto, though
not de jure citizens of the country of their domicile.[71]
Such permanent resident[72] may be classified as a denizen, a
kind of middle state between alien and a natural-born subject
and partakes of both. Paraphrasing Justice Brewer in his
dissenting opinion in Fong Yue Ting v. United States,[73] when
the right to liberty and residence is involved, some other
protection than the mere discretion of the petitioner or the
BOC is required. We recall the warning of the United States
Supreme Court in Boyd v. United States:[74]
Illegitimate and unconstitutional practices get their first
footing in that way, namely, by silent approaches and slight
deviations from legal modes of procedure. This can only be
obviated by adhering to the rule that constitutional provisions
for the security of person and property should be liberally
construed. A close and literal construction deprives them of
half their efficacy, and leads to a gradual depreciation of the
right, as if it consisted more in sound than in substance. It is
114
the duty of the courts to be watchful for the constitutional
rights of the citizen, and against any stealthy encroachments
thereon. Their motto should be obsta principiis.
In sum, the arrest and detention of the respondent and his
deportation under the Summary Deportation Order of the BOC
for insurance fraud and illegal activities in Palawan violated his
constitutional and statutory rights to due process.
The Respondents Arrest and Detention was Premature,
Unwarranted and Arbitrary
We agree that the Immigration Commissioner is mandated to
implement a legal and valid Summary Deportation Order
within a reasonable time. But in this case, the arrest of the
respondent in his house, at near midnight, and his subsequent
detention was premature, unwarranted and arbitrary. Like a
thunderbolt in the sky, the BID agents and marines arrested
the respondent on June 6, 2002, on orders of the petitioner
based on the September 27, 1995 Summary Deportation
Order. Under the basic rudiments of fair play and due process,
the petitioner was required to first resolve the respondents
Urgent Motion for Reconsideration of the said Order, which
was filed more than six years before or on December 5, 1995.
It may be argued that respondents filing of an Urgent Motion
for Reconsideration did not ipso facto suspend the efficacy of
the BOCs deportation order. However, such an argument
cannot be sustained in this case because of the extant and
peculiar factual milieu. It bears stressing that more than six
years had elapsed, from the time the Summary Deportation
Order was issued, until the respondent was finally arrested.
Supervening facts and circumstances rendered the
respondents arrest and detention unjust, unreasonable,
barren of factual and legal basis. The BOC should have set the
respondents motion for hearing to afford him a chance to be
heard and adduce evidence in support thereon. It was bad
enough that the BOC issued its Summary Deportation Order
without a hearing; the BOC dealt the respondent a more
severe blow when it refused to resolve his motion for
reconsideration before causing his arrest on June 6, 2002.
As aforestated, the BOC ordered the deportation of the
respondent after a summary proceeding without prior notice
on the following grounds: (a) the respondents German
passport had expired; (b) there was a pending criminal case for
physical injuries against him in Germany; (c) the respondent
indulged in illegal activities in Palawan; (d) that in all likelihood,
the respondents passport will not be renewed by the German
Embassy as he was wanted for insurance fraud in Germany;
and, (e) he was an undesirable alien. But then, in response to
the written query of no less than the petitioner herself, the
German Embassy declared that the respondent was not
wanted by the German police for any crime, including
insurance fraud. This could only mean that the warrant of
arrest issued by the German Federal police mentioned in
Note Verbale No. 369/95 had been lifted, and that the
respondent was not involved in any illegal activities in
Germany. The criminal case against the respondent for
physical injuries, which does not involve moral turpitude, was
dismissed by the German District Court.Furthermore, there
was no evidence of insurance fraud against the respondent.
The BOC issued its Summary Deportation Order without
affording the respondent the right to be heard on his motion
and adduce evidence thereon. It merely concluded that the
respondent was involved in illegal activities in Palawan. What
made matters worse was that the BOC indulged in sheer
speculation, that the German Embassy is unlikely to issue a
new passport to the respondent. The deportation of aliens
should not be based on mere speculation or a mere product of
procrastinations as in this case. As it turned out, the German
Embassy re-issued the respondents passport; he was issued a
temporary passport, and, thereafter, a regular passport, yet to
expire on March 12, 2006. The petitioner cannot feign
ignorance of this matter because the respondent himself, six
years before he was arrested, informed then Immigration
Commissioner Verceles in a Letter dated March 1, 1996. The
respondents letter forms part of the records of the BOC. There
is no evidence on record that the respondent committed any
illegal activities in Palawan. He was even designated as special
agent of the NBI, and was, in fact, issued clearances by the PNP
and the NBI no less. Despite all the foregoing, the petitioner
ordered and caused the arrest and detention of the
respondent.
What is most nettlesome is the apparent antedating of the
BOC Omnibus Resolution. The records show that the petitioner
sought to assuage the respondents concern on the belated
resolution of his pending urgent motion for reconsideration in
a Letter to the latters counsel dated July 18, 2002 in which the
petitioner assured the respondent that the BOC will provide
him of its action on the said motion:
Dear Atty. Sagisag,
We respond to your letter of 17 June 2002 by informing you
that the case of Mr. Herbert Scheer is being evaluated by the
Board of Commissioners (BOC). The BOC will provide you of the
results of its collegial action in due time.
Very truly yours, (Sgd.) ANDREA D. DOMINGO
Commissioner[75]
However, the Omnibus Resolution of the BOC was dated June
14, 2002, although on its face it was filed with the Records
Division of the BID only on July 18, 2002.
115
The foregoing gave reason for the CA to suspect that the
Omnibus Resolution of the BOC was antedated.[76] The petition
of the respondent in the CA must have jolted the petitioner
and the BOC from its stupor because it came out with its
Omnibus Resolution on July 18, 2002, which was, however,
dated as early as June 14, 2002. The respondent had to wait in
anxiety for the BOC to quench his quest for justice. The BOCs
wanton acts amounted to an abdication of its duty to act
and/or resolve cases/incidents with reasonable dispatch. To
recall our ruling in Board of Commissioners v. De la
Rosa,[77] citing Sheor v. Bengson,[78] thus:
This inaction or oversight on the part of the immigration
officials has created an anomalous situation which, for reasons
of equity, should be resolved in favor of the minor herein
involved.
The petitioner and the BOC should have taken to heart the
following pronouncement in Commissioner of Immigration v.
Fernandez:[79]
In the face of the disclosure that Teban Caoili had been all
along working in the Avenue Electrical Supply Co. (Avesco),
located at No. 653 Rizal Avenue, Manila, until his arrest, and
the documentary evidence showing that he had been issued a
Philippine Passport; had regularly paid his Residence Tax
Certificates (A & B), and filed Income Tax Returns, a finding of
fact is necessary whether the Commissioner really had
intended to notify Teban Caoili of the exclusion proceedings
the Board had conducted in his absence. While it may be true
that the proceedings is purely administrative in nature, such a
circumstance did not excuse the serving of notice. There are
cardinal primary rights which must be respected even in
proceedings of administrative character, the first of which is
the right of the party interested or affected to present his own
case and submit evidence in support thereof.[80]
...
Since the proceedings affected Caoilis status and liberty, notice
should have been given. And in the light of the actuations of
the new Board of Commissioners, there is a necessity of
determining whether the findings of the Board of Special
Inquiry and the old Board of Commissioners are correct or not.
This calls for an examination of the evidence, and, the law on
the matter.[81]
Apparently, the BOC did not bother to review its own records
in resolving the respondents Urgent Motion for
Reconsideration. It anchored its Omnibus Resolution only on
the following: the membership of the BOC had changed when
it issued its September 27, 1995 Summary Deportation Order
and under Commonwealth Act No. 613, Section 27(b); the BOC
is precluded from reversing a previous order issued by
it;[82]and, the September 27, 1995 Order of the BOC had
become final and could no longer be reviewed and reversed by
it after the lapse of one year.[83] However, the rulings cited by
the petitioner are not applicable in the instant case, as the said
cases cited involve appeals to the BOC from the decisions of
the Board of Special Inquiry (BSI). In Sy v. Vivo[84] and Lou v.
Vivo,[85] we ruled that under Section 27(b) of Commonwealth
Act No. 613, as amended, the Decision of the BOC on appeal
from the decision of the BSI becomes final and executory after
one year:
(b) A board of special inquiry shall have authority (1) to
determine whether an alien seeking to enter or land in the
Philippines shall be allowed to enter or land or shall be
excluded, and (2) to make its findings and recommendations in
all the cases provided for in section twenty-nine of this Act
wherein the Commissioner of Immigration may admit an alien
who is otherwise inadmissible. For this purpose, the board or
any member thereof, may administer oaths and take evidence
and in case of necessity may issue subpoena and/or
subpoena duces tecum. The hearing of all cases brought
before a board of special inquiry shall be conducted under
rules of procedure to be prescribed by the Commissioner of
Immigration. The decision of any two members of the board
shall prevail and shall be final unless reversed on appeal by the
Board of Commissioners as hereafter stated, or in the absence
of an appeal, unless reversed by the Board of Commissioners
after a review by it, motu propio, of the entire proceedings
within one year from the promulgation of the decision.
[86]
In Commissioner of Immigration v. Fernandez, we held that
the BOC composed of new members is precluded from
reversing, motu proprio, the decision of the BOC on appeal
from a BSI decision. But not to be ignored was our ruling that
at any rate, the issue of authority should be made in
accordance with the procedure established by law, with a view
to protecting the rights of individuals.[87]
In this case, the Summary Deportation Order was issued by the
BOC in the exercise of its authority under Office Memorandum
Order No. 34, and not in the exercise of its appellate
jurisdiction of BSI decisions. There is no law nor rule which
provides that a Summary Deportation Order issued by the BOC
in the exercise of its authority becomes final after one year
from its issuance,[88] or that the aggrieved party is barred from
filing a motion for a reconsideration of any order or decision of
the BOC. The Rules of Court may be applied in a suppletory
manner to deportation proceedings[89] and under Rule 37, a
motion for reconsideration of a decision or final order may be
filed by the aggrieved party.
Neither is there any law nor rule providing that the BOC,
composed of new members, cannot revise a Summary
Deportation Order previously issued by a different body of
Commissioners. The BOC that issued the Summary
116
Deportation Order and the BOC which resolved the
respondents Urgent Motion for Reconsideration are one and
the same government entity, with the same powers and duties
regardless of its membership. Similarly, an RTC judge who
replaces another judge who presided over a case may review
the judgment or order of his predecessor as long as the said
judgment or order has not as yet become final or
executory. The act subject of review is not the act of the judge
but the act of the court.
The petitioners contention that it failed to resolve the
respondents motion for reconsideration because of the
change of administration in the BOC was branded by the CA as
flimsy, if not bordering on the absurd:
Firstly, it was issued three days (June 14, 2002) after petitioner
filed this instant petition on June 11, 2002 or almost seven
years from the time the motion for reconsideration was filed;
Secondly, respondents counsels excuse that it took such time
to resolve it because it was only later that the motion for
reconsideration was discovered because of change of
administration, is flimsy, if not bordering on the absurd;[90]
The Issuance of a New and Regular Passport to the
RespondentRendered the Summary Deportation Order Moot
andAcademic, and the OmnibusResolution of the BOC
Lackingin Legal Basis
We agree with the petitioner that a foreign embassys
cancellation of the passport it had issued to its citizens, or its
refusal to issue a new one in lieu of a passport that has expired,
will result in the loss of the aliens privilege to stay in this
country and his subsequent deportation therefrom. But even
the BOC asserted in its Summary Deportation Order that an
embassys issuance of a new passport to any of its citizens may
bar the latters deportation, citing the resolution of this Court
in Schonemann v. Commissioner Santiago.[91]
Irrefragably, Commissioner Verceles was mandated to cause
the arrest of the respondent preparatory to his deportation
from the Philippines. However, there was no fixed period in
the Order within which to comply with the same. The
Commissioner is not mandated to deport an alien immediately
upon receipt of the BOCs deportation order. It is enough that
the Commissioner complies with the Order within a reasonable
time, which, in Mejoff v. Director of Prisons,[92] we held to
connote as follows:
The meaning of reasonable time depends upon the
circumstances, specially the difficulties of obtaining a passport,
the availability of transportation, the diplomatic arrangements
with the governments concerned and the efforts displayed to
send the deportee away; but the Court warned that under
established precedents, too long a detention may justify the
issuance of a writ of habeas corpus.
In this case, the BOC had yet to act on the respondents Urgent
Motion for Reconsideration. The respondent was also given a
chance to secure a clearance and a new passport with the
German Embassy. After all, the possibility that the German
Embassy would renew the respondents passport could not be
ruled out. This was exactly what happened: the German
Embassy issued a new passport to the respondent on March
12, 1996 after the German District Court dismissed the case for
physical injuries. Thus, the respondent was no longer an
undocumented alien; nor was he an undesirable one for that
matter.
The petitioner even admits that there is no longer a legal or
factual basis to disqualify the respondent from remaining in
the country as a permanent resident. Yet, the OSG insists that
he has to be deported first so that the BOCs Summary
Deportation Order could be implemented. This contention was
rejected by the CA, thus:
During the hearing of petitioners prayer for issuance of a writ
of preliminary injunction before Us, respondents counsel from
the Office of the Solicitor General had the occasion to manifest
in open court that the State has no opposition to petitioners
stay in the country provided he first leave and re-enter and re-
apply for residency if only to comply with the Summary
Deportation Order of 1995. That, to Our mind, seems
preposterous, if not ridiculous. An individuals human rights
and rights to freedom, liberty and self-determination
recognize no boundaries in the democratic, free and civilized
world. Such rights follow him wherever he may
be. If presently, there is no factual or legal impediment to
disqualify petitioner in his stay in the country, other than
allegedly those relied upon in the Summary Deportation Order
of 1995 (as hereinbefore discussed, had ceased to exist),
requiring petitioner to leave the country and re-enter and re-
apply for residency makes little sense or no sense at all, more
so, in the case of petitioner who, for many years past, had lived
herein and nurtured a family that is Filipino.
Thus, opined, We, therefore, believe and hereby rule, that
there is presently every reason to enjoin/prohibit the Bureau
of Immigration, respondent Commissioner Domingo in
particular, from presently deporting petitioner.[93]
We agree with the Court of Appeals. The Summary
Deportation Order had been rendered moot and academic
upon the German Embassys issuance of a new passport to the
respondent. The respondent had been in the Philippines as a
permanent resident since July 18, 1986, and had married a
Filipino citizen, with whom he has two children. He is not a
burden to the country nor to the people of Palawan. He put up,
117
and has been managing, the Bavaria Restaurant with about 30
employees. He has no pending criminal case; nor does he have
any derogatory record. The respondent was allowed by then
Immigration Commissioner Verceles to renew his passport and
was given time to secure a clearance from the German
Embassy.The respondent was able to do so. The case against
him for physical injuries was dismissed by the German District
Court. Thus, the inceptual basis for the respondents
deportation had ceased to exist.
The power to deport is a police matter against undesirable
aliens, whose presence in the country is found to be injurious
to the public good. We believe that the deportation of the
respondent late in the day did not achieve the said purpose.
The petitioner admitted that there is no longer a factual and
legal basis to disqualify the respondent from staying in the
country.He is not an undesirable alien; nor is his presence in
the country injurious to public good. He is even an
entrepreneur and a productive member of society.
Arrest, detention and deportation orders of aliens should not
be enforced blindly and indiscriminately, without regard to
facts and circumstances that will render the same unjust,
unfair or illegal.[94] To direct the respondent to leave the
country first before allowing him re-entry is downright
iniquitous.[95] If the respondent does leave the country, he
would thereby be accepting the force and effect of the BOCs
Summary Deportation Order with its attendant infirmities. He
will thereby lose his permanent resident status and admit the
efficacy of the cancellation of his permanent resident visa.
Moreover, his entry into the country will be subject to such
conditions as the petitioner may impose.
The deportation of an alien is not intended as a punishment or
penalty. But in a real sense, it is. In Bridges v. Wixon,[96] Mr.
Justice Murphy declared that the impact of deportation upon
the life of an alien is often as great if not greater than the
imposition of a criminal sentence. In dealing with deportation,
there is no justifiable reason for disregarding the democratic
and human tenets of our legal system and descending to the
practices of despotism. As Justice Brewer opined in Fong
Yue Ting v. United States,[97] deportation is a punishment
because it requires first, an arrest, a deprivation of liberty and
second, a removal from home, from family, from business,
from property. To be forcibly taken away from home, family,
business and property and sent across the ocean to a distant
land is punishment; and that oftentimes is most severe and
cruel. It would be putting salt on the respondents woes
occasioned by the BOCs ineptitude. Considering the peculiar
backdrop and the equities in this case, the respondent’s
deportation and the cancellation of his permanent resident
visa as a precondition to his re-entry into this country is severe
and cruel; it is a form of punishment.
Our ruling in Vivo v. Cloribel,[98] has no application in this case,
precisely because the factual milieu here is entirely
different. In that case, the Commissioner of Immigration
required the respondents to leave the country on or before
September 12, 1962, because their stay in the country as
approved by the Secretary of Justice had been cancelled. Our
ruling in Bing v. Commission on Immigration,[99] even
buttresses the case for the respondent since we ruled therein
that an alien entitled to a permanent stay cannot be deported
without being accorded due notice and hearing.

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

Decision of the Court of Appeals is AFFIRMED.

118
EUFEMIO C. DOMINGO, CELSO D. GANGAN, PACASIO S.
BANARIA, SOFRONIO B. URSAL, ALBERTO P. CRUZ, MARIA L.
MATIB, RACHEL U. PACPACO, ANGELO G. SANCHEZ, and
SHERWIN A. SIP-AN, petitioners, vs. HON. GUILLERMO N.
CARAGUE, in his capacity as Chairman, Commission on Audit,
HON. EMMANUEL M. DALMAN and HON. RAUL C. FLORES, in
their capacities as Commissioners, Commission on
Audit, respondents. SANDOVAL-GUTIERREZ, J.:
Judicial power is the power to hear and decide cases pending
between parties who have the right to sue in courts of law and
equity.[1] Corollary to this dictum is the principle of locus
standi of a litigant. He who is directly affected and whose
interest is immediate and substantial has the standing to sue.
Thus, a party must show a personal stake in the outcome of
the case or an injury to himself that can be redressed by a
favorable decision in order to warrant an invocation of the
courts jurisdiction and justify the exercise of judicial power on
his behalf.
Assailed in this petition for certiorari is the legality of
Resolution No. 2002-05 of the Commission on Audit (COA)
providing for Organizational Restructuring Plan. The above-
named petitioners basically alleged therein that this Plan is
intrinsically void for want of an enabling law authorizing COA
to undertake the same and providing for the necessary
standards, conditions, restrictions, limitations, guidelines, and
parameters. Petitioners further alleged that in initiating such
Organizational Restructuring Plan without legal authority, COA
committed grave abuse of discretion amounting to lack or
excess of jurisdiction.
At this point, it is pertinent to state that the COA is a quasi-
judicial body and that its decision, order or ruling may be
brought to the Supreme Court on certiorari by the aggrieved
party.[2]
Petitioners Eufemio C. Domingo, Celso C. Gangan, Pascasio S.
Banaria are retired Chairmen, while Sofronio B. Ursal, and
Alberto P. Cruz are retired Commissioners of COA. All claim to
maintain a deep-seated abiding interest in the affairs of
COA,[3] especially in its Organizational Restructuring Plan, as
concerned taxpayers.
The other petitioners are incumbent officers or employees of
COA. Maria L. Matib and Angelo G. Sanchez are State Auditor
III and State Auditor II, respectively, assigned to the Cordillera
Administrative Region (CAR). Prior to the implementation of
the questioned COA Organizational Restructuring Plan, they
were Resident Auditors and later Audit Team Leaders.
Petitioner Rachel U. Pacpaco is a State Auditor III assigned to
CAR and a Team Supervisor, while petitioner Sherwin A. Sipi-
an is a State Auditor I also assigned at the CAR. These
petitioners claim that they were unceremoniously divested of
119
their designations/ranks as Unit Head, Team Supervisor, and
Team Leader upon implementation of the COA Organizational
Restructuring Plan without just cause and without due process,
in violation of Civil Service Law. Moreover, they were deprived
of their respective Representation and Transportation
Allowances (RATA), thus causing them undue financial
prejudice.
Petitioners now invoke this Courts judicial power to strike
down the COA Organizational Restructuring Plan for being
unconstitutional or illegal.
Initially, for our resolution is the issue of whether petitioners
have the legal standing to institute the instant petition.
Petitioners invoke our ruling in Chavez v. Public Estates
Authority,[4] Agan, Jr. v. Philippine International Air Terminals
Co., Inc.,[5] and Information Technology Foundation of the
Philippines v. Commission on Elections[6] that where the
subject matter of a case is a matter of public concern and
imbued with public interest, then this fact alone gives them
legal standing to institute the instant petition. Petitioners
contend that the COA Organizational Restructuring Plan is not
just a mere reorganization but a revamp or overhaul of the
COA, with a spillover effect upon its audit performance. This
will have an impact upon the rest of the government bodies
subject to its audit supervision, thus, should be treated as a
matter of transcendental importance. Consequently,
petitioners legal standing should be recognized and upheld.
Respondents, through the Office of the Solicitor General
(OSG), counter that petitioners have no legal standing to file
the present petition since following our ruling in Kilusang
Mayo Uno Labor Center v. Garcia, Jr.,[7] they have not shown a
personal stake in the outcome of the case or an actual or
potential injury that can be redressed by our favorable
decision. Petitioners themselves admitted that they do not
seek any affirmative relief nor impute any improper or
improvident act against the said respondents and are not
motivated by any desire to seek affirmative relief from COA or
from respondents that would redound to their personal
benefit or gain. It is clear then that petitioners failed to show
any present substantial interest in the outcome of this case,
citing Kilosbayan v. Morato.[8] Nor may petitioners claim that
as taxpayers, they have legal standing since nowhere in their
petition do they claim that public funds are being spent in
violation of law or that there is a misapplication of the
taxpayers money, as we ruled in Dumlao v. Comelec.[9]
Petitioners reliance upon our rulings in Chavez,[10] Agan,
Jr.,[11] and Information Technology Foundation[12] is flawed.
In Chavez, we ruled that the petitioner has legal standing since
he is a taxpayer and his purpose in filing the petition is to
compel the Public Estate Authority (PEA) to perform its
constitutional duties with respect to: (a) the right of the
citizens to information on matters of public concern; and (b)
the application of a constitutional provision intended to insure
the equitable distribution of alienable lands of the public
domain among Filipino citizens. The thrust of the first is to
compel PEA to disclose publicly information on the sale of
Government lands worth billions of pesos, as mandated by the
Constitution and statutory law. The thrust of the second is to
prevent PEA from alienating hundreds of hectares of alienable
lands of the public domain, thereby compelling it to comply
with a constitutional duty to the nation. We held that these
matters are of transcendental public importance.[13]
In Agan, Jr., we held that petitioners have legal standing as
they have a direct and substantial interest to protect. By the
implementation of the PIATCO contracts, they stand to lose
their source of livelihood, a property right zealously protected
by the Constitution. Such financial prejudice on their part is
sufficient to confer upon them the requisite locus standi.[14]
In Information Technology Foundation, there were two
reasons why petitioners standing was recognized. First, the
nations political and economic future virtually hangs in the
balance, pending the outcome of the 2004 elections.
Accordingly, the award for the automation of the electoral
process was a matter of public concern, imbued with public
interest. Second, the individual petitioners, as taxpayers,
asserted a material interest in seeing to it that public funds are
properly used.
Here, petitioners have not shown any direct and personal
interest in the COA Organizational Restructuring Plan. There is
no indication that they have sustained or are in imminent
danger of sustaining some direct injury as a result of its
implementation. In fact, they admitted that they do not seek
any affirmative relief nor impute any improper or improvident
act against the respondents and are not motivated by any
desire to seek affirmative relief from COA or from respondents
that would redound to their personal benefit or gain. Clearly,
they do not have any legal standing to file the instant suit.
We are well aware of the averments of petitioners Matib,
Pacpaco, Sanchez, and Sipi-An that they were demoted and
unceremoniously divested of their previous designations as
Unit Head, Team Supervisor, or Team Leader; that they were
deprived of their RATA; that they were relegated to being mere
Team Members, entitled to only a reimbursable transportation
allowance; and that they were denied due process.
Such averments lack merit. Actually, they were not demoted.
Under Section 11, Rule VII of the Omnibus Rules Implementing
Book V of the Administrative Code of 1987, a demotion is the
movement from one position to another involving the issuance
of an appointment with diminution in duties, responsibilities,
120
status, or rank which may or may not involve reduction in
salary.[15] A demotion by assigning an employee to a lower
position in the same service which has a lower rate of
compensation is tantamount to removal, if no cause is shown
for it.[16]
Here, there have been no new appointments issued to Matib,
Pacpaco, Sanchez, and Sipi-An under the COA Organizational
Restructuring Plan. Thus, their contention that they have been
demoted is baseless.
Moreover, the change in their status from COA auditors
(receiving monthly RATA) to COA auditors (receiving only
reimbursable RATA) cannot be attributed to the COA
Organizational Restructuring Plan but to the implementation
of the Audit Team Approach (ATAP), pursuant to COA
Resolution No. 96-305 dated April 16, 1996.
Under the ATAP, an audit team, not a resident auditor, is
deployed to conduct an audit. An audit team may be
composed of two (2) or more members under an Audit Team
Leader. Whenever practicable, an Audit Team Supervisor
supervises at least three (3) audit teams. The composition of
an audit team is not permanent. Hence, an Audit Team
Member may be designated or assigned as an Audit Team
Leader for one assignment and subsequently as a Team
Member in another engagement. The designation depends
upon the position or rank of the one who is designated as an
Audit Team Leader. Thus, a State Auditor III who may have
been assigned as an Audit Team Leader in one engagement
may find himself relegated to being an Audit Team Member in
another engagement, if a State Auditor IV or State Auditor V is
designated as the Audit Team Leader.
Pursuant to the COA Organizational Restructuring Plan, the
COA issued Memorandum No. 2002-034[17] providing for the
guidelines regarding the payment of RATA, thus:
1. All holders of State Auditor IV position shall be entitled to
fixed commutable RATA wherever they are assigned.
2. Henceforth, only State Auditors IV shall be assigned as new
Unit Heads or Team Leaders.
3. State Auditors below State Auditor IV assigned as Unit Heads
or Team Leaders who have been receiving fixed RATA shall
continue to be designated as such and to receive the RATA
until relieved of the designation for incompetence,
inefficiency, or misconduct.
All others who collect RATA on reimbursable basis, including
those paid on a daily basis under COA Resolution No. 99-007
dated June 7, 1999, are likewise entitled thereto.
Matib, Pacpaco, Sanchez, and Sipi-An are not qualified to be
Audit Team Leaders or to receive fixed monthly RATA since
none of them holds the rank or position of State Auditor IV. But
this does not mean that they are not entitled to receive
reimbursable RATA if they are designated as Audit Team
Leaders. It is clear from the text of the said COA Memorandum
that the principle of non-diminution of benefits has been
upheld.

Thus, in the implementation of the COA Organizational

Restructuring Plan, we fail to see how petitioners could have
sustained personal injury as they have not shown to have a
personal stake therein. Accordingly, they are wanting in legal
standing to institute the instant petition. Corollarily, we find no
reason to delve into the constitutionality or legality of the COA
Organizational Restructuring Plan.

WHEREFORE, the petition is DISMISSED. No pronouncement as

to costs.

121
REBECCA PACAÑA-CONTRERAS and ROSALIE
PACAÑA, Petitioners, vs. ROVILA WATER SUPPLY, INC., EARL
U KOKSENG, LILIA TORRES, DALLA P. ROMANILLOS and
MARISSA GABUYA, Respondents. BRION, J.:
Before the Court is a petition for review on certiorari1 under
Rule 4 of the Rules of Court seeking the reversal of the
decision2 dated January 27, 2005 and the resolution3 dated
June 6, 2005 of the Courts of Appeals (CA) in CA-G.R. SP No.
71551. The CA set aside the orders dated February 28,
20024 and April 1, 20025 of the Regional Trial Court (RTC),
Branch 8, Cebu City, which denied the motion to dismiss for
reconsideration respectively, of respondents Rovila Water
Supply, Inc. (Rovilla, Inc.), Earl U. Kokseng, Lialia Torres, Dalla
P. Romanillos and Marissa Gabuya.
THE FACTUAL ANTECEDENTS
Petitioners Rebecca Pacaña-Contreras and Rosalie Pacaña,
children of Lourdes Teves Pacaña and Luciano Pacaña, filed the
present case against Rovila Inc., Earl, Lilia, Dalla and Marisa for
accounting and damages.6
The petitioners claimed that their family has long been known
in the community to be engaged in the water supply business;
they operated the "Rovila Water Supply" from their family
residence and were engaged in the distribution of water to
customers in Cebu City. The petitioners alleged that Lilia was a
former trusted employee in the family business who hid
business records and burned and ransacked the family files.
Lilia also allegedly posted security guards and barred the
members of the Pacaña family from operating their business.
She then claimed ownership over the family business through
a corporation named "Rovila Water Supply, Inc." (Rovila Inc.)
Upon inquiry with the Securities and Exchange Commission
(SEC), the petitioners claimed that Rovila Inc. was
surreptitiously formed with the respondents as the majority
stockholders. The respondents did so by conspiring with one
another and forming the respondent corporation to takeover
and illegally usurp the family business’ registered name. 7
In forming the respondent corporation, the respondents
allegedly used the name of Lourdes as one of the incorporators
and made it appear in the SEC documents that the family
business was operated in a place other than the Pacaña
residence. Thereafter, the respondents used the Pacaña
family’s receipts and the deliveries and sales were made to
appear as those of the respondent Rovila Inc. Using this
scheme, the respondents fraudulently appropriated the
collections and payments.8
The petitioners filed the complaint in their own names
although Rosalie was authorized by Lourdes through a sworn
declaration and special power of attorney (SPA). The
respondents filed a first motion to dismiss on the ground that
122
the RTC had no jurisdiction over an intra-corporate
controversy.9
The RTC denied the motion. On September 26, 2000, Lourdes
died10 and the petitioners amended their complaint, with
leave of court, on October 2, 2000 to reflect this
development.11
They still attached to their amended complaint the sworn
declaration with SPA, but the caption of the amended
complaint remained the same.12
On October 10, 2000, Luciano also died.13
The respondents filed their Answer on November 16, 2000. 14
The petitioners’ sister, Lagrimas Pacaña-Gonzales, filed a
motion for leave to intervene and her answer-in-intervention
was granted by the trial court. At the subsequent pre-trial, the
respondents manifested to the RTC that a substitution of the
parties was necessary in light of the deaths of Lourdes and
Luciano. They further stated that they would seek the dismissal
of the complaint because the petitioners are not the real
parties in interest to prosecute the case. The pre-trial pushed
through as scheduled and the RTC directed the respondents to
put into writing their earlier manifestation. The RTC issued a
pre-trial order where one of the issues submitted was whether
the complaint should be dismissed for failure to comply with
Section 2, Rule 3 of the Rules of Court which requires that
every action must be prosecuted in the name of the real party
in interest.15
On January 23, 2002,16 the respondents again filed a motion to
dismiss on the grounds, among others, that the petitioners are
not the real parties in interest to institute and prosecute the
case and that they have no valid cause of action against the
respondents.
THE RTC RULING
The RTC denied the respondents’ motion to dismiss. It ruled
that, save for the grounds for dismissal which may be raised at
any stage of the proceedings, a motion to dismiss based on the
grounds invoked by the respondents may only be filed within
the time for, but before, the filing of their answer to the
amended complaint. Thus, even granting that the defenses
invoked by the respondents are meritorious, their motion was
filed out of time as it was filed only after the conclusion of the
pre-trial conference. Furthermore, the rule on substitution of
parties only applies when the parties to the case die, which is
not what happened in the present case.17
The RTC likewise denied the respondents’ motion for
reconsideration.18
The respondents filed a petition for certiorari under Rule 65 of
the Rules of Court with the CA, invoking grave abuse of
discretion in the denial of their motion to dismiss. They argued
that the deceased spouses Luciano and Lourdes, not the
petitioners, were the real parties in interest. Thus, the
petitioners violated Section 16, Rule 3 of the Rules of Court on
the substitution of parties.19
Furthermore, they seasonably moved for the dismissal of the
case20 and the RTC never acquired jurisdiction over the
persons of the petitioners as heirs of Lourdes and Luciano.21
THE CA RULING
The CA granted the petition and ruled that the RTC committed
grave abuse of discretion as the petitioners filed the complaint
and the amended complaint as attorneys-in-fact of their
parents. As such, they are not the real parties in interest and
cannot bring an action in their own names; thus, the complaint
should be dismissed22 pursuant to the Court’s ruling in
Casimiro v. Roque and Gonzales.23
Neither are the petitioners suing as heirs of their deceased
parents.1awp++i1 Pursuant to jurisprudence,24 the petitioners
should first be declared as heirs before they can be considered
as the real parties in interest. This cannot be done in the
present ordinary civil case but in a special proceeding for that
purpose. The CA agreed with the respondents that they alleged
the following issues as affirmative defenses in their answer: 1)
the petitioners are not the real parties in interest; and 2) that
they had no legal right to institute the action in behalf of their
parents.25
That the motion to dismiss was filed after the period to file an
answer has lapsed is of no moment. The RTC judge entertained
it and passed upon its merit. He was correct in doing so
because in the pre-trial order, one of the submitted issues was
whether the case must be dismissed for failure to comply with
the requirements of the Rules of Court. Furthermore, in
Dabuco v. Court of Appeals,26 the Court held that the ground
of lack of cause of action may be raised in a motion to dismiss
at anytime.27
The CA further ruled that, in denying the motion to dismiss, the
RTC judge acted contrary to established rules and
jurisprudence which may be questioned via a petition for
certiorari. The phrase "grave abuse of discretion" which was
traditionally confined to "capricious and whimsical exercise of
judgment" has been expanded to include any action done
"contrary to the Constitution, the law or jurisprudence[.]"28
THE PARTIES’ ARGUMENTS
123
The petitioners filed the present petition and argued that, first,
in annulling the interlocutory orders, the CA unjustly allowed
the motion to dismiss which did not conform to the rules.29
Specifically, the motion was not filed within the time for, but
before the filing of, the answer to the amended complaint, nor
were the grounds raised in the answer. Citing Section 1, Rule 9
of the Rules of Court, the respondents are deemed to have
waived these grounds, as correctly held by the RTC.30
Second, even if there is non-joinder and misjoinder of parties
or that the suit is not brought in the name of the real party in
interest, the remedy is not outright dismissal of the complaint,
but its amendment to include the real parties in interest. 31
Third, the petitioners sued in their own right because they
have actual and substantial interest in the subject matter of
the action as heirs or co-owners, pursuant to Section 2, Rule 3
of the Rules of Court.32
Their declaration as heirs in a special proceeding is not
necessary, pursuant to the Court’s ruling in Marabilles, et al. v.
Quito.33
Finally, the sworn declaration is evidentiary in nature which
remains to be appreciated after the trial is completed. 34
The respondents reiterated in their comment that the
petitioners are not the real parties in interest. 35
They likewise argued that they moved for the dismissal of the
case during the pre-trial conference due to the petitioners’
procedural lapse in refusing to comply with a condition
precedent, which is, to substitute the heirs as plaintiffs.
Besides, an administrator of the estates of Luciano and
Lourdes has already been appointed.36
The respondents also argued that the grounds invoked in their
motion to dismiss were timely raised, pursuant to Section 2,
paragraphs g and i, Rule 18 of the Rules of Court. Specifically,
the nature and purposes of the pre-trial include, among others,
the dismissal of the action, should a valid ground therefor be
found to exist; and such other matters as may aid in the
prompt disposition of the action. Finally, the special civil action
of certiorari was the proper remedy in assailing the order of
the RTC.37
THE COURT’S RULING
We find the petition meritorious.
Petition for certiorari under Rule 65 is a proper remedy for a
denial of a motion to dismiss attended by grave abuse of
discretion
In Barrazona v. RTC, Branch 61, Baguio City,38 the Court held
that while an order denying a motion to dismiss is interlocutory
and non-appealable, certiorari and prohibition are proper
remedies to address an order of denial made without or in
excess of jurisdiction. The writ of certiorari is granted to keep
an inferior court within the bounds of its jurisdiction or to
prevent it from committing grave abuse of discretion
amounting to lack or excess of jurisdiction.
The history and development of the ground "fails to state a
cause of action" in the 1940, 1964 and the present 1997 Rules
of Court Preliminarily, a suit that is not brought in the name of
the real party in interest is dismissible on the ground that the
complaint "fails to state a cause of action."39
Pursuant to jurisprudence,40 this is also the ground invoked
when the respondents alleged that the petitioners are not the
real parties in interest because: 1) the petitioners should not
have filed the case in their own names, being merely
attorneys-in-fact of their mother; and 2) the petitioners should
first be declared as heirs. A review of the 1940, 1964 and the
present 1997 Rules of Court shows that the fundamentals of
the ground for dismissal based on "failure to state a cause of
action" have drastically changed over time. A historical
background of this particular ground is in order to preclude any
confusion or misapplication of jurisprudence decided prior to
the effectivity of the present Rules of Court. The 1940 Rules of
Court provides under Section 10, Rule 9 that:
Section 10. Waiver of defenses- Defenses and objections not
pleaded either in a motion to dismiss or in the answer are
deemed waived; except the defense of failure to state a cause
of action, which may be alleged in a later pleading, if one is
permitted, or by motion for judgment on the pleadings, or at
the trial on the merits; but in the last instance, the motion shall
be disposed of as provided in section 5 of Rule 17 in the light
of any evidence which may have been received. Whenever it
appears that the court has no jurisdiction over the subject-
matter, it shall dismiss the action. [underscoring supplied]
This provision was essentially reproduced in Section 2, Rule 9
of the 1964 Rules of Court, and we quote:
Section 2. Defenses and objections not pleaded deemed
waived. — Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived; except
the failure to state a cause of action which may be alleged in a
later pleading, if one is permitted, or by motion for judgment
on the pleadings, or at the trial on the merits; but in the last
instance, the motion shall be disposed of as provided in section
5 of Rule 10 in the light of any evidence which may have been
received. Whenever it appears that the court has no
jurisdiction over the subject-matter, it shall dismiss the action.
[underscoring supplied]
Under the present Rules of Court, this provision was reflected
in Section 1, Rule 9, and we quote:
124
Section 1. Defenses and objections not pleaded. — Defenses
and objections not pleaded either in a motion to dismiss or in
the answer are deemed waived. However, when it appears
from the pleadings or the evidence on record that the court
has no jurisdiction over the subject matter, that there is
another action pending between the same parties for the same
cause, or that the action is barred by a prior judgment or by
statute of limitations, the court shall dismiss the claim.
[underscoring supplied]
Notably, in the present rules, there was a deletion of the
ground of "failure to state a cause of action" from the list of
those which may be waived if not invoked either in a motion
to dismiss or in the answer. Another novelty introduced by the
present Rules, which was totally absent in its two precedents,
is the addition of the period of time within which a motion to
dismiss should be filed as provided under Section 1, Rule 16
and we quote:
Section 1. Grounds. — Within the time for but before filing the
answer to the complaint or pleading asserting a claim, a
motion to dismiss may be made on any of the following
grounds: xxx [underscoring supplied]
All these considerations point to the legal reality that the new
Rules effectively restricted the dismissal of complaints in
general, especially when what is being invoked is the ground
of "failure to state a cause of action." Thus, jurisprudence
governed by the 1940 and 1964 Rules of Court to the effect
that the ground for dismissal based on failure to state a cause
of action may be raised anytime during the proceedings, is
already inapplicable to cases already governed by the present
Rules of Court which took effect on July 1, 1997. As the rule
now stands, the failure to invoke this ground in a motion to
dismiss or in the answer would result in its waiver. According
to Oscar M. Herrera,41 the reason for the deletion is that failure
to state a cause of action may be cured under Section 5, Rule
10 and we quote:
Section 5. Amendment to conform to or authorize
presentation of evidence. — When issues not raised by the
pleadings are tried with the 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 to amend
does not effect 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 with liberality if the
presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. The court may
grant a continuance to enable the amendment to be made.
With this clarification, we now proceed to the substantial
issues of the petition.
The motion to dismiss in the present case based on failure to
state a cause of action was not timely filed and was thus
waived
Applying Rule 16 of the Rules of Court which provides for the
grounds for the dismissal of a civil case, the respondents’
grounds for dismissal fall under Section 1(g) and (j), Rule 16 of
the Rules of Court, particularly, failure to state a cause of
action and failure to comply with a condition precedent
(substitution of parties), respectively. The first paragraph of
Section 1,42
Rule 16 of the Rules of Court provides for the period within
which to file a motion to dismiss under the grounds
enumerated. Specifically, the motion should be filed within the
time for, but before the filing of, the answer to the complaint
or pleading asserting a claim. Equally important to this
provision is Section 1,43
Rule 9 of the Rules of Court which states that defenses and
objections not pleaded either in a motion to dismiss or in the
answer are deemed waived, except for the following grounds:
1) the court has no jurisdiction over the subject matter; 2) litis
pendencia; 3) res judicata; and 4) prescription. Therefore, the
grounds not falling under these four exceptions may be
considered as waived in the event that they are not timely
invoked. As the respondents’ motion to dismiss was based on
the grounds which should be timely invoked, material to the
resolution of this case is the period within which they were
raised. Both the RTC and the CA found that the motion to
dismiss was only filed after the filing of the answer and after
the pre-trial had been concluded. Because there was no
motion to dismiss before the filing of the answer, the
respondents should then have at least raised these grounds as
affirmative defenses in their answer. The RTC’s assailed orders
did not touch on this particular issue but the CA ruled that the
respondents did, while the petitioners insist that the
respondents did not. In the present petition, the petitioners
reiterate that there was a blatant non-observance of the rules
when the respondents did not amend their answer to invoke
the grounds for dismissal which were raised only during the
pre-trial and, subsequently, in the subject motion to dismiss.44
The divergent findings of the CA and the petitioners’
arguments are essentially factual issues. Time and again, we
have held that the jurisdiction of the Court in a petition for
review on certiorari under Rule 45, such as the present case, is
limited only to questions of law, save for certain exceptions.
One of these is attendant herein, which is, when the findings
are conclusions without citation of specific evidence on which
they are based.45
125
In the petition filed with the CA, the respondents made a
passing allegation that, as affirmative defenses in their answer,
they raised the issue that the petitioners are not the real
parties in interest.46
On the other hand, the petitioners consistently argued
otherwise in their opposition47 to the motion to dismiss, and in
their comment48 and in their memorandum49 on the
respondents’ petition before the CA. Our examination of the
records shows that the CA had no basis in its finding that the
respondents alleged the grounds as affirmative defenses in
their answer. The respondents merely stated in their petition
for certiorari that they alleged the subject grounds in their
answer. However, nowhere in the petition did they support
this allegation; they did not even attach a copy of their answer
to the petition. It is basic that the respondents had the duty to
prove by substantial evidence their positive assertions.
Considering that the petition for certiorari is an original and
not an appellate action, the CA had no records of the RTC’s
proceedings upon which the CA could refer to in order to
validate the respondents’ claim. Clearly, other than the
respondents’ bare allegations, the CA had no basis to rule,
without proof, that the respondents alleged the grounds for
dismissal as affirmative defenses in the answer. The
respondents, as the parties with the burden of proving that
they timely raised their grounds for dismissal, could have at
least attached a copy of their answer to the petition. This
simple task they failed to do. That the respondents did not
allege in their answer the subject grounds is made more
apparent through their argument, both in their motion to
dismiss50 and in their comment,51 that it was only during the
pre-trial stage that they verbally manifested and invited the
attention of the lower court on their grounds for dismissal. In
order to justify such late invocation, they heavily relied on
Section 2(g) and (i), Rule 1852 of the Rules of Court that the
nature and purpose of the pre-trial include, among others, the
propriety of dismissing the action should there be a valid
ground therefor and matters which may aid in the prompt
disposition of the action. The respondents are not correct. The
rules are clear and require no interpretation. Pursuant to
Section 1, Rule 9 of the Rules of Court, a motion to dismiss
based on the grounds invoked by the respondents may be
waived if not raised in a motion to dismiss or alleged in their
answer. On the other hand, "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."53
The issues submitted during the pre-trial are thus the issues
that would govern the trial proper. The dismissal of the case
based on the grounds invoked by the respondents are
specifically covered by Rule 16 and Rule 9 of the Rules of Court
which set a period when they should be raised; otherwise, they
are deemed waived.
The Dabuco ruling is inapplicable in the present case; the
ground for dismissal "failure to state a cause of action"
distinguished from "lack of cause of action"
To justify the belated filing of the motion to dismiss, the CA
reasoned out that the ground for dismissal of "lack of cause of
action" may be raised at any time during the proceedings,
pursuant to Dabuco v. Court of Appeals. 54
This is an erroneous interpretation and application of Dabuco
as will be explained below.
First, in Dabuco, the grounds for dismissal were raised as
affirmative defenses in the answer which is in stark contrast to
the present case.
Second, in Dabuco, the Court distinguished between the
dismissal of the complaint for "failure to state a cause of
action" and "lack of cause of action." The Court emphasized
that in a dismissal of action for lack of cause of action,
"questions of fact are involved, [therefore,] courts hesitate to
declare a plaintiff as lacking in cause of action. Such declaration
is postponed until the insufficiency of cause is apparent from a
preponderance of evidence.
Usually, this is done only after the parties have been given the
opportunity to present all relevant evidence on such questions
of fact."55
In fact, in Dabuco, the Court held that even the preliminary
hearing on the propriety of lifting the restraining order was
declared insufficient for purposes of dismissing the complaint
for lack of cause of action. This is so because the issues of fact
had not yet been adequately ventilated at that preliminary
stage. For these reasons, the Court declared in Dabuco that the
dismissal by the trial court of the complaint was premature. In
the case of Macaslang v. Zamora,56 the Court noted that the
incorrect appreciation by both the RTC and the CA of the
distinction between the dismissal of an action, based on
"failure to state a cause of action" and "lack of cause of action,"
prevented it from properly deciding the case, and we quote:
Failure to state a cause of action and lack of cause of action are
really different from each other. On the one hand, failure to
state a cause of action refers to the insufficiency of the
pleading, and is a ground for dismissal under Rule 16 of the
Rules of Court. On the other hand, lack of cause [of] action
refers to a situation where the evidence does not prove the
cause of action alleged in the pleading. Justice Regalado, a
recognized commentator on remedial law, has explained the
126
distinction: xxx What is contemplated, therefore, is a failure to
state a cause of action which is provided in Sec. 1(g) of Rule 16.
This is a matter of insufficiency of the pleading. Sec. 5 of Rule
10, which was also included as the last mode for raising the
issue to the court, refers to the situation where the evidence
does not prove a cause of action. This is, therefore, a matter of
insufficiency of evidence. Failure to state a cause of action is
different from failure to prove a cause of action. The remedy
in the first is to move for dismissal of the pleading, while the
remedy in the second is to demur to the evidence, hence
reference to Sec. 5 of Rule 10 has been eliminated in this
section. The procedure would consequently be to require the
pleading to state a cause of action, by timely objection to its
deficiency; or, at the trial, to file a demurrer to evidence, if
such motion is warranted. [italics supplied]
Based on this discussion, the Court cannot uphold the dismissal
of the present case based on the grounds invoked by the
respondents which they have waived for failure to invoke them
within the period prescribed by the Rules. The Court cannot
also dismiss the case based on "lack of cause of action" as this
would require at least a preponderance of evidence which is
yet to be appreciated by the trial court. Therefore, the RTC did
not commit grave abuse of discretion in issuing the assailed
orders denying the respondents’ motion to dismiss and motion
for reconsideration. The Court shall not resolve the merits of
the respondents’ grounds for dismissal which are considered
as waived.
Other heirs of the spouses Pacaña to be impleaded in the case.
It should be emphasized that insofar as the petitioners are
concerned, the respondents have waived the dismissal of the
complaint based on the ground of failure to state a cause of
action because the petitioners are not the real parties in
interest. At this juncture, a distinction between a real party in
interest and an indispensable party is in order. In Carandang v.
Heirs of de Guzman, et al.,57 the Court clarified these two
concepts and held that "[a] real party in interest is the party
who stands to be benefited or injured by the judgment of the
suit, or the party entitled to the avails of the suit. On the other
hand, an indispensable party is a party in interest without
whom no final determination can be had of an action, in
contrast to a necessary party, which is one who is not
indispensable but who ought to be joined as a party if
complete relief is to be accorded as to those already parties,
or for a complete determination or settlement of the claim
subject of the action. xxx If a suit is not brought in the name of
or against the real party in interest, a motion to dismiss may
be filed on the ground that the complaint states no cause of
action. However, the dismissal on this ground entails an
examination of whether the parties presently pleaded are
interested in the outcome of the litigation, and not whether all
persons interested in such outcome are actually pleaded. The
latter query is relevant in discussions concerning indispensable
and necessary parties, but not in discussions concerning real
parties in interest. Both indispensable and necessary parties
are considered as real parties in interest, since both classes of
parties stand to be benefited or injured by the judgment of the
suit."
At the inception of the present case, both the spouses Pacaña
were not impleaded as parties-plaintiffs. The Court notes,
however, that they are indispensable parties to the case as the
alleged owners of Rovila Water Supply. Without their inclusion
as parties, there can be no final determination of the present
case. They possess such an interest in the controversy that a
final decree would necessarily affect their rights, so that the
courts cannot proceed without their presence. Their interest
in the subject matter of the suit and in the relief sought is
inextricably intertwined with that of the other parties.58
Jurisprudence on the procedural consequence of the inclusion
or non-inclusion of an indispensable party is divided in our
jurisdiction. Due to the non-inclusion of indispensable parties,
the Court dismissed the case in Lucman v. Malawi, et al. 59 and
Go v. Distinction Properties Development Construction,
Inc.,60 while in Casals, et al. v. Tayud Golf and Country Club et
al.,61 the Court annulled the judgment which was rendered
without the inclusion of the indispensable parties. In Arcelona
et al. v. Court of Appeals62 and Bulawan v. Aquende,63 and
Metropolitan Bank & Trust Company v. Alejo et al.64 the Court
ruled that the burden to implead or order the impleading of an
indispensable party rests on the plaintiff and on the trial court,
respectively. Thus, the non-inclusion of the indispensable
parties, despite notice of this infirmity, resulted in the
annulment of these cases. In Plasabas, et al. v. Court of
Appeals, et al.,65 the Court held that the trial court and the CA
committed reversible error when they summarily dismissed
the case, after both parties had rested their cases following a
protracted trial, on the sole ground of failure to implead
indispensable parties. Non-joinder of indispensable parties is
not a ground for the dismissal of an action. The remedy is to
implead the non-party claimed to be indispensable. However,
in the cases of Quilatan, et al. v. Heirs of Quilatan, et al. 66 and
Lagunilla, et al. v. Monis, et al.,67 the Court remanded the case
to the RTC for the impleading of indispensable parties. On the
other hand, in Lotte Phil. Co., Inc. v. Dela Cruz,68PepsiCo, Inc. v.
Emerald Pizza, 69 and Valdez Tallorin, v. Heirs of Tarona, et
al.,70 the Court directly ordered that the indispensable parties
be impleaded. Mindful of the differing views of the Court as
regards the legal effects of the non-inclusion of indispensable
parties, the Court clarified in Republic of the Philippines v.
Sandiganbayan, et al.,71that the failure to implead
indispensable parties is a curable error and the foreign origin
127
of our present rules on indispensable parties permitted this
corrective measure. This cited case held:
Even in those cases where it might reasonably be argued that
the failure of the Government to implead the sequestered
corporations as defendants is indeed a procedural aberration
xxx, slight reflection would nevertheless lead to the conclusion
that the defect is not fatal, but one correctible under
applicable adjective rules – e.g., Section 10, Rule 5 of the Rules
of Court [specifying the remedy of amendment during trial to
authorize or to conform to the evidence]; Section 1, Rule 20
[governing amendments before trial], in relation to the rule
respecting omission of so-called necessary or indispensable
parties, set out in Section 11, Rule 3 of the Rules of Court. It is
relevant in this context to advert to the old familiar doctrines
that the omission to implead such parties "is a mere technical
defect which can be cured at any stage of the proceedings even
after judgment"; and that, particularly in the case of
indispensable parties, since their presence and participation is
essential to the very life of the action, for without them no
judgment may be rendered, amendments of the complaint in
order to implead them should be freely allowed, even on
appeal, in fact even after rendition of judgment by this Court,
where it appears that the complaint otherwise indicates their
identity and character as such indispensable parties." Although
there are decided cases wherein the non-joinder of
indispensable parties in fact led to the dismissal of the suit or
the annulment of judgment, such cases do not jibe with the
matter at hand. The better view is that non-joinder is not a
ground to dismiss the suit or annul the judgment. The rule on
joinder of indispensable parties is founded on equity. And the
spirit of the law is reflected in Section 11, Rule 3 of the 1997
Rules of Civil Procedure. It prohibits the dismissal of a suit on
the ground of non-joinder or misjoinder of parties and allows
the amendment of the complaint at any stage of the
proceedings, through motion or on order of the court on its
own initiative. Likewise, jurisprudence on the Federal Rules of
Procedure, from which our Section 7, Rule 3 on indispensable
parties was copied, allows the joinder of indispensable parties
even after judgment has been entered if such is needed to
afford the moving party full relief. Mere delay in filing the
joinder motion does not necessarily result in the waiver of the
right as long as the delay is excusable.
In Galicia, et al. v. Vda. De Mindo, et al.,72 the Court ruled that
in line with its policy of promoting a just and inexpensive
disposition of a case, it allowed the intervention of the
indispensable parties instead of dismissing the complaint.
Furthermore, in Commissioner Domingo v. Scheer,73 the Court
cited Salvador, et al. v. Court of Appeals, et al.74 and held that
the Court has full powers, apart from that power and authority
which are inherent, to amend the processes, pleadings,
proceedings and decisions by substituting as party-plaintiff the
real party in interest. The Court has the power to avoid delay
in the disposition of this case, and to order its amendment in
order to implead an indispensable party. With these
discussions as premises, the Court is of the view that the
proper remedy in the present case is to implead the
indispensable parties especially when their non-inclusion is
merely a technical defect. To do so would serve proper
administration of justice and prevent further delay and
multiplicity of suits. Pursuant to Section 9, Rule 3 of the Rules
of Court, parties may be added by order of the court on motion
of the party or on its own initiative at any stage of the action.
If the plaintiff refuses to implead an indispensable party
despite the order of the court, then the court may dismiss the
complaint for the plaintiff’s failure to comply with a lawful
court order.75

The operative act that would lead to the dismissal of the case
would be the refusal to comply with the directive of the court
for the joinder of an indispensable party to the case. 76

Obviously, in the present case, the deceased Pacañas can no

longer be included in the complaint as indispensable parties
because of their death during the pendency of the case. Upon
their death, however, their ownership and rights over their
properties were transmitted to their heirs, including herein
petitioners, pursuant to Article 77477 in relation with Article
77778 of the Civil Code.

In Orbeta, et al. v. Sendiong,79 the Court acknowledged that

the heirs, whose hereditary rights are to be affected by the
case, are deemed indispensable parties who should have been
impleaded by the trial court. Therefore, to obviate further
delay in the proceedings of the present case and given the
Court’s authority to order the inclusion of an indispensable
party at any stage of the proceedings, the heirs of the spouses
Pacaña, except the petirioners who are already parties to the
case are Lagrimas Pacaña-Gonzalez who intervened in the
case, are hereby ordered impleaded as parties-plaintiffs.

WHEREFORE, the petition is GRANTED. The decision dated

January 27, 2005 and the resolution date June 6, 2005 of the
Court of Appeals in CA-G.R. SP No. 71551 are REVERSED and
SET ASIDE. The heirs of the spouses Luciano and Lourdes
Pacaña, except herein petitioner and Lagrimas Pacaña-
Gonzalez, are ORDERED IMPLEADED as parties plaintiffs and
the RTC is directed tp proceed with the trial of the case with
DISPATCH. SO ORDERED.

128
MATHAY VS. CONSOLIDATED BANK ZALDIVAR, J.:p
In this appeal, appellants-plaintiffs and movants-intervenors
seek the reversal of the order dated March 21, 1964 of the
Court of First Instance of Manila dismissing the complaint
together with all other pending incidents in Civil Case No.
55810.
The complaint in this case, filed on December 24, 1963 as a
class suit, under Section 12, Rule 3, of the Rules of Court,
contained six causes of action. Under the first cause of action,
plaintiffs-appellants alleged that they were, on or before
March 28, 1962, stockholders in the Consolidated Mines, Inc.
(hereinafter referred to as CMI), a corporation duly organized
and existing under Philippine laws; that the stockholders of the
CMI, including the plaintiffs-appellants, passed, at a regular
stockholders' meeting, a Resolution providing: (a) that the
Consolidated Bank & Trust Co. (hereinafter referred to as
Bank) be organized with an authorized capital of
P20,000,000.00; (b) that the organization be undertaken by a
Board of Organizers composed of the President and Members
of the Board of Directors of the CMI; (c) that all stockholders
of the CMI, who were legally qualified to become stockholders,
would be entitled to subscribe to the capital stock of the
proposed Bank "at par value to the same extent and in the
same amount as said stockholders' respective share holdings
in the CMI," as shown in its stock books on a date to be fixed
by the Board of Directors [which date was subsequently fixed
as January 15, 1963], provided that the right to subscribe
should be exercised within thirty days from the date so fixed,
and "that if such right to subscription be not so exercised then
the stockholders concerned shall be deemed to have thereby
waived and released ipso factotheir right to such subscription
in favor of the Interim Board of Organizers of the Defendant
Bank or their assignees;" and (d) that the Board of Directors of
the CMI be authorized to declare a "special dividend" in an
amount it would fix, which the subscribing stockholders might
authorize to be paid directly to the treasurer of the proposed
Bank in payment of the subscriptions; that the President and
members of the Board of Directors of the CMI, who are the
individuals-defendants-appellees in the instant case,
constituted themselves as the Interim Board of Organizers;
that said Board sent out, on or about November 20, 1962, to
the CMI stockholders, including the plaintiffs-appellants,
circular letters with "Pre-Incorporation Agreement to
Subscribe" forms that provided that the payment of the
subscription should be made in cash from time to time or by
the application of the special dividend declared by the CMI,
and that the subscription must be made within the period from
December 4, 1962 to January 15, 1963, "otherwise such
subscription right shall be deemed to have been thereby ipso
facto waived and released in favor of the Board of Organizers
of the Defendant Bank and their assignees"; that the plaintiffs-
129
appellants accomplished and filed their respective "Pre-
Incorporation Agreement to Subscribe" and paid in full their
subscriptions; that plaintiffs-appellants and the other CMI
subscribing stockholders in whose behalf the action was
brought also subscribed to a very substantial amount of
shares; that on June 25, 1963, the Board of Organizers caused
the execution of the Articles or Incorporation of the proposed
Bank indicating an original subscription of 50,000 shares worth
P5,000,000 subscribed and paid only by six of the individuals-
defendants-appellees, namely, Antonio P. Madrigal, Jose P.
Madrigal Simon R. Paterno, Fermin Z. Caram, Jr., Claudio
Teehankee, and Wilfredo C. Tecson, thereby excluding the
plaintiffs-appellants and the other CMI subscribing
stockholders who had already subscribed; that the execution
of said Articles of Incorporation was "in violation of law and in
breach of trust and contractual agreement as a means to gain
control of Defendant Bank by Defendant Individuals and
persons or entities chosen by them and for their personal
profit or gain in disregard of the rights of Plaintiffs and other
CMI Subscribing Stockholders;" that the paid-in capital stock
was raised, as required by the Monetary Board, to
P8,000,000.00, and individuals-defendants-appellees caused
to be issued from the unissued shares 30,000 shares
amounting to P3,000,000.00, all of which were again
subscribed and paid for entirely by individuals-defendants-
appellees or entities chosen by them "to the exclusion of
Plaintiffs and other CMI subscribing stockholders" "in violation
of law and breach of trust and of the contractual agreement
embodied in the contractual agreement of March 28, 1962";
that the Articles were filed with the Securities and Exchange
Commission which issued the Certificate of Incorporation on
June 25, 1963; that as of the date of the Complaint, the
plaintiffs-appellants and other CMI subscribing stockholders
had been denied, through the unlawful acts and manipulation
of the defendant Bank and Individuals-defendants-appellees,
the right to subscribe at par value, in proportion to their
equities established under their respective "Pre-Incorporation
Agreements to Subscribe" to the capital stock, i.e., (a) to the
original issue of 50,000 shares and/or (b) to the additional
issue of 30,000 shares, and/or (c) in that portion of said original
or additional issue which was unsubscribed; that the
individuals-defendants-appellees and the persons chosen by
them had unlawfully acquired stockholdings in the defendant-
appellee Bank in excess of what they were lawfully entitled and
held such shares "in trust" for the plaintiffs-appellants and the
other CMI stockholders; that it would have been vain and futile
to resort to intra corporate remedies under the facts and
circumstances alleged above. As relief on the first cause of
action, plaintiffs-appellants prayed that the subscriptions and
share holdings acquired by the individuals-defendants-
appellees and the persons chosen by them, to the extent that
plaintiffs-appellants and the other CMI stockholders had been
deprived of their right to subscribe, be annulled and
transferred to plaintiffs-appellants and other CMI subscribing
stockholders.
Besides reproducing all the above allegations in the other
causes of action, plaintiffs-appellants further alleged under the
second cause of action that on or about August 28, 1963,
defendants-appellees Antonio P. Madrigal, Jose P. Madrigal:
Fermin Z. Caram, Jr., and Wilfredo C. Tecson "falsely certified
to the calling of a special stockholders' meeting allegedly
pursuant to due notice and call of Defendant Bank" although
plaintiffs-appellants and other CMI stockholders were not
notified thereof, and amended the Articles of Incorporation
increasing the number of Directors from 6 to 7, and had the
illegally created Position of Director filled up by defendant-
appellee Alfonso Juan Olondriz, who was not competent or
qualified to hold such position. In the third cause of action,
plaintiffs-appellants claimed actual damages in an amount
equivalent to the difference between the par value of the
shares they were entitled, but failed, to acquire and the higher
market value of the same shares. In the fourth cause of action,
Plaintiffs-appellants claimed moral damages; in the fifth,
exemplary damages; and in the sixth, attorney's fees.
In his manifestation to the court on January 4, 1964, Francisco
Sevilla, who was one of the original plaintiffs, withdrew. On
January 15, 1964 Cipriano Azada, Maria Cristina Olondriz
Pertierra, Maria del Puy Olondriz de Stevens (who later
withdrew as intervenors-appellants) and Carmen Sievert de
Amoyo, filed a motion to intervene, and to join the plaintiffs-
appellants on record, to which motion defendants-appellees,
except Fermin Z. Caram, Jr., filed, on January 17, 1964 their
opposition.
On February 7, 1964 defendants-appellees, except Fermin Z.
Caram, Jr., filed a motion to dismiss on the grounds that (a)
plaintiffs-appellants had no legal standing or capacity to
institute the alleged class suit; (b) that the complaint did not
state a sufficient and valid cause of action; and (c) that
plaintiffs-appellants' complaint against the increase of the
number of directors did not likewise state a cause of action.
Plaintiffs-appellants filed their opposition thereto on February
21, 1964.
On March 4, 1964 appellants, plaintiffs and intervenors, filed a
verified petition for a writ of preliminary injunction to enjoin
defendants-appellees from considering or ratifying by
resolution, at the meeting of the stockholders of defendant-
appellee Bank to be held the following day, the unlawful
apportionment of the shares of the defendant-appellee Bank
and the illegal amendment to its Articles of Incorporation
increasing the number of Directors, The Court, after hearing,
granted the writ, but subsequently set it aside upon the
appellees' filing a counter bond.
130
Some subscribers to the capital stock of the Bank like
Concepcion Zuluaga, et al., and Carlos Moran Sison, et al., filed
separate manifestations that they were opposing and
disauthorizing the suit of plaintiffs-appellants.
On March 7, 1964 defendants-appellees, except Fermin Z.
Caram, Jr., filed a supplemental ground for their motion to
dismiss, to wit, that the stockholders, except Fermin Z. Caram,
Jr., who abstained, had unanimously, at their regular annual
meeting held on March 5, 1964, ratified and confirmed all the
actuations of the organizers-directors in the incorporation,
organization and establishment of the Bank.
In its order, dated March 21, 1964, the trial court granted the
motion to dismiss, holding, among other things, that the class
suit could not be maintained because of the absence of a
showing in the complaint that the plaintiffs-appellants were
sufficiently numerous and representative, and that the
complaint failed to state a cause of action. From said order,
appellants, plaintiffs and intervenors, interposed this appeal to
this Court on questions of law and fact, contending that the
lower court erred as follows:
1. In holding that plaintiffs-appellants could not maintain the
present class suit because of the absence of a showing in the
complaint that they were sufficiently numerous and
representative;
II. In holding that the instant action could not be maintained as
a class suit because plaintiffs-appellants did not have a
common legal interest in the subject matter of the suit;
III. In dismissing the present class suit on the ground that it did
not meet the requirements of Rule 3, section 12 of the Rules
of Court;
IV. In holding that the complaint was fatally defective in that it
failed to state with particularity that plaintiffs-appellants had
resorted to, and exhausted, intra-corporate remedies;
V. In resolving defendants-appellees' motion on the basis of
facts not alleged in the complaint;
VI. In holding that plaintiffs-appellants' complaint stated no
valid cause of action against defendants-appellees;
VII. In not holding that a trust relationship existed between the
Interim Board of Organizers of defendant-appellee Bank and
the CMI subscribing stockholders and in not holding that the
waiver was in favor of the Board of Trustees for the CMI
subscribing stockholders;
VIII. In holding that the failure of plaintiffs-appellants to allege
that they had paid or had offered to pay for the shares
allegedly pertaining to them constituted another ground for
dismissal;
XI. In holding that the allegations under the second cause of
action stated no valid cause of action due to a fatal omission
to allege that plaintiffs-appellants were stockholders of record
at the time of the holding of the special stockholders' meeting;
X. In holding that plaintiffs-appellants' complaint stated no
cause of action against defendant-appellee Bank; and
XI. In considering the resolution of ratification and
confirmation and in holding that the resolution rendered the
issues in this case moot.
The assigned error revolve around two questions namely: (1)
whether the instant action could be maintained as a class suit,
and (2) whether the complaint stated a cause of action. These
issues alone will be discussed.
1. Appellants contended in the first three assigned errors that
the trial court erred in holding that the present suit could not
be maintained as a class suit, and in support thereof argued
that the propriety of a class suit should be determined by the
common interest in the subject matter of the controversy; that
in the instant case there existed such common interest which
consisted not only in the recovery of the shares of which the
appellants were unlawfully deprived, but also in divesting the
individuals-defendants-appellees and the person or entities
chosen by them of control of the appellee Bank. 1 ; that the
complaint showed that besides the four plaintiff-appellants of
record, and the four movant-intervenors-appellants there
were in the appellee Bank many other stockholders who,
tough similarly situated as the appellants, did not formally
include themselves as parties on record in view of the
representative character of the suit; that the test, in order to
determine the legal standing of a party to institute a class suit,
was not one, of number, but whether or not the interest of said
party was representative of the persons in whose behalf the
class suit was instituted; that granting arguendo, that the
plaintiffs-appellants were not sufficiently numerous and
representative, the court should not have dismissed the
action, for insufficiency of number in a class suit was not a
ground for a motion to dismiss, and the court should have
treated the suit as an action under Rule 3, section 6, of the
Rules of Court which permits a joinder of parties.
Defendants-appellees, on the contrary, stressed that the
instant suit was instituted as a class suit and the plaintiffs-
appellants did not sue in their individual capacities for the
protection of their individual interests; that the plaintiffs
appellants of record could not be considered numerous and
representative, as said plaintiffs-appellants were only four out
of 1,500 stockholders, and owned only 8 shares out of the
80,000 shares of stock of the appellee Bank; that even if to the
four plaintiffs-appellants were added the four movants-
intervenors-appellants the situation would be the same as two
131
of the intervenors, to wit, Ma. Cristina Olondriz Pertierra and
Ma. del Puy Olondriz de Stevens, could not sue as they did not
have their husbands' consent; that it was necessary that in a
class suit the complaint itself should allege facts showing that
the plaintiffs were sufficiently numerous and representative,
and this did not obtain in the instant case, as the complaint did
not. even allege how many other CMI stockholders were
"similarly situated"; that the withdrawal of one plaintiff,
Francisco Sevilla, the subsequent disclaimers of any interest in
the suit made in two separate pleadings by other CMI
stockholders and the disauthorization of their being
represented by plaintiffs-appellants by the 986 (out of 1,663)
stockholders who attended the annual meeting of bank
stockholders on March 5, 1964, completely negated plaintiffs-
appellants' pretension that they were sufficiently numerous
and representative or that there were many other
stockholders similarly situated whom the plaintiffs-appellants
allegedly represented; that plaintiffs-appellants did not have
that common or general interest required by the Rules of Court
in the subject matter of the suit.2
In their Reply Brief, appellants insisted that non-compliance
with Section 12, Rule 3, not being one enumerated in Rules 16
and 17, was not a ground for dismissal; that the requirements
for a class had been complied with; that the required common
interest existed even if the interests were several for there was
a common question of law or fact and a common relief was
sought; that the common or general interest could be in the
object of the action, in the result of the proceedings, or in the
question involved in the action, as long as there was a common
right based on the same essential facts; that plaintiffs-
appellants adequately represented the aggrieved group of
bank stockholders, inasmuch as appellants' interests were not
antagonistic to those of the latter, and appellants were in the
same position as the group in whose behalf the complaint was
filed.
The governing statutory provision for the maintenance of a
class suit is Section 12 of Rule 3 of the Rules of Court, which
reads as follows:
Sec. 12. Class suit — When the subject matter of the
controversy is one of common or general interest to many
persons, and the parties are so numerous that it is
impracticable to bring them all before the court, one or more
may sue or defend for the benefit of -ill. But in such case the
court shall make sure that the parties actually before it are
sufficiently numerous and representative so that all interests
concerned are fully protected. Any party in interest shall have
a right to intervene in protection of his individual interest.
The necessary elements for the maintenance of a class suit are
accordingly: (1) that the subject matter of the controversy be
one of common or general interest to many persons, and (2)
that such persons be so numerous as to make it impracticable
to bring them all to the court. An action does not become a
class suit merely because it is designated as such in the
pleadings. Whether the suit is or is not a class quit depends
upon the attending facts, and the complaint, or other pleading
initiating the class action should allege the existence of the
necessary facts, to wit, the existence of a subject matter of
common interest, and the existence of a class and the number
of persons in the alleged class,3 in order that the court might
be enabled to determine whether the members of the class are
so numerous as to make it impracticable to bring them all
before the court, to contrast the number appearing on the
record with the number in the class and to determine whether
claimants on record adequately represent the class and the
subject matter of general or common interest.4
The complaint in the instant case explicitly declared that the
plaintiffs- appellants instituted the "present class suit under
Section 12, Rule 3, of the Rules of Court in. behalf of CMI
subscribing stockholders"5 but did not state the number of said
CMI subscribing stockholders so that the trial court could not
infer, much less make sure as explicitly required by the
sufficiently numerous and representative in order that all
statutory provision, that the parties actually before it were
interests concerned might be fully protected, and that it was
impracticable to bring such a large number of parties before
the court.
The statute also requires, as a prerequisite to a class suit, that
the subject-matter of the controversy be of common or
general interest to numerous persons. Although it has been
remarked that the "innocent 'common or general interest'
requirement is not very helpful in determining whether or not
the suit is proper",6 the decided cases in our jurisdiction have
more incisively certified the matter when there is such
common or general interest in the subject matter of the
controversy. By the phrase "subject matter of the action" is
meant "the physical facts, the things real or personal, the
money, lands, chattels, and the like, in relation to which the
suit is prosecuted, and not the delict or wrong committed by
the defendant."7
This Court has ruled that a class suit did not lie in an action for
recovery of real property where separate portions of the same
parcel were occupied and claimed individually by different
parties to the exclusion of each other, such that the different
parties had determinable, though undivided interests, in the
property in question.8 It his likewise held that a class suit would
not lie against 319 defendants individually occupying different
portions of a big parcel of land, where each defendant had an
interest only in the particular portion he was occupying, which
portion was completely different from the other portions
individually occupied by other defendants, for the applicable
132
section 118 of the Code of Civil Procedure relates to a common
and general interest in single specific things and not to distinct
ones.9In an action for the recovery of amounts that
represented surcharges allegedly collected by the city from
some 30,000 customers of four movie houses, it was held that
a class suit did not lie, as no one plaintiff had any right to, or
any share in the amounts individually claimed by the others, as
each of them was entitled, if at all, only to the return of what
he had personally paid. 10
The interest, subject matter of the class suits in the above cited
cases, is analogous to the interest claimed by appellants in the
instant case. The interest that appellants, plaintiffs and
intervenors, and the CMI stockholders had in the subject
matter of this suit — the portion of stocks offering of the Bank
left unsubscribed by CMI stockholders who failed to exercise
their right to subscribe on or before January 15, 1963 — was
several, not common or general in the sense required by the
statute. Each one of the appellants and the CMI stockholders
had determinable interest; each one had a right, if any, only to
his respective portion of the stocks. No one of them had any
right to, or any interest in, the stock to which another was
entitled. Anent this point, the trial court correctly remarked:
It appears to be the theory of the plaintiffs borne out by the
prayer, that each subscribing CMI stockholder is entitled to
further subscribe to a certain Proportion depending upon his
stockholding in the CMI, of the P8 million capital stock of the
defendant bank open to subscription (out of the 20 million
authorized capital stock) as well as the unsubscribed portion of
the P8 million stock offering which were left unsubscribed by
those CMI stockholders who for one reason or another had
failed to exercise their subscription rights on or before January
15, 1963. Under the plaintiffs' theory therefore, each
subscribing CMI stockholder was entitled to subscribe to a
definite number of shares both in the original offering of P8
million and in that part thereof not subscribed on or before the
deadline mentioned, so that one subscribing CMI stockholder
may be entitled to subscribe to one share, another to 3 shares
and a third to 11 shares, and so on, depending upon the
amount and extent of CMI stockholding. But except for the fact
that a question of law — the proper interpretation of the
waiver provisions of the CMI stockholders' resolution of March
28, 1962 — is common to all, each CMI subscribing stock
holder has a legal interest in, and a claim to, only his respective
proportion of shares in the defendant bank, and none with
regard to any of the shares to which another stockholder is
entitled. Thus plaintiff Ismael Mathay has no legal interest in,
or claim to, any share claimed by any or all of his co-plaintiffs
from the defendant individuals. Hence, no CMI subscribing
stockholder or, for that matter, not any number of CMI
stockholders can maintain a class suit in behalf of others,... 11
Even if it be assumed, for the sake of argument, that the
appellants and the CMI stockholders suffered wrongs that had
been committed by similar means and even pursuant to a
single plan of the Interim Board of Organizers of the Bank, the
wrong suffered by each of them would constitute a wrong
separate from those suffered by the other stockholders, and
those wrongs alone would not create that common or general
interest in the subject matter of the controversy as would
entitle any one of them to bring a class suit on behalf of the
others. Anent this point it has been said that:
Separate wrongs to separate persons, although committed by
similar means and even pursuant to a single plan, do not alone
create a 'common' or 'general' interest in those who are
wronged so as to entitle them to maintain a representative
action. 12
Appellants, however, insisted, citing American
13
authorities, that a class suit might be brought even if the
interests of plaintiffs-appellants might be several as long as
there was a common question of law or fact affecting them and
a common relief was sought. We have no conflict with the
authorities cited; those were rulings under the Federal Rules
of Civil Procedure, pursuant to Rule 23 of which, there were
three types of class suits, namely: the true, the hybrid, and the
spurious, and these three had only one feature in common,
that is, in each the persons constituting the class must be so
numerous as to make it impracticable to bring them all before
the court. The authorities cited by plaintiffs-appellants refer to
the spurious class action (Rule 23 (a) (3) which involves a right
sought to be enforced, which is several, and there is a common
question of law or fact affecting the several rights and a
common relief is sought. 14 The spurious class action is merely
a permissive joinder device; between the members of the class
there is no jural relationship, and the right or liability of each is
distinct, the class being formed solely by the presence of a
common question of law or fact. 15 This permissive joinder is
provided in Section 6 of Rule 3, of our Rules of Court. Such
joinder is not and cannot be regarded as a class suit, which this
action purported and was intended to be as per averment of
the complaint.
It may be granted that the claims of all the appellants involved
the same question of law. But this alone, as said above, did not
constitute the common interest over the subject matter
indispensable in a class suit. The right to purchase or subscribe
to the shares of the proposed Bank, claimed by appellants
herein, is analogous to the right of preemption that
stockholders have when their corporation increases its capital.
The right to preemption, it has been said, is personal to each
stockholder, 16 and while a stockholder may maintain a suit to
compel the issuance of his proportionate share of stock, it has
been ruled, nevertheless, that he may not maintain a
133
representative action on behalf of other stockholders who are
similarly situated. 17 By analogy, the right of each of the
appellants to subscribe to the waived stocks was personal, and
no one of them could maintain on behalf of others similarly
situated a representative suit.
Straining to make it appear that appellants and the CMI
subscribing stockholders had a common or general interest in
the subject matter of the suit, appellants stressed in their brief
that one of the reliefs sought in the instant action was
"to divest defendant individuality and the persons or entities
chosen by them of control of the defendant bank." 18 This relief
allegedly sought by appellants did not, however, appear either
in the text or in the prayer of the complaint.
Appellants, furthermore, insisted that insufficiency of number
in a class suit was not a ground for dismissal of one action. This
Court has, however, said that where it appeared that no
sufficient representative parties had been joined, the dismissal
by the trial court of the action, despite the contention by
plaintiffs that it was a class suit, was correct. 19 Moreover,
insofar as the instant case is concerned, even if it be granted
for the sake of argument, that the suit could not be dismissed
on that ground, it could have been dismissed, nevertheless, on
the ground of lack of cause of action which will be presently
discussed. .
2. Appellants supported their assigned error that the court
erred in holding that the complaint stated no valid cause of
action, by claiming that paragraph 15 together with the other
allegations of the complaint to the effect that defendants-
appellees had unlawfully acquired stockholdings in the capital
stock of defendant-appellee Bank in excess of what they were
lawfully entitled to, in violation of law and in breach of trust
and the contractual agreement, constituted a valid and
sufficient cause of action; 20 and that only the allegations in the
complaint should have been considered by the trial court in
determining whether the complaint stated a cause of action or
not.
Defendants-appellees, on the contrary, maintained that the
allegations of the complaint should not be the only ones to be
considered in determining whether there is a cause of action;
that even if the ultimate facts alleged in the first cause of
action of the complaint be the only ones considered the
complaint would still fail to state a valid cause of action on the
following grounds: first, there was no allegation regarding
appellants' qualification to subscribe to the capital stock of the
appellee Bank, for under the CMI stockholders' resolution of
March 28, 1962, only those qualified under the law were
entitled to subscribe, and under the regulations of the
Monetary Board, only natural-born Filipino citizens could be
stockholders of a banking corporation organized under the
laws of the Philippines, and nowhere did the complaint alleged
that plaintiffs-appellants were natural born Filipino
citizens. 21 Second, appellants' averment in paragraph 8 that
they "subscribed," and their averment in paragraph 15 that
they were "denied the right to subscribe ... to the capital stock
of the defendant Bank", were inconsistent, and hence
neutralized each other, thereby leaving in shambles the first
cause of action. Third, there was no allegation that appellants
had not yet received or had not been issued the corresponding
certificates of stock covering the shares they had subscribed
and paid for. Fourth, the allegations failed to show the
existence of the supposed trust; and fifth, the complaint failed
to allege that plaintiffs-appellants had paid or offered to pay
for the shares allegedly pertaining to them. 22
Let us premise the legal principles governing the motion to
dismiss on the ground of lack of cause of action.
Section 1, Rule 16 of the Rules of Court providing in part that:.
Within the time for pleading a motion to dismiss may be made
on any of the following grounds: .... (g) That the complaint
states no cause of action. ..1.
explicitly requires that the sufficiency of the complaint must be
tested exclusively on the basis of the complaint itself and no
other should be considered when the ground for motion to
dismiss is that the complaint states no cause of action.
Pursuant thereto this Court has ruled that:
As a rule the sufficiency of the complaint, when Challenged in
a motion to dismiss, must be determined exclusively on the
basis of the facts alleged therein. 23
It has been likewise held that a motion to dismiss based on lack
of cause of action hypothetically admits the truth of the
allegations of fact made in the complaint. 24 It is to be noted
that only the facts well pleaded in the complaint, and likewise,
any inferences fairly deducible therefrom, are deemed
admitted by a motion to dismiss. Neither allegations of
conclusions 25 nor allegations of facts the falsity of which the
court may take judicial notice are deemed admitted. 26 The
question, therefore, submitted to the Court in a motion to
dismiss based on lack of cause of action is not whether the
facts alleged in the complaint are true, for these are
hypothetically admitted, but whether the facts alleged are
sufficient to constitute a cause of action such that the court
may render a valid judgment upon the facts alleged therein.
A cause of action is an act or omission of one party in violation
of the legal right of the other. Its essential elements are,
namely: (1) the existence of a legal right in the plaintiff, (2) a
correlative legal duty in the defendant, and (3) an act or
omission of the defendant in violation of plaintiff's right with
consequential injury or damage to the plaintiff for which he
may maintain an action for the recovery of damages or other
134
appropriate relief. 27 On the other hand, Section 3 of Rule 6 of
the Rules of Court provides that the complaint must state the
ultimate facts constituting the plaintiff's cause of action.
Hence, where the complaint states ultimate facts that
constitute the three essential elements of a cause of action,
the complaint states a cause of action; 28 otherwise, the
complaint must succumb to a motion to dismiss on that
ground.
The legal principles having been premised, let us now analyze
and discuss appellant's various causes of action.
Appellants' first cause of action, pursuant to what has been
premised above, should have consisted of: (1) the right of
appellants as well as of the other CMI stockholders to
subscribe, in proportion to their equities established under
their respective "Pre-Incorporation Agreements to Subscribe",
to that portion of the capital stock which was unsubscribed
because of failure of the CMI stockholders to exercise their
right to subscribe thereto; (2) the legal duty of the appellant to
have said portion of the capital stock to be subscribed by
appellants and other CMI stockholders; and (3) the violation or
breach of said right of appellants and other CMI stockholders
by the appellees.
Did the complaint state the important and substantial facts
directly forming the basis of the primary right claimed by
plaintiffs? Before proceeding to elucidate this question, it
should be noted that a bare allegation that one is entitled to
something is an allegation of a conclusion. Such allegations
adds nothing to the pleading, it being necessary to plead
specifically the facts upon which such conclusion is
founded. 29 The complaint alleged that appellants were
stockholders of the CMI; that as such stockholders, they were
entitled; by virtue of the resolution of March 28, 1962, to
subscribe to the capital stock of the proposed Consolidated
Bank and Trust Co., at par value to the same extent and in the
same amount as said stockholders' respective share holdings
in the CMI as shown in the latter's stock book as of January 15,
1963, the right to subscribe to be exercised until January 15,
1963, provided said stockholders of the CMI were qualified
under the law to become stockholders of the proposed
Bank; 30 that appellants accomplished and filed their
respective "Pre-Incorporation Agreements to Subscribe" and
fully paid the subscription. 31
These alleged specific facts did not even show that appellants
were entitled to subscribe to the capital stock of the proposed
Bank, for said right depended on a condition precedent, which
was, that they were qualified under the law to become
stockholders of the Bank, and there was no direct averment in
the complaint of the facts that qualified them to become
stockholders of the Bank. The allegation of the fact that they
subscribed to the stock did not, by necessary implication, show
that they were possessed of the necessary qualifications to
become stockholders of the proposed Bank.
Assuming arguendo that appellants were qualified to become
stockholders of the Bank, they could subscribe, pursuant to the
explicit terms of the resolution of March 28, 1962, "to the same
extent and in the same amount as said stockholders' respective
stockholdings in the CMI" as of January 15, 1963. 32 This was
the measure of the right they could claim to subscribe to
waived stocks. Appellants did not even aver that the stocks
waived to the subscription of which they claimed the right to
subscribe, were comprised in "the extent and amount" of their
respective share holdings in the CMI. It is not surprising that
they did not make such an averment for they did not even
allege the amount of shares of stock to which they claimed
they were entitled to subscribe. The failure of the complaint to
plead specifically the above facts rendered it impossible for the
court to conclude by natural reasoning that the appellants and
other CMI stockholders had a right to subscribe to the waived
shares of stock, and made any allegation to that effect a
conclusion of the pleader, not an ultimate fact, in accordance
with the test suggested by the California Supreme Court, to
wit:
If from the facts in evidence, the result can be reached by that
process of natural reasoning adopted in the investigation of
truth, it becomes an ultimate fact, to be found as such. If, on
the other hand, resort must be had to the artificial processes
of the law, in order to reach a final determination, the result is
a conclusion of law. 33
Let us now pass to the second and third elements that would
have constituted the first cause of action. Did the complaint
allege as ultimate facts the legal duty of defendants-appellees
to have a portion of the capital stock subscribed to by
appellants? Did the complaint allege as ultimate facts that
defendants appellees had violated appellants' right?
Even if it be assumed arguendo that defendants-appellees had
the duty to have the waived stocks subscribed to by the CMI
stockholders, this duty was not owed to all the CMI
stockholders, but only to such CMI stockholders as were
qualified to become stockholders of the proposed Bank.
Inasmuch as it has been shown that the complaint did not
contain ultimate facts to show that plaintiffs-appellants were
qualified to become stockholders of the Bank, it follows that
the complaint did not show that defendants-appellees were
under duty to have plaintiffs-appellants subscribe to the stocks
of the proposed Bank. It inevitably follows also that the
complaint did not contain ultimate facts to show that the right
of the plaintiffs-appellants to subscribe to the shares of the
proposed Bank had been violated by defendants-appellees.
How could a non-existent right be violated?
135
Let us continue the discussion further. The complaint alleged
that by virtue of the resolution of March 28, 1962, the
President and Members of the Board of Directors of the CMI
would be constituted as a Board of Organizers to undertake
and carry out the organization of the Bank; 34 that the Board of
Organizers was constituted and proceeded with the
establishment of the Bank, 35 that the persons composing the
Board of Organizers were the individuals-defendants-
appellees; 36 that the Board of Organizers sent our circular
letters with "Pre-Incorporation Agreement to Subscribe"
forms 37 which specified, among others, "such subscription
right shall be deemed ipso facto waived and released in favor
of the Board of Organizers of the defendant Bank and their
assignees"; 38 that in the Articles of Incorporation prepared by
the Board of Organizers, the individuals-defendants-appellees
alone appeared to have subscribe to the 50, shares; 39 and that
individuals-defendants-appellees again subscribe to all the
additional 30,000 shares. 40 From these facts, appellants
concluded that they were denied their right to subscribe in
proportion to their equities; 41 that the individuals-
defendants-appellees unlawfully acquired stockholdings far in
excess of what they were lawfully entitled in violation of law
and in breach of trust and of contractual agreement; 42and
that, because of matters already alleged, the individuals-
defendants-appellees "hold their shares in the defendant bank
in trust for plaintiffs." 43
The allegation in the complaint that the individuals-
defendants-appellees held their shares "in trust" for plaintiffs-
appellants without averment of the facts from which the court
could conclude the existence of the alleged trust, was not
deemed admitted by the motion to dismiss for that was a
conclusion of law. Express averments "that a party was the
beneficial owner of certain property; ... that property or
money was received or held in trust, or for the use of another;
that particular funds were trust funds; that a particular
transaction created an irrevocable trust; that a person held
Property as constructive trustee; that on the transfer of certain
property a trust resulted" have been considered as mere
conclusions of law. 44 The facts alleged in the complaint did
not, by logical reasoning, necessarily lead to the conclusion
that defendants-appellees were trustees in favor of appellants
of the shares of stock waived by the CMI stockholders who
failed to exercise their right to subscribe. In this connection, it
has been likewise said that:
"The general rule is that an allegation of duty in terms
unaccompanied by a statement of the facts showing the
existence of the duty, is a mere conclusion of law, unless there
is a relation set forth from which the law raises the duty." 45
In like manner, the allegation that individuals-defendants-
appellees held said shares in trust was no more than an
interpretation by appellants of the effect of the waiver clause
of the Resolution and as such it was again a mere conclusion
of law. It has been said that:
The following are also conclusions of law: ... an allegation
characterizing an instrument or purporting to interpret it and
state its effects, ... 46
Allegations in petition in the nature of conclusions about the
meaning of contract, inconsistent with stated terms of the
contract, cannot be considered. 47
stands to reason, therefore, that said causes of action would
also be fatally defective.
It having been shown that the complaint failed to state
ultimate facts to constitute a cause of action, it becomes
unnecessary to discuss the other assignments of errors.
WHEREFORE, the instant appeal is dismissed, and the order
dated March 21, 1964 of the Court of First Instance of Manila
dismissing the complaint in Civil Case No. 55810 is affirmed,
with costs in this instance against appellants. It is so ordered.

The allegation that the defendants-appellee acquired

stockholdings far in excess of what they were lawfully entitled,
in violation of law and in breach of trust and of contractual
agreement, is also mere conclusion of law.

Of course, the allegation that there was a violation of trust

duty was plainly a conclusion of law, for "a mere allegation that
it was the duty of a party to do this or that, or that he was guilty
of a breach of duty, is a statement of a conclusion not of
fact." 48

An averment ... that an act was 'unlawful' or 'wrongful' is a

mere legal conclusion or opinion of the pleader. 49

Moreover, plaintiffs-appellants did not state in the complaint

the amount of subscription the individual defendant-appellee
were entitled to; hence there was no basis for the court to
determine what amount subscribed to by them was excessive.

From what has been said, it is clear that the ultimate facts
stated under the first cause of action are not sufficient to
constitute a cause of action.

The further allegations in the second cause of action that the

calling of a special meeting was "falsely certified", that the
seventh position of Director was "illegally created" and that
defendant Alfonso Juan Olondriz was "not competent or
qualified" to be a director are mere conclusions of law, the
same not being necessarily inferable from the ultimate facts
stated in the first and second causes of action. It has been held
in this connection that:

An averment that ... an act was 'unlawful' or 'wrongful' is a

mere legal conclusion or opinion of the pleader. The same is
true of allegations that an instrument was 'illegally' certified or
... that an act was arbitrarily done ..." 50

A pleader states a mere conclusion when he makes any of the

following allegations: that a party was incapacitated to enter
into a contract or convey
property ... 51

The third, fourth, fifth and sixth causes of action depended on

the first cause of action, which, as has been shown, did not
state ultimate facts sufficient to constitute a cause of action. It
136
NEWSWEEK VS. IAC
Petitioner, Newsweek, Inc., a foreign corporation licensed to
do business in the Philippines, in this special action for
certiorari, prohibition with preliminary injunction, seeks to
annul the decision of the Intermediate Appellate Court dated
December 17, 1982 sustaining the Order of the then Court of
First Instance of Bacolod City which denied petitioner's Motion
to Dismiss the complaint for libel filed by private respondents
(Civil Case No. 15812), and the Resolution dated March 10,
1983 which denied its Motion for Reconsideration.
It appears that on March 5, 1981, private respondents,
incorporated associations of sugarcane planters in Negros
Occidental claiming to have 8,500 members and several
individual sugar planters, filed Civil Case No. 15812 in their own
behalf and/or as a class suit in behalf of all sugarcane planters
in the province of Negros Occidental, against petitioner and
two of petitioners' non-resident correspondents/reporters
Fred Bruning and Barry Came. The complaint alleged that
petitioner and the other defendants committed libel against
them by the publication of the article "An Island of Fear" in the
February 23, 1981 issue of petitioner's weekly news
magazine Newsweek. The article supposedly portrayed the
island province of Negros Occidental as a place dominated by
big landowners or sugarcane planters who not only exploited
the impoverished and underpaid sugarcane workers/laborers,
but also brutalized and killed them with imprunity.
Complainants therein alleged that said article, taken as a
whole, showed a deliberate and malicious use of falsehood,
slanted presentation and/or misrepresentation of facts
intended to put them (sugarcane planters) in bad light, expose
them to public ridicule, discredit and humiliation here in the
Philippines and abroad, and make them objects of hatred,
contempt and hostility of their agricultural workers and of the
public in general. They prayed that defendants be ordered to
pay them PlM as actual and compensatory damages, and such
amounts for moral, exemplary and corrective damages as the
court may determine, plus expenses of litigation, attorney's
fees and costs of suit. A photo copy of the article was attached
to the complaint.
On November 5, 1981, petitioner filed a motion to dismiss on
the grounds that (1) the printed article sued upon is not
actionable in fact and in law; and (2) the complaint is bereft of
allegations that state, much less support a cause of action. It
pointed out the non-libelous nature of the article and,
consequently, the failure of the complaint to state a cause of
action. Private respondents filed an Opposition to the motion
to dismiss and petitioner filed a reply.
On March 17, 1982, the trial court denied the motion to
dismiss, stating that the grounds on which the motion to
dismiss are predicated are not indubitable as the complaint on
137
its face states a valid cause of action; and the question as to
whether the printed article sued upon its actionable or not is a
matter of evidence. Petitioner's motion for reconsideration
was denied on May 28, 1982.
On June 18, 1982, petitioner filed a petition for certiorari with
respondent Court (CA-G. R. No. 14406) seeking the annulment
of the aforecited trial court's Orders for having been issued
with such a grave abuse of discretion as amounting to lack of
jurisdiction and praying for the dismissal of the complaint for
failure to state a cause of action.
As earlier stated, respondent Court affirmed the trial court's
Orders in a Decision dated December 17, 1982 and ordered the
case to be tried on the merits on the grounds that -(1) the
complaint contains allegations of fact which called for the
presentation of evidence; and (2) certiorari under Rule 65
cannot be made to substitute for an appeal where an appeal
would lie at a proper time. Subsequently, on March 10, 1983,
the respondent Court denied petitioner's Motion for
Reconsideration of the aforesaid decision, hence this petition.
The proper remedy which petitioner should have taken from
the decision of respondent Court is an appeal by certiorari
under Rule 45 of the Rules of Court and not the special civil
action of certiorari and prohibition under Rule 65 of said Rules.
However, since the petition was filed on time within fifteen
days from notice of the Resolution denying the motion for
reconsideration, we shall treat the same as a petition for
review on certiorari. The two (2) issues raised in the petition
are: (1) whether or not the private respondents' complaint
failed to state a cause of action; and (2) whether or not the
petition for certiorari and prohibition is proper to question the
denial of a motion to dismiss for failure to state a cause of
action.
First, petitioner argues that private respondents' complaint
failed to state a cause of action because the complaint made
no allegation that anything contained in the article complained
of regarding sugarcane planters referred specifically to any one
of the private respondents; that libel can be committed only
against individual reputation; and that in cases where libel is
claimed to have been directed at a group, there is actionable
defamation only if the libel can be said to reach beyond the
mere collectivity to do damage to a specific, individual group
member's reputation.
We agree with petitioner.
In the case of Corpus vs. Cuaderno, Sr. (16 SCRA 807) this Court
ruled that "in order to maintain a libel suit, it is essential that
the victim be identifiable (People vs. Monton, L-16772,
November 30, 1962), although it is not necessary that he be
named (19 A.L.R. 116)." In an earlier case, this Court declared
that" ... defamatory matter which does not reveal the Identity
of the person upon whom the imputation is cast, affords no
ground of action unless it be shown that the readers of the libel
could have Identified the personality of the individual
defamed." (Kunkle vs. Cablenews-American and Lyons 42 Phil.
760).
This principle has been recognized to be of vital importance,
especially where a group or class of persons, as in the case at
bar, claim to have been defamed, for it is evident that the
larger the collectivity, the more difficult it is for the individual
member to prove that the defamatory remarks apply to him.
(Cf. 70 ALR 2d. 1384).
In the case of Uy Tioco vs. Yang Shu Wen , 32 Phil. 624, this
Court held as follows:
Defamatory remarks directed at a class or group of persons in
general language only, are not actionable by individuals
composing the class or group unless the statements are
sweeping; and it is very probable that even then no action
would lie where the body is composed of so large a number of
persons that common sense would tell those to whom the
publication was made that there was room for persons
connected with the body to pursue an upright and law abiding
course and that it would be unreasonable and absurd to
condemn all because of the actions of a part. (supra p. 628).
It is evident from the above ruling that where the defamation
is alleged to have been directed at a group or class, it is
essential that the statement must be so sweeping or all-
embracing as to apply to every individual in that group or class,
or sufficiently specific so that each individual in the class or
group can prove that the defamatory statement specifically
pointed to him, so that he can bring the action separately, if
need be.
We note that private respondents filed a "class suit" in
representation of all the 8,500 sugarcane planters of Negros
Occidental. Petitioner disagrees and argues that the absence
of any actionable basis in the complaint cannot be cured by the
filing of a class suit on behalf of the aforesaid sugar planters.
We find petitioner's contention meritorious.
The case at bar is not a class suit. It is not a case where one or
more may sue for the benefit of all (Mathay vs. Consolidated
Bank and Trust Company, 58 SCRA 559) or where the
representation of class interest affected by the judgment or
decree is indispensable to make each member of the class an
actual party (Borlaza vs. Polistico, 47 Phil. 348). We have here
a case where each of the plaintiffs has a separate and distinct
reputation in the community. They do not have a common or
general interest in the subject matter of the controversy.
138
The disputed portion of the article which refers to plaintiff Sola
and which was claimed to be libelous never singled out plaintiff
Sola as a sugar planter. The news report merely stated that the
victim had been arrested by members of a special police unit
brought into the area by Pablo Sola, the mayor of Kabankalan.
Hence, the report, referring as it does to an official act
performed by an elective public official, is within the realm of
privilege and protected by the constitutional guarantees of
free speech and press.
The article further stated that Sola and the commander of the
special police unit were arrested. The Court takes judicial
notice of this fact. (People vs. Sola, 103 SCRA 393.)
The second issue to be resolved here is whether or not the
special civil action of certiorari or prohibition is available to
petitioner whose motion to dismiss the complaint and
subsequent motion for reconsideration were denied.
As a general rule, an order denying a motion to dismiss is
merely interlocutory and cannot be subject of appeal until final
judgment or order is rendered. (Sec. 2 of Rule 4 1). The
ordinary procedure to be followed in such a case is to file an
answer, go to trial and if the decision is adverse, reiterate the
issue on appeal from the final judgment. The same rule applies
to an order denying a motion to quash, except that instead of
filing an answer a plea is entered and no appeal lies from a
judgment of acquittal.
This general rule is subject to certain exceptions. If the court,
in denying the motion to dismiss or motion to quash, acts
without or in excess of jurisdiction or with grave abuse of
discretion, then certiorari or prohibition lies. The reason is that
it would be unfair to require the defendant or accused to
undergo the ordeal and expense of a trial if the court has no
jurisdiction over the subject matter or offense, or is not the
court of proper venue, or if the denial of the motion to dismiss
or motion to quash is made with grave abuse of discretion or a
whimsical and capricious exercise of judgment. In such cases,
the ordinary remedy of appeal cannot be plain and adequate.
The following are a few examples of the exceptions to the
general rule.
In De Jesus vs. Garcia (19 SCRA 554), upon the denial of a
motion to dismiss based on lack of jurisdiction over the subject
matter, this Court granted the petition for certiorari and
prohibition against the City Court of Manila and directed the
respondent court to dismiss the case.
In Lopez vs. City Judge (18 SCRA 616), upon the denial of a
motion to quash based on lack of jurisdiction over the offense,
this Court granted the petition for prohibition and enjoined the
respondent court from further proceeding in the case.
In Enriquez vs. Macadaeg (84 Phil. 674), upon the denial of a
motion to dismiss based on improper venue, this Court
granted the petition for prohibition and enjoined the
respondent judge from taking cognizance of the case except to
dismiss the same.
On the other hand, petitioner would do well to heed the
admonition of the President to media that they should check
the sources of their information to ensure the publication of
the truth. Freedom of the press, like all freedoms, should be
exercised with responsibility.

In Manalo vs. Mariano (69 SCRA 80), upon the denial of a WHEREFORE, the decision of the Intermediate Appellate Court
motion to dismiss based on bar by prior judgment, this Court is reversed and the complaint in Civil Case No. 15812 of the
granted the petition for certiorari and directed the respondent Court of First Instance of Negros Occidental is dismissed,
judge to dismiss the case. without pronouncement as to costs.

In Yuviengco vs. Dacuycuy (105 SCRA 668), upon the denial of

a motion to dismiss based on the Statute of Frauds, this Court
granted the petition for certiorari and dismissed the amended
complaint.

In Tacas vs. Cariaso (72 SCRA 527), this Court granted the
petition for certiorari after the motion to quash based on
double jeopardy was denied by respondent judge and ordered
him to desist from further action in the criminal case except to
dismiss the same.

In People vs. Ramos (83 SCRA 11), the order denying the
motion to quash based on prescription was set aside on
certiorari and the criminal case was dismissed by this Court.

Respondent Court correctly stated the general rule and its

exceptions. However, it ruled that none of the exceptions is
present in the case at bar and that the case appears complex
and complicated, necessitating a full-blown trial to get to the
bottom of the controversy.

Petitioner's motion to dismiss is based on the ground that the

complaint states no cause of action against it by pointing out
the non-libelous nature of the article sued upon. There is no
need of a trial in view of the conclusion of this Court that the
article in question is not libelous. The specific allegation in the
complaint, to the effect that the article attributed to the
sugarcane planters the deaths and brutalization of sugarcane
workers, is not borne out by a perusal of the actual text.

The complaint contains a recital of the favorable working

conditions of the agricultural workers in the sugar industry and
the various foundations and programs supported by planters'
associations for the benefit of their workers. Undoubtedly, the
statements in the article in question are sweeping and
exaggerated; but, paraphrasing the ruling in the Uy Tioco case
above quoted, it would be unreasonable and absurd to
condemn the majority of the sugarcane planters, who have at
heart the welfare of their workers, because of the actions of a
part. Nonetheless, articles such as the one in question may also
serve to prick the consciences of those who have but are not
doing anything or enough for those who do not have.

139
OPOSA VS. FACTORAN
In a broader sense, this petition bears upon the right of
Filipinos to a balanced and healthful ecology which the
petitioners dramatically associate with the twin concepts of
"inter-generational responsibility" and "inter-generational
justice." Specifically, it touches on the issue of whether the said
petitioners have a cause of action to "prevent the
misappropriation or impairment" of Philippine rainforests and
"arrest the unabated hemorrhage of the country's vital life
support systems and continued rape of Mother Earth."
The controversy has its genesis in Civil Case No. 90-77 which
was filed before Branch 66 (Makati, Metro Manila) of the
Regional Trial Court (RTC), National Capital Judicial Region. The
principal plaintiffs therein, now the principal petitioners, are
all minors duly represented and joined by their respective
parents. Impleaded as an additional plaintiff is the Philippine
Ecological Network, Inc. (PENI), a domestic, non-stock and
non-profit corporation organized for the purpose of, inter alia,
engaging in concerted action geared for the protection of our
environment and natural resources. The original defendant
was the Honorable Fulgencio S. Factoran, Jr., then Secretary of
the Department of Environment and Natural Resources
(DENR). His substitution in this petition by the new Secretary,
the Honorable Angel C. Alcala, was subsequently ordered upon
proper motion by the petitioners. 1 The complaint2 was
instituted as a taxpayers' class suit3 and alleges that the
plaintiffs "are all citizens of the Republic of the Philippines,
taxpayers, and entitled to the full benefit, use and enjoyment
of the natural resource treasure that is the country's virgin
tropical forests." The same was filed for themselves and others
who are equally concerned about the preservation of said
resource but are "so numerous that it is impracticable to bring
them all before the Court." The minors further asseverate that
they "represent their generation as well as generations yet
unborn."4 Consequently, it is prayed for that judgment be
rendered:
. . . ordering defendant, his agents, representatives and other
persons acting in his behalf to —
(1) Cancel all existing timber license agreements in the
country;
(2) Cease and desist from receiving, accepting, processing,
renewing or approving new timber license agreements.
and granting the plaintiffs ". . . such other reliefs just and
equitable under the premises."5
The complaint starts off with the general averments that the
Philippine archipelago of 7,100 islands has a land area of thirty
million (30,000,000) hectares and is endowed with rich, lush
and verdant rainforests in which varied, rare and unique
140
species of flora and fauna may be found; these rainforests
contain a genetic, biological and chemical pool which is
irreplaceable; they are also the habitat of indigenous
Philippine cultures which have existed, endured and flourished
since time immemorial; scientific evidence reveals that in
order to maintain a balanced and healthful ecology, the
country's land area should be utilized on the basis of a ratio of
fifty-four per cent (54%) for forest cover and forty-six per cent
(46%) for agricultural, residential, industrial, commercial and
other uses; the distortion and disturbance of this balance as a
consequence of deforestation have resulted in a host of
environmental tragedies, such as (a) water shortages resulting
from drying up of the water table, otherwise known as the
"aquifer," as well as of rivers, brooks and streams, (b)
salinization of the water table as a result of the intrusion
therein of salt water, incontrovertible examples of which may
be found in the island of Cebu and the Municipality of Bacoor,
Cavite, (c) massive erosion and the consequential loss of soil
fertility and agricultural productivity, with the volume of soil
eroded estimated at one billion (1,000,000,000) cubic meters
per annum — approximately the size of the entire island of
Catanduanes, (d) the endangering and extinction of the
country's unique, rare and varied flora and fauna, (e) the
disturbance and dislocation of cultural communities, including
the disappearance of the Filipino's indigenous cultures, (f) the
siltation of rivers and seabeds and consequential destruction
of corals and other aquatic life leading to a critical reduction in
marine resource productivity, (g) recurrent spells of drought as
is presently experienced by the entire country, (h) increasing
velocity of typhoon winds which result from the absence of
windbreakers, (i) the floodings of lowlands and agricultural
plains arising from the absence of the absorbent mechanism
of forests, (j) the siltation and shortening of the lifespan of
multi-billion peso dams constructed and operated for the
purpose of supplying water for domestic uses, irrigation and
the generation of electric power, and (k) the reduction of the
earth's capacity to process carbon dioxide gases which has led
to perplexing and catastrophic climatic changes such as the
phenomenon of global warming, otherwise known as the
"greenhouse effect."
Plaintiffs further assert that the adverse and detrimental
consequences of continued and deforestation are so capable
of unquestionable demonstration that the same may be
submitted as a matter of judicial notice. This notwithstanding,
they expressed their intention to present expert witnesses as
well as documentary, photographic and film evidence in the
course of the trial.
As their cause of action, they specifically allege that:
CAUSE OF ACTION
7. Plaintiffs replead by reference the foregoing allegations.
8. Twenty-five (25) years ago, the Philippines had some sixteen
(16) million hectares of rainforests constituting roughly 53% of
the country's land mass.
9. Satellite images taken in 1987 reveal that there remained no
more than 1.2 million hectares of said rainforests or four per
cent (4.0%) of the country's land area.
10. More recent surveys reveal that a mere 850,000 hectares
of virgin old-growth rainforests are left, barely 2.8% of the
entire land mass of the Philippine archipelago and about 3.0
million hectares of immature and uneconomical secondary
growth forests.
11. Public records reveal that the defendant's, predecessors
have granted timber license agreements ('TLA's') to various
corporations to cut the aggregate area of 3.89 million hectares
for commercial logging purposes.
A copy of the TLA holders and the corresponding areas covered
is hereto attached as Annex "A".
12. At the present rate of deforestation, i.e. about 200,000
hectares per annum or 25 hectares per hour — nighttime,
Saturdays, Sundays and holidays included — the Philippines
will be bereft of forest resources after the end of this ensuing
decade, if not earlier.
13. The adverse effects, disastrous consequences, serious
injury and irreparable damage of this continued trend of
deforestation to the plaintiff minor's generation and to
generations yet unborn are evident and incontrovertible. As a
matter of fact, the environmental damages enumerated in
paragraph 6 hereof are already being felt, experienced and
suffered by the generation of plaintiff adults.
14. The continued allowance by defendant of TLA holders to
cut and deforest the remaining forest stands will work great
damage and irreparable injury to plaintiffs — especially
plaintiff minors and their successors — who may never see,
use, benefit from and enjoy this rare and unique natural
resource treasure.
This act of defendant constitutes a misappropriation and/or
impairment of the natural resource property he holds in trust
for the benefit of plaintiff minors and succeeding generations.
15. Plaintiffs have a clear and constitutional right to a balanced
and healthful ecology and are entitled to protection by the
State in its capacity as the parens patriae.
16. Plaintiff have exhausted all administrative remedies with
the defendant's office. On March 2, 1990, plaintiffs served
upon defendant a final demand to cancel all logging permits in
the country.
141
A copy of the plaintiffs' letter dated March 1, 1990 is hereto
attached as Annex "B".
17. Defendant, however, fails and refuses to cancel the existing
TLA's to the continuing serious damage and extreme prejudice
of plaintiffs.
18. The continued failure and refusal by defendant to cancel
the TLA's is an act violative of the rights of plaintiffs, especially
plaintiff minors who may be left with a country that is
desertified (sic), bare, barren and devoid of the wonderful
flora, fauna and indigenous cultures which the Philippines had
been abundantly blessed with.
19. Defendant's refusal to cancel the aforementioned TLA's is
manifestly contrary to the public policy enunciated in the
Philippine Environmental Policy which, in pertinent part, states
that it is the policy of the State —
(a) to create, develop, maintain and improve conditions under
which man and nature can thrive in productive and enjoyable
harmony with each other;
(b) to fulfill the social, economic and other requirements of
present and future generations of Filipinos and;
(c) to ensure the attainment of an environmental quality that
is conductive to a life of dignity and well-being. (P.D. 1151, 6
June 1977)
20. Furthermore, defendant's continued refusal to cancel the
aforementioned TLA's is contradictory to the Constitutional
policy of the State to —
a. effect "a more equitable distribution of opportunities,
income and wealth" and "make full and efficient use of natural
resources (sic)." (Section 1, Article XII of the Constitution);
b. "protect the nation's marine wealth." (Section 2, ibid);
c. "conserve and promote the nation's cultural heritage and
resources (sic)" (Section 14, Article XIV, id.);
d. "protect and advance the right of the people to a balanced
and healthful ecology in accord with the rhythm and harmony
of nature." (Section 16, Article II, id.)
21. Finally, defendant's act is contrary to the highest law of
humankind — the natural law — and violative of plaintiffs'
right to self-preservation and perpetuation.
22. There is no other plain, speedy and adequate remedy in
law other than the instant action to arrest the unabated
hemorrhage of the country's vital life support systems and
continued rape of Mother Earth. 6
On 22 June 1990, the original defendant, Secretary Factoran,
Jr., filed a Motion to Dismiss the complaint based on two (2)
grounds, namely: (1) the plaintiffs have no cause of action
against him and (2) the issue raised by the plaintiffs is a political
question which properly pertains to the legislative or executive
branches of Government. In their 12 July 1990 Opposition to
the Motion, the petitioners maintain that (1) the complaint
shows a clear and unmistakable cause of action, (2) the motion
is dilatory and (3) the action presents a justiciable question as
it involves the defendant's abuse of discretion.
On 18 July 1991, respondent Judge issued an order granting
the aforementioned motion to dismiss.7 In the said order, not
only was the defendant's claim — that the complaint states no
cause of action against him and that it raises a political
question — sustained, the respondent Judge further ruled that
the granting of the relief prayed for would result in the
impairment of contracts which is prohibited by the
fundamental law of the land.
Plaintiffs thus filed the instant special civil action
for certiorari under Rule 65 of the Revised Rules of Court and
ask this Court to rescind and set aside the dismissal order on
the ground that the respondent Judge gravely abused his
discretion in dismissing the action. Again, the parents of the
plaintiffs-minors not only represent their children, but have
also joined the latter in this case.8
On 14 May 1992, We resolved to give due course to the
petition and required the parties to submit their respective
Memoranda after the Office of the Solicitor General (OSG) filed
a Comment in behalf of the respondents and the petitioners
filed a reply thereto.
Petitioners contend that the complaint clearly and
unmistakably states a cause of action as it contains sufficient
allegations concerning their right to a sound environment
based on Articles 19, 20 and 21 of the Civil Code (Human
Relations), Section 4 of Executive Order (E.O.) No. 192 creating
the DENR, Section 3 of Presidential Decree (P.D.) No. 1151
(Philippine Environmental Policy), Section 16, Article II of the
1987 Constitution recognizing the right of the people to a
balanced and healthful ecology, the concept of generational
genocide in Criminal Law and the concept of man's inalienable
right to self-preservation and self-perpetuation embodied in
natural law. Petitioners likewise rely on the respondent's
correlative obligation per Section 4 of E.O. No. 192, to
safeguard the people's right to a healthful environment.
It is further claimed that the issue of the respondent
Secretary's alleged grave abuse of discretion in granting
Timber License Agreements (TLAs) to cover more areas for
logging than what is available involves a judicial question.
Anent the invocation by the respondent Judge of the
Constitution's non-impairment clause, petitioners maintain
that the same does not apply in this case because TLAs are not
142
contracts. They likewise submit that even if TLAs may be
considered protected by the said clause, it is well settled that
they may still be revoked by the State when the public interest
so requires.
On the other hand, the respondents aver that the petitioners
failed to allege in their complaint a specific legal right violated
by the respondent Secretary for which any relief is provided by
law. They see nothing in the complaint but vague and nebulous
allegations concerning an "environmental right" which
supposedly entitles the petitioners to the "protection by the
state in its capacity as parens patriae." Such allegations,
according to them, do not reveal a valid cause of action. They
then reiterate the theory that the question of whether logging
should be permitted in the country is a political question which
should be properly addressed to the executive or legislative
branches of Government. They therefore assert that the
petitioners' resources is not to file an action to court, but to
lobby before Congress for the passage of a bill that would ban
logging totally.
As to the matter of the cancellation of the TLAs, respondents
submit that the same cannot be done by the State without due
process of law. Once issued, a TLA remains effective for a
certain period of time — usually for twenty-five (25) years.
During its effectivity, the same can neither be revised nor
cancelled unless the holder has been found, after due notice
and hearing, to have violated the terms of the agreement or
other forestry laws and regulations. Petitioners' proposition to
have all the TLAs indiscriminately cancelled without the
requisite hearing would be violative of the requirements of
due process.
Before going any further, We must first focus on some
procedural matters. Petitioners instituted Civil Case No. 90-
777 as a class suit. The original defendant and the present
respondents did not take issue with this matter. Nevertheless,
We hereby rule that the said civil case is indeed a class suit.
The subject matter of the complaint is of common and general
interest not just to several, but to all citizens of the Philippines.
Consequently, since the parties are so numerous, it, becomes
impracticable, if not totally impossible, to bring all of them
before the court. We likewise declare that the plaintiffs therein
are numerous and representative enough to ensure the full
protection of all concerned interests. Hence, all the requisites
for the filing of a valid class suit under Section 12, Rule 3 of the
Revised Rules of Court are present both in the said civil case
and in the instant petition, the latter being but an incident to
the former.
This case, however, has a special and novel element.
Petitioners minors assert that they represent their generation
as well as generations yet unborn. We find no difficulty in
ruling that they can, for themselves, for others of their
generation and for the succeeding generations, file a class suit.
Their personality to sue in behalf of the succeeding
generations can only be based on the concept of
intergenerational responsibility insofar as the right to a
balanced and healthful ecology is concerned. Such a right, as
hereinafter expounded, considers
the "rhythm and harmony of nature." Nature means the
created world in its entirety.9 Such rhythm and harmony
indispensably include, inter alia, the judicious disposition,
utilization, management, renewal and conservation of the
country's forest, mineral, land, waters, fisheries, wildlife, off-
shore areas and other natural resources to the end that their
exploration, development and utilization be equitably
accessible to the present as well as future
generations. 10Needless to say, every generation has a
responsibility to the next to preserve that rhythm and
harmony for the full enjoyment of a balanced and healthful
ecology. Put a little differently, the minors' assertion of their
right to a sound environment constitutes, at the same time,
the performance of their obligation to ensure the protection
of that right for the generations to come.
The locus standi of the petitioners having thus been
addressed, We shall now proceed to the merits of the petition.
After a careful perusal of the complaint in question and a
meticulous consideration and evaluation of the issues raised
and arguments adduced by the parties, We do not hesitate to
find for the petitioners and rule against the respondent Judge's
challenged order for having been issued with grave abuse of
discretion amounting to lack of jurisdiction. The pertinent
portions of the said order reads as follows:
xxx xxx xxx
After a careful and circumspect evaluation of the Complaint,
the Court cannot help but agree with the defendant. For
although we believe that plaintiffs have but the noblest of all
intentions, it (sic) fell short of alleging, with sufficient
definiteness, a specific legal right they are seeking to enforce
and protect, or a specific legal wrong they are seeking to
prevent and redress (Sec. 1, Rule 2, RRC). Furthermore, the
Court notes that the Complaint is replete with vague
assumptions and vague conclusions based on unverified data.
In fine, plaintiffs fail to state a cause of action in its Complaint
against the herein defendant.
Furthermore, the Court firmly believes that the matter before
it, being impressed with political color and involving a matter
of public policy, may not be taken cognizance of by this Court
without doing violence to the sacred principle of "Separation
of Powers" of the three (3) co-equal branches of the
Government.
143
The Court is likewise of the impression that it cannot, no
matter how we stretch our jurisdiction, grant the reliefs prayed
for by the plaintiffs, i.e., to cancel all existing timber license
agreements in the country and to cease and desist from
receiving, accepting, processing, renewing or approving new
timber license agreements. For to do otherwise would amount
to "impairment of contracts" abhored (sic) by the fundamental
law. 11
We do not agree with the trial court's conclusions that the
plaintiffs failed to allege with sufficient definiteness a specific
legal right involved or a specific legal wrong committed, and
that the complaint is replete with vague assumptions and
conclusions based on unverified data. A reading of the
complaint itself belies these conclusions.
The complaint focuses on one specific fundamental legal right
— the right to a balanced and healthful ecology which, for the
first time in our nation's constitutional history, is solemnly
incorporated in the fundamental law. Section 16, Article II of
the 1987 Constitution explicitly provides:
Sec. 16. The State shall protect and advance the right of the
people to a balanced and healthful ecology in accord with the
rhythm and harmony of nature.
This right unites with the right to health which is provided for
in the preceding section of the same article:
Sec. 15. The State shall protect and promote the right to health
of the people and instill health consciousness among them.
While the right to a balanced and healthful ecology is to be
found under the Declaration of Principles and State Policies
and not under the Bill of Rights, it does not follow that it is less
important than any of the civil and political rights enumerated
in the latter. Such a right belongs to a different category of
rights altogether for it concerns nothing less than self-
preservation and self-perpetuation — aptly and fittingly
stressed by the petitioners — the advancement of which may
even be said to predate all governments and constitutions. As
a matter of fact, these basic rights need not even be written in
the Constitution for they are assumed to exist from the
inception of humankind. If they are now explicitly mentioned
in the fundamental charter, it is because of the well-founded
fear of its framers that unless the rights to a balanced and
healthful ecology and to health are mandated as state policies
by the Constitution itself, thereby highlighting their continuing
importance and imposing upon the state a solemn obligation
to preserve the first and protect and advance the second, the
day would not be too far when all else would be lost not only
for the present generation, but also for those to come —
generations which stand to inherit nothing but parched earth
incapable of sustaining life.
The right to a balanced and healthful ecology carries with it the
correlative duty to refrain from impairing the environment.
During the debates on this right in one of the plenary sessions
of the 1986 Constitutional Commission, the following
exchange transpired between Commissioner Wilfrido
Villacorta and Commissioner Adolfo Azcuna who sponsored
the section in question:
MR. VILLACORTA:
Does this section mandate the State to provide sanctions
against all forms of pollution — air, water and noise pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful (sic) environment
necessarily carries with it the correlative duty of not impairing
the same and, therefore, sanctions may be provided for
impairment of environmental balance. 12
The said right implies, among many other things, the judicious
management and conservation of the country's forests.
Without such forests, the ecological or environmental balance
would be irreversiby disrupted.
Conformably with the enunciated right to a balanced and
healthful ecology and the right to health, as well as the other
related provisions of the Constitution concerning the
conservation, development and utilization of the country's
natural resources, 13 then President Corazon C. Aquino
promulgated on 10 June 1987 E.O. No. 192, 14 Section 4 of
which expressly mandates that the Department of
Environment and Natural Resources "shall be the primary
government agency responsible for the conservation,
management, development and proper use of the country's
environment and natural resources, specifically forest and
grazing lands, mineral, resources, including those in
reservation and watershed areas, and lands of the public
domain, as well as the licensing and regulation of all natural
resources as may be provided for by law in order to ensure
equitable sharing of the benefits derived therefrom for the
welfare of the present and future generations of Filipinos."
Section 3 thereof makes the following statement of policy:
Sec. 3. Declaration of Policy. — It is hereby declared the policy
of the State to ensure the sustainable use, development,
management, renewal, and conservation of the country's
forest, mineral, land, off-shore areas and other natural
resources, including the protection and enhancement of the
quality of the environment, and equitable access of the
different segments of the population to the development and
the use of the country's natural resources, not only for the
present generation but for future generations as well. It is also
the policy of the state to recognize and apply a true value
144
system including social and environmental cost implications
relative to their utilization, development and conservation of
our natural resources.
This policy declaration is substantially re-stated it Title XIV,
Book IV of the Administrative Code of 1987,15 specifically in
Section 1 thereof which reads:
Sec. 1. Declaration of Policy. — (1) The State shall ensure, for
the benefit of the Filipino people, the full exploration and
development as well as the judicious disposition, utilization,
management, renewal and conservation of the country's
forest, mineral, land, waters, fisheries, wildlife, off-shore areas
and other natural resources, consistent with the necessity of
maintaining a sound ecological balance and protecting and
enhancing the quality of the environment and the objective of
making the exploration, development and utilization of such
natural resources equitably accessible to the different
segments of the present as well as future generations.
(2) The State shall likewise recognize and apply a true value
system that takes into account social and environmental cost
implications relative to the utilization, development and
conservation of our natural resources.
The above provision stresses "the necessity of maintaining a
sound ecological balance and protecting and enhancing the
quality of the environment." Section 2 of the same Title, on the
other hand, specifically speaks of the mandate of the DENR;
however, it makes particular reference to the fact of the
agency's being subject to law and higher authority. Said section
provides:
Sec. 2. Mandate. — (1) The Department of Environment and
Natural Resources shall be primarily responsible for the
implementation of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge of
carrying out the State's constitutional mandate to control and
supervise the exploration, development, utilization, and
conservation of the country's natural resources.
Both E.O. NO. 192 and the Administrative Code of 1987 have
set the objectives which will serve as the bases for policy
formulation, and have defined the powers and functions of the
DENR.
It may, however, be recalled that even before the ratification
of the 1987 Constitution, specific statutes already paid special
attention to the "environmental right" of the present and
future generations. On 6 June 1977, P.D. No. 1151 (Philippine
Environmental Policy) and P.D. No. 1152 (Philippine
Environment Code) were issued. The former "declared a
continuing policy of the State (a) to create, develop, maintain
and improve conditions under which man and nature can
thrive in productive and enjoyable harmony with each other,
(b) to fulfill the social, economic and other requirements of
present and future generations of Filipinos, and (c) to insure
the attainment of an environmental quality that is conducive
to a life of dignity and well-being." 16 As its goal, it speaks of
the "responsibilities of each generation as trustee and
guardian of the environment for succeeding
generations." 17 The latter statute, on the other hand, gave
flesh to the said policy.
Thus, the right of the petitioners (and all those they represent)
to a balanced and healthful ecology is as clear as the DENR's
duty — under its mandate and by virtue of its powers and
functions under E.O. No. 192 and the Administrative Code of
1987 — to protect and advance the said right.
A denial or violation of that right by the other who has the
corelative duty or obligation to respect or protect the same
gives rise to a cause of action. Petitioners maintain that the
granting of the TLAs, which they claim was done with grave
abuse of discretion, violated their right to a balanced and
healthful ecology; hence, the full protection thereof requires
that no further TLAs should be renewed or granted.
A cause of action is defined as:
. . . an act or omission of one party in violation of the legal right
or rights of the other; and its essential elements are legal right
of the plaintiff, correlative obligation of the defendant, and act
or omission of the defendant in violation of said legal right. 18
It is settled in this jurisdiction that in a motion to dismiss based
on the ground that the complaint fails to state a cause of
action, 19 the question submitted to the court for resolution
involves the sufficiency of the facts alleged in the complaint
itself. No other matter should be considered; furthermore, the
truth of falsity of the said allegations is beside the point for the
truth thereof is deemed hypothetically admitted. The only
issue to be resolved in such a case is: admitting such alleged
facts to be true, may the court render a valid judgment in
accordance with the prayer in the complaint? 20 In Militante vs.
Edrosolano, 21 this Court laid down the rule that the judiciary
should "exercise the utmost care and circumspection in
passing upon a motion to dismiss on the ground of the absence
thereof [cause of action] lest, by its failure to manifest a
correct appreciation of the facts alleged and deemed
hypothetically admitted, what the law grants or recognizes is
effectively nullified. If that happens, there is a blot on the legal
order. The law itself stands in disrepute."
After careful examination of the petitioners' complaint, We
find the statements under the introductory affirmative
allegations, as well as the specific averments under the sub-
heading CAUSE OF ACTION, to be adequate enough to
show, prima facie, the claimed violation of their rights. On the
145
basis thereof, they may thus be granted, wholly or partly, the
reliefs prayed for. It bears stressing, however, that insofar as
the cancellation of the TLAs is concerned, there is the need to
implead, as party defendants, the grantees thereof for they are
indispensable parties.
The foregoing considered, Civil Case No. 90-777 be said to raise
a political question. Policy formulation or determination by the
executive or legislative branches of Government is not
squarely put in issue. What is principally involved is the
enforcement of a right vis-a-vis policies already formulated
and expressed in legislation. It must, nonetheless, be
emphasized that the political question doctrine is no longer,
the insurmountable obstacle to the exercise of judicial power
or the impenetrable shield that protects executive and
legislative actions from judicial inquiry or review. The second
paragraph of section 1, Article VIII of the Constitution states
that:
Judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.
Commenting on this provision in his book, Philippine Political
Law, 22 Mr. Justice Isagani A. Cruz, a distinguished member of
this Court, says:
The first part of the authority represents the traditional
concept of judicial power, involving the settlement of
conflicting rights as conferred as law. The second part of the
authority represents a broadening of judicial power to enable
the courts of justice to review what was before forbidden
territory, to wit, the discretion of the political departments of
the government.
As worded, the new provision vests in the judiciary, and
particularly the Supreme Court, the power to rule upon even
the wisdom of the decisions of the executive and the
legislature and to declare their acts invalid for lack or excess of
jurisdiction because tainted with grave abuse of discretion.
The catch, of course, is the meaning of "grave abuse of
discretion," which is a very elastic phrase that can expand or
contract according to the disposition of the judiciary.
In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for this
Court, noted:
In the case now before us, the jurisdictional objection becomes
even less tenable and decisive. The reason is that, even if we
were to assume that the issue presented before us was
political in nature, we would still not be precluded from
revolving it under the expanded jurisdiction conferred upon us
that now covers, in proper cases, even the political question.
Article VII, Section 1, of the Constitution clearly provides: . . .
The last ground invoked by the trial court in dismissing the
complaint is the non-impairment of contracts clause found in
the Constitution. The court a quo declared that:
The Court is likewise of the impression that it cannot, no
matter how we stretch our jurisdiction, grant the reliefs prayed
for by the plaintiffs, i.e., to cancel all existing timber license
agreements in the country and to cease and desist from
receiving, accepting, processing, renewing or approving new
timber license agreements. For to do otherwise would amount
to "impairment of contracts" abhored (sic) by the fundamental
law. 24
We are not persuaded at all; on the contrary, We are amazed,
if not shocked, by such a sweeping pronouncement. In the first
place, the respondent Secretary did not, for obvious reasons,
even invoke in his motion to dismiss the non-impairment
clause. If he had done so, he would have acted with utmost
infidelity to the Government by providing undue and
unwarranted benefits and advantages to the timber license
holders because he would have forever bound the
Government to strictly respect the said licenses according to
their terms and conditions regardless of changes in policy and
the demands of public interest and welfare. He was aware that
as correctly pointed out by the petitioners, into every timber
license must be read Section 20 of the Forestry Reform Code
(P.D. No. 705) which provides:
. . . Provided, That when the national interest so requires, the
President may amend, modify, replace or rescind any contract,
concession, permit, licenses or any other form of privilege
granted herein . . .
Needless to say, all licenses may thus be revoked or rescinded
by executive action. It is not a contract, property or a property
right protested by the due process clause of the Constitution.
In Tan vs. Director of Forestry, 25 this Court held:
. . . A timber license is an instrument by which the State
regulates the utilization and disposition of forest resources to
the end that public welfare is promoted. A timber license is not
a contract within the purview of the due process clause; it is
only a license or privilege, which can be validly withdrawn
whenever dictated by public interest or public welfare as in this
case.
A license is merely a permit or privilege to do what otherwise
would be unlawful, and is not a contract between the
authority, federal, state, or municipal, granting it and the
person to whom it is granted; neither is it property or a
property right, nor does it create a vested right; nor is it
taxation (37 C.J. 168). Thus, this Court held that the granting of
146
license does not create irrevocable rights, neither is it property
or property rights (People vs. Ong Tin, 54 O.G. 7576).
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co.,
Inc. vs. Deputy Executive Secretary: 26
. . . Timber licenses, permits and license agreements are the
principal instruments by which the State regulates the
utilization and disposition of forest resources to the end that
public welfare is promoted. And it can hardly be gainsaid that
they merely evidence a privilege granted by the State to
qualified entities, and do not vest in the latter a permanent or
irrevocable right to the particular concession area and the
forest products therein. They may be validly amended,
modified, replaced or rescinded by the Chief Executive when
national interests so require. Thus, they are not deemed
contracts within the purview of the due process of law clause
[See Sections 3(ee) and 20 of Pres. Decree No. 705, as
amended. Also, Tan v. Director of Forestry, G.R. No. L-24548,
October 27, 1983, 125 SCRA 302].
Since timber licenses are not contracts, the non-impairment
clause, which reads:
Sec. 10. No law impairing, the obligation of contracts shall be
passed. 27
cannot be invoked.
In the second place, even if it is to be assumed that the same
are contracts, the instant case does not involve a law or even
an executive issuance declaring the cancellation or
modification of existing timber licenses. Hence, the non-
impairment clause cannot as yet be invoked. Nevertheless,
granting further that a law has actually been passed mandating
cancellations or modifications, the same cannot still be
stigmatized as a violation of the non-impairment clause. This is
because by its very nature and purpose, such as law could have
only been passed in the exercise of the police power of the
state for the purpose of advancing the right of the people to a
balanced and healthful ecology, promoting their health and
enhancing the general welfare. In Abe vs. Foster Wheeler
Corp. 28 this Court stated:
The freedom of contract, under our system of government, is
not meant to be absolute. The same is understood to be
subject to reasonable legislative regulation aimed at the
promotion of public health, moral, safety and welfare. In other
words, the constitutional guaranty of non-impairment of
obligations of contract is limited by the exercise of the police
power of the State, in the interest of public health, safety,
moral and general welfare.
The reason for this is emphatically set forth in Nebia vs. New
York, 29 quoted in Philippine American Life Insurance Co. vs.
Auditor General,30 to wit:

Under our form of government the use of property and the

making of contracts are normally matters of private and not of
public concern. The general rule is that both shall be free of
governmental interference. But neither property rights nor
contract rights are absolute; for government cannot exist if the
citizen may at will use his property to the detriment of his
fellows, or exercise his freedom of contract to work them
harm. Equally fundamental with the private right is that of the
public to regulate it in the common interest.

In short, the non-impairment clause must yield to the police

power of the state. 31

Finally, it is difficult to imagine, as the trial court did, how the

non-impairment clause could apply with respect to the prayer
to enjoin the respondent Secretary from receiving, accepting,
processing, renewing or approving new timber licenses for,
save in cases of renewal, no contract would have as of yet
existed in the other instances. Moreover, with respect to
renewal, the holder is not entitled to it as a matter of right.

WHEREFORE, being impressed with merit, the instant Petition

is hereby GRANTED, and the challenged Order of respondent
Judge of 18 July 1991 dismissing Civil Case No. 90-777 is hereby
set aside. The petitioners may therefore amend their
complaint to implead as defendants the holders or grantees of
the questioned timber license agreements.

147
Spouses JULITA DE LA CRUZ and FELIPE DE LA
CRUZ, petitioners, vs. PEDRO JOAQUIN, respondent.
PANGANIBAN, J.:
The Rules require the legal representatives of a dead litigant to
be substituted as parties to a litigation. This requirement is
necessitated by due process. Thus, when the rights of the legal
representatives of a decedent are actually recognized and
protected, noncompliance or belated formal compliance with
the Rules cannot affect the validity of the promulgated
decision. After all, due process had thereby been satisfied.
The Case. Before us is a Petition for Review[1] under Rule 45 of
the Rules of Court, assailing the August 26, 2003
Decision[2] and the March 9, 2004 Resolution[3] of the Court of
Appeals (CA) in CA-GR CV No. 34702. The challenged Decision
disposed as follows:
WHEREFORE, the foregoing considered, the appeal is
DISMISSED and the assailed decision accordingly AFFIRMED in
toto. No costs.[4]
On the other hand, the trial courts affirmed Decision disposed
as follows: WHEREFORE, judgment is hereby rendered:
a) declaring the Deed of Absolute Sale (Exh. D) and Kasunduan
(Exhibit B), to be a sale with right of repurchase;
b) ordering the plaintiff to pay the defendants the sum
of P9,000.00 by way of repurchasing the land in question;
c) ordering the defendants to execute a deed of reconveyance
of said land in favor of the plaintiff after the latter has paid
them the amount of P9,000.00 to repurchase the land in
question;
d) ordering the defendants to yield possession of the subject
land to the plaintiff after the latter has paid them the amount
of P9,000.00 to repurchase the property from them; and
e) ordering the defendants to pay the plaintiff the amount
of P10,000.00 as actual and compensatory damages; the
amount of P5,000[.00] as exemplary damages; the amount
of P5,000.00 as expenses of litigation and the amount
of P5,000.00 by way of attorneys fees.[5]
The Facts
The case originated from a Complaint for the recovery of
possession and ownership, the cancellation of title, and
damages, filed by Pedro Joaquin against petitioners in the
Regional Trial Court of Baloc, Sto. Domingo, Nueva
Ecija.[6] Respondent alleged that he had obtained a loan from
them in the amount of P9,000 on June 29, 1974, payable after
five (5) years; that is, on June 29, 1979. To secure the payment
of the obligation, he supposedly executed a Deed of Sale in
favor of petitioners. The Deed was for a parcel of land in
148
Pinagpanaan, Talavera, Nueva Ecija, covered by TCT No. T-
111802. The parties also executed another document
entitled Kasunduan. [7]
Respondent claimed that the Kasunduan showed the Deed of
Sale to be actually an equitable mortgage.[8] Spouses De la Cruz
contended that this document was merely an accommodation
to allow the repurchase of the property until June 29, 1979, a
right that he failed to exercise.[9]
On April 23, 1990, the RTC issued a Decision in his favor. The
trial court declared that the parties had entered into a sale
with a right of repurchase.[10] It further held that respondent
had made a valid tender of payment on two separate occasions
to exercise his right of repurchase.[11] Accordingly, petitioners
were required to reconvey the property upon his payment.[12]
Ruling of the Court of Appeals Sustaining the trial court, the CA
noted that petitioners had given respondent the right to
repurchase the property within five (5) years from the date of
the sale or until June 29, 1979. Accordingly, the parties
executed the Kasunduan to express the terms and conditions
of their actual agreement.[13] The appellate court also found no
reason to overturn the finding that respondent had validly
exercised his right to repurchase the land.[14]
In the March 9, 2004 Resolution, the CA denied
reconsideration and ordered a substitution by legal
representatives, in view of respondents death on December
24, 1988.[15]
Hence, this Petition.[16]
The Issues Petitioners assign the following errors for our
consideration:
I. Public Respondent Twelfth Division of the Honorable Court
of Appeals seriously erred in dismissing the appeal and
affirming in toto the Decision of the trial court in Civil Case No.
SD-838;
II. Public Respondent Twelfth Division of the Honorable Court
of Appeals likewise erred in denying [petitioners] Motion for
Reconsideration given the facts and the law therein
presented.[17]
Succinctly, the issues are whether the trial court lost
jurisdiction over the case upon the death of Pedro Joaquin, and
whether respondent was guilty of forum shopping.[18]
The Courts Ruling The Petition has no merit.
First Issue: Jurisdiction
Petitioners assert that the RTCs Decision was invalid for lack of
jurisdiction.[19] They claim that respondent died during the
pendency of the case. There being no substitution by the heirs,
the trial court allegedly lacked jurisdiction over the
litigation.[20]
Rule on Substitution
When a party to a pending action dies and the claim is not
extinguished,[21] the Rules of Court require a substitution of
the deceased. The procedure is specifically governed by
Section 16 of Rule 3, which reads thus:
Section 16. Death of a party; duty of counsel. Whenever a
party to a pending action dies, and the claim is not thereby
extinguished, it shall be the duty of his counsel to inform the
court within thirty (30) days after such death of the fact
thereof, and to give the name and address of his legal
representative or representatives. Failure of counsel to comply
with this duty shall be a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for
the deceased, without requiring the appointment of an
executor or administrator and the court may appoint a
guardian ad litem for the minor heirs.
The court shall forthwith order said legal representative or
representatives to appear and be substituted within a period
of thirty (30) days from notice.
If no legal representative is named by the counsel for the
deceased party, or if the one so named shall fail to appear
within the specified period, the court may order the opposing
party, within a specified time, to procure the appointment of
an executor or administrator for the estate of the deceased,
and the latter shall immediately appear for and on behalf of
the deceased. The court charges in procuring such
appointment, if defrayed by the opposing party, may be
recovered as costs.
The rule on the substitution of parties was crafted to protect
every partys right to due process.[22] The estate of the
deceased party will continue to be properly represented in the
suit through the duly appointed legal
representative.[23] Moreover, no adjudication can be made
against the successor of the deceased if the fundamental right
to a day in court is denied.[24]
The Court has nullified not only trial proceedings conducted
without the appearance of the legal representatives of the
deceased, but also the resulting judgments.[25] In those
instances, the courts acquired no jurisdiction over the persons
of the legal representatives or the heirs upon whom no
judgment was binding.[26]
This general rule notwithstanding, a formal substitution by
heirs is not necessary when they themselves voluntarily
appear, participate in the case, and present evidence in
149
defense of the deceased.[27] These actions negate any claim
that the right to due process was violated.
The Court is not unaware of Chittick v. Court of Appeals,[28] in
which the failure of the heirs to substitute for the original
plaintiff upon her death led to the nullification of the trial
courts Decision. The latter had sought to recover support in
arrears and her share in the conjugal partnership. The children
who allegedly substituted for her refused to continue the case
against their father and vehemently objected to their inclusion
as parties.[29] Moreover, because he died during the pendency
of the case, they were bound to substitute for the defendant
also. The substitution effectively merged the persons of the
plaintiff and the defendant and thus extinguished the
obligation being sued upon.[30]
Clearly, the present case is not similar, much less identical, to
the factual milieu of Chittick.
Strictly speaking, the rule on the substitution by heirs is not a
matter of jurisdiction, but a requirement of due process. Thus,
when due process is not violated, as when the right of the
representative or heir is recognized and protected,
noncompliance or belated formal compliance with the Rules
cannot affect the validity of a promulgated decision. [31] Mere
failure to substitute for a deceased plaintiff is not a sufficient
ground to nullify a trial courts decision. The alleging party must
prove that there was an undeniable violation of due process.
Substitution in
the Instant Case
The records of the present case contain a Motion for
Substitution of Party Plaintiff dated February 15, 2002, filed
before the CA. The prayer states as follows:
WHEREFORE, it is respectfully prayed that the Heirs of the
deceased plaintiff-appellee as represented by his daughter
Lourdes dela Cruz be substituted as party-plaintiff for the said
Pedro Joaquin.
It is further prayed that henceforth the undersigned
counsel[32] for the heirs of Pedro Joaquin be furnished with
copies of notices, orders, resolutions and other pleadings at its
address below.
Evidently, the heirs of Pedro Joaquin voluntary appeared and
participated in the case. We stress that the appellate court had
ordered[33] his legal representatives to appear and substitute
for him. The substitution even on appeal had been ordered
correctly. In all proceedings, the legal representatives must
appear to protect the interests of the deceased.[34] After the
rendition of judgment, further proceedings may be held, such
as a motion for reconsideration or a new trial, an appeal, or an
execution.[35]
Considering the foregoing circumstances, the Motion for
Substitution may be deemed to have been granted; and the
heirs, to have substituted for the deceased, Pedro Joaquin.
There being no violation of due process, the issue of
substitution cannot be upheld as a ground to nullify the trial
courts Decision.
Second Issue:
Forum Shopping
Petitioners also claim that respondents were guilty of forum
shopping, a fact that should have compelled the trial court to
dismiss the Complaint.[36] They claim that prior to the
commencement of the present suit on July 7, 1981,
respondent had filed a civil case against petitioners on June 25,
1979. Docketed as Civil Case No. SD-742 for the recovery of
possession and for damages, it was allegedly dismissed by the
Court of First Instance of Nueva Ecija for lack of interest to
prosecute.
Forum Shopping Defined
Forum shopping is the institution of two or more actions or
proceedings involving the same parties for the same cause of
action, either simultaneously or successively, on the
supposition that one or the other court would make a
favorable disposition.[37] Forum shopping may be resorted to
by a party against whom an adverse judgment or order has
been issued in one forum, in an attempt to seek a favorable
opinion in another, other than by an appeal or a special civil
action for certiorari.[38]
Public policy requires that controversies must be settled with
finality at a given point in time.
The elements of res judicata are as follows: (1) the former
judgment or order must be final; (2) it must have been
rendered on the merits of the controversy; (3) the court that
rendered it must have had jurisdiction over the subject matter
and the parties; and (4) there must have been -- between the
first and the second actions -- an identity of parties, subject
matter and cause of action.[45]
Failure to Support Allegation
The onus of proving allegations rests upon the party raising
them.[46] As to the matter of forum shopping and res judicata,
petitioners have failed to provide this Court with relevant and
clear specifications that would show the presence of an
identity of parties, subject matter, and cause of action
between the present and the earlier suits. They have also failed
to show whether the other case was decided on the merits.
Instead, they have made only bare assertions involving its
existence without reference to its facts. In other words, they
have alleged conclusions of law without stating any factual or
legal basis. Mere mention of other civil cases without showing
the identity of rights asserted and reliefs sought is not enough
basis to claim that respondent is guilty of forum shopping, or
that res judicata exists.[47]
WHEREFORE, the Petition is DENIED and the assailed Decision
and Resolution are AFFIRMED. Costs against petitioners.

Forum shopping trifles with the courts, abuses their processes,

degrades the administration of justice, and congests court
dockets.[39] Willful and deliberate violation of the rule against
it is a ground for the summary dismissal of the case; it may also
constitute direct contempt of court.[40]

The test for determining the existence of forum shopping is

whether the elements of litis pendentia are present, or
whether a final judgment in one case amounts to res
judicata in another.[41] We note, however, petitioners claim
that the subject matter of the present case has already been
litigated and decided. Therefore, the applicable doctrine is res
judicata.[42]

Applicability of Res Judicata

Under res judicata, a final judgment or decree on the merits by

a court of competent jurisdiction is conclusive of the rights of
the parties or their privies, in all later suits and on all points
and matters determined in the previous suit.[43] The term
literally means a matter adjudged, judicially acted upon, or
settled by judgment.[44] The principle bars a subsequent suit
involving the same parties, subject matter, and cause of action.
150
SPOUSES ALGURA VS. CITY OF NAGA
Anyone who has ever struggled with povertyknows how
extremely expensive it is to be poor. James Baldwin
The Constitution affords litigantsmoneyed or poorequal
access to the courts; moreover, it specifically provides that
poverty shall not bar any person from having access to the
courts.[1] Accordingly, laws and rules must be formulated,
interpreted, and implemented pursuant to the intent and spirit
of this constitutional provision. As such, filing fees, though one
of the essential elements in court procedures, should not be
an obstacle to poor litigants opportunity to seek redress for
their grievances before the courts.
The Case. This Petition for Review on Certiorari seeks the
annulment of the September 11, 2001 Order of the Regional
Trial Court (RTC) of Naga City, Branch 27, in Civil Case No. 99-
4403 entitled Spouses Antonio F. Algura and Lorencita S.J.
Algura v. The Local Government Unit of the City of Naga, et al.,
dismissing the case for failure of petitioners Algura spouses to
pay the required filing fees.[2] Since the instant petition
involves only a question of law based on facts established from
the pleadings and documents submitted by the parties, [3] the
Court gives due course to the instant petition sanctioned under
Section 2(c) of Rule 41 on Appeal from the RTCs, and governed
by Rule 45 of the 1997 Rules of Civil Procedure.
The Facts. On September 1, 1999, spouses Antonio F. Algura
and Lorencita S.J. Algura filed a Verified Complaint
dated August 30, 1999[4] for damages against the Naga City
Government and its officers, arising from the alleged illegal
demolition of their residence and boarding house and for
payment of lost income derived from fees paid by their
boarders amounting to PhP 7,000.00 monthly.
Simultaneously, petitioners filed an Ex-Parte Motion to
Litigate as Indigent Litigants,[5] to which petitioner Antonio
Alguras Pay Slip No. 2457360 (Annex A of motion) was
appended, showing a gross monthly income of Ten Thousand
Four Hundred Seventy Four Pesos (PhP 10,474.00) and a net
pay of Three Thousand Six Hundred Sixteen Pesos and Ninety
Nine Centavos (PhP 3,616.99) for [the month of] July
1999.[6] Also attached as Annex B to the motion was a July 14,
1999 Certification[7] issued by the Office of the City Assessor of
Naga City, which stated that petitioners had no property
declared in their name for taxation purposes.
Finding that petitioners motion to litigate as indigent litigants
was meritorious, Executive Judge Jose T. Atienza of the Naga
City RTC, in the September 1, 1999 Order,[8] granted
petitioners plea for exemption from filing fees.
Meanwhile, as a result of respondent Naga City Governments
demolition of a portion of petitioners house, the Alguras
151
allegedly lost a monthly income of PhP 7,000.00 from their
boarders rentals. With the loss of the rentals, the meager
income from Lorencita Alguras sari-sari store and Antonio
Alguras small take home pay became insufficient for the
expenses of the Algura spouses and their six (6) children for
their basic needs including food, bills, clothes, and schooling,
among others.
On October 13, 1999, respondents filed an Answer withb
Counterclaim dated October 10, 1999,[9] arguing that the
defenses of the petitioners in the complaint had no cause of
action, the spouses boarding house blocked the road right of
way, and said structure was a nuisance per se.
Praying that the counterclaim of defendants (respondents) be
dismissed, petitioners then filed their Reply with Ex-
Parte Request for a Pre-Trial Setting[10] before the Naga City
RTC on October 19, 1999. On February 3, 2000, a pre-trial was
held wherein respondents asked for five (5) days within which
to file a Motion to Disqualify Petitioners as Indigent Litigants.
On March 13, 2000, respondents filed a Motion to Disqualify
the Plaintiffs for Non-Payment of Filing Fees dated March 10,
2000.[11] They asserted that in addition to the more than PhP
3,000.00 net income of petitioner Antonio Algura, who is a
member of the Philippine National Police, spouse Lorencita
Algura also had a mini-store and a computer shop on the
ground floor of their residence along Bayawas St., Sta.
Cruz, Naga City. Also, respondents claimed that petitioners
second floor was used as their residence and as a boarding
house, from which they earned more than PhP 3,000.00 a
month. In addition, it was claimed that petitioners derived
additional income from their computer shop patronized by
students and from several boarders who paid rentals to them.
Hence, respondents concluded that petitioners were not
indigent litigants.
On March 28, 2000, petitioners subsequently interposed their
Opposition to the Motion[12] to respondents motion to
disqualify them for non-payment of filing fees.
On April 14, 2000, the Naga City RTC issued an Order
disqualifying petitioners as indigent litigants on the ground
that they failed to substantiate their claim for exemption from
payment of legal fees and to comply with the third paragraph
of Rule 141, Section 18 of the Revised Rules of Courtdirecting
them to pay the requisite filing fees.[13]
On April 28, 2000, petitioners filed a Motion for
Reconsideration of the April 14, 2000 Order. On May 8, 2000,
respondents then filed their Comment/Objections to
petitioners Motion for Reconsideration.
On May 5, 2000, the trial court issued an Order[14] giving
petitioners the opportunity to comply with the requisites laid
down in Section 18, Rule 141, for them to qualify as indigent
litigants.
On May 13, 2000, petitioners submitted their
[15]
Compliance attaching the affidavits of petitioner Lorencita
Algura[16] and Erlinda Bangate,[17] to comply with the
requirements of then Rule 141, Section 18 of the Rules of Court
and in support of their claim to be declared as indigent
litigants.
In her May 13, 2000 Affidavit, petitioner Lorencita Algura
claimed that the demolition of their small dwelling deprived
her of a monthly income amounting to PhP 7,000.00. She, her
husband, and their six (6) minor children had to rely mainly on
her husbands salary as a policeman which provided them a
monthly amount of PhP 3,500.00, more or less. Also, they did
not own any real property as certified by the assessors office
of Naga City. More so, according to her, the meager net
income from her small sari-saristore and the rentals of some
boarders, plus the salary of her husband, were not enough to
pay the familys basic necessities.
To buttress their position as qualified indigent litigants,
petitioners also submitted the affidavit of Erlinda Bangate,
who attested under oath, that she personally knew spouses
Antonio Algura and Lorencita Algura, who were her neighbors;
that they derived substantial income from their boarders; that
they lost said income from their boarders rentals when the
Local Government Unit of the City of Naga, through its officers,
demolished part of their house because from that time, only a
few boarders could be accommodated; that the income from
the small store, the boarders, and the meager salary of Antonio
Algura were insufficient for their basic necessities like food and
clothing, considering that the Algura spouses had six (6)
children; and that she knew that petitioners did not own any
real property.
Thereafter, Naga City RTC Acting Presiding Judge Andres B.
Barsaga, Jr. issued his July 17, 2000[18] Order denying the
petitioners Motion for Reconsideration.
Judge Barsaga ratiocinated that the pay slip of Antonio F.
Algura showed that the GROSS INCOME or TOTAL EARNINGS
of plaintiff Algura [was] ₧10,474.00 which amount [was] over
152
and above the amount mentioned in the first paragraph of
Rule 141, Section 18 for pauper litigants residing outside Metro
Manila.[19] Said rule provides that the gross income of the
litigant should not exceed PhP 3,000.00 a month and shall not
own real estate with an assessed value of PhP 50,000.00. The
trial court found that, in Lorencita S.J. Alguras May 13,
2000 Affidavit, nowhere was it stated that she and her
immediate family did not earn a gross income of PhP 3,000.00.
The Issue
Unconvinced of the said ruling, the Alguras instituted the
instant petition raising a solitary issue for the consideration of
the Court: whether petitioners should be considered as
indigent litigants who qualify for exemption from paying filing
fees.
The Ruling of the Court
The petition is meritorious.
A review of the history of the Rules of Court on suits in forma
pauperis (pauper litigant) is necessary before the Court rules
on the issue of the Algura spouses claim to exemption from
paying filing fees.
When the Rules of Court took effect on January 1, 1964, the
rule on pauper litigants was found in Rule 3, Section 22 which
provided that:
SECTION 22. Pauper litigant.Any court may authorize a litigant
to prosecute his action or defense as a pauper upon a proper
showing that he has no means to that effect by affidavits,
certificate of the corresponding provincial, city or municipal
treasurer, or otherwise. Such authority[,] once given[,] shall
include an exemption from payment of legal fees and from
filing appeal bond, printed record and printed brief. The legal
fees shall be a lien to any judgment rendered in the case
[favorable] to the pauper, unless the court otherwise provides.
From the same Rules of Court, Rule 141 on Legal Fees, on the
other hand, did not contain any provision on pauper litigants.
 available for food, shelter and basic necessities for himself and
his family.
On July 19, 1984, the Court, in Administrative Matter No. 83-
6-389-0 (formerly G.R. No. 64274), approved the
recommendation of the Committee on the Revision of Rates
Such authority shall include an exemption from payment of
and Charges of Court Fees, through its Chairman, then Justice
docket and other lawful fees, and of transcripts of
Felix V. Makasiar, to revise the fees in Rule 141 of the Rules of
stenographic notes which the court may order to be furnished
Court to generate funds to effectively cover administrative
him. The amount of the docket and other lawful fees which the
costs for services rendered by the courts.[20] A provision on
indigent was exempted from paying shall be a lien on any
pauper litigants was inserted which reads:
judgment rendered in the case favorable to the indigent,
unless the court otherwise provides.

SECTION 16. Pauper-litigants exempt from payment of court

fees.Pauper-litigants include wage earners whose gross
Any adverse party may contest the grant of such authority at
income do not exceed P2,000.00 a month or P24,000.00 a year
any time before judgment is rendered by the trial court. If the
for those residing in Metro Manila, and P1,500.00 a month or
court should determine after hearing that the party declared
P18,000.00 a year for those residing outside Metro Manila, or
as an indigent is in fact a person with sufficient income or
those who do not own real property with an assessed value of
property, the proper docket and other lawful fees shall be
not more than P24,000.00, or not more than P18,000.00 as the
assessed and collected by the clerk of court. If payment is not
case may be.
made within the time fixed by the court, execution shall issue
Such exemption shall include exemption from payment of fees for the payment thereof, without prejudice to such other
for filing appeal bond, printed record and printed brief. sanctions as the court may impose.

The legal fees shall be a lien on the monetary or property

judgment rendered in favor of the pauper-litigant.
To be entitled to the exemption herein provided, the pauper-
litigant shall execute an affidavit that he does not earn the
gross income abovementioned, nor own any real property with
the assessed value afore-mentioned [sic], supported by a
certification to that effect by the provincial, city or town
assessor or treasurer.
At the time the Rules on Civil Procedure were amended by the
Court in Bar Matter No. 803, however, there was no
amendment made on Rule 141, Section 16 on pauper litigants.
On March 1, 2000, Rule 141 on Legal Fees was amended by the
Court in A.M. No. 00-2-01-SC, whereby certain fees were
increased or adjusted. In this Resolution, the Court amended
Section 16 of Rule 141, making it Section 18, which now reads:

SECTION 18. Pauper-litigants exempt from payment of legal

fees.Pauper litigants (a) whose gross income and that of their
immediate family do not exceed four thousand (P4,000.00)
When the Rules of Court on Civil Procedure were amended by
pesos a month if residing in Metro Manila, and three thousand
the 1997 Rules of Civil Procedure (inclusive of Rules 1 to 71) in
(P3,000.00) pesos a month if residing outside Metro Manila,
Supreme Court Resolution in Bar Matter No. 803 dated April 8,
and (b) who do not own real property with an assessed value
1997, which became effective on July 1, 1997, Rule 3, Section
of more than fifty thousand (P50,000.00) pesos shall be
22 of the Revised Rules of Court was superseded by Rule 3,
exempt from the payment of legal fees.
Section 21 of said 1997 Rules of Civil Procedure, as follows:

The legal fees shall be a lien on any judgment rendered in the

SECTION 21. Indigent party.A party may be authorized to
case favorably to the pauper litigant, unless the court
litigate his action, claim or defense as an indigent if the court,
otherwise provides.
upon an ex parte application and hearing, is satisfied that the
party is one who has no money or property sufficient and

153
To be entitled to the exemption herein provided, the litigant
shall execute an affidavit that he and his immediate family do
not earn the gross income abovementioned, nor do they own
any real property with the assessed value aforementioned,
supported by an affidavit of a disinterested person attesting to
the truth of the litigants affidavit.
Any falsity in the affidavit of a litigant or disinterested person
shall be sufficient cause to strike out the pleading of that party,
without prejudice to whatever criminal liability may have been
incurred.
It can be readily seen that the rule on pauper litigants was
inserted in Rule 141 without revoking or amending Section 21
of Rule 3, which provides for the exemption of pauper litigants
from payment of filing fees. Thus, on March 1, 2000, there
were two existing rules on pauper litigants; namely, Rule 3,
Section 21 and Rule 141, Section 18.
On August 16, 2004, Section 18 of Rule 141 was further
amended in Administrative Matter No. 04-2-04-SC, which
became effective on the same date. It then became Section 19
of Rule 141, to wit:
SEC. 19. Indigent litigants exempt from payment of legal
fees.INDIGENT LITIGANTS (A) WHOSE GROSS INCOME AND
THAT OF THEIR IMMEDIATE FAMILY DO NOT EXCEED AN
AMOUNT DOUBLE THE MONTHLY MINIMUM WAGE OF AN
EMPLOYEE AND (B) WHO DO NOT OWN REAL PROPERTY WITH
A FAIR MARKET VALUE AS STATED IN THE CURRENT TAX
DECLARATION OF MORE THAN THREE HUNDRED THOUSAND
(P300,000.00) PESOS SHALL BE EXEMPT FROM PAYMENT OF
LEGAL FEES.
The legal fees shall be a lien on any judgment rendered in the
case favorable to the indigent litigant unless the court
otherwise provides.
To be entitled to the exemption herein provided, the litigant
shall execute an affidavit that he and his immediate family do
154
not earn a gross income abovementioned, and they do not
own any real property with the fair value aforementioned,
supported by an affidavit of a disinterested person attesting
to the truth of the litigants affidavit. The current tax
declaration, if any, shall be attached to the litigants affidavit.
Any falsity in the affidavit of litigant or disinterested person
shall be sufficient cause to dismiss the complaint or action or
to strike out the pleading of that party, without prejudice to
whatever criminal liability may have been incurred. (Emphasis
supplied.)
Amendments to Rule 141 (including the amendment to Rule
141, Section 18) were made to implement RA 9227 which
brought about new increases in filing fees. Specifically, in the
August 16, 2004 amendment, the ceiling for the gross income
of litigants applying for exemption and that of their immediate
family was increased from PhP 4,000.00 a month in Metro
Manila and PhP 3,000.00 a month outside Metro Manila, to
double the monthly minimum wage of an employee; and the
maximum value of the property owned by the applicant was
increased from an assessed value of PhP 50,000.00 to a
maximum market value of PhP 300,000.00, to be able to
accommodate more indigent litigants and promote easier
access to justice by the poor and the marginalized in the wake
of these new increases in filing fees.
Even if there was an amendment to Rule 141 on August 16,
2004, there was still no amendment or recall of Rule 3, Section
21 on indigent litigants.
With this historical backdrop, let us now move on to the sole
issuewhether petitioners are exempt from the payment of
filing fees.
It is undisputed that the Complaint (Civil Case No. 99-4403)
was filed on September 1, 1999. However, the Naga City RTC,
in its April 14, 2000 and July 17, 2000 Orders, incorrectly
applied Rule 141, Section 18 on Legal Fees when the
applicable rules at that time were Rule 3, Section 21 on
Indigent Party which took effect on July 1, 1997 and Rule 141,
Section 16 on Pauper Litigants which became effective on July
19, 1984 up to February 28, 2000.
The old Section 16, Rule 141 requires applicants to file an ex-
parte motion to litigate as a pauper litigant by submitting an
affidavit that they do not have a gross income of PhP 2,000.00
a month or PhP 24,000.00 a year for those residing in Metro
Manila and PhP 1,500.00 a month or PhP 18,000.00 a year for
those residing outside Metro Manila or those who do not own
real property with an assessed value of not more than PhP
24,000.00 or not more than PhP 18,000.00 as the case may
be. Thus, there are two requirements: a) income
requirementthe applicants should not have a gross monthly
income of more than PhP 1,500.00, and b) property
requirementthey should not own property with an assessed
value of not more than PhP 18,000.00.
In the case at bar, petitioners Alguras submitted the Affidavits
of petitioner Lorencita Algura and neighbor Erlinda Bangate,
the pay slip of petitioner Antonio F. Algura showing a gross
monthly income of PhP 10,474.00,[21] and a Certification of the
Naga City assessor stating that petitioners do not have
property declared in their names for taxation.[22]Undoubtedly,
petitioners do not own real property as shown by the
Certification of the Naga City assessor and so the property
requirement is met. However with respect to the income
requirement, it is clear that the gross monthly income of PhP
10,474.00 of petitioner Antonio F. Algura and the PhP 3,000.00
income of Lorencita Algura when combined, were above the
PhP 1,500.00 monthly income threshold prescribed by then
Rule 141, Section 16 and therefore, the income requirement
was not satisfied. The trial court was therefore correct in
disqualifying petitioners Alguras as indigent litigants although
the court should have applied Rule 141, Section 16 which was
in effect at the time of the filing of the application
on September 1, 1999. Even if Rule 141, Section 18 (which
superseded Rule 141, Section 16 on March 1, 2000) were
applied, still the application could not have been granted as
the combined PhP 13,474.00 income of petitioners was
beyond the PhP 3,000.00 monthly income threshold.
Unrelenting, petitioners however argue in their Motion for
Reconsideration of the April 14, 2000 Order disqualifying them
as indigent litigants[23] that the rules have been relaxed by
relying on Rule 3, Section 21 of the 1997 Rules of Civil
procedure which authorizes parties to litigate their action as
indigents if the court is satisfied that the party is one who has
no money or property sufficient and available for food, shelter
and basic necessities for himself and his family. The trial court
did not give credence to this view of petitioners and simply
applied Rule 141 but ignored Rule 3, Section 21 on Indigent
Party.
155
The position of petitioners on the need to use Rule 3, Section
21 on their application to litigate as indigent litigants brings to
the fore the issue on whether a trial court has to apply both
Rule 141, Section 16 and Rule 3, Section 21 on such
applications or should the court apply only Rule 141, Section
16 and discard Rule 3, Section 21 as having been superseded
by Rule 141, Section 16 on Legal Fees.
The Court rules that Rule 3, Section 21 and Rule 141, Section
16 (later amended as Rule 141, Section 18 on March 1, 2000
and subsequently amended by Rule 141, Section 19 on August
16, 2003, which is now the present rule) are still valid and
enforceable rules on indigent litigants.
For one, the history of the two seemingly conflicting rules
readily reveals that it was not the intent of the Court to
consider the old Section 22 of Rule 3, which took effect
on January 1, 1994 to have been amended and superseded by
Rule 141, Section 16, which took effect on July 19,
1984 through A.M. No. 83-6-389-0. If that is the case, then the
Supreme Court, upon the recommendation of the Committee
on the Revision on Rules, could have already deleted Section
22 from Rule 3 when it amended Rules 1 to 71 and approved
the 1997 Rules of Civil Procedure, which took effect on July 1,
1997. The fact that Section 22 which became Rule 3, Section
21 on indigent litigant was retained in the rules of procedure,
even elaborating on the meaning of an indigent party, and was
also strengthened by the addition of a third paragraph on the
right to contest the grant of authority to litigate only goes to
show that there was no intent at all to consider said rule as
expunged from the 1997 Rules of Civil Procedure.
Furthermore, Rule 141 on indigent litigants was amended
twice: first on March 1, 2000 and the second on August 16,
2004; and yet, despite these two amendments, there was no
attempt to delete Section 21 from said Rule 3. This clearly
evinces the desire of the Court to maintain the two (2) rules on
indigent litigants to cover applications to litigate as an indigent
litigant.
It may be argued that Rule 3, Section 21 has been impliedly
repealed by the recent 2000 and 2004 amendments to Rule
141 on legal fees. This position is bereft of merit. Implied
repeals are frowned upon unless the intent of the framers of
the rules is unequivocal. It has been consistently ruled that:

(r)epeals by implication are not favored, and will not be
decreed, unless it is manifest that the legislature so
intended. As laws are presumed to be passed with deliberation
and with full knowledge of all existing ones on the subject, it is
but reasonable to conclude that in passing a statute[,] it was
not intended to interfere with or abrogate any former law
relating to same matter, unless the repugnancy between the
two is not only irreconcilable, but also clear and convincing,
and flowing necessarily from the language used, unless the
later act fully embraces the subject matter of the earlier, or
unless the reason for the earlier act is beyond peradventure
removed. Hence, every effort must be used to make all acts
stand and if, by any reasonable construction they can
be reconciled, the later act will not operate as a repeal of the
earlier.[24] (Emphasis supplied).
Instead of declaring that Rule 3, Section 21 has been
superseded and impliedly amended by Section 18 and later
Section 19 of Rule 141, the Court finds that the two rules can
and should be harmonized.
The Court opts to reconcile Rule 3, Section 21 and Rule 141,
Section 19 because it is a settled principle that when conflicts
are seen between two provisions, all efforts must be made to
harmonize them. Hence, every statute [or rule] must be so
construed and harmonized with other statutes [or rules] as to
form a uniform system of jurisprudence.[25]
In Manila Jockey Club, Inc. v. Court of Appeals, this Court
enunciated that in the interpretation of seemingly conflicting
laws, efforts must be made to first harmonize them. This Court
thus ruled:
Consequently, every statute should be construed in such a way
that will harmonize it with existing laws. This principle is
expressed in the legal maxim interpretare et concordare leges
legibus est optimus interpretandi, that is, to interpret and to
do it in such a way as to harmonize laws with laws is the best
method of interpretation.[26]
In the light of the foregoing considerations, therefore, the two
(2) rules can stand together and are compatible with each
other. When an application to litigate as an indigent litigant is
filed, the court shall scrutinize the affidavits and supporting
documents submitted by the applicant to determine if the
applicant complies with the income and property standards
156
prescribed in the present Section 19 of Rule 141that is, the
applicants gross income and that of the applicants immediate
family do not exceed an amount double the monthly minimum
wage of an employee; and the applicant does not own real
property with a fair market value of more than Three Hundred
Thousand Pesos (PhP 300,000.00). If the trial court finds that
the applicant meets the income and property requirements,
the authority to litigate as indigent litigant is automatically
granted and the grant is a matter of right.
However, if the trial court finds that one or both requirements
have not been met, then it would set a hearing to enable the
applicant to prove that the applicant has no money or property
sufficient and available for food, shelter and basic necessities
for himself and his family. In that hearing, the adverse party
may adduce countervailing evidence to disprove the evidence
presented by the applicant; after which the trial court will rule
on the application depending on the evidence adduced. In
addition, Section 21 of Rule 3 also provides that the adverse
party may later still contest the grant of such authority at any
time before judgment is rendered by the trial court, possibly
based on newly discovered evidence not obtained at the time
the application was heard. If the court determines after
hearing, that the party declared as an indigent is in fact a
person with sufficient income or property, the proper docket
and other lawful fees shall be assessed and collected by the
clerk of court. If payment is not made within the time fixed by
the court, execution shall issue or the payment of prescribed
fees shall be made, without prejudice to such other sanctions
as the court may impose.
The Court concedes that Rule 141, Section 19 provides specific
standards while Rule 3, Section 21 does not clearly draw the
limits of the entitlement to the exemption. Knowing that the
litigants may abuse the grant of authority, the trial court must
use sound discretion and scrutinize evidence strictly in
granting exemptions, aware that the applicant has not hurdled
the precise standards under Rule 141. The trial court must also
guard against abuse and misuse of the privilege to litigate as
an indigent litigant to prevent the filing of exorbitant claims
which would otherwise be regulated by a legal fee
requirement.
Thus, the trial court should have applied Rule 3, Section 21 to
the application of the Alguras after their affidavits and
supporting documents showed that petitioners did not satisfy
the twin requirements on gross monthly income and
ownership of real property under Rule 141. Instead of
disqualifying the Alguras as indigent litigants, the trial court
should have called a hearing as required by Rule 3, Section 21
to enable the petitioners to adduce evidence to show that they
didnt have property and money sufficient and available for
food, shelter, and basic necessities for them and their
family.[27] In that hearing, the respondents would have had the
right to also present evidence to refute the allegations and
evidence in support of the application of the petitioners to
litigate as indigent litigants. Since this Court is not a trier of
facts, it will have to remand the case to the trial court to
determine whether petitioners can be considered as indigent
litigants using the standards set in Rule 3, Section 21.

Recapitulating the rules on indigent litigants, therefore, if the

applicant for exemption meets the salary and property
requirements under Section 19 of Rule 141, then the grant of
the application is mandatory. On the other hand, when the
application does not satisfy one or both requirements, then
the application should not be denied outright; instead, the
court should apply the indigency test under Section 21 of Rule
3 and use its sound discretion in determining the merits of the
prayer for exemption.

Access to justice by the impoverished is held sacrosanct under

Article III, Section 11 of the 1987 Constitution. The Action
Program for Judicial Reforms (APJR) itself, initiated by former
Chief Justice Hilario G. Davide, Jr., placed prime importance on
easy access to justice by the poor as one of its six major
components. Likewise, the judicial philosophy of Liberty and
Prosperity of Chief Justice Artemio V. Panganiban makes it
imperative that the courts shall not only safeguard but also
enhance the rights of individualswhich are considered sacred
under the 1987 Constitution. Without doubt, one of the most
precious rights which must be shielded and secured is the
WHITE LIGHT CORPORATION, TITANIUM CORPORATION and
unhampered access to the justice system by the poor, the
STA. MESA TOURIST & DEVELOPMENT
underprivileged, and the marginalized.
CORPORATION, Petitioners, vs. CITY OF MANILA,
WHEREFORE, the petition is GRANTED and the April 14, 2000 represented by DE CASTRO, MAYOR ALFREDO S.
Order granting the disqualification of petitioners, the July 17, LIM, Respondent. Tinga, J.:
2000 Order denying petitioners Motion for Reconsideration,
With another city ordinance of Manila also principally involving
and the September 11, 2001 Order dismissing the case in Civil
the tourist district as subject, the Court is confronted anew
Case No. RTC-99-4403 before the Naga City RTC, Branch 27
with the incessant clash between government power and
are ANNULLED and SET ASIDE. Furthermore, the Naga City
individual liberty in tandem with the archetypal tension
RTC is ordered to set the Ex-Parte Motion to Litigate as
between law and morality.
Indigent Litigants for hearing and apply Rule 3, Section 21 of
the 1997 Rules of Civil Procedure to determine whether In City of Manila v. Laguio, Jr.,1 the Court affirmed the
petitioners can qualify as indigent litigants. nullification of a city ordinance barring the operation of motels
and inns, among other establishments, within the Ermita-
Malate area. The petition at bar assails a similarly-motivated
city ordinance that prohibits those same establishments from
offering short-time admission, as well as pro-rated or "wash
up" rates for such abbreviated stays. Our earlier decision
tested the city ordinance against our sacred constitutional
rights to liberty, due process and equal protection of law. The
same parameters apply to the present petition.

This Petition2 under Rule 45 of the Revised Rules on Civil

Procedure, which seeks the reversal of the Decision3 in C.A.-
157
G.R. S.P. No. 33316 of the Court of Appeals, challenges the
validity of Manila City Ordinance No. 7774 entitled, "An
Ordinance Prohibiting Short-Time Admission, Short-Time
Admission Rates, and Wash-Up Rate Schemes in Hotels,
Motels, Inns, Lodging Houses, Pension Houses, and Similar
Establishments in the City of Manila" (the Ordinance).
I. The facts are as follows: On December 3, 1992, City Mayor
Alfredo S. Lim (Mayor Lim) signed into law the Ordinance.4 The
Ordinance is reproduced in full, hereunder:
SECTION 1. Declaration of Policy. It is hereby the declared
policy of the City Government to protect the best interest,
health and welfare, and the morality of its constituents in
general and the youth in particular.
SEC. 2. Title. This ordinance shall be known as "An Ordinance"
prohibiting short time admission in hotels, motels, lodging
houses, pension houses and similar establishments in the City
of Manila.
SEC. 3. Pursuant to the above policy, short-time admission and
rate [sic], wash-up rate or other similarly concocted terms, are
hereby prohibited in hotels, motels, inns, lodging houses,
pension houses and similar establishments in the City of
Manila.
SEC. 4. Definition of Term[s]. Short-time admission shall mean
admittance and charging of room rate for less than twelve (12)
hours at any given time or the renting out of rooms more than
twice a day or any other term that may be concocted by
owners or managers of said establishments but would mean
the same or would bear the same meaning.
SEC. 5. Penalty Clause. Any person or corporation who shall
violate any provision of this ordinance shall upon conviction
thereof be punished by a fine of Five Thousand (₱5,000.00)
Pesos or imprisonment for a period of not exceeding one (1)
year or both such fine and imprisonment at the discretion of
the court; Provided, That in case of [a] juridical person, the
president, the manager, or the persons in charge of the
operation thereof shall be liable: Provided, further, That in
case of subsequent conviction for the same offense, the
business license of the guilty party shall automatically be
cancelled.
SEC. 6. Repealing Clause. Any or all provisions of City
ordinances not consistent with or contrary to this measure or
any portion hereof are hereby deemed repealed.
SEC. 7. Effectivity. This ordinance shall take effect immediately
upon approval.
Enacted by the city Council of Manila at its regular session
today, November 10, 1992.
158
Approved by His Honor, the Mayor on December 3, 1992.
On December 15, 1992, the Malate Tourist and Development
Corporation (MTDC) filed a complaint for declaratory relief
with prayer for a writ of preliminary injunction and/or
temporary restraining order ( TRO)5 with the Regional Trial
Court (RTC) of Manila, Branch 9 impleading as defendant,
herein respondent City of Manila (the City) represented by
Mayor Lim.6 MTDC prayed that the Ordinance, insofar as it
includes motels and inns as among its prohibited
establishments, be declared invalid and unconstitutional.
MTDC claimed that as owner and operator of the Victoria
Court in Malate, Manila it was authorized by Presidential
Decree (P.D.) No. 259 to admit customers on a short time basis
as well as to charge customers wash up rates for stays of only
three hours.
On December 21, 1992, petitioners White Light Corporation
(WLC), Titanium Corporation (TC) and Sta. Mesa Tourist and
Development Corporation (STDC) filed a motion to intervene
and to admit attached complaint-in-intervention7 on the
ground that the Ordinance directly affects their business
interests as operators of drive-in-hotels and motels in
Manila.8 The three companies are components of the Anito
Group of Companies which owns and operates several hotels
and motels in Metro Manila.9
On December 23, 1992, the RTC granted the motion to
intervene.10 The RTC also notified the Solicitor General of the
proceedings pursuant to then Rule 64, Section 4 of the Rules
of Court. On the same date, MTDC moved to withdraw as
plaintiff.11
On December 28, 1992, the RTC granted MTDC's motion to
withdraw.12 The RTC issued a TRO on January 14, 1993,
directing the City to cease and desist from enforcing the
Ordinance.13 The City filed an Answer dated January 22, 1993
alleging that the Ordinance is a legitimate exercise of police
power.14
On February 8, 1993, the RTC issued a writ of preliminary
injunction ordering the city to desist from the enforcement of
the Ordinance.15 A month later, on March 8, 1993, the Solicitor
General filed his Comment arguing that the Ordinance is
constitutional.
During the pre-trial conference, the WLC, TC and STDC agreed
to submit the case for decision without trial as the case
involved a purely legal question.16 On October 20, 1993, the
RTC rendered a decision declaring the Ordinance null and void.
The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774
of the City of Manila is hereby declared null and void.
Accordingly, the preliminary injunction heretofor issued is
hereby made permanent. SO ORDERED.17
The RTC noted that the ordinance "strikes at the personal
liberty of the individual guaranteed and jealously guarded by
the Constitution."18 Reference was made to the provisions of
the Constitution encouraging private enterprises and the
incentive to needed investment, as well as the right to operate
economic enterprises. Finally, from the observation that the
illicit relationships the Ordinance sought to dissuade could
nonetheless be consummated by simply paying for a 12-hour
stay, the RTC likened the law to the ordinance annulled in Ynot
v. Intermediate Appellate Court,19 where the legitimate
purpose of preventing indiscriminate slaughter of carabaos
was sought to be effected through an inter-province ban on
the transport of carabaos and carabeef.
The City later filed a petition for review on certiorari with the
Supreme Court.20 The petition was docketed as G.R. No.
112471. However in a resolution dated January 26, 1994, the
Court treated the petition as a petition for certiorari and
referred the petition to the Court of Appeals.21
Before the Court of Appeals, the City asserted that the
Ordinance is a valid exercise of police power pursuant to
Section 458 (4)(iv) of the Local Government Code which
confers on cities, among other local government units, the
power:
[To] regulate the establishment, operation and maintenance
of cafes, restaurants, beerhouses, hotels, motels, inns, pension
houses, lodging houses and other similar establishments,
including tourist guides and transports.22
The Ordinance, it is argued, is also a valid exercise of the power
of the City under Article III, Section 18(kk) of the Revised
Manila Charter, thus:
"to enact all ordinances it may deem necessary and proper for
the sanitation and safety, the furtherance of the prosperity
and the promotion of the morality, peace, good order,
comfort, convenience and general welfare of the city and its
inhabitants, and such others as be necessary to carry into
effect and discharge the powers and duties conferred by this
Chapter; and to fix penalties for the violation of ordinances
which shall not exceed two hundred pesos fine or six months
imprisonment, or both such fine and imprisonment for a single
offense.23
Petitioners argued that the Ordinance is unconstitutional and
void since it violates the right to privacy and the freedom of
movement; it is an invalid exercise of police power; and it is an
unreasonable and oppressive interference in their business.
159
The Court of Appeals reversed the decision of the RTC and
affirmed the constitutionality of the Ordinance. 24 First, it held
that the Ordinance did not violate the right to privacy or the
freedom of movement, as it only penalizes the owners or
operators of establishments that admit individuals for short
time stays. Second, the virtually limitless reach of police power
is only constrained by having a lawful object obtained through
a lawful method. The lawful objective of the Ordinance is
satisfied since it aims to curb immoral activities. There is a
lawful method since the establishments are still allowed to
operate. Third, the adverse effect on the establishments is
justified by the well-being of its constituents in general. Finally,
as held in Ermita-Malate Motel Operators Association v. City
Mayor of Manila, liberty is regulated by law.
TC, WLC and STDC come to this Court via petition for review on
certiorari.25 In their petition and Memorandum, petitioners in
essence repeat the assertions they made before the Court of
Appeals. They contend that the assailed Ordinance is an invalid
exercise of police power.
II. We must address the threshold issue of petitioners’
standing. Petitioners allege that as owners of establishments
offering "wash-up" rates, their business is being unlawfully
interfered with by the Ordinance. However, petitioners also
allege that the equal protection rights of their clients are also
being interfered with. Thus, the crux of the matter is whether
or not these establishments have the requisite standing to
plead for protection of their patrons' equal protection rights.
Standing or locus standi is the ability of a party to demonstrate
to the court sufficient connection to and harm from the law or
action challenged to support that party's participation in the
case. More importantly, the doctrine of standing is built on the
principle of separation of powers,26 sparing as it does
unnecessary interference or invalidation by the judicial branch
of the actions rendered by its co-equal branches of
government.
The requirement of standing is a core component of the
judicial system derived directly from the Constitution.27 The
constitutional component of standing doctrine incorporates
concepts which concededly are not susceptible of precise
definition.28 In this jurisdiction, the extancy of "a direct and
personal interest" presents the most obvious cause, as well as
the standard test for a petitioner's standing.29 In a similar vein,
the United States Supreme Court reviewed and elaborated on
the meaning of the three constitutional standing requirements
of injury, causation, and redressability in Allen v. Wright.30
Nonetheless, the general rules on standing admit of several
exceptions such as the overbreadth doctrine, taxpayer suits,
third party standing and, especially in the Philippines, the
doctrine of transcendental importance.31
For this particular set of facts, the concept of third party
standing as an exception and the overbreadth doctrine are
appropriate. In Powers v. Ohio,32 the United States Supreme
Court wrote that: "We have recognized the right of litigants to
bring actions on behalf of third parties, provided three
important criteria are satisfied: the litigant must have suffered
an ‘injury-in-fact,’ thus giving him or her a "sufficiently
concrete interest" in the outcome of the issue in dispute; the
litigant must have a close relation to the third party; and there
must exist some hindrance to the third party's ability to protect
his or her own interests."33 Herein, it is clear that the business
interests of the petitioners are likewise injured by the
Ordinance. They rely on the patronage of their customers for
their continued viability which appears to be threatened by the
enforcement of the Ordinance. The relative silence in
constitutional litigation of such special interest groups in our
nation such as the American Civil Liberties Union in the United
States may also be construed as a hindrance for customers to
bring suit.34
American jurisprudence is replete with examples where
parties-in-interest were allowed standing to advocate or
invoke the fundamental due process or equal protection
claims of other persons or classes of persons injured by state
action. In Griswold v. Connecticut,35 the United States
Supreme Court held that physicians had standing to challenge
a reproductive health statute that would penalize them as
accessories as well as to plead the constitutional protections
available to their patients. The Court held that:
"The rights of husband and wife, pressed here, are likely to be
diluted or adversely affected unless those rights are
considered in a suit involving those who have this kind of
confidential relation to them."36
An even more analogous example may be found in Craig v.
Boren,37 wherein the United States Supreme Court held that a
licensed beverage vendor has standing to raise the equal
protection claim of a male customer challenging a statutory
scheme prohibiting the sale of beer to males under the age of
21 and to females under the age of 18. The United States High
Court explained that the vendors had standing "by acting as
advocates of the rights of third parties who seek access to their
market or function."38
Assuming arguendo that petitioners do not have a relationship
with their patrons for the former to assert the rights of the
latter, the overbreadth doctrine comes into play. In
overbreadth analysis, challengers to government action are in
effect permitted to raise the rights of third parties. Generally
applied to statutes infringing on the freedom of speech, the
overbreadth doctrine applies when a statute needlessly
restrains even constitutionally guaranteed rights.39 In this
case, the petitioners claim that the Ordinance makes a
160
sweeping intrusion into the right to liberty of their clients. We
can see that based on the allegations in the petition, the
Ordinance suffers from overbreadth.
We thus recognize that the petitioners have a right to assert
the constitutional rights of their clients to patronize their
establishments for a "wash-rate" time frame.
III.To students of jurisprudence, the facts of this case will recall
to mind not only the recent City of Manila ruling, but our 1967
decision in Ermita-Malate Hotel and Motel Operations
Association, Inc., v. Hon. City Mayor of Manila. 40Ermita-
Malate concerned the City ordinance requiring patrons to fill
up a prescribed form stating personal information such as
name, gender, nationality, age, address and occupation before
they could be admitted to a motel, hotel or lodging house. This
earlier ordinance was precisely enacted to minimize certain
practices deemed harmful to public morals. A purpose similar
to the annulled ordinance in City of Manila which sought a
blanket ban on motels, inns and similar establishments in the
Ermita-Malate area. However, the constitutionality of the
ordinance in Ermita-Malate was sustained by the Court.
The common thread that runs through those decisions and the
case at bar goes beyond the singularity of the localities covered
under the respective ordinances. All three ordinances were
enacted with a view of regulating public morals including
particular illicit activity in transient lodging establishments.
This could be described as the middle case, wherein there is no
wholesale ban on motels and hotels but the services offered
by these establishments have been severely restricted. At its
core, this is another case about the extent to which the State
can intrude into and regulate the lives of its citizens.
The test of a valid ordinance is well established. A long line of
decisions including City of Manila has held that for an
ordinance to be valid, it must not only be within the corporate
powers of the local government unit to enact and pass
according to the procedure prescribed by law, it must also
conform to the following substantive requirements: (1) must
not contravene the Constitution or any statute; (2) must not
be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade;
(5) must be general and consistent with public policy; and (6)
must not be unreasonable.41
The Ordinance prohibits two specific and distinct business
practices, namely wash rate admissions and renting out a room
more than twice a day. The ban is evidently sought to be
rooted in the police power as conferred on local government
units by the Local Government Code through such implements
as the general welfare clause.
A. Police power, while incapable of an exact definition, has
been purposely veiled in general terms to underscore its
comprehensiveness to meet all exigencies and provide enough
room for an efficient and flexible response as the conditions
warrant.42 Police power is based upon the concept of necessity
of the State and its corresponding right to protect itself and its
people.43 Police power has been used as justification for
numerous and varied actions by the State. These range from
the regulation of dance halls,44 movie theaters,45 gas
stations46 and cockpits.47 The awesome scope of police power
is best demonstrated by the fact that in its hundred or so years
of presence in our nation’s legal system, its use has rarely been
denied.
The apparent goal of the Ordinance is to minimize if not
eliminate the use of the covered establishments for illicit sex,
prostitution, drug use and alike. These goals, by themselves,
are unimpeachable and certainly fall within the ambit of the
police power of the State. Yet the desirability of these ends do
not sanctify any and all means for their achievement. Those
means must align with the Constitution, and our emerging
sophisticated analysis of its guarantees to the people. The Bill
of Rights stands as a rebuke to the seductive theory of
Macchiavelli, and, sometimes even, the political majorities
animated by his cynicism.
Even as we design the precedents that establish the
framework for analysis of due process or equal protection
questions, the courts are naturally inhibited by a due
deference to the co-equal branches of government as they
exercise their political functions. But when we are compelled
to nullify executive or legislative actions, yet another form of
caution emerges. If the Court were animated by the same
passing fancies or turbulent emotions that motivate many
political decisions, judicial integrity is compromised by any
perception that the judiciary is merely the third political
branch of government. We derive our respect and good
standing in the annals of history by acting as judicious and
neutral arbiters of the rule of law, and there is no surer way to
that end than through the development of rigorous and
sophisticated legal standards through which the courts analyze
the most fundamental and far-reaching constitutional
questions of the day.
B.The primary constitutional question that confronts us is one
of due process, as guaranteed under Section 1, Article III of the
Constitution. Due process evades a precise definition.48 The
purpose of the guaranty is to prevent arbitrary governmental
encroachment against the life, liberty and property of
individuals. The due process guaranty serves as a protection
against arbitrary regulation or seizure. Even corporations and
partnerships are protected by the guaranty insofar as their
property is concerned.
The due process guaranty has traditionally been interpreted as
imposing two related but distinct restrictions on government,
161
"procedural due process" and "substantive due process."
Procedural due process refers to the procedures that the
government must follow before it deprives a person of life,
liberty, or property.49 Procedural due process concerns itself
with government action adhering to the established process
when it makes an intrusion into the private sphere. Examples
range from the form of notice given to the level of formality of
a hearing.
If due process were confined solely to its procedural aspects,
there would arise absurd situation of arbitrary government
action, provided the proper formalities are followed.
Substantive due process completes the protection envisioned
by the due process clause. It inquires whether the government
has sufficient justification for depriving a person of life, liberty,
or property.50
The question of substantive due process, moreso than most
other fields of law, has reflected dynamism in progressive legal
thought tied with the expanded acceptance of fundamental
freedoms. Police power, traditionally awesome as it may be, is
now confronted with a more rigorous level of analysis before
it can be upheld. The vitality though of constitutional due
process has not been predicated on the frequency with which
it has been utilized to achieve a liberal result for, after all, the
libertarian ends should sometimes yield to the prerogatives of
the State. Instead, the due process clause has acquired
potency because of the sophisticated methodology that has
emerged to determine the proper metes and bounds for its
application.
C.The general test of the validity of an ordinance on
substantive due process grounds is best tested when assessed
with the evolved footnote 4 test laid down by the U.S. Supreme
Court in U.S. v. Carolene Products.51 Footnote 4 of the
Carolene Products case acknowledged that the judiciary would
defer to the legislature unless there is a discrimination against
a "discrete and insular" minority or infringement of a
"fundamental right."52 Consequently, two standards of judicial
review were established: strict scrutiny for laws dealing with
freedom of the mind or restricting the political process, and
the rational basis standard of review for economic legislation.
A third standard, denominated as heightened or immediate
scrutiny, was later adopted by the U.S. Supreme Court for
evaluating classifications based on gender53 and
54
legitimacy. Immediate scrutiny was adopted by the U.S.
Supreme Court in Craig,55 after the Court declined to do so in
Reed v. Reed.56 While the test may have first been articulated
in equal protection analysis, it has in the United States since
been applied in all substantive due process cases as well.
We ourselves have often applied the rational basis test mainly
in analysis of equal protection challenges.57 Using the rational
basis examination, laws or ordinances are upheld if they
rationally further a legitimate governmental interest.58 Under
intermediate review, governmental interest is extensively
examined and the availability of less restrictive measures is
considered.59 Applying strict scrutiny, the focus is on the
presence of compelling, rather than substantial, governmental
interest and on the absence of less restrictive means for
achieving that interest.
In terms of judicial review of statutes or ordinances, strict
scrutiny refers to the standard for determining the quality and
the amount of governmental interest brought to justify the
regulation of fundamental freedoms.60 Strict scrutiny is used
today to test the validity of laws dealing with the regulation of
speech, gender, or race as well as other fundamental rights as
expansion from its earlier applications to equal
protection.61 The United States Supreme Court has expanded
the scope of strict scrutiny to protect fundamental rights such
as suffrage,62 judicial access63and interstate travel.64
If we were to take the myopic view that an Ordinance should
be analyzed strictly as to its effect only on the petitioners at
bar, then it would seem that the only restraint imposed by the
law which we are capacitated to act upon is the injury to
property sustained by the petitioners, an injury that would
warrant the application of the most deferential standard – the
rational basis test. Yet as earlier stated, we recognize the
capacity of the petitioners to invoke as well the constitutional
rights of their patrons – those persons who would be deprived
of availing short time access or wash-up rates to the lodging
establishments in question.
Viewed cynically, one might say that the infringed rights of
these customers were are trivial since they seem shorn of
political consequence. Concededly, these are not the sort of
cherished rights that, when proscribed, would impel the
people to tear up their cedulas. Still, the Bill of Rights does not
shelter gravitas alone. Indeed, it is those "trivial" yet
fundamental freedoms – which the people reflexively exercise
any day without the impairing awareness of their
constitutional consequence – that accurately reflect the
degree of liberty enjoyed by the people. Liberty, as integrally
incorporated as a fundamental right in the Constitution, is not
a Ten Commandments-style enumeration of what may or what
may not be done; but rather an atmosphere of freedom where
the people do not feel labored under a Big Brother presence as
they interact with each other, their society and nature, in a
manner innately understood by them as inherent, without
doing harm or injury to others.
D.The rights at stake herein fall within the same fundamental
rights to liberty which we upheld in City of Manila v. Hon.
Laguio, Jr. We expounded on that most primordial of rights,
thus:
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Liberty as guaranteed by the Constitution was defined by
Justice Malcolm to include "the right to exist and the right to
be free from arbitrary restraint or servitude. The term cannot
be dwarfed into mere freedom from physical restraint of the
person of the citizen, but is deemed to embrace the right of
man to enjoy the facilities with which he has been endowed by
his Creator, subject only to such restraint as are necessary for
the common welfare."[65] In accordance with this case, the
rights of the citizen to be free to use his faculties in all lawful
ways; to live and work where he will; to earn his livelihood by
any lawful calling; and to pursue any avocation are all deemed
embraced in the concept of liberty.[66]
The U.S. Supreme Court in the case of Roth v. Board of Regents,
sought to clarify the meaning of "liberty." It said:
While the Court has not attempted to define with exactness
the liberty . . . guaranteed [by the Fifth and Fourteenth
Amendments], the term denotes not merely freedom from
bodily restraint but also the right of the individual to contract,
to engage in any of the common occupations of life, to acquire
useful knowledge, to marry, establish a home and bring up
children, to worship God according to the dictates of his own
conscience, and generally to enjoy those privileges long
recognized . . . as essential to the orderly pursuit of happiness
by free men. In a Constitution for a free people, there can be
no doubt that the meaning of "liberty" must be broad
indeed.67 [Citations omitted]
It cannot be denied that the primary animus behind the
ordinance is the curtailment of sexual behavior. The City
asserts before this Court that the subject establishments "have
gained notoriety as venue of ‘prostitution, adultery and
fornications’ in Manila since they ‘provide the necessary
atmosphere for clandestine entry, presence and exit and thus
became the ‘ideal haven for prostitutes and thrill-
seekers.’"68 Whether or not this depiction of a mise-en-scene
of vice is accurate, it cannot be denied that legitimate sexual
behavior among willing married or consenting single adults
which is constitutionally protected69 will be curtailed as well,
as it was in the City of Manila case. Our holding therein retains
significance for our purposes:
The concept of liberty compels respect for the individual
whose claim to privacy and interference demands respect. As
the case of Morfe v. Mutuc, borrowing the words of Laski, so
very aptly stated:
Man is one among many, obstinately refusing reduction to
unity. His separateness, his isolation, are indefeasible; indeed,
they are so fundamental that they are the basis on which his
civic obligations are built. He cannot abandon the
consequences of his isolation, which are, broadly speaking,
that his experience is private, and the will built out of that
experience personal to himself. If he surrenders his will to
others, he surrenders himself. If his will is set by the will of
others, he ceases to be a master of himself. I cannot believe
that a man no longer a master of himself is in any real sense
free.
Indeed, the right to privacy as a constitutional right was
recognized in Morfe, the invasion of which should be justified
by a compelling state interest. Morfe accorded recognition to
the right to privacy independently of its identification with
liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions
into the personal life of the citizen.70
We cannot discount other legitimate activities which the
Ordinance would proscribe or impair. There are very legitimate
uses for a wash rate or renting the room out for more than
twice a day. Entire families are known to choose pass the time
in a motel or hotel whilst the power is momentarily out in their
homes. In transit passengers who wish to wash up and rest
between trips have a legitimate purpose for abbreviated stays
in motels or hotels. Indeed any person or groups of persons in
need of comfortable private spaces for a span of a few hours
with purposes other than having sex or using illegal drugs can
legitimately look to staying in a motel or hotel as a convenient
alternative.
E.That the Ordinance prevents the lawful uses of a wash rate
depriving patrons of a product and the petitioners of lucrative
business ties in with another constitutional requisite for the
legitimacy of the Ordinance as a police power measure. It must
appear that the interests of the public generally, as
distinguished from those of a particular class, require an
interference with private rights and the means must be
reasonably necessary for the accomplishment of the purpose
and not unduly oppressive of private rights. 71 It must also be
evident that no other alternative for the accomplishment of
the purpose less intrusive of private rights can work. More
importantly, a reasonable relation must exist between the
purposes of the measure and the means employed for its
accomplishment, for even under the guise of protecting the
public interest, personal rights and those pertaining to private
property will not be permitted to be arbitrarily invaded.72
Lacking a concurrence of these requisites, the police measure
shall be struck down as an arbitrary intrusion into private
rights. As held in Morfe v. Mutuc, the exercise of police power
is subject to judicial review when life, liberty or property is
affected.73 However, this is not in any way meant to take it
away from the vastness of State police power whose exercise
enjoys the presumption of validity.74
Similar to the Comelec resolution requiring newspapers to
donate advertising space to candidates, this Ordinance is a
blunt and heavy instrument.75 The Ordinance makes no
distinction between places frequented by patrons engaged in
illicit activities and patrons engaged in legitimate actions. Thus
it prevents legitimate use of places where illicit activities are
rare or even unheard of. A plain reading of section 3 of the
Ordinance shows it makes no classification of places of lodging,
thus deems them all susceptible to illicit patronage and subject
them without exception to the unjustified prohibition.
The Court has professed its deep sentiment and tenderness of
the Ermita-Malate area, its longtime home,76 and it is skeptical
of those who wish to depict our capital city – the Pearl of the
Orient – as a modern-day Sodom or Gomorrah for the Third
World set. Those still steeped in Nick Joaquin-dreams of the
grandeur of Old Manila will have to accept that Manila like all
evolving big cities, will have its problems. Urban decay is a fact
of mega cities such as Manila, and vice is a common problem
confronted by the modern metropolis wherever in the world.
The solution to such perceived decay is not to prevent
legitimate businesses from offering a legitimate product.
Rather, cities revive themselves by offering incentives for new
businesses to sprout up thus attracting the dynamism of
individuals that would bring a new grandeur to Manila.
The behavior which the Ordinance seeks to curtail is in fact
already prohibited and could in fact be diminished simply by
applying existing laws. Less intrusive measures such as curbing
the proliferation of prostitutes and drug dealers through active
police work would be more effective in easing the situation. So
would the strict enforcement of existing laws and regulations
penalizing prostitution and drug use. These measures would
have minimal intrusion on the businesses of the petitioners
and other legitimate merchants. Further, it is apparent that the
Ordinance can easily be circumvented by merely paying the
whole day rate without any hindrance to those engaged in
illicit activities. Moreover, drug dealers and prostitutes can in
fact collect "wash rates" from their clientele by charging their
customers a portion of the rent for motel rooms and even
apartments.
IV.We reiterate that individual rights may be adversely
affected only to the extent that may fairly be required by the
legitimate demands of public interest or public welfare. The
State is a leviathan that must be restrained from needlessly
intruding into the lives of its citizens. However well-
intentioned the Ordinance may be, it is in effect an arbitrary
and whimsical intrusion into the rights of the establishments
as well as their patrons. The Ordinance needlessly restrains the
operation of the businesses of the petitioners as well as
restricting the rights of their patrons without sufficient
justification. The Ordinance rashly equates wash rates and
renting out a room more than twice a day with immorality
without accommodating innocuous intentions.

163
The promotion of public welfare and a sense of morality
among citizens deserves the full endorsement of the judiciary
provided that such measures do not trample rights this Court
is sworn to protect.77 The notion that the promotion of public
morality is a function of the State is as old as Aristotle. 78 The
advancement of moral relativism as a school of philosophy
does not de-legitimize the role of morality in law, even if it may
foster wider debate on which particular behavior to penalize.
It is conceivable that a society with relatively little shared
morality among its citizens could be functional so long as the
pursuit of sharply variant moral perspectives yields an
adequate accommodation of different interests.79

To be candid about it, the oft-quoted American maxim that

"you cannot legislate morality" is ultimately illegitimate as a
matter of law, since as explained by Calabresi, that phrase is
more accurately interpreted as meaning that efforts to
legislate morality will fail if they are widely at variance with
public attitudes about right and wrong.80 Our penal laws, for
one, are founded on age-old moral traditions, and as long as
there are widely accepted distinctions between right and
wrong, they will remain so oriented.

Yet the continuing progression of the human story has seen

not only the acceptance of the right-wrong distinction, but also
the advent of fundamental liberties as the key to the
enjoyment of life to the fullest. Our democracy is distinguished
from non-free societies not with any more extensive
elaboration on our part of what is moral and immoral, but from
our recognition that the individual liberty to make the choices
in our lives is innate, and protected by the State. Independent
and fair-minded judges themselves are under a moral duty to
uphold the Constitution as the embodiment of the rule of law,
by reason of their expression of consent to do so when they
take the oath of office, and because they are entrusted by the
people to uphold the law.81

Even as the implementation of moral norms remains an

indispensable complement to governance, that prerogative is
hardly absolute, especially in the face of the norms of due
process of liberty. And while the tension may often be left to
the courts to relieve, it is possible for the government to avoid
the constitutional conflict by employing more judicious, less
drastic means to promote morality.

WHEREFORE, the Petition is GRANTED. The Decision of the

Court of Appeals is REVERSED, and the Decision of the Regional
Trial Court of Manila, Branch 9, is REINSTATED. Ordinance No.
7774 is hereby declared UNCONSTITUTIONAL. No
pronouncement as to costs.

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